Aggravated, Exemplary and Restitutionary ... - Law Commission

1.141 In our view, this is necessary to facilitate comparisons and so consistency between
punitive damages awards. There is also a statutory precedent in the Law Reform
(Contributory Negligence) Act 1945: section 1(2) requires a court to “find and
record the total damages which would have been recoverable” if they had not been
reduced because of the plaintiff’s contributory negligence.
(3) The destination of punitive damages awards
(a) The problem of the destination of punitive damages awards
1.142 An objection regularly made to punitive damages awards is that they result in a
plaintiff receiving a windfall benefit. One possible answer to this objection is to
dismiss it as wholly misconceived. The civil law is not concerned only with
compensation, as shown by restitutionary awards. Once plaintiffs have established
that their rights have been infringed, they have established an entitlement to a
range of remedies, which include, in certain circumstances, non-compensatory
punitive damages. Once one accepts that civil punishment is legitimate (as we do)
there is no necessary objection to the victim of a wrong keeping the punishment
exacted.
1.143 But while we reject the ‘compensation-only’ dogma, we recognise the force of the
view that punitive damages are a ‘hybrid’. Although they are awarded in respect of
an identified civil wrong against a private individual, they nonetheless include a
significant (even primary) public element - that is, the public interest in the
punishment and deterrence of outrageously wrongful conduct. On this approach,
it is arguable that the ‘windfall’ objection would be most appropriately met by
making either all, or a percentage (say 33%), of any punitive award payable to the
state or some other public fund.
1.144 Of these two, we do not find at all attractive the suggestion that all of the punitive
award should be payable to the state (or other public fund). This would normally
remove any incentive for a plaintiff to claim punitive damages and would therefore
normally nullify the point in retaining punitive damages. 713
A plaintiff who stands
to receive nothing from an award of punitive damages normally has no reason to
claim them and, given the costs involved in establishing that they are merited, a
clear financial disincentive to do so. If, as we believe, punitive damages play a valid
role in ensuring that the civil law is properly upheld, it must follow that, even if one
does not wish to go to the lengths of encouraging plaintiffs to sue who would
otherwise not have sued, one should at least ensure that those who do sue for
compensation (or restitution) are not discouraged from also seeking punitive
damages.
1.145 Much more attractive, therefore, is the compromise position whereby the state or
some other public fund would receive a percentage (say 33%) of any punitive
damages award. 714
This would reduce the size of any ‘windfall’ obtained by
713 We do not rule out the possibility that some plaintiffs may wish to bring an action simply to
have their rights vindicated.
714 This option was briefly discussed, without a provisional view being reached, in Aggravated,
Exemplary and Restitutionary Damages (1993) Consultation Paper No 132, para 6.38. We
have chosen 33% rather than a higher percentage - which might make ‘diversion’ more costeffective
- because we are concerned about the potential implications for the pleading of
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