United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MISS MONICA CARSS-FRISK (One of Her Majesty's Counsel) and MR ASHLEY SERR (of Counsel) Instructed by: The Treasury Solicitors Litigation and Employment One Kemble Street London WC2B 4TS
For the Respondent	MR JOHN MACKENZIE (Solicitor) Messrs John Mackenzie Solicitors Rotherfield House 7 Fairmile Henley on Thames Oxon RG9 2JR


 


SUMMARY

SEX DISCRIMINATION

Injury to feelings

SEXUAL ORIENTATION DISCRIMINATION

Where there is overlap between the basis of aggravated damages and compensation for injury to feelings, double counting should be avoided but a reasonable sum may be awarded for uncompensated aggravating elements of the conduct which forms the basis of the awards – Vento v Chief Constable of West Yorkshire Police [2003] IRLR 102 paragraph 68 applied. Conduct of proceedings justified part of the award of aggravated damages – Zaiwalla & Co v Walia [2002] IRLR 697 applied. The ET erred in double counting and failing to have regard to the totality of awards for non-pecuniary loss. Aggravated damages reduced to £8,000.

The basis for the award of exemplary damages – the failure of the Army to provide a mechanism for redress of Ms Fletcher's complaints – did not cross the high threshold of oppressive, arbitrary or contumelious conduct for making such an award – Kuddus v Chief Constable of Leicestershire [2002] AC 122 applied. Further there was no proper basis for the amount of the award of £50,000, arrived at by aggregating the amount awarded in compensation for injury to feelings and aggravated damages. Award of exemplary damages set aside.


 


THE HONOURABLE MRS JUSTICE SLADE

1. The Ministry of Defence ('MOD') appeals from two elements of a remedy award made by an Employment Tribunal ('ET') in a judgment on 25 November 2008 (the 'RJ'). The remedy hearing followed findings by the ET on three ET1s lodged by Kerry Fletcher. In its judgment on liability of 15 January 2008 (the 'LJ') the ET upheld Ms Fletcher's claims of direct discrimination and harassment under the Sex Discrimination Act 1975 ('SDA') and claims of victimisation contrary to the Employment Equality (Sexual Orientation) Regulations 2003 (the 'Sexual Orientation Regulations'). The ET dismissed claims of direct discrimination under the Sexual Orientation Regulations.
2. By the RJ the ET awarded Ms Fletcher £30,000 for injury to feelings, aggravated damages of £20,000, £50,000 exemplary damages and costs of £10,000. Sums in respect of loss of earnings and pension entitlement were also awarded. The MOD appealed the basis for and amount of the award of aggravated damages and from the making of an award of exemplary damages and its amount. Miss Carss-Frisk QC on behalf of the MOD did not seek to challenge the awards for injury to feelings, pecuniary loss or costs. However it was contended that there are elements of overlap and double recovery between the awards and that the size of the award for injury to feelings is relevant in determining whether the overall award in respect of non-pecuniary loss and for exemplary damages are proportionate. She had not appeared as counsel for the MOD at the liability hearing.
3. Miss Carss-Frisk for the MOD stated that the appeal should not be seen as an attempt to persuade the Employment Appeal Tribunal ('EAT') to take a less serious view than the ET did of the treatment suffered by Ms Fletcher.

Issues on Appeal

4. The issues before us are:

Whether the ET erred in holding that the conduct of the ET proceedings on behalf of the MOD warranted an award of aggravated damages;

Whether there was double recovery in respect of the awards of aggravated damages on the one hand and injury to feelings and costs on the other;

Whether the ET failed to have proper regard to the totality and proportionality of the awards for non-pecuniary loss.

Whether in making an award of exemplary damages the ET erred in holding that the conduct of the MOD fell within the first category outlined by Lord Devlin in Rookes v Barnard [1964] AC 1129;

Whether, if the ET did not err in making an award of exemplary damages, the award was perversely high.

Summary of the Facts

5. We will give a brief summary of the facts and set out references to the LJ and RJ to the limited extent required for the purposes of determining the issues which arise on this appeal. The liability hearing took nearly three weeks. The LJ extends over 98 pages and 271 paragraphs. The remedy hearing took three days.
6. Mr Mackenzie for Ms Fletcher prepared a helpful chronology of three and a half pages based on the ET's findings at the two hearings.
7. Ms Fletcher joined the Army in October 1996. In June 1998 she was posted to 3 Royal Horse Artillery and worked in the stables. By September 2004 she was posted to Topcliff barracks.
8. Ms Fletcher's ET1s are concerned with events in the period between 2004 and 2006 when she was found by the ET to have suffered sexual harassment and extensive victimisation. The start of this turn of events appears to have been appallingly inappropriate behaviour towards her by Sergeant Brown who was her superior. The ET held at paragraph 245 of the LJ:

"The conclusion, therefore, is that Sergeant Brown was telling the Claimant that her partner was ugly, that she should have a sexual relationship with him, and sending her regular text messages of a sexual nature. He boasted about the size of his penis and told the Claimant that his girlfriend was away. … At the end of January, he embarked on the utilisation of administrative sanctions against the Claimant, instructing Bombardier Morris to punish her, varying the nature of the punishment and demonstrating his inability to make an effective ruling under the AGAI system. He subsequently involved BSM Tabone, escalating matters to him on 11 February 2005. The Claimant was reduced to a mental state where she could no longer continue under this pressure, and when she obtained medical assistance which recommended sick leave, she was mocked and humiliated in front of others by BSM Tabone…"

9. Allegations were made against Ms Fletcher which, as can be seen from LJ paragraph 249, the ET did not believe. She was disciplined for these matters. The ET observed:

"Dealing next with the disciplinary matters against the Claimant, no sooner had the inappropriate behaviour taken place than the Claimant found herself in a hostile disciplinary environment which previously had been informal. There are allegations of insubordination and lateness against her which suggest that this was habitual on her part. However, the Tribunal simply did not believe the evidence put forward by the Respondent in this context…"

Ms Fletcher was disciplined for a variety of incidents over a considerable period of time.

10. On 4 April 2005 Ms Fletcher made written complaints about Staff Sergeant Brown and BSM Tabone. On 19 April 2005 Ms Fletcher was removed from stables duties and relocated in the Motor Transport stores. The ET found that Sergeant Tabone told staff to make Ms Fletcher's life 'a fucking misery'.
11. She submitted several redress of complaints applications under the appropriate procedure.
12. Miss Fletcher made her first application for redress of complaint under Section 108 of the Army Act on 18 May 2005. It was in similar terms to the complaint made on 4 April 2005.
13. From 7 March 2006 Ms Fletcher was away from work sick. A recommendation for her discharge from the Army was made on grounds that she was temperamentally unsuitable.
14. On 23 and 24 November 2006 Major General Loudon conducted a hearing of Ms Fletcher's complaints. By a decision on 24 January 2007 he concluded that Staff Sergeant Brown did behave inappropriately and that there was merit in Ms Fletcher's complaints against him. He found no merit in her other complaints.
15. In February 2007 Ms Fletcher applied to transfer to the RAF, the Royal Military Police or the Royal Army Veterinary Corps.
16. On 1 April 2007 Ms Fletcher transferred temporarily to Redditch. By December 2007 her applications for transfer were rejected.
17. The ET was extremely critical of the conduct of the Army in disciplining Ms Fletcher and in its reaction to her complaints. At paragraph 262 of the LJ it held:

"All these events, together, are tantamount to a classic history of victimisation. The Claimant was reduced to a condition where she could no longer continue because of the stress which persistent disciplinary allegations against her on trivial grounds trumped up into summary dealings under the Army Act caused to her. The medical advice was then utilised to provide a basis for discharge on disadvantageous terms to the Claimant at a time when she clearly was not suffering from any serious mental illness but was merely seeking to pursue a legitimate grievance against Sergeants Brown and Tabone and the regiment for unsatisfactory action in response to the complaint."

18. The ET held at paragraph 20 of the RJ:

"In relation to the case as a whole, we concluded from our findings in the liability judgment that it was important to characterise the Claimant as someone who had suffered sexual harassment from a person in a position of command and responsibility above her, that her applications for redress had been dealt with below the level of General Officer Commanding in a high handed and arbitrary fashion, and in a way that is unsupported by the procedures regarding the proper method of investigation of grievances which were produced to us."

