AGS v KES HC Rotorua CIV 2006-463-523

[2007] NZHC 1585

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

CIV 2006-000463-523

BETWEEN  AGS Appellant

ANDKES Respondent

Hearing:         24 November 2006 (Heard at Rotorua)

Appearances: PT Birks on instruction from JJ Cleary for Appellant

EM Gooch for Respondent

Judgment:      8 February 2007 at 10:30 am

JUDGMENT OF ASHER J

This judgment was delivered by me on 8 February 2007 at 10:30 am pursuant to Rule 540(4) of the High Court Rules

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Registrar/Deputy Registrar

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Date

Solicitors:

Goodmans, Solicitors, PO Box 1439 Palmerston North

Olphert Sandford, Solicitors, PO Box 99 Rotorua
Copy to:

JJ Cleary, PO Box 10 406

AGS V KES HC ROT CIV 2006-000463-523  8 February 2007

Introduction

[1]      This is an appeal against a decision of the District Court at Rotorua awarding the respondent, KES, exemplary damages of $20,000 against her grandfather, AGS.

[2]     AGS has been convicted of nine counts of a sexual nature against his granddaughter.   The conduct occurred between 1991 and 1999.   It began with his exposing himself to her, and then forcing her to place her finger on his penis when she was three years old.  He then proceeded to indecently assault her, touching her vagina with his finger and lying on top of her, rubbing himself against her.   He kissed her vagina and forced her to kiss his penis by pushing her head down.  His conduct continued with more touching.   Ultimately, in the worst of the events, he penetrated her vagina with his finger.

[3]      KES, as is common with young children being abused by close relatives, did not during this eight year period tell anyone about what had happened.   She complained some years later.   AGS, after some initial acceptance of wrongdoing, when confronted, proceeded to deny the charges.  There was a jury trial, and he was convicted.  At the time of sentencing AGS was 72 years old and a first offender.  He was in poor health, with a heart problem.  A starting point for sentence was reached of six years’ imprisonment.  Two years were deducted because of his health issues and lack of previous convictions.  The final sentence was four years’ imprisonment.

[4]      KES then proceeded to seek exemplary damages under s 319 of the Injury Prevention, Rehabilitation and Compensation Act 2001 for mental injury suffered as a result of the abuse.  A decision was delivered on 8 May 2006 awarding $20,000 damages against AGS, though the case was described by the Judge as “by no means the most egregious case of sexual abuse to come before the Courts”.   The Judge placed weight on the criteria for consideration set out in McDermott v Wallace [2005] 3 NZLR 661. He concluded that the award must be a modest one. He took into account the continued denial of wrongdoing on the part of AGS. The Judge also had regard to the means of AGS, which were modest. He was not prepared to

conclude that the penalty imposed of four years’ imprisonment was unjustifiably lenient.

The challenge

[5]      Counsel for AGS, Mr Birks, raised three essential arguments challenging the District Court decision.  First, he submitted that there was insufficient evidence to justify the Court’s conclusion that the abuse was an abject betrayal of trust and thus exhibited the degree of flagrancy to warrant exemplary damages.   Second, he criticised the emphasis on AGS’ lack of remorse.  Third, he argued that the District Court decision would open the floodgates to exemplary damages claims. He submitted that AGS must be presumed to have been punished sufficiently, and that exemplary damages should only be awarded in cases of inadequate sentences.  If that were not so, conviction and sentence would lead inevitably to an exemplary damages claim in all cases of serious sexual misconduct.

Findings of fact: the quality of the evidence

[6]      KES gave evidence in the jury trial, but did not give evidence in the civil claim for exemplary damages.  Rather, a senior social worker at Rotorua Hospital who had counselled KES on a one-on-one basis was called.  She described certain ongoing physical effects suffered by KES, including headaches, neck pain and back pain relating to stress and anxiety.  She has ongoing feelings of fear, nightmares and difficulty in sleeping, she has difficulty in concentrating at school, and she is withdrawn  and  has  difficulty  in  communicating.     She  has  had  difficulty  in developing friendships.  Some of her family members have been openly angry and negative towards her following the charges.  She could not face giving evidence a second time.

