Claiming Punitive Damages
Has Allegations of Misconduct That Have to Be Recanted
Page last modified : December 08 2023
What Kind of Case Is Fit for a Punitive Damage Award?
In a case where the court determines that the defendant's misconduct was so egregious that monetary penalties are a suitable way to denounce the behavior and if the compensation awarded is insufficient to serve as a deterrent, punitive damages may be awarded.
Knowing When It's Time to File a Punitive Damages Claim to Discourage Severe Misconduct
Punitive damages awards are rare in Canadian courts, but they might be granted in situations when the detrimental behavior was intentionally done in order to denounce the offending behavior.
The Law
In certain cases, the amount of compensation granted might not be considered adequate to address misconduct that was particularly heinous, oppressive, or high-handed, in which case a punitive award would be considered a necessary and acceptable supplementary reward. In the decisions of Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595, and Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130, the Supreme Court articulated the explicit goal of punitive awards.
196 When the defendant’s actions are so heinous, oppressive, and conceited that they violate the court’s moral standards, punitive damages may be granted. Punitive damages have no bearing on the appropriate amount of compensation for the plaintiff. Their goal is to punish the offender, not to make amends to the plaintiff. It is a way for the jury or judge to show how appalled they are by the defendant’s heinous actions. They are similar to fines, with the intention of discouraging the offender and others from acting in the same way. It is crucial to stress that punitive damages need to be granted exclusively in situations when the aggregate verdict of general and aggravated damages
36 Punitive damages are granted in extraordinary circumstances when the defendant engages in behavior that “offends the court’s sense of decency” and is “malicious, oppressive, and high-handed”: Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC), [1995] 2 S.C.R. 1130, at para. 196. As a result, the test restricts the award to wrongdoing that clearly deviates from accepted norms of acceptable behavior. Punitive damages lie on the border between civil law (compensation) and criminal law (punishment), with their goal being to punish the offender rather than to recompense a plaintiff (whose appropriate compensation will already have been determined).
Punitive damages may be awarded as a means of ensuring punishment for the Defendant rather than as a means of compensating the Plaintiff, as the Supreme Court clarified in the aforementioned Hill and Whiten cases. As such, an award of punitive damages should only be considered after determining the amount of compensation that the Plaintiff is entitled to, with a key question being whether the compensation is sufficient to deter future similar conduct or whether punitive damages are required as a means for the court to send the appropriate message.
Availability
Punitive damages may be awarded in any type of lawsuit (a cause of action is the legal basis for filing a lawsuit). As a result, when the situation calls for it, punitive damages may be awarded in lawsuits involving contract breaches, tortious behavior, or other matters. In fact, according to the cases mentioned above, a contract violation occurred in the Whiten case and a tort of defamation occurred in the Hill case. In Whiten, the Supreme Court addressed the argument that, in accordance with the earlier precedent set by Vorvis v. Insurance Corporation of British Columbia, [1989] 1 S.C.R. 1085, punitive damages must be awarded for independently committed wrongdoing in addition to contract violations.
78 This, as noted, is a break of agreement case. This Court ruled in Vorvis that punitive damages are recoverable in such cases if the defendant’s alleged behavior is itself “an actionable wrong” (p. 1106). The degree to be given this articulation is the edge question for this situation, i.e., is a break of a guarantor’s obligation to act with sincere intentions a significant wrong free of the misfortune guarantee under the fire insurance contract? Vorvis itself was a case about the business’ break of a work contract. This is the way McIntyre J. outlined the standard at pp. 1105-6:
When then, at that point, could correctional harms at any point be granted? Never lose sight of the fact that a person is punished by a court as a result of the judicial process when a sentence is handed down by a judge or jury. Would could it be that is rebuffed? It most likely can’t be only direct of which the Court objects, but firmly the adjudicator might feel. Discipline may not be forced in a humanized local area without a legitimization in regulation. The main reason for the burden of such discipline should be a finding of the commission of a noteworthy wrong which caused the injury whined of by the offended party. [ Accentuation added.]
According to McIntyre J. (p. 1106), this viewpoint “has found approval in the Restatement on the Law of Contracts 2d in the United States,” as follows:
Correctional harms are not recoverable for a break of agreement except if the lead comprising the break is likewise a misdeed for which reformatory harms are recoverable. [ Accentuation added.]
Applying these standards in Vorvis, McIntyre J. expressed, at p. 1109:
Each party reserved the option to fire the agreement without the assent of the other, and where the work contract was fired by the business, the litigant was qualified for sensible notification of such end or installment of pay and advantages for the time of sensible notification. The end of the agreement on this premise by the business is certainly not a wrong in regulation and, where the sensible notification is given or installment in lieu thereof is made, the offended party — dependent upon a thought of irritated harms which have been permitted at times however which were denied for this situation — is qualified for no further cure . . . . [ Accentuation added.]