19. On 12 January 2008 Ms Fletcher gave 12 months notice to leave the Army.

Relevant Statutory provisions

20. Sex Discrimination Act 1975

65 Remedies on complaint under section 63

(1) Where an [employment tribunal] finds that a complaint [of discrimination in employment] is well-founded the tribunal shall make such of the following as it considers just and equitable—

…

(b) an order requiring the respondent to pay to the complainant compensation of an amount corresponding to any damages he could have been ordered by a county court or by a sheriff court to pay to the complainant if the complaint had fallen to be dealt with under section 66;

66 Claims under Part III

(1) A claim by any person ("the claimant") that another person ("the respondent")—

(a) has committed an act of discrimination against the claimant which is unlawful by virtue of Part III,

……

may be made the subject of civil proceedings in like manner as any other claim in tort …

…

(4) For the avoidance of doubt it is hereby declared that damages in respect of an unlawful act of discrimination may include compensation for injury to feelings whether or not they include compensation under any other head.

85 Application to Crown

…

(2) Parts II [complaints of discrimination in employment] and IV apply to—

…

(c) service in the armed forces,

as they apply to employment by a private person, and shall so apply as if references to a contract of employment included references to the terms of service.

21. Employment Equality (Sexual Orientation) Regulations 2003

30.  - (1) Where an employment tribunal finds that a complaint presented to it under regulation 28 [discrimination in employment] is well-founded, the tribunal shall make such of the following as it considers just and equitable -

…
(b) an order requiring the respondent to pay to the complainant compensation of an amount corresponding to any damages he could have been ordered by a county court or by a sheriff court to pay to the complainant if the complaint had fallen to be dealt with under regulation 31 (jurisdiction of county and sheriff courts);

31.  - (1) A claim by any person ("the claimant") that another person ("the respondent") -

(a) has committed against the claimant an act to which this regulation applies;

may be made the subject of civil proceedings in like manner as any other claim in tort…

…

(3) For the avoidance of doubt it is hereby declared that damages in respect of an unlawful act to which this regulation applies may include compensation for injury to feelings whether or not they include compensation under any other head.

36.

 …
(2) These Regulations apply to -

…
(c) service in the armed forces,

as they apply to employment by a private person, and shall so apply as if references to a contract of employment included references to the terms of service.

22. Army Act 1955

69 Conduct to prejudice of military discipline

Any person subject to military law who is guilty [whether by any act or omission or otherwise, of conduct] to the prejudice of good order and military discipline shall, on conviction by court-martial, be liable to imprisonment for a term not exceeding two years or any less punishment provided by this Act.

180 Redress of complaints

(1)If a person subject to military law thinks himself wronged in any matter relating to his service he may make a complaint with respect to that matter to such officer as may be prescribed.

(2)A person may not make a complaint under this section with respect to a matter against which he may present a petition under section 113 of this Act, ask for a review under section 115 of this Act or bring an appeal under the Courts-Martial (Appeals) Act 1968.

(3)The procedure for making and dealing with a complaint under this section shall be laid down in Queen's Regulations, which may, in particular, provide—

(a) for a complaint not to be made after the end of such period as may be prescribed;

(b) for any such period to be extended, in the case of a complaint made after the end of the period, in such circumstances as may be prescribed;

(c) for a complaint to be referred, for its first consideration, by the officer to whom it was made to a superior officer; and

(d) if the complainant does not obtain the redress to which he thinks he is entitled (whether from the officer who first considered the complaint or from a superior officer by virtue of provision made as mentioned in this paragraph), for the complaint to be referred to, and considered by, a superior officer.

(4)Any period prescribed for the purposes mentioned in subsection (3)(a) above shall not be less than three months beginning with the day on which the matter complained of occurred.

(5)An officer to whom a complaint is made or referred under provision made by virtue of subsection (3) above shall grant any redress which appears to him necessary.

(6)If the complainant does not obtain the redress to which he thinks he is entitled by the procedure referred to in subsection (3) above, he may submit his complaint to the Defence Council in accordance with the procedure laid down in Queen's Regulations.

(7)The Defence Council shall have any complaint submitted to them investigated and shall grant any redress which appears to them necessary.

(8)Where a complaint by an officer has been submitted to the Defence Council and he does not obtain the redress to which he thinks he is entitled, the Defence Council shall, at his request, make a report on the complaint through the Secretary of State to Her Majesty in order to receive the directions of Her Majesty thereon.

(9)This section applies to a person who is not subject to military law, in relation to any matter which took place while he was so subject, as it applies to a person who is subject to military law.

(10)In this section "prescribed" means prescribed by Queen's Regulations.]

Aggravated Damages

The Contentions of the parties

23. Miss Carss-Frisk rightly accepted that aggravated damages are available to a successful claimant in discrimination proceedings. It was further accepted that at least since the judgment of the EAT in Zaiwalla & Co v Walia [2002] IRLR 697, aggravated damages are available to compensate for the manner in which legal proceedings are conducted. However, Miss Carss-Frisk contended that in order to found an award of aggravated damages the litigation misconduct must be exceptional amounting to victimisation, deliberately designed to intimidate. Acting in good faith in conducting a defence should not attract an award of aggravated damages.
24. It was accepted by the MOD that the ET did not err in principle in relying on the other matters referred to in paragraphs 43 and 45 of the remedies judgment as founding an award of aggravated damages. These were the disciplinary sanctions applied to Ms Fletcher by a range of Army officers from senior non-commissioned officers, and by senior officers extending through battery commanders and the adjutants to the commanding officers of the regiment. Secondly, the ET took into account the inappropriate procedures used by the Commanding Officer of the regiment in dealing with Ms Fletcher's initial claims for redress of her complaints extending to '…the actions of the commander of the Catterick Garrison'. The MOD considered this to be a reference to paragraph 83 of the LJ in which there is a reference to Ms Fletcher being told that her submission was incomplete. However it is recorded in paragraph 85 that the commander did accept Ms Fletcher's complaint after it had been re-submitted.
25. Miss Carss-Frisk contended that the findings of the ET in paragraph 44 of the RJ on the conduct of the defence of the proceedings do not support a finding of such exceptionally reprehensible conduct of the liability hearing to form a basis upon which the ET could decide to make an award of aggravated damages. She contended that the ET failed to apply the principles in Zaiwalla to the award of aggravated damages for the way in which a defence of proceedings is conducted. Those principles make clear that aggravated damages may be awarded for conducting proceedings deliberately in an oppressive fashion amounting, in effect, to victimisation.
26. On behalf of the MOD it was said that the ET erred in treating as a basis for an award of aggravated damages the cross-examination of Ms Fletcher about Staff Sergeant Brown's conduct towards her. The ET considered that because Major General Loudon had upheld complaints about the conduct of Sergeant Brown, such cross-examination was unnecessary. In its opinion the cross-examination was carried out in a highly challenging fashion. Miss Carss-Frisk contended that the ET misunderstood the evidence regarding the Major General's inquiry. He was only concerned with Sergeant Brown's texts and comments at the end of 2004 and the beginning of 2005. Further evidence was available before the ET, in particular, telephone records showing the frequency of communication between Ms Fletcher and Sergeant Brown, which had not been available to Major General Loudon. It was therefore necessary to ask Ms Fletcher about this. Further, it was said that no objection had been taken to the cross-examination of Ms Fletcher either by her representative or by the ET. The ET also considered that she should not have been cross-examined about her psychiatric history and the early origin of her sexual orientation. Miss Carss-Frisk explained that Ms Fletcher was asked about her medical history because this was relevant to her conduct, disciplinary record and the Army's proposal for her medical discharge.
27. Miss Carss-Frisk said that there was no basis for attributing to the MOD the 'media circus' attendant on the hearing before the ET. The MOD had sought and obtained various reporting restrictions.
28. It was contended that a party is entitled to conduct its case robustly. An award of aggravated damages should only be made when the conduct of proceedings has crossed the threshold of unacceptability set out in Zaiwalla. That threshold had not been crossed in this case.
29. Further it was contended on behalf of the MOD that caution must be exercised to avoid awarding aggravated damages and costs for the same conduct. Miss Carss-Frisk referred to the fact that the sum of £10,000 costs had been awarded to Ms Fletcher by the ET because it considered that:

