595, 2002 SCC 18 [Whiten] explained the role of punitive damages in bad faith claims: An award of punitive damages in a contract case, though rare, is obtainable. Canadian punitive damage compensation: The dwelling and all their belongings were destroyed and their three cats died in the fire. The insured wants to be defended against all allegations. As an adjunct to the fundamental compensatory basis of personal injury damages awards, Canadian courts can also make non-compensatory awards in the form of exemplary or punitive damages in circumstances warranting censure and punishment of the defendant.2 The allegations of intentional conduct seeking punitive damages, however, are not covered and there is no obligation on the part of the insurer to defend. In the common law provinces, we frequently see the courts sanction insurers for showing bad faith in how they manage an insured’s claim by ordering them to pay punitive damages. Insurers now await the result of the appeal, wondering what impact the proliferation of punitive damage cases may have on the industry and if the unprecedented size of the Whiten award is a sign of things to come. A punitive damage award is not available to an employee whose has suffered discrimination at the hands of his or her employer in breach of the Human Rights Code. 670; Cooper-Stephenson, K. and Saunders, I., Personal Injury Damages in Canada. We use cookies to make your website experience better. Punitive damages are intended as a deterrence. • Punitive damages may only be awarded for breach of an independent actionable wrong. Your email address will not be published. The Applicant filed a motion to the LAT requesting that a claim for punitive damages be added as an issue in dispute on the basis of an alleged privacy breach. They are almost never awarded in negligence, which is the basis of Smith's claim. Punitive damages have been part of the common law for hundreds of years. Pilot Insurance Co. ignored the recommendation of their independent adjuster to pay the claim and, despite conclusions of the fire chief at the scene and an engineer they hired to the contrary, took the position that the fire was incendiary and that the Whitens committed arson, disentitling them to coverage. Canadian courts are generally careful in exercising their discretion to award these damages, which are an exception to the time-honored principle that civil damages seek to compensate the victim. Both the Applicant and Respondent cited Stegenga v Economical Mutual Insurance Company2 in … Save my name, email, and website in this browser for the next time I comment. The reasoning of the majority of the Ontario Court of Appeal explores the history of punitive damage awards in Canada and appears to follow a rationale that such awards should be restricted to the most severe cases. This is an unsettled area of law in Canada. The most often seen damages that are sought by victims of medical malpractice are punitive damages. The case related to the oppressive conduct of an insurance company in dealing with the policyholders' claim following a fire. Although no rule prohibits punitive damag-es in negligence, the authorities are few and cautious. Skillful plaintiffs’ counsel may attempt to capitalize on this wedge between the insurer and its insured by continually raising the specter of the punitive damages claim. The case was McIntyre v.Grigg, 83 O.R. While actual awards have been minimal, usually less than $25,000, punitive damages are sought in legal pleadings in virtually every insurance case and in many others. According to the majority, "his was an exceptional case that justified an exceptional remedy." It is normally reserved for cases in which the insurance companies acted in manners that were especially egregious. 2 Although discrimination cases occasional involve acts by an employer that are so malicious that it would normally attract an award of punitive damages, the Supreme Court of Canada held in Honda Canada Inc. v Keays 3 that the Code is a … When the statement of claim is passed to the insurer, the insurer often issues a “reservation of rights letter”. The insurer, try as they may to dispel the insured’s fears, can not state that they are defending the punitive damages claim. Immediately the insured becomes concerned that the insurance policy does not provide him or her with adequate protection for this lawsuit. Currently, the leading decision in this area is Whiten v. Pilot where Justice Binnie laid out the following principles: Punitive damages Punitive (or “exemplary”) damages are different in that their purpose is not to compensate but to punish someone for bad behavior. Pilot appealed the decision. Money awarded in a civil lawsuit to make an injured person whole, including recompense for damaged property, lost wages or