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. 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. Some policies specifically exclude coverage for punitive damages, while others rely on state laws. The Basics of Punitive Damages. Punitive damages have been part of the common law for hundreds of years. Historically, punitive damages were not available in Quebec civil law but are now provided for in certain legislation. Punitive damages Punitive or exemplary damages are generally only available in Canada where there is proof of malicious conduct on the part of the defendant. Health care providers, lawyers, adjusters, and brokers routinely face substantial punitive damage claims when they are named in an action. The insurer will tell the insured that the allegations against them in negligence are covered by the policy and that the insurer will defend the claim. 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. ; pecuniary Punitive damages in Canada Punitive or exemplary damages are generally only available in Canada where there is proof of malicious conduct on the part of the defendant. Pilot Insurance Co., [2002] 1 S.C.R. 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 allegations of intentional conduct seeking punitive damages, however, are not covered and there is no obligation on the part of the insurer to defend. It requires an “actionable wrong” in addition to the breach of contract. There are two sources of punitive damages in Canada – the Common Law and statutes. In 1969 the House of Lords in Rookes v. Barnard. Trans Canada Insurance Marketing (TCIM) is the proud recipient of the 2016 Five Star MGAs Award as published in Insurance Business Canada, Copyright © 2020. To search a specific page press ctrl+f while in that page. Required fields are marked *. Remaining independent in today’s marketplace is a tough ask of brokers. By accepting this notice and continuing to browse our website you confirm you accept our Terms of Use & Privacy Policy. This is an unsettled area of law in Canada. A highly-valued and requested resource guide, the Review provides an overview of constitutional and statutory limitations on punitive damages.It also summarizes the laws in each state. Currently, few insurance policies respond to claims for punitive damages. Both the Applicant and Respondent cited Stegenga v Economical Mutual Insurance Company2 in … (3d) 161, Ont CA 2006. , “ The Expanding Availability of Punitive Damages in Contract Actions ” (1975)8 Indiana L. Rev. a breach of the contractual duty of good faith is independent of and in addition to the breach of contractual duty to pay the loss) • Punitive damages may be awarded in situations where the defendant's misconduct is so If the plaintiffs are successful, the court may award both punitive and compensatory damages. The natural fear of being involved as a defendant in a lawsuit is not allayed. Like so many other states, the issue may be more complex and less clear than it is sometimes portrayed. The claim for punitive damages was advanced on the basis that Canada Life acted so inappropriately punitive damages were required. 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. The most often seen damages that are sought by victims of medical malpractice are punitive damages. The Ontario Court of Appeal found that punitive damages are available in motor vehicle accident cases in 2006. Often the target defendant is an insurer but the “statement of claim” usually seeks punitive damages against all defendants. According to the majority, "his was an exceptional case that justified an exceptional remedy." The Supreme Court of Canada in Whiten v Pilot Insurance Co. 1 reiterated that the three objectives of punitive damages are “retribution, deterrence, and denunciation”. All Rights Reserved. 1. The insured wants to be defended against all allegations. Court Some legal analysts speculate that the Supreme Court will provide guidance on which types of claims should properly attract punitive damages and which should not. Canadian punitive damage compensation: Some courts have relied upon public policy considerations to refuse to … What about the rise in punitive damage claims in other areas? We use cookies to make your website experience better. Punitive or exemplary damages are generally only available in Canada where there is proof of malicious conduct on the part of the defendant. 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. Search by keyword, across entire website. The purpose of a punitive damage award is to punish the defendant. Currently, the leading decision in this area is Whiten v. Pilot where Justice Binnie laid out the following principles: Punitive damages Are punitive damages insurable? 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. Punitive (or “exemplary”) damages are different in that their purpose is not to compensate but to punish someone for bad behavior. The more recent of the two Supreme Court of Canada decisions is Whiten v. Pilot Insurance Co., [2002] 1 SCR 595, 2002 SCC 18 (CanLII). 