Honest Belief Is No Absolute Defence: Exemplary Damages For Institutional Misconduct

The High Court confirmed that an institutional defendant cannot escape exemplary damages simply because its agents honestly believed their conduct was lawful. Where institutional failures expose callous disregard for vulnerable people in their custody, exemplary damages remain available.

In issue

• Whether exemplary damages may be awarded notwithstanding that government officers honestly believed (or assumed) their conduct was lawful.

The background

On 21 August 2014, prison officers at the Don Dale Youth Detention Centre discharged CS gas (a form of tear gas) to subdue a 'rampant detainee'. The prison officers were acting with the authority of the Director of Correctional Services, who was recorded as stating 'I don’t care how much gas you use.' The appellants were bystanders at the time the gas was deployed and remained locked in their cells.

The appellants’ claims were dismissed before the Supreme Court of the Northern Territory¹ and Northern Territory Court of Appeal² on the basis that the use of CS gas was 'reasonable and necessary' for maintaining order and safety under the Youth Justice Act 2005 (NT) (YJ Act).

The High Court rejected that conclusion in Binsaris v Northern Territory (Binsaris)³, holding that the use of CS gas was prohibited under the Weapons Control Act 2001 (NT), was not authorised by the YJ Act, and therefore constituted unlawful battery. The matter was remitted to the Supreme Court for assessment of damages only.

On remitter, the NT Supreme Court awarded each appellant exemplary damages of $200,000 (totalling $800,000).⁴ The NT appealed,⁵ and the Court of Appeal relied upon Kelly J's finding that the use of CS gas was 'reasonable and necessary' and on the officers’ belief that their conduct was lawful.

The appellants were granted special leave to appeal to the High Court, with the key issues in dispute being:

1. whether the Court of Appeal was entitled to rely on the primary judge's finding that the deployment of CS gas was 'reasonable and necessary', notwithstanding the High Court’s prior conclusion in Binsaris that the use of CS gas was unlawful
2. whether an honest belief by officers that their conduct was lawful would dispel any award of exemplary damages, and
3. by way of the NT’s cross-appeal, whether the award of $200,000 in exemplary damages to each of the appellants ($800,000 total) was 'manifestly excessive'.

The decision

On 17 June 2026, the High Court (Gordon, Edelman, Gleeson, Jagot and Beech‑Jones JJ; Gageler CJ and Steward J dissenting) allowed the appeals and allowed the cross‑appeal in part. The majority held that:

1. The Court of Appeal erred in relying upon the primary judge’s finding that the use of CS gas was 'reasonable and necessary', because that finding depended upon the erroneous assumption that the use of CS gas was lawfully available.
2. Although 'conscious wrongdoing' is sufficient to justify exemplary damages, it is not necessary. Contumelious conduct and the totality of the circumstances may justify an award, such that the officers' honest belief in the lawfulness of their conduct did not preclude exemplary damages, particularly in light of the Northern Territory's systemic failures and the appellants' status as minors in its care and custody.
3. The exemplary damages award of $200,000 per appellant was manifestly excessive having regard to principles of proportionality and totality. The exemplary damages were therefore reduced to $50,000 per appellant.

Implications for you

Three key takeaways emerge from this decision.

Firstly, where multiple claims arise from the same wrongdoing, courts will assess exemplary damages through the lens of proportionality and totality. The overall punitive effect of the award remains critical. The decision therefore reinforces the need for defendant lawyers and insurers to consider aggregate exposure across all related claims when assessing quantum, setting reserves and formulating settlement strategy.

Secondly, an honest belief in legality is not a safe harbour from exemplary damages. The High Court confirmed that 'conscious wrongdoing' is sufficient, but not necessary, for such an award. Conduct may attract exemplary damages where it is contumelious, callous, or otherwise demonstrates a serious disregard for the rights of others, even where the defendant believed its conduct was lawful.

Thirdly, the decision underscores the importance of systems, training and governance. In assessing exemplary damages, courts may look beyond the immediate conduct of individual employees or agents and scrutinise the broader institutional context, including supervision, policies, operational frameworks and organisational culture. For defendants and insurers, systemic shortcomings can significantly increase exposure where liability is established and may support findings that punishment, denunciation and deterrence are warranted through an award of exemplary damages.

Austral v Northern Territory; Binsaris v Northern Territory; O’Shea v Northern Territory; Webster v Northern Territory [2026] HCA 20

Footnotes

^{1  LO v Northern Territory (2017) 317 FLR 324.
2 JB v Northern Territory (2019) 343 FLR 41.
3 (2020) 270 CLR 549.
4 Binsaris v Northern Territory [2023] NTSC 79.
5 Northern Territory v Austral [2025] NTCA 3.}

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.