Aggravated, Exemplary and Restitutionary ... - Law Commission

plaintiffs must be permitted to do what they like with their damages leaves
unexplained when and why the damages are to be characterised as theirs, apart
from the fact that they have sued to claim them. In the case of a compensatory
damages award the explanation is clear and strong: the damages award is the
plaintiff’s because it represents the plaintiff’s loss. It is, in a sense, an entirely
private award. In contrast, in the case of a punitive award, which is inherently a
non-compensatory award, the position is different. Here the award has a
significant public element - corresponding to the function of the award in punishing
and deterring the defendant and others minded to act in a similar way. It does not
seem to us, therefore, that the normal rule for compensatory damages necessarily
has to apply.
(iii) “It is unsatisfactory that the state should both pay and receive an award”
1.156 Some consultees observed that, where an organ of the state is made liable to pay
punitive damages, one would be left with the unsavoury sight of the state being the
beneficiary of the award which it had paid by way of punishment.
1.157 However, this argument could be dealt with, in two different ways. One response
would be to exempt successful punitive damages claims against state organs from
the category of awards where all or part of the punitive damages should be paid
over to the state. To make this concession, however, would really render pointless
- because even less cost-effective 719
- any form of diversion. A second response
would be to use any diverted sum, not in some general way for the benefit of the
state, but instead for the benefit of individuals in a similar position to the plaintiff.
(c) Conclusion
1.158 In common with the views of a bare majority of consultees, we would recommend,
albeit with some hesitation, that:
(29) no proportion of a plaintiff’s punitive damages award should be
‘diverted’ to a public fund.
Our main reason is that, since we anticipate punitive damages being moderate in
size, we consider that the benefits of diversion would be outweighed by the costs
involved and the tactical distortions in settlements that it might produce.
(4) Multiple plaintiffs
1.159 Multiple plaintiff cases raise very difficult practical problems, as well as problems
of principle, for any framework of liability to punitive damages. Indeed, the fact
that a case involves multiple claims to punitive damages, arising out of the same
course of wrongdoing, has been considered a good reason for precluding any claim
plaintiff in an action for personal injuries could recover damages in respect of the loss that a
third party had suffered in caring without reward for the injured plaintiff; however, any such
damages recovered by the plaintiff would be held by him or her on trust, for the benefit of
the third party.
719 Such diversion would be most unlikely to be cost-effective, given that awards against the
state may be anticipated to be the greatest single category.
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