" … the unreasonable conduct of the Respondent in seeking to lead the evidence of Staff Sergeant Brown and all the witnesses who were present in the stables at the time of the sexual harassment of the Claimant, despite the finding of Major General Loudon against Sergeant Brown, effectively doubled the length of the liability hearing in this case." (Para 56)

30. Miss Carss-Frisk further contended that there was significant overlap between the basis of the award for injury to feelings and that for aggravated damages. In certain respects the same conduct, such as the disciplinary action taken against Ms Fletcher, was relied upon.
31. Accordingly Miss Carss-Frisk contended that the MOD had already been penalised by the costs award for its conduct of the ET proceedings. The award for injury to feelings compensated Ms Fletcher for the way in which she was treated during her service. There was thus an element of overlap and double recovery between the awards of aggravated damages, costs and compensation for injury to feelings.
32. Miss Carss-Frisk contended that the ET failed to have proper regard to the total amount awarded for non-pecuniary loss. The sum of £20,000 for aggravated damages was perversely high. Ms Fletcher received £30,000 for injury to feelings; this sum was in the top band as set out in Vento v Chief Constable of West Yorkshire Police [2003] IRLR 102, increased for inflation. Added to £20,000 for aggravated damages, the total sum awarded for non-pecuniary loss was £50,000 (excluding interest and exemplary damages). Such a figure would under the JSB guidelines be appropriate compensation for moderate brain damage in head injury category (c) (iii) or for PTSD of the utmost severity where the injured person is prevented from working at all and where all aspects of their life will be badly affected.
33. Miss Carss-Frisk accordingly contended that the award of £20,000 for aggravated damages was perversely high.
34. Mr Mackenzie for Ms Fletcher contended that the question of whether features of the case amounted to conduct which merited an award of aggravated damages was a matter for the ET. The judgment in Zaiwalla does not limit the circumstances in which aggravated damages may be awarded. There is no precise limitation on the aggravating features which may be taken into account.
35. Mr Mackenzie also referred to Armitage, Marston and HM Prison Service v Johnson [1997] IRLR 162 in which Mrs Justice Smith (as she then was) in the EAT held at paragraph 42:

"It seems to us that there were here factors which entitled the tribunal to make an award of aggravated damages. In particular they identified the third appellant's conduct of the investigation of the complaints of race discrimination. The tribunal described this as a travesty of what it should have been. Instead of providing the respondent with a remedy for the wrongs which he had suffered, the third appellants added to his injury by attributing all his problems to his own defects of personality. We think this was a true case of aggravation: a case where the appellant's actions rubbed salt in the respondent's wounds."

36. Reference was also made to Vento in which the Court of Appeal held at paragraph 67:

"The decision whether or not to award aggravated damages and, if so, in what amount must depend on the particular circumstances of the discrimination and on the way in which the complaint of discrimination has been handled."

37. As to the amount awarded in respect of aggravated damages, Mr Mackenzie helpfully produced a handwritten schedule showing the amounts awarded in respect of aggravated and exemplary damages in the authorities placed before us. He, as did Miss Carss-Frisk, drew attention to the principles to be derived from the authorities that regard must be had to the overall size of the award for non-pecuniary loss and that double recovery should be avoided. As for the amount of the injury to feelings element of the award for non-pecuniary loss, he contended that this case fell within the top band given as guidance by the Court of Appeal in Vento properly adjusted for inflation. The uprating of the Vento band for inflation and the award of £30,000 is not challenged in this appeal.
38. Mr Mackenzie pointed out that the ET based its award of aggravated damages on three features: the misuse by the Army of disciplinary procedures, the failure of the procedures for redress of Ms Fletcher's complaints and the conduct of the proceedings before the ET. At the hearing Ms Fletcher was cross-examined about the veracity of her complaints against Sergeant Brown and was subjected to intrusive questioning about her sexual and psychiatric history. The award of aggravated damages in respect of the conduct of the proceedings was entirely appropriate.
39. In the light of the findings of the ET and the awards made in the other cases set out in his schedule of authorities, Mr Mackenzie contended that the award of £20,000 in respect of aggravated damages cannot be said to be made in error of law or perversely high and we should not interfere with it.

Discussion

40. There is agreement between the parties and it is well established that aggravated damages may be awarded by ETs in discrimination cases. It is agreed that it was open to the ET to award aggravated damages in respect of oppressive use of disciplinary procedures against Ms Fletcher and for failure properly to investigate and provide redress for her complaints of discrimination. Further it is agreed that in principle aggravated damages may be awarded to reflect the way in which litigation is conducted. However the MOD contended that the way in which it conducted the case before the ET could not form the basis of an award of aggravated damages.
41. As to the quantum of the award of aggravated damages, the parties are agreed that regard should be had to the overall sum awarded in respect non-pecuniary loss. Further double recovery should be avoided by taking appropriate account of the overlap between the individual heads of damage.
42. The statutory provisions for compensation are similar in SDA and in the Sexual Orientation Regulations. Compensation for injury to feelings may be included in such an award
43. The Court of Appeal in Alexander v The Home Office [1988] IRLR 190 held that aggravated damages could be awarded in discrimination cases. In Alexander a black prisoner at Parkhurst prison alleged that he had not been permitted to work in the prison kitchens because of his race. The Judge in the County Court found that he had been unlawfully discriminated against on racial grounds. He awarded Mr Alexander a sum in respect of injury to feelings which was increased on appeal to £500. In the course of its judgment the Court of Appeal made observations on aggravated and exemplary damages although they had not been sought in that case. May LJ observed at paragraph 14:

"Nevertheless damages for this relatively new tort of unlawful racial discrimination are at large, that is to say that they are not limited to the pecuniary loss that can be specifically proved. Further, even where exemplary or punitive damages are not sought, nevertheless compensatory damages may and in some instances should include an element of aggravated damages where, for example, the defendant may have behaved in a highhanded, malicious, insulting or oppressive manner in committing the act of discrimination: see per Lord Devlin in Rookes v. Barnard [1964] AC 1129 , 1221; per Lord Reid in Broome v. Cassell & Co. Ltd. [1972] AC 1027 , 1085 and per Lord Diplock in Broome's case, at p. 1124. The material passage from Lord Diplock's speech is in these terms:

'The three heads under which damages are recoverable for those torts for which damages are 'at large' are classified under three heads. (1) Compensation for the harm caused to the plaintiff by the wrongful physical act of the defendant in respect of which the action is brought. In addition to any pecuniary loss specifically proved the assessment of this compensation may itself involve putting a money value upon physical hurt, as in assault, upon curtailment of liberty, as in false imprisonment or malicious prosecution, upon injury to reputation, as in defamation, false imprisonment and malicious prosecution, upon inconvenience or disturbance of the even tenor of life, as in many torts, including intimidation. (2) Additional compensation for the injured feelings of the plaintiff where his sense of injury resulting from the wrongful physical act is justifiably heightened by the manner in which or motive for which the defendant did it. This Lord Devlin calls 'aggravated damages'. (3) Punishment of the defendant for his anti-social behaviour to the plaintiff. This Lord Devlin calls "exemplary damages'."

44. Whilst aggravated damages were not sought in Alexander and the observations in that regard were obiter dicta, in Armitage aggravated damages were in issue. £7,500 aggravated damages were awarded by an ET having regard to the dismissal of an Afro-Carribbean prison officer's legitimate complaints of a 'campaign of appalling treatment' and attributing them to defects in his personality. Mrs Justice Smith in the EAT held at paragraph 40:

"We consider that, as a matter of principle, aggravated damages ought to be available to plaintiffs or applicants for the statutory torts of sex and race discrimination. Damages are at large and, at least so far as direct discrimination is concerned, the torts may be sufficiently intentional as to enable the plaintiff to rely upon malice, or the defendant's manner of committing the tort, or other conduct, as aggravating the injury to feelings."

