Aggravated, Exemplary and Restitutionary ... - Law Commission

plaintiffs, whilst arguably preserving the financial incentive to claim punitive
damages. Several American states have adopted this course of action. While
neatly reflecting the ‘hybrid’ nature of civil punishment, this compromise does
carry with it some serious difficulties, which we must now consider.
(i) The cost of diversion to the state or public body
1.146 Applying our recommendation that awards be ‘moderate’ in size, we fear that the
costs of administering such a scheme might be disproportionate to the amounts
being recovered. There are several possible responses to this fear.
1.147 The first response would involve confining state ‘diversion’ to ‘large’ awards.
However, this would involve a cut-off point which might be vulnerable to abuse by
more powerful parties and to accusations of arbitrariness. 715
A second and more
general response would be to challenge whether the cost of diversion would be
significant. For reasons stated below, only if the court makes an award in such an
action, and the defendant fails to satisfy the part that is to be diverted to the public
fund, will the significant costs of enforcement by the body in charge of the public
fund arise. 716
(ii) The enforcement of the punitive damages award
1.148 If the state or some other public body was to be entitled to a percentage of the
punitive damages awarded, how would that part of the award be enforced? In a
civil action, the victim of a wrong has the entitlement to sue and to bring further
proceedings to enforce the award. However, he or she would have no incentive to
bring further proceedings for the enforcement of any part of the award that is to
go to the state. And certainly we would not favour a system whereby the claim of
the victim-plaintiff is rendered secondary to that of the state or of a public fund.
On the contrary, the claims of victim-plaintiffs should be the first to be satisfied
from any sums received from defendants or their insurers.
1.149 However, while unusual, we see no objection to giving the state (or public fund) a
right to enforce that part of the punitive damages award to which it is entitled. A
possible analogy is with the role of the Attorney-General, who possesses the legal
power to institute private law proceedings in his capacity as the guardian of the
public interest. In our view, therefore, there would be no objection (other than
cost, to which we have referred above), to conferring the right to enforce part of
punitive damages of 50% diversion. We believe that only the plaintiff should be able to
plead punitive damages - and not, for example, in addition some person or body like the
Attorney-General acting on behalf of the general public. To choose a 50-50 division might
have the unfortunate effect of suggesting that the victim and the public have equal stakes in
punitive damages awards, so that both should be capable of pleading or claiming them.
715 Arbitrariness is particularly inevitable, given that what is cost-effective cannot be
determined without knowing what the likely number and scale of awards will be; such
information will not be ascertainable with accuracy until any scheme has been in place for
some time; and the degree to which any figure fixed upon is arbitrary will depend on the
very variable behaviour of litigants.
716 See paras 5.148-5.149 below.
142