Aggravated, Exemplary and Restitutionary ... - Law Commission

number of awards made in one action to a number of plaintiffs be moderate and
proportionate (or ‘not excessive’). The second reason is that, for the reasons
discussed above, the risk of excessive punishment is especially acute in ‘multiple
plaintiff’ cases. A special, express provision against excessive punishment should
better direct courts to this risk.
1.171 What will this limitation require in practice? It may happen that the individuallyassessed
punitive damages awards, if they are added together, constitute excessive
punishment for the defendant’s conduct. In order to avoid that ‘excess’, the court
will obviously have to decide what an appropriate (lower) total liability is; it will
then need to reduce each successful plaintiff’s punitive damages award, so as to
ensure that the aggregate is equal to that ‘appropriate’ sum. We consider that a
form of pro rata deduction from each individual punitive damages award would be
the best solution. That deduction could proceed as follows:
Example:
A, B, & C are given punitive damages of £10,000, £10,000 and £20,000,
in one action.
Applying clause 6(3) of our draft Bill, the court decides that the ‘aggregate
amount’ (£40,000) punishes the defendant excessively for his or her conduct;
£30,000 would be sufficient. The ‘aggregate amount’ is therefore £10,000
too much.
The awards are reduced by £10,000, preserving the proportion which they
bore to the aggregate sum: A (1/4); B (1/4); C (1/2), or ratio 1(A) : 1(B) :
2(C). Accordingly, A’s award is reduced by £10,000/4 (£2,500); B’s
award is reduced by £10,000/4 (£2,500) and C’s award is reduced by
£10,000/2 (£5,000).
This leaves the final judgment as £30,000 in total, consisting of £7,500
(A); £7,500 (B); and £15,000 (C).
(iv) The relevance of ‘settlements’ with one or more multiple plaintiffs
1.172 Where there are multiple plaintiffs or potential plaintiffs, the otherwise desirable
practice of out of court settlement raises particular problems. A defendant may
settle with some, but not all, potential multiple claimants. Unless there is at least
the chance that this will be taken into account by a court, when deciding the
defendant’s liability to punitive damages to plaintiffs who have not settled, the law
could give a strong disincentive to defendants to seek to settle out of court, except
where the defendant could be sure of securing a settlement with all potential
claimants. This is because such a defendant will owe or have paid the settlement
sum, but in addition will be liable to pay, inter alia, a sum of punitive damages
which ignores the fact that he or she has settled with one, some or many potential
claimants. The defendant’s total liability (settlement sums + court award) could
be an excessively punitive sum.
1.173 In order to avoid this risk, we suggest that, in deciding whether punitive damages
should be awarded and/or how much should be awarded in a multiple plaintiff
case, the court should take account of any settlement which the defendant has
made with other multiple plaintiffs in relation to the conduct. But this should only
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