45. The EAT held in Zaiwalla that aggravated damages could be awarded for the way in which legal proceedings were conducted by the Respondent. In Zaiwalla the EAT upheld an award of aggravated damages of £7,500 in respect of the Claimant's treatment on the termination of her solicitor's training contract and the conduct by her employer of the ET proceedings. Of the conduct of the proceedings the ET held:

"When she took Tribunal proceedings a monumental amount of effort was put into defending those proceedings. That exercise was of the most inappropriate kind, attacking the Applicant in relation to her personal standards of professional conduct and holding a series of threats over her head which would be daunting to any individual let alone to someone about to embark on a legal career having difficulty obtaining a training contract. The defence of these proceedings was deliberately designed by the Respondents to be intimidatory and cause the maximum unease and distress to the Applicant. There is no other way of describing it." (EAT para 22)

46. In the EAT Mr Justice Maurice Kay (as he then was) held at para 24:

"In our judgment, there is no reason in law why aggravated damages should not be awarded by reference to conduct in the defence of proceedings in a discrimination case such as the present case, which is very different from the context of non-intentional torts as exemplified in AB v. South West Water Services Ltd. [1993] QB 507. Indeed, there is a very good policy reason for allowing such a claim in an appropriate discrimination case. If a respondent misconducts himself in the defence of a discrimination case, it may amount to victimisation of the applicant in respect of the protected act of bringing the claim. It is easy to imagine cases in which the misconduct amounting to victimisation might only arise at a late stage of the proceedings, perhaps only during the hearing. It seems to us that it would be regrettable if such victimisation could only be compensated by the commencement of further proceedings. In the field of discrimination law there are already too many cases that give rise to multiple proceedings and satellite litigation. In the sort of case which we are considering here, it is preferable that, where there is misconduct of sufficient gravity, it is compensated by the Tribunal which is seised of the matter and which has the feel for the aggravating material and its effect on the victim. In the present case, we are satisfied that the approach of the Tribunal to aggravated damages was entirely appropriate and free from legal error."

47. Maurice Kay J held that in making an award of aggravated damages, ETs should have regard to its relationship to any award for injury to feelings and the total size of the award for non-pecuniary damages. The EAT held at paragraph 25:

"The quantification of the compensation for aggravated damages was first and foremost a matter for the Tribunal, which was bound to have regard to the principle of just and equitable compensation, the relationship to injury to feelings and the global size of the award. Mr. Lennard submits that, if aggravated damages are available for this aspect of the case (as we have held), the award of £7,500 was too high in any event. However, he has failed to satisfy us that it is plainly wrong. In our judgment, it was consistent with the Armitage and Vento (No. 2) cases. We observe that the award of aggravated damages were not limited to misconduct in the defence of the proceedings but included a reflection of the manner of the discrimination which gave rise to the proceedings. We do not find the figure of £7,500 to be appealable.'

48. Maurice Kay J cautioned against routine claims for aggravated damages in respect of alleged misconduct of ET proceedings. He observed at paragraph 28:

"We are sensitive to the possibility that over enthusiastic litigants and litigants in Employment Tribunals may be tempted to read our conclusions in a way which would give the green light to claims for aggravated damages in respect of alleged misconduct in the defence of proceedings almost as a matter of routine. They would be wrong to do so. The findings of fact in the present case (which were not challenged in the quantum appeal) were exceptional in their assessment of the litigation misconduct. We expect that cases attracting awards of aggravated damages for such behaviour will be few and far between. It saddens us that this exceptional case concerned the behaviour of a firm of solicitors."

49. As explained by Lord Devlin in Rookes v Barnard at page 1221 and by Mrs Justice Smith in Armitage, the manner of committing a wrong may warrant the award of aggravated damages.

"… it is very well established that in cases where the damages are at large the jury (or the judge if the award is left to him) can take into account the motives or conduct of the defendant where they aggravate the injury done to the plaintiff. There may be malevolence or spite or the manner of committing the wrong may be such as to injure the plaintiff's proper feelings of dignity or pride. These are matters which the jury can take into account in assessing the appropriate compensation."

It is not necessary to establish that the conduct is malicious although malicious conduct may attract aggravated damages.

50. Mummery LJ in Vento at paragraph 68 held that double recovery under different heads of loss should be avoided 'by taking appropriate account of the overlap between the individual heads of damage. The extent of the overlap will depend on the facts of each particular case'. In Armitage and in Vento the principal factor upon which the aggravated damages were awarded was the way in which complaints of discrimination were handled. There was no suggestion that aggravated damages could only be awarded in respect of the handling of the complaints if they did not form the basis for an award for injury to feelings. In Zaiwalla whilst the principal basis of the award of aggravated damages was the conduct of the ET proceedings and therefore could not have formed a basis for the award of injury to feelings, it was not the only basis for the award of aggravated damages.
51. If the manner of or malice in committing the acts of discrimination are not fully reflected in an award for injury to feelings, in our judgment it is not an error of law for an ET to do so by making an award of aggravated damages in respect of those acts. Duplication of compensation must be avoided but in our judgment, in the words of Mummery LJ, an ET would take 'appropriate account of the overlap between individual heads of damage' in awarding aggravated damages in respect of an act which forms the basis for an award for injury to feelings if the manner of or motive for the conduct is so extreme that it falls within Lord Devlin's explanation of the basis for an award of aggravated damages and is uncompensated for by other remedies.
52. That there can be a penal element in the award of aggravated damages is referred to in the Law Commission Report Aggravated, Exemplary and Restitutionary Damages (1993) (Consultation Paper No 132) paragraph 2.17 et seq. mentioned in Thompson and Hsu v Commissioner of Police of the Metropolis [1998] QB 498 at page 512D.
53. Not only should double recovery be avoided and appropriate account be taken of any overlap between aggravated damages and other awards but also the totality of the awards for non-pecuniary compensation should affect the determination of the amount of aggravated damages.
54. In Armitage Mrs Justice Smith cited the dictum of Lord Bingham in the libel case John v MGN [1996] 3 WLR 593 in which he said:

"Any legal process should yield a successful plaintiff appropriate compensation, that is, compensation which is neither too much nor too little. That is so whether the award is made by judge or jury. No other result can be accepted as just. But there is continuing evidence of libel awards in sums which appear so large as to bear no relation to the ordinary values of life. This is most obviously unjust to defendants. But it serves no public purpose to encourage plaintiffs to regard a successful libel action, risky though the process undoubtedly is, as a road to untaxed riches. Nor is it healthy if any legal process fails to command the respect of lawyer and layman alike, as is regrettably true of the assessment of damages by libel juries.

…

It is, in our view, offensive to public opinion, and rightly so, that a defamation plaintiff should recover damages for injury to reputation greater, perhaps by a significant factor, than if that same plaintiff had been rendered a helpless cripple or an insensate vegetable. The time has in our view come when judges, and counsel, should be free to draw the attention of juries to these comparisons."

55. Mrs Justice Smith drew on this dictum to formulate one of the five principles to be borne in mind when making awards for injury to feelings in discrimination cases. In our view the following principles formulated in Armitage (para 27) for the assessment of damages for injury to feelings are also applicable to the assessment of aggravated damages.

"(3) Awards should bear some broad general similarity to the range of awards in personal injury cases. We do not think this should be done by reference to any particular type of personal injury award, rather to the whole range of such awards.

(4) In exercising their discretion in assessing a sum, tribunals should remind themselves of the value in everyday life of the sum they have in mind. This may be done by reference to purchasing power or by reference to earnings.

(5) Finally, tribunals should bear in mind Sir Thomas Bingham's reference to the need for public respect for the level of awards made."

56. The Court of Appeal in Thompson gave guidance on the directions to be given by judges to juries on the award of damages in cases of malicious prosecution. In the eighth paragraph of such guidance Lord Woolf said in relation to aggravated damages:

"(8) … Such damages can be awarded where there are aggravating features about the case which would result in the plaintiff not receiving sufficient compensation for the injury suffered if the award were restricted to a basic award.

…

(11) … the total figure for basic and aggravated damages should not exceed what they consider is fair compensation for the injury which the plaintiff has suffered. It should also be explained that if aggravated damages are awarded such damages, though compensatory are not intended as a punishment, will in fact contain a penal element as far as the defendant is concerned."

57. In Zaiwalla Mr Justice Maurice Kay held at paragraph 25:

"The quantification of the compensation for aggravated damages was first and foremost a matter for the Tribunal, which was bound to have regard to the principle of just and equitable compensation, the relationship to injury to feelings and the global size of the award."