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. ; pecuniary. Aggravated damages, as distinguished from punitive. Learn more and download a copy.. A court may order an amount, in addition to the regular damages, because the plaintiff’s feelings were hurt due to the defendant’s behavior. In these times of social distancing and working from home, it’s become even more crucial to ensure strong cybersecurity measures are in place for you and your business. Characteristics of Medical Malpractice Punitive Damages that are Awarded in Canada. As the term implies, “punitive” damages are meant to punish the offending party rather than to compensate the plaintiff. Trans Canada Insurance Marketing Inc. Canada's FCA refuses to intervene in trial judge's decision with respect to punitive damages. Compensatory damages The worst aspect of this harsh reality is that the insured wonders why his insurer is not fully supporting him. Punitive damages remain rare in any type of Canadian tort case. Your email address will not be published. Therefore, whether or not punitive damages can be reinsured is ultimately determined by the terms of the policy. vated damages where the defendant's conduct was particularly blameworthy. A hard market. The leading cases on the award of punitive damages are two Supreme Court of Canada cases, both cited by Judge Yake in Wilderdijk-Streutker v Zhao (at paras 88-89).   Some of these states bar insurance if the act was intentional. It is an exception to the general principle that the purpose of a civil action is to compensate the plaintiff for his or her loss, not to punish the defendant. On September 23, 2020, the License Appeal Tribunal (“LAT”) released a ruling that it does not have jurisdiction to award punitive damages. 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. 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 … Insureds may even be willing to pay a small additional premium for this added protection and peace of mind. Aggravated damages are commonly described as being awarded for conduct which shocks the plaintiff, while exemplary awards are for conduct that shocks the court. Wawanesa Mutual Insurance Co.2 and moving on to more recent decisions in which claims for aggravated or punitive damages were made, a review of the caselaw reveals that the courts remain fairly conservative in their approach to such claims, and that the upper end of punitive damages established in Whiten v. February 1, 2001   Courts in Canada tend to be conservative with awarding punitive damages, however. Although some common law courts have expressed public policy concerns about the insurability of punitive damages in Canada, there are no statutory prohibitions against such coverage within such jurisdictions of Canada. The plaintiff appealed from that decision. The Court held that to determine the amount of punitive damages an employer is … The fast pace of technology and consolidation. Working from Home: Cybersecurity and the Remote Worker, What’s keeping insurance CEOs up at night, Another win for wedding vendors in a COVID cancellation dispute, Why an adjuster’s notes are out of bounds in this subrogation case, What brokers need to do to place hospitality coverage, Christmas movies that would benefit from insurance coverage, Defying The Grinch may cost your clients home insurance coverage, Why the D&O market will probably get harder. However, other courts approve insurance coverage for punitive damages, claiming that the deterrent effect of punitive damages has nothing to do with the insurance coverage itself and that the policy of insured, which covers all awarded damages, should be honored. 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. What is certain is that punitive damage claims are on the rise in Canada. ( Hockley v. • Punitive damages may only be awarded for breach of an independent actionable wrong. Thus, whether punitive damages are insurable in Indiana may not be a yes or no question. If the defence is going to be picked up anyway, why not provide for it specifically in the policy? 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. 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. When the statement of claim is passed to the insurer, the insurer often issues a “reservation of rights letter”. (i.e. Many observers hope that the Supreme Court may use this case to set a high water mark for punitive damages in an insurance action. Insurers anxiously await the ruling, which may not be released until late spring or early summer. The 2018 Punitive Damages Review provides an overview of constitutional and statutory limitations on punitive damages and summarizes the laws of each state, including: 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 Thankfully, there’s a way to keep your brokerage and level the playing field. Aggravated damages would (1981)685. Whiten v Pilot Insurance Co, 2002 SCC 18, 1 S.C.R. Some states prohibit insurance of punitive damages on the grounds that spreading the risk of punishment for willful misconduct lessens the deterrent effect. explore whether Mr. Smith is entitled to recover punitive damages, and if so, in what amount. Pilot Insurance Co., 2002 SCC 18 (CanLII), [2002] 1 SCR 595, the Supreme Court of Canada provided guidance on the formula for calculating punitive damages. Website Monitoring by BinaryCanary.com. The amount awarded, $1 million, was the highest punitive damage against an insurance company in Canadian history. The Whitens rented a nearby cottage and Pilot paid the rent for a few months and then stopped without giving notice to the Whitens or the adjuster. The case was McIntyre v.Grigg, 83 O.R. Twenty-three states permit insurance coverage for punitive damages assessed against the party that committed the egregious act. The defence agreement usually already stipulates that the policy will defend frivolous and vexatious claims and other claims without merit. In the last few decades, the SCC has repeatedly confirmed and approved the use of punitive damage awards in Canada. What does this do? 670; Cooper-Stephenson, K. and Saunders, I., Personal Injury Damages in Canada. Pilot appealed the decision. 