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Aggravated, Exemplary and Restitutionary ... - Law Commission

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punishment would cause him or her undue hardship, if he or she had to discharge<br />

it. We therefore recommend that:<br />

(26) the defendant should be allowed to show that he does not have the<br />

means, without being caused undue hardship, to discharge the<br />

punitive damages award which the court has decided to grant;<br />

where the defendant satisfies the court that this is so, the court<br />

must award a lower sum which it considers avoids that hardship.<br />

(Draft Bill, clause 6(2))<br />

What this amounts to is a rebuttable presumption of ability to meet a punitive<br />

award without undue hardship, with the burden of rebuttal (obviously) falling on<br />

the defendant.<br />

1.137 We would add, however, that we do not anticipate defendants seeking to rebut the<br />

presumption in very many cases: plaintiffs are unlikely to sue defendants who are<br />

obviously not able to satisfy an award made against them.<br />

(b) The relevance of insurance against liability for punitive damages<br />

1.138 We consider that the definition of the ‘means’ of the defendant should be left for<br />

the courts to flesh out, except to the extent of making one point clear. We<br />

recommend that:<br />

(27) our draft Bill should provide that the ‘defendant’s means’ include<br />

the fruits of any contract of insurance against the risk of liability to<br />

pay punitive damages. (Draft Bill, clause 6(4))<br />

1.139 In our view, if a liability to pay punitive damages will be fully satisfied by sums paid<br />

under a contract of insurance, there should be no room for defendants (or their<br />

insurers) to argue that the award which would otherwise be appropriate<br />

punishment would cause them ‘undue hardship’, <strong>and</strong> so ought to be reduced. Of<br />

course, if a liability to pay punitive damages is only partially covered by a contract<br />

of insurance, then the defendant would have to show that paying the unsatisfied<br />

part (the total award less any sum payable by the insurers) will cause him or her<br />

‘undue hardship’.<br />

(c) The requirement to record the sum which would have been<br />

awarded<br />

1.140 Where a court does reduce an award on the basis of the defendant’s incapacity to<br />

pay an otherwise appropriate sum, we consider that it would be desirable if the<br />

court not just found but also recorded the sum it would have awarded, but for the<br />

deduction. We therefore recommend that:<br />

(28) where a court has decided to award punitive damages, it must<br />

indicate the amount which it is minded to award, irrespective of the<br />

defendant’s means; (Draft Bill, clause 6(1)); <strong>and</strong> if the court has<br />

reduced an award of punitive damages on account of undue<br />

hardship to the defendant (under recommendation (26)) the court<br />

should record what sum would have been awarded, but for that<br />

reduction. (Draft Bill, clause 6(3))<br />

140

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