58. In Vento the Court of Appeal set out guidance on the broad bands of compensation for injury to feelings. Aggravated damages are not included in the level of awards for injury to feelings in the Vento guidelines as was observed by HH Judge Ansell in Virgo Fidelis Senior School v Boyle [2004] IRLR 268. The Court of Appeal in Vento made clear that in discrimination cases the totality of any award for non-pecuniary loss should be considered. The Court referred to taking into account JSB Guidelines on general damages in personal injury cases and the level of awards for non-pecuniary loss in discrimination cases undisturbed on recent appeals to the EAT as being relevant to the level of such awards. Mummery LJ held at paragraph 68:

"Common sense requires that regard should also be had to the overall magnitude of the sum total of the awards of compensation for non-pecuniary loss made under the various headings of injury to feelings, psychiatric damage and aggravated damage. In particular, double recovery should be avoided by taking appropriate account of the overlap between the individual heads of damage. The extent of overlap will depend on the facts of each particular case."

In that case the Court of Appeal reduced compensation for injury to feelings from £50,000 to £18,000 and aggravated damages from £15,000 to £5,000.

59. As for the quantum of general damages for personal injury, the JSB Guidelines 9^th Edition June 2008 contain the following:

'(A) Brain Damage

…

(c) Moderate Brain Damage £27,500 to £58,000

…

(iii) Cases in which concentration and memory are affected, the ability to work is reduced, where there is a small risk of epilepsy and any dependence on others is very limited.

(B) Post-Traumatic Stress Disorder

Cases within this category are exclusively those where there is a specific diagnosis of a reactive psychiatric disorder in which characteristic symptoms are displayed following a psychologically distressing event which causes intense fear, helplessness and horror. The guidelines below have been compiled by reference to cases which variously reflect the criteria established in the 4th edition of Diagnostic and Statistical Manual of Mental Disorders (DSM-IV-TR). The symptoms affect basic functions such as breathing, pulse rate and bowel and/or bladder control. They also involve persistent re-experience of the relevant event, difficulty in controlling temper, in concentrating and sleeping, and exaggerated startle response.

(a) Severe £40,000 to £64,250

Such cases will involve permanent effects which prevent the injured person from working at all or at least from functioning at anything approaching the pre-trauma level. All aspects of the life of the injured person will be badly affected.'

60. Mr Mackenzie helpfully provided us with a list of cases in which aggravated and exemplary damages have been awarded giving the amounts.
61. The basis for the award of aggravated damages to Ms Fletcher is set out in paragraphs 43 to 45 of the RJ. The basis for the ET's award of compensation for injury to feelings is set out in paragraph 42 of the RJ. That in turn referred to paragraphs 245 to 269 of the LJ.
62. The ET based the award of aggravated damages in part on the MOD's defence of Ms Fletcher's claim. In paragraph 44 of the RJ it held that the aggravating conduct of the MOD extended:

"…to the conduct of the defence of the proceedings. The Claimant was challenged in relation to the truth of her allegations regarding the initial sexual harassment, at a time when the Army had already accepted at the highest level that this had taken place. The Claimant was subjected to a particularly unpleasant cross-examination delving into her intimate psychiatric history as an adolescent, and the early origin of her sexual orientation, in a highly challenging fashion. The trial of the Claimant's claim was extended and this created a media circus. The defence of the claim could have been managed in an entirely different fashion had the Respondent accepted that the findings of Major General Loudon should dictate the defence of the Claim and dealt with the case as limited to the Claimant's allegations of victimisation. The allegations of victimisation were dealt with by the Respondent by the provision of the middle ranking officers, the adjutants and battery commanders. The regimental commanders at Lieutenant Colonel level and the Garrison commander at Colonel level did not give evidence in response to the serious allegations made by the Claimant. The only senior officer prepared to give evidence was Lieutenant Colonel Bosanquet, the psychiatrist. The fact that he attended the Tribunal and gave his evidence so candidly did him great credit."

63. The assessment of whether conduct of proceedings amounts to misconduct of sufficient gravity to merit an award of aggravated damages will be fact sensitive. The ET observing such conduct will be best placed to make such an assessment. However if the award of aggravated damages is reached in error of law, is not warranted by the facts or is perverse as to basis or amount, the appellate courts will intervene.
64. A party to proceedings before an ET is entitled to defend themselves or pursue their claim robustly. Different advocates may conduct proceedings differently: some may cross-examine in detail and take apparently peripheral points to lay the ground for the central ones. Some advocates are more experienced or competent than others. Bad advocacy should not attract an award of aggravated damages for the party represented. Something more is required. As is apparent from paragraph 24 of the judgment in Zaiwalla there must be misconduct of sufficient gravity.
65. The facts relied upon by the ET to find that Ms Fletcher was subjected to unpleasant cross-examination about her intimate psychiatric history as an adolescent and the early origin of her sexual orientation were not challenged. The justification advanced before us for cross-examination of Ms Fletcher on her medical history was its alleged relevance to consideration of her medical discharge.
66. When considering the application for costs, the ET held to be unreasonable the calling of oral evidence from Sergeant Brown and others relating to the allegations of his sexual harassment of Ms Fletcher and cross-examining her on these matters. At paragraph 56 of the RJ the ET considered and rejected the justification that the ET had material to which Major General Loudon did not have access when dealing with Ms Fletcher's complaints against Sergeant Brown. This justification for calling such evidence was also advanced before us in challenging this aspect of the conduct of the defence which was relied upon by the ET for making an award of aggravated damages.
67. Whilst a party must be free to test evidence by appropriate and robust cross examination, evidence and cross examination should be relevant. No material has been put before us to demonstrate that the ET erred in holding that challenging Ms Fletcher about her early psychiatric history and origin of her sexual orientation was objectionable. Further, in our judgment, it has not been established that the ET erred in rejecting the explanation of the MOD for calling Sergeant Brown and others to give evidence relating to Ms Fletcher's allegations against him and in criticising the cross-examination of Ms Fletcher on her allegations against him.
68. In our judgment the ET did not err in considering the conduct of proceedings in these two respects to be of sufficient gravity to warrant an award of aggravated damages.
69. However we consider that the ET erred if and insofar as it took into account as a basis for an award of aggravated damages the suggestion that the extension of the hearing by the conduct of the defence created a media circus. In our judgment the material referred to in the RJ does not support such a conclusion. Further, in our judgment, the ET erred if and insofar as it relied upon the MOD not calling certain witnesses as founding a basis for an award of aggravated damages.
70. As can be seen from paragraphs 249, 250 and 256-258 of the LJ, the ET relied on its conclusion that disciplinary sanctions were part of a campaign of victimisation as a basis for awarding Ms Fletcher compensation for injury to feelings. So too were the inappropriate way in which the redress procedures were carried out. These factors were also taken into account in awarding aggravated damages. In this regard there was overlap in the awards of aggravated damages and compensation for injury to feelings. Insofar as there was double recovery of compensation for the same wrong the ET erred. However in our judgment the ET did not err in basing part of its award of aggravated damages on the extremely reprehensible conduct in the Army's misuse of disciplinary procedures against Ms Fletcher and the way in which her applications for redress were handled. In our judgment, taking appropriate account of the overlap with the award in respect of injury to feelings it was open to the ET to award a reasonable sum by way of aggravated damages for these elements. There is no overlap with the compensation for injury to feelings in the other basis for the award of aggravated damages.
71. In paragraph 56 of the RJ the ET set out the basis for the award of costs of £10,000. It held that leading evidence and cross-examining on Ms Fletcher's complaints against Sergeant Brown doubled the length of the hearing to 12 days. The amount awarded was Mr Mackenzie's remuneration for six days of the hearing. It is apparent that this sum was awarded in respect of legal expenses. It was not based on any hurt suffered by Ms Fletcher caused by the way in which the proceedings were conducted. This was one of the bases on which aggravated damages were awarded. In our judgment there is no overlap between the order for costs and the award of aggravated damages.
72. At paragraph 45 of the RJ the ET observed:

"Given the level of the injury to feelings award it is this Tribunal's conclusion that an aggravated damages award of £20,000 is appropriate."