[7]      The social worker’s views were developed from her conversations with KES, although she learned of some matters from a paediatrician’s file.  She stated in Court that it was part of the assessment of a victim to ask about physical signs, and to get a victim to express her or his feelings.

[8]      KES’s father was also called.  He gave evidence about the severe problems KES had developed when she was about 13 years old with her back, and how there were no physical reasons to explain the pain.  KES had had difficulties in school and had suffered depression.  He said that the effects of the abuse on KES were obvious to his family.   KES has difficulty in maintaining relationships, she suffers from depression and has been on anti-depressants as well as sleeping pills.  He pointed out that neither AGS or his wife (who are his parents) have admitted that AGS did anything wrong and they have never apologised for the abuse.  The family has been divided and KES is blamed for what happened.   He  made the  point  that  AGS continues to deny his guilt.

[9]      The District Court Judge was alert to issues of hearsay.  He raised the matter specifically with counsel.  He noted that he had to assess the case on the basis of the evidence that had been given.  There were no specific findings on the level of trauma and damage suffered by KES, but it is implicit in his judgment that she did suffer trauma and long-term effects.  The Judge had the benefit of the notes of evidence and the sentencing notes from the previous hearing.   There was no contest as to their admissibility.

[10]     The evidence of the social worker and the father of KES was, with a few small exceptions, direct evidence and not hearsay.  It was admissible, and painted a sad  picture of  the  difficulties  suffered  by  KES.    There  was  certainly sufficient evidence for the Judge to be able to infer that KES was a victim, and had suffered severely from AGS’s misconduct.

[11]     In a way, however, this evidence was not of central relevance.  The issue in assessing exemplary damages is not the extent of the loss suffered by the party wronged.   The focus is rather on the nature of the wrongdoing on the part of the defendant.   To this extent the harm suffered is only an aspect of the defendant’s wrongdoing.  Of the dreadful acts carried out by AGS to his granddaughter there was no doubt.  The wrongdoing was proven.  The clearest evidence was available in the Court record, and this was not contested.

[12]     I conclude that there was sufficient admissible evidence to justify the factual conclusions reached by the learned Judge.

Principles to be applied in a claim for exemplary damages

[13]     The  award  of  exemplary  damages  is  exceptional.    The  jurisprudence  in relation to exemplary damages has developed in the context of its contrast with compensatory damages.   It has been stated that such damages should be awarded only  if  the  amount  available  in  compensation  is  “inadequate  to  punish  [the defendant] for his outrageous conduct, to make the disapproval of such conduct and to deter him from repeating it”: Rookes v Barnard [1964] 1 AC 1129 at 1228 per Lord Devlin.

[14]     To  satisfy  the  test  of  outrageousness,  the  conduct  will  usually  involve intentional wrongdoing with an element of flagrancy or cynicism or oppression or the like.  It has been described as “something additional, rendering the wrongdoing or the manner or circumstances in which it was committed particularly appalling” Bottrill v A [2003] 2 NZLR 721 at 729 per Lord Nicholls of Birkenhead.

[15]     In Daniels v Thompson [1998] 3 NZLR 22 it was held by the Court of Appeal that exemplary damages were designed to punish the acts complained of, and where there had already been conviction and sentence for those acts, it followed that punishment had already been exacted. It would be unacceptable for one Court to add to the punishment exacted by another, and it was therefore appropriate that there should be an absolute bar on such claims. Thomas J dissented and stated that the criminal process did not adequately punish conduct in all cases. In his view, the criminal process left room for the operation of a civil suit as a way of giving full effect to the victim’s rights and interests.

[16]     Following   that   decision,   the   Accident   Compensation   legislation   was amended.  Section 319 of the Injury Prevention, Rehabilitation, and Compensation Act 2001 reads:

319    Exemplary damages

(1)Nothing in this Act, and no rule of law, prevents any person from bringing proceedings in any court in New Zealand for exemplary damages for conduct by the defendant that has resulted in—

(a)      personal injury covered by this Act; or

(b)      personal injury covered by the former Acts.