profits, pain, bereavement, medical expenses, etc. Damages awarded in a civil lawsuit in order to punish wrongdoing of a greater culpability than simple negligence, without regard to compensating the plaintiff’s actual loss. A hard market. Working from home can pose its own challenges and takes adjusting to; the last thing anyone would want is a cyber breach to occur at the same time. In the last few decades, the SCC has repeatedly confirmed and approved the use of punitive damage awards in Canada. Money awarded in a civil lawsuit to make an injured person whole, including recompense for damaged property, lost wages or profits, pain, bereavement, medical expenses, etc. The plaintiff appealed from that decision. In 1969 the House of Lords in Rookes v. Barnard. The insured wonders about the potential of a punitive damage award that not only might irreparably damage their reputation but cause financial ruin. explore whether Mr. Smith is entitled to recover punitive damages, and if so, in what amount. The Ontario Court of Appeal, with Justice Laskin dissenting, allowed the appeal in part by substituting the sum of $100,000 for the punitive damages award. Pilot Insurance Co., [2002] 1 S.C.R. recovery of punitive damages through taxation of the punitive award and/or by statute requiring a percentage of the award be paid directly to a state agency. Some policies specifically exclude coverage for punitive damages, while others rely on state laws. 595 is a leading Supreme Court of Canada decision on the availability of punitive damages in contract. The Ontario Court of Appeal found that punitive damages are available in motor vehicle accident cases in 2006. The table below shows the insurability of punitive damages by state. The insurer needs the full commitment, cooperation and trust of the insured to properly investigate and defend the covered allegations. Some states prohibit insurance of punitive damages on the grounds that spreading the risk of punishment for willful misconduct lessens the deterrent effect. The original trial jury heard evidence that lead them to conclude that Pilot acted in bad faith against its insured Whiten and awarded punitive damages of $1 million against the insurance company. Some courts have relied upon public policy considerations to refuse to … The 2018 Punitive Damages Review provides an overview of constitutional and statutory limitations on punitive damages and summarizes the laws of each state, including: Trans Canada Insurance Marketing Inc. What the insurer will say is that the allegations against the insured of negligent acts or omissions will be defended and unless this defence is unsuccessful, there would be minimal chance of a finding of punitive damages. The fast pace of technology and consolidation. Some states prohibit insurance of punitive damages on the grounds that spreading the risk of punishment for willful misconduct lessens the deterrent effect. Courts in Canada tend to be conservative with awarding punitive damages, however. The natural fear of being involved as a defendant in a lawsuit is not allayed. Punitive damages cannot generally be awarded in contract disputes. The court did something similar in a trilogy of cases in 1978 that still imposes a ceiling on non-pecuniary general damage awards of $100,000 in 1978 dollars (now adjusted for inflation to slightly over $250,000). Damages awarded in a civil lawsuit in order to punish wrongdoing of a greater culpability than simple negligence, without regard to compensating the plaintiff’s actual loss. Insureds may even be willing to pay a small additional premium for this added protection and peace of mind. What does this do? Not only do they dispute that a negligent error or omission was made, they vehemently dispute that they acted vindictively against the plaintiff. Characteristics of Medical Malpractice Punitive Damages that are Awarded in Canada. Often the target defendant is an insurer but the “statement of claim” usually seeks punitive damages against all defendants. compensation for a person’s out-of-pocket losses and future expenses due to injury, disability, disfigurement, pain and suffering, and all actual losses, whether economic or non-economic. (3d) 161, Ont CA 2006. ; pecuniary. Like so many other states, the issue may be more complex and less clear than it is sometimes portrayed. Aggravated damages would Required fields are marked *. On September 23, 2020, the License Appeal Tribunal (“LAT”) released a ruling that it does not have jurisdiction to award punitive damages. Whiten v Pilot Insurance Co, 2002 SCC 18, 1 S.C.R. It seems that there is a growing trend to seek punitive damages from a defendant in almost any situation where a contractual duty of care or intentional conduct is argued. 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