It is not clear to us how or why the amount of the award of aggravated damages relates to that for injury to feelings.

73. In accordance with our conclusions set out above, the award of aggravated damages is to be reduced to recognise the overlap with matters which were taken into account by the ET in the award for injury to feelings, leaving in place a reasonable sum in recognition of the uncompensated aggravating elements of the basis of the award in respect of victimization by use of disciplinary and redress procedures. The ET made no finding that the MOD or any individual had acted from malice. However the manner in which the disciplinary procedures were used to victimise Ms Fletcher and the extreme inadequacy of the redress procedures could form the basis of an award of aggravated damages. The only matter relied upon by the ET in making its award of aggravated damages not taken into account in the award for injury to feelings was the conduct by the MOD of the proceedings before the ET.
74. The basis for the award of aggravated damages in Zaiwalla is closest to the sustainable basis of the award in this case. The EAT in Zaiwalla did not interfere with an award of £7,500. It appears from paragraph 26 of the judgment in that case that most of the award of aggravated damages of £7,500 related to the defence of the proceedings although part related to the original acts of discrimination. The award for injury to feelings at £15,000 was half that in this case. Taking into account the element of double recovery, the totality of the award of £50,000 for non-pecuniary loss, the JSB guidelines in personal injury cases and decisions of the appellate courts, in our judgment not only was the award of aggravated damages of £20,000 reached in error of law but it was perversely high.
75. In the event that we concluded that the award of aggravated damages was to be set aside we were invited to substitute our decision for that of the ET. The award to Ms Fletcher in respect of injury to feelings of £30,000 is at the very top of the highest band in Vento adjusted for inflation. In the light of the size of that award, in our judgment it would be inappropriate to award any significant sum by way of aggravated damages for the original discrimination and victimisation which formed the basis for compensation for injury to feelings. Ms Fletcher has already received compensation in respect of non-pecuniary loss resulting from these matters.
76. We have considered the levels of awards of aggravated damages both in the discrimination and other contexts which have been drawn to our attention. We have also considered the JSB Guidelines on damages for personal injury. Applying the principles applicable to awards of aggravated damages, having regard to the facts of this case upon which an award of aggravated damages is properly to be based, principally the conduct of proceedings before the ET, and the totality of the award for non-pecuniary loss, in our judgment the appropriate award in respect of aggravated damages is £8,000.

Exemplary Damages

Contentions of the parties

77. The ET awarded Ms Fletcher £50,000 exemplary damages. Its reasons are set out in paragraphs 46 to 50 of the RJ.
78. Miss Carss-Frisk made it clear that she was not contending that exemplary damages were not available in discrimination cases because the discrimination legislation was not available before the judgment of the House of Lords in Rookes v Barnard. The key issue was whether in the case of Ms Fletcher there was any relevant conduct which fell within the first category of circumstances in which exemplary damages may be awarded as decided by Lord Devlin in that case (the 'first category'). That is '…oppressive, arbitrary or unconstitutional action by servants of the government'. She contended that the conduct relied upon by the ET to award exemplary damages was not the exercise of governmental power as was required to fall within the first category.
79. Miss Carss-Frisk contended that whilst the ET purported to accept the principles applicable to the award of exemplary damages which were not in dispute between the parties, they failed to apply them to the facts of the case.
80. Miss Carss-Frisk contended that to fall within the first category there must be something more than the exercise by a public authority of powers which takes the case outside the employment context. There must be the exercise of specific powers given to the public authority.
81. Further, Miss Carss-Frisk relied on the dictum of Lord Nicholls in Kuddus v Chief Constable of Leicestershire [2002] AC 122 at page 144 as to when exemplary damages may be exceptionally awarded to mark conscious wrongdoing that is so outrageous, the disregard of the claimant's rights so contumelious that something more is needed to show that the law will not tolerate such behaviour. She drew attention to dicta in paragraphs 73, 86, 91, 92, 95, 96, 101, 104, 110, 121 and 122 in Kuddus to the effect that it was in only very exceptional cases that exemplary damages should be awarded. Indeed Lord Scott regarded the remedy as no longer serving any useful purpose.
82. Miss Carss-Frisk contended that since the issue in Kuddus was whether a claim for exemplary damages could be brought in respect of a cause of action which was not accepted before Rookes v Barnard it was not to be taken as an example of the type of conduct which would attract an award of exemplary damages. If exemplary damages could be awarded in respect of a cause of action which first became available after Rookes v Barnard the parties accepted that the conduct of the Chief Constable could fall within the first category.
83. City of Bradford Metropolitan Council v Arora [1991] IRLR 165 is the only reported discrimination case in which exemplary damages have been awarded. As was pointed out by Stuart-Smith LJ in A.B. v South West Water Services Ltd [1993] QB 507 at page 522B the only issue before the Court of Appeal was whether the council official whose conduct was criticised was exercising private or public functions. The question of type of misconduct which could attract an award of exemplary damages was not before the court.
84. The judgment of the Privy Council in Takitota v the Attorney General [2009] UKPC 11 was relied upon by Miss Carss-Frisk for the dictum at paragraph 12 that exemplary damages serve to restrain 'improper use of executive power'.
85. Miss Carss-Frisk contended that the facts found by the ET could not support an award of exemplary damages. She contended that it can be inferred from paragraph 49 of the RJ that exemplary damages would not have been awarded but for what the ET saw as a systemic failure of mechanisms for redress. Miss Carss-Frisk attacks this basis for the award of exemplary damages on three grounds. First, the failure to provide redress involved no exercise of governmental power such as to fall within Lord Devlin's first category. Second there was no finding that such failure was tainted by conscious wrongdoing. Third that the failure to provide proper mechanisms for redress of complaint formed no part of Ms Fletcher's pleaded case that had been upheld in the liability hearing.
86. The third basis for challenging the award of exemplary damages had not been included in the Grounds of Appeal. Mr Mackenzie objected to Miss Carss-Frisk taking the point. It had been raised far too late and that the extent to which exemplary damages had to be based on pleaded allegations was a far from easy point. Miss Carss-Frisk contended that since the argument was set out in paragraph 25 of her skeleton argument two weeks notice that the point would be taken had been given and that no prejudice would be suffered by Ms Fletcher by raising it.
87. Having regard to the overriding objective of the EAT Rules in dealing with cases justly, we held that the MOD should not be permitted to rely on the point set out in paragraph 25 of their skeleton argument for this hearing as a ground for challenging the basis for the award of exemplary damages.
88. Further Miss Carss-Frisk contended that if and insofar as the ET relied on its view that the Army had failed to implement an agreement between the Chief of Defence Staff and the Equal Opportunities Commission as a basis for the award of exemplary damages it erred. The ET held at paragraph 22 that it had heard insufficient evidence to conclude that the Army had failed to conduct an internal enquiry and put in place remedial steps as an alternative to the EOC pursuing its own enquiry into harassment.
89. Ms Carss-Frisk submitted that there was a risk that there was double counting in the award of exemplary damages and aggravated damages. In any event there was no proper basis for the amount of the exemplary damages awarded which was to double the aggregated awards for injury to feelings and aggravated damages. Further, the ET failed to have regard to the dicta on the award of exemplary damages in the judgment of the Court of Appeal in Thompson and the level of such awards in cases outside the employment field. The only employment case of which Miss Carss-Frisk was aware in which exemplary damages were awarded was Arora. In that case exemplary damages of £1,000 were awarded but the amount was not an issue in the appeal in that case.
90. Mr Mackenzie submitted that the ET did not err in the basis upon which it awarded exemplary damages. The amount of such damages was a decision for the ET with which we should not interfere.
91. In paragraph 30 of his skeleton argument for this appeal Mr Mackenzie set out the factors upon which he submitted that the ET based their award of exemplary damages. Although these were seven in number they may be summarised as the improper and inadequate way in which Ms Fletcher's complaints about her treatment were dealt with and the lack of a proper system for investigating, ruling on and providing a remedy for complaints of discrimination and victimization. Mr Mackenzie rightly did not pursue at the hearing his submissions supporting the appropriateness of the ET's reliance on its view that the Army had not adhered to its agreement with the EOC to investigate and put systems in place for dealing with allegations of discrimination and victimisation. However he contended that the ET was entitled to rely on the nature of the defence presented by the MOD at the hearing of the proceedings before them as a basis for exemplary damages.
92. It was submitted that the failure of the Army to deal properly with Ms Fletcher's complaints of discrimination and victimisation or to provide an adequate system for investigating, ruling on and providing a remedy for well-founded complaints were 'unconstitutional action by the servants of the government' within Lord Devlin's first category since they were based on a statutory obligation. The procedures for redress are based on the Army Act 1955. Mr Mackenzie pointed out that the redress procedures are, at the lowest level, administrative action based on the Army General and Administrative Instructions (AGAI). Ms Fletcher invoked the redress of complaint procedure under Section 180 of the Army Act 1955. Mr Mackenzie contended that the Commanding Officer and other officers and senior non-commissioned officers had a statutory obligation to investigate and adjudicate upon a complaint. He submitted that instead of benefiting from the proper operation of these procedures Ms Fletcher was subjected to a campaign of victimisation with the explicit purpose of intimidating her into abandoning her complaints.
93. Mr Mackenzie submitted that the findings of the ET in the LJ supported the award of exemplary damages for failure to provide Ms Fletcher with a proper means of pursuing and obtaining redress for her complaints. He contended that the references in Lord Nicholls' speech in Kuddus to 'conscious wrongdoing' and the disregard of the plaintiff's rights so 'contumelious' are glosses on the first category as explained by Lord Devlin in Rookes v Barnard and are not prerequisites for a basis for an award of exemplary damages. Accordingly it was not necessary for the ET to have found that the failures in redress of Ms Fletcher's complaints were contumelious or malicious although Mr Mackenzie submitted that they were held to be so by the ET.
94. Mr Mackenzie contended that the principle of the need to avoid overlap does not apply to exemplary damages. Accordingly it was open to the ET to award such damages for failures in dealing with Ms Fletcher's complaints and her treatment in the proceedings before the ET which had also formed the basis for the award of aggravated damages.
95. As to the sum of £50,000 awarded for exemplary damages, Mr Mackenzie contended that it was difficult to think of a worse case than that of Ms Fletcher. The EAT should not interfere with the award.

