Aggravated, Exemplary and Restitutionary ... - Law Commission

the punitive damages award on the Attorney-General (on behalf of the state) or on
the trustees of the relevant public fund. 717
(iii) Settlements
1.150 Perhaps the most serious difficulty with the 33% diversion suggestion would be the
tactical incentives created by such a scheme. In order to catch all punitive awards
it would be necessary for the scope of the scheme of diversion to include
settlements. The primary difficulty is that where damages are settled by means of
agreement between the parties, rather than by a court, the true nature of such
damages can be distorted. In particular the incentive is likely to be for the parties
to overstate the size of the compensatory (or restitutionary) damages award, so as
to avoid diversion of any relevant part of the punitive damages award. On the
other hand, one can argue that, as a counter-balance to the expansion of the scope
of punitive damages, it is desirable to provide plaintiffs with an incentive to settle
out-of-court.
(b) Some further problems of principle & policy raised on consultation
1.151 Three further problems with awarding part or all of punitive damages to the state
were put to us by consultees. We consider that each is plainly surmountable.
(i) “If the state takes part of a punitive damages award, it is imposing a fine”
1.152 Some consultees objected that for the state to take part of a punitive damages
award is tantamount to imposing a fine at the instigation of an individual; this
would constitute an unsatisfactory confusion of the criminal law and the civil law.
1.153 We are unconvinced by this. The first, essentially presentational concern, can be
met by using the award in support of a valuable social cause. An often used
justification for the availability of punitive damages is that they are necessary to
enable plaintiffs fully to vindicate their rights which the defendant has infringed. It
would be consistent with this, for example, to utilise any part of the award diverted
by the state in the advice and even the financial assistance of other victims of civil
wrongs. The second is to concede the analogy, but to deny its significance. All
punitive damages, whether payable to the state or not, can be regarded as a type of
fine.
(ii) “It infringes the rule that plaintiffs can do what they want with their damages”
1.154 It is a fundamental rule underlying the awarding of damages within the civil law
that plaintiffs are entitled to use any damages they are awarded as they wish; this is
infringed, it is argued, by requiring plaintiffs to pay all or any part of their award to
a public fund.
1.155 However, this argument fails to recognise the distinctive, hybrid nature of a
punitive damages award, and in any case is somewhat circular. 718
To assert that
717 A possible approach (which we do not prefer) would be to leave the enforcement of punitive
damages to the court of its own motion, by, for example, appointing a court officer to
supervise compliance.
718 The principle is not even of universal application in relation to compensatory damages: see,
for example, Hunt v Severs [1994] 2 AC 350. In that case the House of Lords held that a
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