Punitive Damages are awarded to Punish Liable Persons for Reprehensible Conduct

Posted by Injury Lawyers of Ontario on January 09, 2016


When do the courts award punitive damages in an a claim for injury compensation?

Punitive damages are intended to express condemnation and punish a defendant whose actions or inaction are particularly malicious or egregious.  In this respect, punitive damages differ from the usual damages that are awarded to an injured person to compensate them for losses arising from their injury. Compensatory damages commonly awarded in civil cases and negligence suits include compensation for financial losses (pecuniary losses) such as loss of income and rehabilitation expenses and compensation for a reduction in the quality of life and pain and suffering (non-pecuniary losses).

As defined in a landmark case, Whiten v. Pilot Insurance Co., 2002, “The purpose of the [tort law] part of our legal system remains to make good the loss suffered, no less, no more.”  This objective is considered to be fulfilled when an accident victim who was seriously injured by a negligent party receives fair compensation to allow them to function, as much as possible, the way they did prior to their injury.  By contrast, the objective in a punitive damage award is “retribution, deterrence and denunciation”.

In Canadian law, there is a recognition that punishment should be carried out by our criminal laws and regulations.  Accordingly, punitive damages in civil actions are awarded only in exceptional cases, in order to both punish the particularly egregious action and also prevent similar future behaviour by the wrongdoer and other members of society.

Illustrative Ontario cases where punitive damages were awarded

In a landmark case, Whiten v. Pilot Insurance Co., [2002], The Supreme Court of Canada awarded a punitive damage of $1 Million against the insurer in recognition of their failure to meet an obligation of good faith and fair dealing. This $1 Million punitive damage award restored the amount initially awarded by the Provincial Court in a trial by jury, but which the Ontario Court of Appeal reduced to $100,000. The Supreme Court concluded that the insurer’s actions in this instance were exceptional and, although the $1 Million amount is unusually high, it is within acceptable limits.  The decision to award punitive damages was considered rational in this case, given the evidence that the claimants were exploited and unfairly opposed in settling their claim after having purchased a fire insurance policy in good faith.

In January 1994, the Whiten family home in Haliburton County, Ontario, burned down during the night in minus 18 Celsius temperatures.  The husband, wife and their daughter escaped in their pajamas, but lost all the contents of their home and their three cats. Mr. Whiten suffered severe frostbite on his feet, for which he was hospitalized.  Pilot Insurance made a one-time $5000 payment for living expenses and covered their rent in a winterized cottage for a few months, then discontinued paying without informing the family. The family’s financial situation became increasingly desperate over the more than two years, during which Pilot delayed settling their claim. This situation led to a prolonged eight week trial in which the insurer alleged that the family burned down their own home, although experts including the fire chief and insurer’s own investigator found no evidence of arson.

Pilot’s case was discredited during the trial.  The Whiten family was awarded compensatory damages by the Jury as well as $1 million in punitive damages. The Court concluded “the insurer’s conduct towards the [Whitens] was exceptionally reprehensible.” The family was forced to accumulate $320,000 in legal costs they did not have.  It was held that denial of the claim was deliberate with the intention to force the family to take an unfair and undervalued settlement. The Jury also concluded that the insurer knew all along that arson was not the cause of the fire and were counting on the fact that the devastated family would be unable to challenge the wrongful dismissal of their claim.

The Supreme Court found that the Jury’s response to the facts presented in the initial trial was rational in their conclusion that Pilot should not get away with paying only the amount of the claim that was originally due (plus costs), after having dragged out the claim for so long. The Supreme Court found no good reason to challenge the original Jury decision that something more was needed (in the form of a substantial punitive award) to show the insurance company that dealing in bad faith with the loss claim was not a profitable or wise course of action.

In McIntyre v. Grigg. (2006), the Ontario Court of Appeal reduced the punitive damages that were initially awarded by a jury in a lower court from $100,000 to $20,000.  Although the impaired driver’s actions were viewed as reckless, his actions were an isolated event and not aimed at the injured woman.  The judge concluded that the defendant’s drinking and driving behaviour was not extreme. “As deplorable as the reality is, personal injuries arising from impaired driving cases are far from exceptional in our society”, and therefore, a large punitive award was not deemed appropriate in this case.