Discussion

96. The classic exposition of the basis on which exemplary damages may be awarded was set out by Lord Devlin in Rookes v Barnard. The first category of cases in which such damages may be awarded is at page 1226:

"The first category is oppressive, arbitrary or unconstitutional action by the servants of the government. I should not extend this category – I say this with particular reference to the facts of this case – to oppressive action by private corporations or individuals. Where one man is more powerful than another, it is inevitable that he will try to use his power to gain his ends; and if his power is much greater than the other's, he might, perhaps, be said to be using it oppressively. If he uses his power illegally, he must of course pay for his illegality in the ordinary way; but he is not to be punished simply because he is the more powerful. In the case of the government it is different, for the servants of the government are also the servants of the people and the use of their power must always be subordinate to their duty of service…"

97. The issue of whether a certain activity, in that case selection of individuals for employment by a local authority, constituted the exercise of public powers in respect of which exemplary damages could be awarded was considered by the Court of Appeal in Arora. Neill LJ at paragraph 30 did not accept that when the appellant was being interviewed by a committee of or including councillors they were carrying out some private function of the Council. On that basis the Court of Appeal dismissed the Council's appeal from the award of exemplary damages. Neill LJ did not find it necessary in that case to examine the exact ambit of Lord Devlin's first category.
98. In Virgo Fidelis Senior School v Boyle [2004] IRLR 268 the EAT held that there was no reason in principle why exemplary damages could not be awarded in a statutory employment law case. However HH Judge Ansell held at paragraph 81 that on the facts of that case the school in exercise of their disciplinary powers were not acting as servants or agents of the executive, even at a local level. Arora does not appear to have been cited to the EAT in Virgo Fidelis.
99. Whilst the Court of Appeal in Arora expressly did not provide guidance on the ambit of Lord Devlin's first category we consider that we are bound by the decision in that case that certain 'ordinary' employment law functions performed under statute by an official of a public body of sufficient seniority may, subject to other conditions, be capable of supporting an award of exemplary damages. Accordingly, in our judgment on the current state of authority, the exercise by those of sufficient seniority within the Army of its functions under statutory procedures for the redress of complaints are activities which, if exercised oppressively, arbitrarily, unconstitutionally and in the manner set out by Lord Nicholls in Kuddus, are capable of falling within the scope of Lord Devlin's first category.
100. The MOD did not rely on any special power to conduct proceedings before the ET. In our judgment it was not using a power available only because the Army is a state body. The conduct by the MOD of the proceedings before the ET was not in our judgment an activity which falls within Lord Devlin's first category.
101. The purpose and ambit of the first category identified by Lord Devlin in which exemplary damages may be available was considered by the House of Lords in Kuddus in the context of determining whether such damages were available in respect of causes of action which were not in existence before 1964, the year of the judgment in Rookes v Barnard. In Kuddus the House of Lords held that a claim for exemplary damages for misfeasance in public office was not precluded because this was a cause of action which had not been accepted before 1964.
102. Lord Nicholls in Kuddus repeated the principle that exemplary damages are punitive and not compensatory. At paragraph 51 he held:

"Exemplary damages or punitive damages, the terms are synonymous, stand apart from awards of compensatory damages. They are additional to an award which is intended to compensate a plaintiff fully for the loss he has suffered, both pecuniary and non-pecuniary. They are intended to punish and deter."

103. In a review of the law on exemplary damages, Lord Nicholls considered the Law Commission Report Aggravated, Exemplary and Restitutionary Damages (1997) (Law Com 247) and noted that the Government had decided not to take forward its proposals for reform of exemplary damages. In the absence of legislative reform Lord Nicholls considered ' … what should now be the law relating to exemplary damages'. At paragraph 63 he held:

"The availability of exemplary damages has played a significant role in buttressing civil liberties, in claims for false imprisonment and wrongful arrest. 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."

104. The dicta of Lord Nicholls in Kuddus are not a gloss on Lord Devlin's first category but an explanation of the modern law on its application. Thus we accept the contention of Miss Carss-Frisk that in order to fall within the first category meriting an award of exemplary damages the conduct of the wrongdoer must be conscious and contumelious.
105. That exemplary damages are to be reserved for the very worst cases of oppressive use of power by public authorities is illustrated by the examples of decided cases provided to us by Miss Carss-Frisk and Mr Mackenzie.
106. As was observed by Lord Nicholls in Kuddus, exemplary damages are of particular importance in cases of wrongful arrest and malicious prosecution. In Thompson Ms Thompson was lawfully arrested but subsequently manhandled and assaulted by police officers and wrongfully detained in a cell at a police station for four hours. On her release she was charged with assault and at trial she was acquitted of a substituted charge of assaulting a police officer. She was awarded £1,500 damages and aggravated damages and £50,000 exemplary damages. Mr Hsu, whose appeal was heard with that of Ms Thompson, was awarded £200,000 exemplary damages in addition to £20,000 damages including aggravated damages for wrongful arrest, false imprisonment and assault. Police had forcibly entered his home, unlawfully arrested him, abused and wrongly detained him in a police cell for an hour and a quarter. The Court of Appeal held that the juries' awards in both cases were unreasonable. They substituted in the case of Ms Thompson £10,000 compensatory and aggravated damages and £25,000 exemplary damages. In the case of Mr Hsu the award of exemplary damages was reduced to £15,000.
107. Lord Woolf gave guidelines for the assistance of judges summing up to juries on the issue of damages. The following guidelines are of assistance in considering the quantum of exemplary damages in this case:

"(12) Finally the jury should be told in a case where exemplary damages are claimed and the judge considers that there is evidence to support such a claim, that though it is not normally possible to award damages with the object of punishing the defendant, exceptionally this is possible where there has been conduct, including oppressive or arbitrary behaviour, by police officers which deserves the exceptional remedy of exemplary damages. It should be explained to the jury:

(a) that if the jury are awarding aggravated damages these damages will have already provided compensation for the injury suffered by the plaintiff as a result of the oppressive and insulting behaviour of the police officer and, inevitably, a measure of punishment from the defendant's point of view;

(b) that exemplary damages should be awarded if, but only if, they consider that the compensation awarded by way of basic and aggravated damages is in the circumstances an inadequate punishment for the defendants;

…

(d) that the sum awarded by way of exemplary damages should be sufficient to mark the jury's disapproval of the oppressive or arbitrary behaviour but should be no more than is required for this purpose.