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. What is the solution? 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. Both the Applicant and Respondent cited Stegenga v Economical Mutual Insurance Company 2 in their submissions as to whether the LAT has jurisdiction to award punitive damages. Punitive damages in Canada They are almost never awarded in negligence, which is the basis of Smith's claim. The insurer, try as they may to dispel the insured’s fears, can not state that they are defending the punitive damages claim. Some policies specifically exclude coverage for punitive damages, while others rely on state laws. 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. 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. What is certain is that punitive damage claims are on the rise in Canada. The trial jury found that Pilot had acted reprehensibly throughout the handling of the claims file and awarded punitive damages. They refer to breach of contract situations specifically suited to punitive damage awards, first party claims by an insured against an insurer, and breach of employment contract or wrongful dismissal situations. Punitive damages are intended as a deterrence. Your email address will not be published. The formal distinction is that aggravated damages are given to compensate the plaintiff when the harm done to him by a wrongful act was aggravated by the manner in which the act was done; As the term implies, “punitive” damages are meant to punish the offending party rather than to compensate the plaintiff. Ferme Gérald Laplante & Fils Ltée v. Grenville Patron Mutual Fire Insurance Co. Ontario: 2002: Punitive Damages: Jury award of $725,000 set aside. Insurers still may have to issue reservation of rights letters to the insured cautioning them that any award of punitive damages would not be covered under their policy but they will, with the assistance of the insured, vigorously defend punitive and other damage claims. 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. 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. Insurance Corp. of British Columbia, [1989] 1 SCR 1085, the Supreme Court of Canada observed that conduct meriting punitive damages awards must be: “harsh, vindictive, reprehensible and malicious”, as well as “extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment”. Some states prohibit insurance of punitive damages on the grounds that spreading the risk of punishment for willful misconduct lessens the deterrent effect. Such nagging doubts do not help in the defence of the case. For example, in Georgia 75 percent of any punitive award is to be paid to the Georgia State Treasury. The Test for the Award of Punitive Damages. The case related to the oppressive conduct of an insurance company in dealing with the policyholders' claim following a fire. Not only do they dispute that a negligent error or omission was made, they vehemently dispute that they acted vindictively against the plaintiff. This is cold comfort to a nervous insured who sees the six-figure damages claims under the heading of punitive damages. Can he trust the counsel appointed by the insurer? Why should a punitive damage claim be an exception? Although no rule prohibits punitive damag-es in negligence, the authorities are few and cautious. Punitive damages cannot generally be awarded in contract disputes. by Jim Cameron of Cameron & Associates Insurance Consultants Ltd. Just before Christmas, the Supreme Court of Canada heard argument in the case of Whiten v. Pilot. 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. Keith and Daphne Whiten discovered a fire in their house as they were going to bed and escaped in their nightclothes in -18oC weather. Provide insurance coverage on all professional liability and CGL policies for defence costs for punitive damage claims. Save my name, email, and website in this browser for the next time I comment. exemplary / punitive damages, on the other, are intended to punish the defendant, and presumably to serve one or more of the objects of punishment – moral retribution or deterrence. If the insured was not at least negligent, how can the conduct complained of be vindictive, willful or malicious to be worthy of attracting punitive damages? 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. The table below shows the insurability of punitive damages by state. Punitive damages are intended as a deterrence. Smith must 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. 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). In practice, insurers usually cannot and will not segregate or allocate defence costs between those incurred for the punitive damage defence and those costs incurred for covered claim defences. 595 is a leading Supreme Court of Canada decision on the availability of punitive damages in contract. 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