What is the difference between damages for mental distress and aggravated damages for breach of contract?

In paras. 51 to 53, the court clarifies the difference between damages for mental distress and aggravated damages as follows: It may be useful to clarify the use of the term “aggravated damages” in the context of damages for mental distress arising from breach of contract. “Aggravated damages”, as defined by Waddams (The Law of Damages (1983), at pp. 562-63), and adopted in Vorvis, at p. 1099, describ[e] an award that aims at compensation, but takes full account of the intangible injuries, such as distress and humiliation, that may have been caused by the defendant’s insulting behaviour. As many writers have observed, the term is used ambiguously. The cases speak of two different types of “aggravated” damages. The first are true aggravated damages, which arise out of aggravating circumstances. They are not awarded under the general principle of Hadley v. Baxendale, but rest on a separate cause of action — usually in tort — like defamation, oppression or fraud. The idea that damages for mental distress for breach of contract may be awarded where an object of a contract was to secure a particular psychological benefit has no effect on the availability of such damages. If a plaintiff can establish mental distress as a result of the breach of an independent cause of action, then he or she may be able to recover accordingly. The award of damages in such a case arises from the separate cause of action. It does not arise out of the contractual breach itself, and it has nothing to do with contractual damages under the rule in Hadley v. Baxendale. The second are mental distress damages which do arise out of the contractual breach itself. These are awarded under the principles of Hadley v. Baxendale, as discussed above. They exist independent of any aggravating circumstances and are based completely on the parties’ expectations at the time of contract formation. With respect to this category of damages, the term “aggravated damages” becomes unnecessary and, indeed, a source of possible confusion.