(13) Where exemplary damages are appropriate they are unlikely to be less than £5,000. Otherwise the case is probably not one which justifies an award of exemplary damages at all. In this class of action the conduct must be particularly deserving of condemnation for an award of as much as £25,000 to be justified and the figure of £50,000 should be regarded as the absolute maximum, involving directly officers of at least the rank of superintendent."

108. Further, that overlap or double recovery is to be avoided between aggravated damages and exemplary damages as well as with compensation for injury to feelings and costs was held by Lord Woolf MR in Thompson. Although the subject matter of the claims was not unlawful discrimination, nonetheless in our view the observation by Lord Woolf at page 513A that:

"There is also a greater problem of awarding exemplary as well as aggravated damages in the class of action under consideration because the very circumstances which will justify the award of aggravated damages are probably the same as those which make it possible to award exemplary damages. This accentuates the risk of double counting."

is of general application.

109. In Rowlands v the Chief Constable of Merseyside Police [2006] EWCA Civ 1773 the Court of Appeal considered an appeal by Mrs Rowlands from the decision of the trial judge to withdraw from the jury the consideration of an award of exemplary damages. She had brought proceedings against the Merseyside police for assault, false imprisonment and malicious prosecution. After complaining about noisy neighbours, following an altercation with a police officer, Mrs Rowlands was arrested in front of her children. She was handcuffed and taken to a police car. Actions by the police caused her physical pain. She was detained and charged with assaulting a police officer in the execution of his duty. She was acquitted and brought proceedings.
110. The Court of Appeal held that the Judge was wrong to withdraw from the jury the possibility of making an award of exemplary damages. Moore-Bick LJ stated at paragraph 50 that:

"… the question of awarding exemplary damages must be considered in the light of the award of compensatory damages in order to ensure that the total award is not excessive."

As to the appropriate sum of exemplary damages Moore-Bick LJ held at paragraph 51:

"An award of aggravated damages in the sum of £6,000 would raise the total amount awarded by way of compensatory damages to £12,350. I consider that the conduct of the police in this case was worthy of significant punishment, not just because the arrest of Mrs Rowlands was unjustified but also because it was carried out in an arrogant and abusive manner and was followed by a persistent attempt to justify it through the giving of false evidence designed to procure her conviction. In my view a total award of £12,350 does not provide adequate punishment in this case and therefore it is appropriate to make an award of exemplary damages. In Thompson Lord Woolf suggested that an award of exemplary damages should rarely be less than £5,000 which, adjusted for inflation, represents a little over £6,000 in today's terms. In that case the court awarded £25,000 to Miss Thompson and £15,000 to Mr. Hsu, but the behaviour of the police in each of those cases was significantly more serious than that of P.C. Patterson in this case, in particular because each of the claimants was subjected to a greater degree of violence than was inflicted on Mrs Rowlands. In my view an appropriate award in this case would be £7,500."

111. In Takitota the Privy Council considered an appeal from the Bahamas by Mr Takitota from the amount of damages he was awarded for unlawful detention. He was unlawfully detained for eight years in appalling conditions. Giving the judgment of the Privy Council on 18 March 2009 Lord Carswell held at paragraph 12:

"The award of exemplary damages is a common law head of damages, the object of which is to punish the defendant for outrageous behaviour and deter him and others from repeating it. One of the residual categories of behaviour in respect of which exemplary damages may properly be awarded is oppressive, arbitrary or unconstitutional action by the servants of the government, the ground relied upon by the Court of Appeal in the present case. It serves, as Lord Devlin said in Rookes v Barnard [1964] AC 1229 at 1223, to restrain such improper use of executive power."

Since Mr Takitota had been awarded the sum of $100,000 in respect of constitutional or vindicatory damages it was not thought appropriate to make an additional award of exemplary damages.

112. The ET in Ms Fletcher's case based its award of exemplary damages 'in response to a systemic failure of mechanisms for redress'. Whilst some of the observations of the ET in connection with the way in which Ms Fletcher's complaints were dealt with may be open to question in two of the respects advanced by Miss Carss-Frisk, in our judgment these do not undermine the ET's justified criticisms. Despite the ET's indication to the contrary the Garrison Commander eventually accepted Ms Fletcher's application for redress. Further the additional evidence relating to the conduct of Sergeant Brown which became available after Major General Loudon completed his inquiry did not replicate evidence then available to him. However these differences do not undermine the conclusion of the ET that the Army had failed to provide proper means of redress for Ms Fletcher.
113. We do not consider that the ET was precluded from relying on matters which had not been pleaded in Ms Fletcher's ETIs in awarding exemplary damages. Provided that findings of fact have been made to support such an award, remedy is at large in ET proceedings.
114. In accordance with the judgment of Lord Nicholls in Kuddus, the act relied upon to support the award of exemplary damages, the systemic failure of mechanisms for redress, would have to be conscious and contumelious. Although there was no finding which applied these terms to the Army's conduct of the redress procedures, the tenor of the RJ was to this effect.
115. The authorities establish that exemplary damages are to be reserved for the most serious abuses of governmental power. The examples of cases in which such damages have been awarded illustrate the high degree of gravity of conduct required to warrant such an award. Although the ET characterised the Army's failure to provide or operate procedures for redress of Ms Fletcher's complaints as 'oppressive, arbitrary and unconstitutional' in our judgment their conduct in this regard, deplorable though it was found to be, did not cross the high threshold warranting an award of exemplary damages. Accordingly the ET erred in making an award of exemplary damages.
116. Our view may have been otherwise if the ET had based the award of exemplary damages on the use by the Army of disciplinary procedures and sanctions to victimise Ms Fletcher for pursuing complaints and to deter her from seeking redress. However the ET stated in paragraph 49 of the RJ and both parties made their submissions on the basis that the award of exemplary damages was based on the Army's conduct in relation to their failure to provide a proper mechanism for redress of Ms Fletcher's complaints.
117. Even if we were not of the view that the ET erred in holding that the conduct relied upon could form the basis for an award of exemplary damages, in our judgment the sum of £50,000 is unsustainable. The rationale of the ET for awarding that sum was that to have any effect on the MOD the amount should match the aggregate amount of the sums awarded for injury to feelings and aggravated damages. There is no authority for such an approach. Exemplary damages in the first of Lord Devlin's categories are awarded against public authorities and met from the public purse. The amount of such damages may therefore be of less significance to the perpetrator of the misconduct than the fact that their conduct had been subject to public criticism. Further determining the amount of exemplary damages by duplicating the sum of the awards in respect of injury to feelings and aggravated damages is likely to lead to double counting. Lord Woolf in Thompson warned against double counting when awarding exemplary as well as aggravated damages. Further, it is only if the amount of compensatory and aggravated damages are insufficient to mark disapproval of the perpetrator's conduct and to provide a proportionate punitive element that exemplary damages will be justified.
118. The sum of £50,000 exemplary damages was stated by Lord Woolf in Thompson to be the absolute maximum to be awarded in cases of wrongful arrest and false imprisonment. He stated that where exemplary damages are appropriate they are unlikely to be less than £5,000 uprated by inflation to £6,000 by December 2006 in Rowlands. Having regard to the conduct on which the ET based their award in Ms Fletcher's case and the range of awards for much more serious misconduct in the cases brought to our attention, if an award of exemplary damages had been warranted it should have been at the lower end of the scale. The ET erred in making an award of £50,000 exemplary damages. If an award of exemplary damages had been appropriate in this case, in our judgment it should have been no more than £7,500.

Conclusion

119. The appeal of the MOD is allowed.
120. The award of £20,000 aggravated damages is set aside and an award of £8,000 substituted. Accordingly the award of interest is to be reduced.
121. The award of exemplary damages is set aside.
122. The conduct of the Army which led to the proceedings successfully pursued by Ms Fletcher was rightly condemned by the ET. We hope that lessons have been learned and that such behaviour will not be repeated.