Aggravated, Exemplary and Restitutionary ... - Law Commission

punishment would cause him or her undue hardship, if he or she had to discharge
it. We therefore recommend that:
(26) the defendant should be allowed to show that he does not have the
means, without being caused undue hardship, to discharge the
punitive damages award which the court has decided to grant;
where the defendant satisfies the court that this is so, the court
must award a lower sum which it considers avoids that hardship.
(Draft Bill, clause 6(2))
What this amounts to is a rebuttable presumption of ability to meet a punitive
award without undue hardship, with the burden of rebuttal (obviously) falling on
the defendant.
1.137 We would add, however, that we do not anticipate defendants seeking to rebut the
presumption in very many cases: plaintiffs are unlikely to sue defendants who are
obviously not able to satisfy an award made against them.
(b) The relevance of insurance against liability for punitive damages
1.138 We consider that the definition of the ‘means’ of the defendant should be left for
the courts to flesh out, except to the extent of making one point clear. We
recommend that:
(27) our draft Bill should provide that the ‘defendant’s means’ include
the fruits of any contract of insurance against the risk of liability to
pay punitive damages. (Draft Bill, clause 6(4))
1.139 In our view, if a liability to pay punitive damages will be fully satisfied by sums paid
under a contract of insurance, there should be no room for defendants (or their
insurers) to argue that the award which would otherwise be appropriate
punishment would cause them ‘undue hardship’, and so ought to be reduced. Of
course, if a liability to pay punitive damages is only partially covered by a contract
of insurance, then the defendant would have to show that paying the unsatisfied
part (the total award less any sum payable by the insurers) will cause him or her
‘undue hardship’.
(c) The requirement to record the sum which would have been
awarded
1.140 Where a court does reduce an award on the basis of the defendant’s incapacity to
pay an otherwise appropriate sum, we consider that it would be desirable if the
court not just found but also recorded the sum it would have awarded, but for the
deduction. We therefore recommend that:
(28) where a court has decided to award punitive damages, it must
indicate the amount which it is minded to award, irrespective of the
defendant’s means; (Draft Bill, clause 6(1)); and if the court has
reduced an award of punitive damages on account of undue
hardship to the defendant (under recommendation (26)) the court
should record what sum would have been awarded, but for that
reduction. (Draft Bill, clause 6(3))
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