(2)The court may make an award of exemplary damages for conduct of the kind described in subsection (1) even though—

(a)the defendant has been charged with, and acquitted or convicted of, an offence involving the conduct concerned in the claim for exemplary damages; or

(b)the defendant has been charged with such an offence, and has been discharged without conviction under [section 106 of the Sentencing Act 2002 or convicted and discharged under section 108] of that Act; or

(c)the defendant has been charged with such an offence and, at the time at which the court is making its decision on the claim for exemplary damages, the charge has not been dealt with; or

(d)the defendant has not, at the time at which the court is making its decision on the claim for exemplary damages, been charged with such an offence; or

(e)the limitation period for bringing a charge for such an offence has expired.

(3)In determining whether to award exemplary damages and, if they are to be awarded, the amount of them, the court may have regard to—

(a)whether a penalty has been imposed on the defendant for an offence involving  the  conduct  concerned  in  the  claim  for  exemplary damages; and

(b)      if so, the nature of the penalty.

[17]     Section 319(2) thus expressly permits a Court to award exemplary damages after conviction and sentence.   It must be seen therefore as a direction from the Legislature that despite the difficulties of awarding exemplary damages for actions already punished by the criminal law, averted to in Daniels v Thompson, the Courts may indeed award exemplary damages in those situations, despite prior conviction and the imposition of severe criminal punishment.

[18]     Two recent appellate decisions have considered the post-s 319 situation in New Zealand: Bottrill v A [2003] 2 NZLR 721 and McDermott v Wallace.  Bottrill v A considered whether conduct that was not intentional could be sufficient to give rise to a claim. McDermott v Wallace involved a general review of the law in a situation involving reckless and dangerous conduct.  Recent awards were summarised, and six considerations relevant to the assessment of quantum of exemplary damages were set out.  These were summarised in the headnote as:

(i)       whether the claimant was a victim of punishable behaviour; (ii)     awards should be moderate;

(iii)     the means of the parties;

(iv)      whether any other compensation has been awarded to the claimant, in criminal or regulatory proceedings;

(v)       whether  there  has  been  any  criminal  penalty  imposed  on  the defendant (consideration of which was also a statutory requirement under  the  Injury  Prevention,  Rehabilitation  and  Compensation Act 2001); and

(vi)      the conduct of the parties including, up to the date of judgment, improper behaviour on the part of the complainant being a factor which could reduce or even eliminate exemplary damages.

[19]     Moderate awards for exemplary damages in appropriate cases are now an established feature of the law of New Zealand: Bottrill v A at 725. Quite a number of such awards have been made for claims against those who have offended sexually against young children, and abused a position of trust: H v H HC AK AP20-SW02

24 July 2002, O’Regan J; B v R (1996) 10 PRNZ 73; H v R [1996] 1 NZLR 299; AB v CD HC TIM CP53/89 CP61/89 11 March 1992, Fraser J; M v J [2003] DCR 619. Indeed, there appears to be no case where exemplary damages have been refused when sexual abuse of a child by a mature adult relative was proven and there were no limitation or other procedural barriers.

General approach of District Court Judge

[20]     The approach taken by the District Court Judge was to apply the six criteria set out in McDermott v Wallace.   The Judge assumed that s 319 of The Injury Prevention Rehabilitation and Compensation Act 2001 applied and that he should

follow McDermott v Wallace and the principles set out therein which took into account s 319.

[21]     He    was    undoubtedly    correct    in    assuming    that    s 319    applied. Section 319(2)(a) specifically states that an award for exemplary damages may be made for conduct that would give rise to an exemplary damages claim, where a defendant has been convicted of an offence involving the conduct concerned in the claim  for  exemplary  damages.    Section 319(3)  also  states  that  in  determining whether to award  exemplary damages the Court may have regard to  whether  a penalty has been imposed on  a defendant for an offence involving the  conduct concerned in the claim for exemplary damages, and if so, the nature of the penalty.