Wilson J., with whom L’Heureux-Dubé J. agreed, disagreed. She disagreed “that corrective harms must be granted when the offense is in itself an ‘significant wrong'”. She expressed, at p. 1130:
The best course of action, in my opinion, is to evaluate the behavior in light of all the circumstances and determine whether it merits punishment due to its shockingly harsh, vengeful, reprehensible, or malicious nature. Without a doubt some direct observed to be meriting discipline will comprise a significant wrong however other lead could not.
Furthermore, punitive damages may be awarded even in the absence of a compensatory damages award, as the Divisional Court clarified in Utilebill Credit Corp. v. Apex Home Services Inc., 2021 ONSC 4633, where it was stated:
[109] Utilebill depends on Pinks v. Bhatia, 2017 ONSC 3742 at para. 31 for the argument that a defendant cannot be required to pay punitive damages unless they are also found liable for general or special damages due to a primary cause of action. Pinks emerged from a mortgagee’s preposterous activities in deal procedures. The mortgage discharge statement contained erroneous and excessive charges, among other issues. The mortgagee, Bhatia, and the mortgagee’s legal advisor, Silver, were seen as mutually obligated for reformatory harms by the little cases court preliminary appointed authority.
[110] Equity Kiteley said at para. 34:
Without a legally binding relationship or other relationship that led to an obligation of care, there is no reason for viewing as Silver responsible for any harms, and without even a trace of a finding of essential responsibility, he can’t be seen as at risk for a free significant wrong.
[111] Here, Ms. Stevenson’s position in regards to the agreement was justified. Utilebill’s work to depend on the agreement as a trustee to a tenant contract totally fizzled. Further, as I expressed in passage [13] above, Utilebill was involved with the agreement. Silver was neither a chosen one nor involved with the agreement. The situation isn’t identical to Pinks.
[112] Additionally, this section on the subject can be found in Waddams on Damages, supra, at 11.370:
The amount of punitive damages is not related to the plaintiff’s actual loss; in fact, exemplary damages may be awarded even if the plaintiff has not suffered any losses at all. It is, nonetheless, fundamental that the offended party has a free reason for activity against the respondent, or, more than likely an individual totally unaffected by the litigant’s direct could sue for commendable harms. Master Devlin said on this point: ” the offended party can’t recuperate model harms except if he is the casualty of the culpable way of behaving. If a plaintiff who was completely unaffected by some oppressive behavior that the jury wanted to punish received exemplary damages, the anomaly would become absurd. Accentuation added, commentaries omitted.]
Assessment
Regarding figuring out how much punitive damages should be awarded, the Midwest Amusement Park, LLC v. Cameron Motorsports Inc., 2018 ONSC 4549 case provided a clear summary of the Whiten case’s rationale for both granting punitive damages and figuring out how much of an award should be made. In Midwest, it was spoken explicitly, mentioning Whiten:
[101] Reformatory harms are just granted in uncommon circumstances. In most cases, punitive damages are taken into consideration when the defendant’s conduct is so barbaric, oppressive, and overbearing as to offend the court’s sense of decency. Correctional harms bear no connection to what the offended party ought to get via pay. Their point isn’t to repay a party, but instead to rebuff somebody. It is the means by which a court communicates its shock at what it thinks about grievous direct of a party.
[102] In the main instance of Brighten v. Pilot Protection Co., the High Court of Canada reestablished a reformatory harms grant of $1 million made by a jury in an activity against a back up plan who had penetrated its obligation of entirely honest intentions and fair managing to its safeguarded. At para. 94 of his judgment, Equity Binnie depicted how to train a jury about correctional harms; he expressed:
94. [ I]t would be useful assuming the preliminary appointed authority’s charge to the jury included words to convey a comprehension of the accompanying places, even at the gamble of some reiteration for accentuation. ( 1) Correctional harms are a lot of the exemption as opposed to the standard, (2) forced provided that there has been overbearing, malignant, erratic or profoundly indefensible wrongdoing that withdraws to an obvious degree from common norms of good way of behaving. ( 3) If punitive damages are awarded, they should be assessed in proportion to the harm done, the level of misconduct, the plaintiff’s relative vulnerability, and any advantage or profit the defendant has gained, taking into account any other fines or penalties the defendant has received for the misconduct in question. 5) Corrective harms are by and large given just where the wrongdoing would somehow or another be unpunished or where different punishments are or alternately are probably going to be insufficient to accomplish the targets of revenge, discouragement and censure. ( 6) Their motivation isn’t to repay the offended party, however (7) to give a litigant their simply desert (retaliation), to hinder the respondent and others from comparable wrongdoing later on (prevention), and to stamp the local area’s aggregate judgment (condemnation) of what has occurred. ( 8) Reformatory harms are granted just where compensatory harms, which somewhat are correctional, are deficient to achieve these goals, and (9) they are given in a sum that is no more prominent than needed to achieve their motivation soundly. ( 10) Although the state would normally pay any fines or penalties for misconduct, the plaintiff will keep punitive damages in addition to compensatory damages as a “windfall.” 11) Judges and juries in our framework have typically found that moderate honors of correctional harms, which unavoidably convey a disgrace in the more extensive local area, are by and large adequate.