In 1996, a young McMaster University student was struck by a car while she was walking along the curb with friends after attending the campus pub. The young woman was a competitive athlete prior to the accident, but the physical (including a head and brain injury, soft tissue damage and multiple orthopaedic injuries) as well as psychological injuries resulting from the car accident had a devastating impact on her physical capabilities and mental health. Mr. Grigg, the driver of the vehicle, was intoxicated and allegedly speeding when he recklessly turned a corner and struck Ms. Mcintyre. A breathalyser test revealed a blood alcohol concentration (BAC) three times the legal limit. Mr. Grigg had been drinking at the campus pub, but this was apparently the third bar he had attended that evening.  The McMaster Student Union responsible for managing the pub was named as a joint defendant for their role in serving alcohol to the intoxicated driver. The $20,000 in punitive damages were payable solely by the Griggs, and $250,000 in general damages were to be shared by the co-defendants.

In Pate Estate v. Galway-Cavendish and Harvey (Townships), 2011, the Ontario Superior Court awarded punitive damages of $550,000 in a re-trial of a wrongful dismissal action and also found the municipality liable for malicious prosecution against Mr. Pate. The municipality was unsuccessful in their appeal of this substantial punitive amount in a higher court. The amount of punitive damages was based on the similarity of this case to McNeil v. Brewers Retail Inc. where punitive damages of $500,000 were awarded.

Gordon Pate was Chief Building Official for Galway-Cavendish Township until it amalgamated with Harvey Township, when he became a building inspector for the amalgamated Townships. Soon after the amalgamation, Mr. Pate was fired by his employer who alleged that they discovered discrepancies with building permit fees.  Prior to being fired, Mr. Pate was pressured to resign to avoid criminal charges, but he was never provided details on the alleged discrepancies. He refused to resign and was subsequently terminated, and some information was turned over to the Ontario Provincial Police (OPP).  OPP were reluctant to lay charges but were allegedly pressured to do so by the Township.  In a four day criminal trial in 2002, Mr. Pate was acquitted of all charges, after having endured much negative local media attention. Mr. Pate did not obtain municipal employment after the trial and passed away in 2011.

In a Dec 2009 trial, Mr. Pate sued the Township for wrongful dismissal, malicious prosecution, injuries to his reputation and other charges. The judge rejected the malicious prosecution claim but awarded Mr. Pate special damages and costs of almost $280,000, excluding the wrongful dismissal settlement paid by the Township. This decision was appealed, the result of which was to order a re-trial. Upon re-trial, the judge found significant misconduct on behalf of the defending municipality, which persisted over a ten year period.  The municipality’s actions, which were deemed intentional and foreseeable against the plaintiff, had a devastating effect on Mr. Pate’s life including his marriage and employability.  These findings were the basis of the $550,000 punitive damages award.

In a defamation of character case, Hill v. The Church of Scientology, 1992, the jury awarded punitive damages of $800,000, an amount which was upheld on Appeal. (General damages of $300,000 and aggravated damages of $500,000 were also awarded to Mr. Hill)  A Crown Attorney, Mr. Hill sued the Church of Scientology after a church representative announced at a press conference in front of a Toronto courthouse, that Mr. Hill had misled a judge and breached a court order sealing church documents. These allegations were determined to be unsubstantiated and untrue.  The compensation in this case, which totalled $1.6 Million, was the largest libel award in Canadian history, until a 2008 court awarded $3 Million for defamation to a pilot, Rick Fennimore.

When the actions of a liable person are significantly and unusually deplorable so as to warrant punitive damages, it remains the responsibility of judge or jury to decide the appropriate amount of damages. In Whiten v. Pilot Insurance Co., the Supreme Court of Canada set out that when the amount awarded for punitive damages is added to the amount awarded for compensatory damages, it must add up to an amount which is reasonably required to punish the wrongdoer. Further, the amount should be in proportion to the blameworthiness of the defendant’s actions; therefore, the more reprehensible the actions, the potentially larger the award.   

Although punitive damages are generally only awarded in cases of unusually offensive conduct, the courts may decide on punitive damages if they are deemed necessary to ‘send a message’ to the ‘at fault’ person. Whether or not punitive damages are appropriate for your case, if you were seriously injured by someone’s negligent actions, you are entitled to compensatory damages for any financial losses you are experiencing as well as for loss of enjoyment in life.  Call an experienced Injury Lawyers of Ontario (ILO) personal injury lawyer to learn about your entitlement to compensation.  Our expert staff will provide you with valuable information on your best options given your unique circumstances, and in most cases, initial consultation is free.

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