[22]     The fact that KES did not give evidence did not in any way mean that the Judge’s decision was inappropriate.   The most important factor was the level of AGS’s misconduct, about which there was no doubt.  There also can be no doubt in the light of the evidence of the social worker and the father that KES had suffered severely, as could be expected, and would continue to do so.

The degree of flagrancy

[23]     Acts of sexual abuse by a mature adult relative against a young child are by definition  at  the  outside  extreme  of  outrageousness  and  flagrancy.    They  must involve the grossest breach of trust, and exploitation of the most vulnerable.   The motivation is self-gratification, and the results are invariably severe and long lasting for the victim.

[24]     The Judge described this particular offending as “by no means the most egregious case of child sexual abuse to come before the Courts” (at [15]).   This statement demonstrates a problem in these sorts of cases.   There is something inherently awkward about having to rank levels of egregiousness when sexual abuse of young children is involved.  Nevertheless, this seems to be inevitable in a non- compensatory damages regime in which flagrancy is a factor.

[25]     It  cannot  be  said  that  the  Judge  made  an  error  in  his  evaluation  of  the conduct’s  outrageousness.    He  seems  to  have  fairly  considered  all  the  relevant criteria set out in McDermott v Wallace.   His general approach on the issue of principle was correct.  The submissions made on behalf of the appellant emphasise that the outrageous conduct must be so out of the ordinary that it requires additional punishment.  If the appellant means to suggest that the appellant’s misconduct was not so out of the ordinary for it to require additional punishment, the submission is incorrect.  The sexual abuse of KES over a long period was a grievous outrage by any standards.   It completely satisfies the requirement of outrageous and flagrant conduct.

Does the criminal sentence need to be inadequate?

[26]     It appeared to be a theme of the submissions for the appellant that a sentence must be inadequate before exemplary damages would be awarded.   The learned Judge rightly concluded in this case that the sentence was not inadequate.  Indeed, it is hard to envisage a situation where a Court would conclude that a sentence was inadequate, given the appeal processes that are available to both Crown and defence. Such a consideration would involve a judge evaluating an earlier judicial process possibly of a higher Court, outside the appellate process.  This is not desirable.

[27]     It is highly unlikely that the Legislature intended ordinary sentences to be reassessed by a Court considering exemplary damages.  The reference in s 319(3) to a Court having regard to whether a penalty has been imposed and the nature of a penalty should be seen as a requirement that the Courts taken into account the circumstances  of  the  defendant  following  the  imposition  of  that  penalty.    If  a sentence had, for instance, involved a very substantial fine or reparation order, that might be a relevant factor in the fixing of exemplary damages because of the effect on the defendant’s recourses.   However, the fact that a substantial term of imprisonment has been imposed which is not inadequate cannot be taken to mean that there is no entitlement to exemplary damages.   The Judge specifically and properly found that the sentence was not inadequate.  That did not entitle AGS to escape an award against him.   An inadequate sentence is not a prerequisite to the award of exemplary damages.

Relevance of absence of remorse

[28]     It was also suggested that the Judge was wrong in taking into account the fact that the defendant had put the complainant to proof, demonstrating an absence of contrition.  The Judge did appear to take into account AGS’s denial of the charges. He noted at [14] that the defence of the case involved a further element of embarrassment and even “re-victimisation” of KES that would not have occurred in the event of a guilty plea.  He stated that it seemed to him that as a matter of logic and principle, the continued denial was something that he could weigh in assessing quantum.  He also said earlier that AGS’s stance was an aggravating feature.

[29]     A  lack  of  remorse  is  not  an  aggravating  factor  in  sentencing  (although remorse can be a mitigating factor under s 9(1)(f) of the Sentencing Act 2002).  A claim for exemplary damages is not a sentencing process.  It is a process whereby society punishes outrageous misconduct where the compensation that is available to the victim is not adequate punishment.   However, in sentencing the  Courts  are understandably reluctant to penalise a lack of remorse, because it is the fundamental right of all citizens to be silent about their alleged wrongdoing and to put the Crown to proof.   The Courts should recognise this, even in a civil claim for exemplary damages.  A person should be able to defend a civil claim without exposing himself to a greater damages claim.