[103] It follows from Equity Binnie’s comments that an appraisal of reformatory harms requires an enthusiasm for: ( a) the level of wrongdoing; ( b) how much mischief caused; ( c) the accessibility of different cures; ( d) the measurement of compensatory harms; and (e) whether or not compensatory damages are sufficient to accomplish the goals of retaliation, deterrence, and denunciation. These variables should be known to guarantee that corrective harms are reasonable and to guarantee that how much reformatory harms isn’t more noteworthy than needed to achieve their motivations.
[104] Prior in his judgment, at para. 74, Equity Binnie expressed:
[T]he administering rule for quantum is proportionality. The objectives for which punitive damages are awarded (retribution, deterrence, and denunciation) should be rationally related to the overall award, which includes compensatory damages, punitive damages, and any other punishment related to the same misconduct.
[105] Later in his judgment, at para. 100, he expressed: ” The sanity test applies both to whether or not an honor of correctional harms ought to be made by any means, as well regarding the subject of quantum.”
Pleading Punitive Damages
Given everything that has been said so far regarding the circumstances under which punitive damages may be claimed as well as the manner in which these claims are evaluated by the courts, it is critical that a plaintiff requesting punitive damages accurately articulate the foundation for the claim as well as any pertinent facts. It is the Plaintiff’s responsibility to make sure the Defendant is aware that punitive damages are a hot topic. The Supreme Court has said specifically that:
86 There is some case regulation that says a case for corrective harms need not be explicitly argued as it is incorporated reasonably in a case for general harms: Ian Shemesh. Harris-Intertype (Canada) Ltd. (1983), 1983 CanLII 1611 (ON SC), 40 O.R. (2d) 558 (H.C.), aff’d (1984), 1984 CanLII 2070 (ON CA), 9 D.L.R. (fourth) 319 (Ont. C.A.); Grenn v. Brampton Poultry Co. (1959), 1959 CanLII 394 (ON CA), 18 D.L.R. (2d) 9 (Ont. C.A.), Starkman v. Delhi Court Ltd. (1960), 1960 CanLII 413 (ON SC), 24 D.L.R. (2d) 152 (Ont. H.C.), aff’d (1961), 1961 CanLII 195 (ON CA), 28 D.L.R. (2d) 269 (Ont. C.A.); Gastebled v. Stuyck (1973), 12 C.P.R. (2d) 102 (F.C.T.D.), aff’d (1974), 15 C.P.R. (2d) 137 (F.C.A.); Paragon Properties Ltd. v. Magna Envestments Ltd. (1972), 1972 ALTASCAD 8 (CanLII), 24 D.L.R. (3d) 156 (Alta. S.C., App. Div.). In my view, the idea that no arguing is fundamental ignores the essential suggestion in our equity framework that before somebody is rebuffed they should have early notification of the charge adequate to permit them to consider the extent of their risk as well as the chance to answer it. This can only be guaranteed if the claim for punitive damages, as opposed to compensatory damages, is not buried under a reference to general damages. This standard, which is actually something like a standard of reasonableness, is made unequivocal in the common guidelines of a portion of our preliminary courts. According to Rieger v. Burgess, 1988 CanLII 209 (SK CA), [1988] 4 W.W.R. 577 (Sask.), the Queen’s Bench Rules in Saskatchewan, for instance, require that claims for punitive damages be explicitly pleaded and specify the misconduct that is claimed to give rise to such damages. C.A.); Lauscher v. Berryere (1999), 1999 CanLII 12242 (SK CA), 172 D.L.R. (fourth) 439 (Sask. C.A.)). Rule 25.06(9) of the Ontario Rules of Common Strategy additionally expects that corrective harms claims be explicitly argued. It is very common, obviously, for the coloring of a case to develop over the long run, yet an arguing can constantly be corrected on conditions during the procedures, contingent upon the presence and degree of bias not compensable in costs, and the equity of the case.
87 A statement of claim’s purpose is to inform the defendant of the case it must face. If, at the end of the day, the defendant receives an award that is multiples of what it thought was the amount at issue, this is clearly unfair. Additionally, the realities said to legitimize correctional harms ought to be begged some disposition. Although they are apt to capture the essence of the remedy, the time-honored adjectives describing conduct as “harsh, vindictive, reprehensible, and malicious” (per McIntyre J. in Vorvis, supra, p. 1108) or their pejorative equivalent are conclusive rather than explanatory.
88 It will be up to the specifics of each case to determine whether a defendant was actually taken by surprise by a weak or defective pleading.
Summary Comment
Punitive damage awards are uncommon in legal cases because they are only granted in situations when the misconduct that gave rise to the lawsuit was extremely heinous and where the compensation awards are insufficient to condemn and discourage the underlying misconduct.
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