Insured Punishment: Lamb v Cotogno 

Abstract

This piece examines the potentially paradoxical question of whether it is (or should be) possible for a wrongdoer to insure himself or herself against an award of punitive damages. It does so through a detailed examination of the curious case of Lamb v Cotogno, decided by the High Court of Australia in 1987, in which a punitive award was upheld against a defendant who was assumed by all concerned to be fully insured for his tortious wrong. 

The piece suggests that the reasons given by the High Court in that case for upholding the award (general deterrence of others, the prevention of vigilantism and the award's expressive, condemnatory value) are strained, to say the least, and that, when the pleading and proceedings of the case are properly understood,  a modest sum of aggravated compensatory damages would have been much more appropriate. Although the precise question asked in Lamb is unlikely to be repeated in Australia any time soon, the High Court's reasoning about the underlying justifications for awards continues to have reverberations about the way in which they are understood in a wider range of cases. 

The piece contains insights and historical material gratefully gleaned from two counsel who were originally party to the pleading of the case and defence in Lamb. It also contains a  wider-ranging review of the insurability of punitive awards across a broader range of common law jurisdictions, both as a matter of fact and law.  It further considers which, if any, of the aims of 'punishment' remain credibly achievable when the persons punished is insulated against an award's  financial effects. 

Keywords: punishment, punitive damages, insurance, Lamb v Cotogno, exemplary damages