[30]     In assessing exemplary damages, the Court is endeavouring to assess the wrongdoer’s conduct in overview, to see whether the outrageousness is such that further compensation is required.  The primary focus is on the wrongful act, not what happened later.   A continued denial of wrongdoing, even after a jury trial and a conviction, is still a defendant’s right.   It is the conduct which constituted the offending which is the focus.  Lack of remorse should not be a relevant factor.

[31]     It is by no means clear that while the Judge considered the lack of remorse, it had any significant effect on the ultimate exemplary damages award of $20,000.  In his conclusion the Judge referred to the assessment that he made against the relevant criteria, by which he was presumably referring to the factors set out in McDermott v Wallace.  This  assessment  appears  to  have  been  the  basis  for  his  reaching  the

exemplary damages figure of $20,000.   The figure was one that, in all the circumstances, was entirely within the reasonable boundaries of the exercise of the discretion.  Despite the fact that I consider that the Judge was in error in considering the lack of remorse, it does not appear to have had a material effect on the outcome. The ultimate award is within the range, and this Court should not interfere with it.

Quantum, and the means of the appellant

[32]     There was some criticism by Mr Birks for the appellant of the award, based on the slender means of AGS.   As I have stated, AGS had owned a house worth

$96,000 which has been sold and the mortgage repaid.   Any uncertainty as to the equity could have been clarified by AGS.

[33]     There was evidence on which the Judge could fairly conclude that there was some money available for an award of damages.  There was a house worth $96,000 owned by the defendant and his wife, which had been sold.  There was a mortgage which was paid off.  No evidence was provided by the appellant as to the amount of the mortgage, but there was a proper basis for the Judge to assume that there was some equity, and therefore money available. The Judge was entitled to conclude that considering his means, an award of $20,000 was appropriate.

[34]     Awards for exemplary damages by the Courts have been modest.  The means of the defendant must always be relevant.  If a very wealthy person had perpetrated this abuse on KES, the Judge might well have awarded a greater sum of damages.  In the end an award must be realistic, and recognise the financial realities of a defendant’s position.  It must not be vindictive and crushing.

[35]     In McDermott v Wallace an award of damages of $20,000 was accepted in the Court of Appeal for a serious act that amounted to more than a momentary lapse of judgment.  The Court of Appeal observed that the High Court Judge should not substitute his own view and assessment of the appropriate award for that of a District Court Judge.   It was observed that because  the  trial  Judge  was  undertaking an evaluative role there needed to be compelling reasons for her views to be overturned (para [64]).  The District Court Judge’s decision was restored.

Floodgates

[36]     I do not consider that the appellant can call in aid the floodgates argument. While it can be fairly said that as adult/child family sexual abuses cases go, this case, whilst serious, was not of the worst order in terms of the actual abuse perpetrated, cases  involving this  type of  abuse  are  generally outrageous  and  warrant  severe punishment.  The abuse normally has severe consequences for the victim.  The fact that exemplary damages may be regularly available in such circumstances is not a reason for them not to be awarded at all, particularly in the light of the clear direction given  by  the  legislature  in  s 319  of  The  Injury  Prevention  Rehabilitation  and Compensation Act 2001 following Daniels v Thompson.  The fact that there may be quite a number of other cases which can be brought in a similar situation is not a reason for the Court to refuse to exercise its discretion.  The real limitation will often be the financial situation of the perpetrator.

Conclusion

[37]     I conclude that save for his consideration of absence of remorse, there was no error by the learned Judge.  I do not consider that his consideration of the absence of remorse had any material affect on his decision and the award of $20,000, which is an award that is within the acceptable range.

Result

[38]     The appeal is dismissed.  Costs are awarded in favour of the respondent on a

2B basis.

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Asher J