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”. explore whether Mr. Smith is entitled to recover punitive damages, and if so, in what amount. 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. Historically, punitive damages were not available in Quebec civil law but are now provided for in certain legislation. According to the majority, "his was an exceptional case that justified an exceptional remedy." 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. 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 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). 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. Keith and Daphne Whiten discovered a fire in their house as they were going to bed and escaped in their nightclothes in -18oC weather. The trial jury found that Pilot had acted reprehensibly throughout the handling of the claims file and awarded punitive damages. 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. 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. 670; Cooper-Stephenson, K. and Saunders, I., Personal Injury Damages in Canada. The amount awarded, $1 million, was the highest punitive damage against an insurance company in Canadian history. 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. Smith must Pilot appealed the decision. Punitive damages are intended as a deterrence. Some policies specifically exclude coverage for punitive damages, while others rely on state laws. Punitive or exemplary damages are generally only available in Canada where there is proof of malicious conduct on the part of the defendant. The insured wants to be defended against all allegations. Although no rule prohibits punitive damag-es in negligence, the authorities are few and cautious. Required fields are marked *. Remaining independent in today’s marketplace is a tough ask of brokers. Can he trust the insurer? Learn more and download a copy.. 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. • Punitive damages may only be awarded for breach of an independent actionable wrong. The Ontario Court of Appeal found that punitive damages are available in motor vehicle accident cases in 2006. 595 is a leading Supreme Court of Canada decision on the availability of punitive damages in contract. Some states prohibit insurance of punitive damages on the grounds that spreading the risk of punishment for willful misconduct lessens the deterrent effect. Health care providers, lawyers, adjusters, and brokers routinely face substantial punitive damage claims when they are named in an action. Immediately the insured becomes concerned that the insurance policy does not provide him or her with adequate protection for this lawsuit. Compensatory damages 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. If the defence is going to be picked up anyway, why not provide for it specifically in the policy? The plaintiff appealed from that decision. On September 23, 2020, the License Appeal Tribunal (“LAT”) released a ruling that it does not have jurisdiction to award punitive damages. What is certain is that punitive damage claims are on the rise in Canada. We use cookies to make your website experience better. It requires an “actionable wrong” in addition to the breach of contract. Allianz Global Corporate & Specialty launches U.S. cyber unit, Exclusion clause for ‘conversion’ in comprehensive auto policy ‘does not come close’ to being easily intelligible: Court, Aspen reports net income of US$76.8 million for Q2 2017, How the pieces of the puzzle fit together during a catastrophe. 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 of these states bar insurance if the act was intentional. The most often seen damages that are sought by victims of medical malpractice are punitive damages. 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. 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. There are two sources of punitive damages in Canada – the Common Law and statutes. 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. 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. Save my name, email, and website in this browser for the next time I comment. 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 defence agreement usually already stipulates that the policy will defend frivolous and vexatious claims and other claims without merit. When the statement of claim is passed to the insurer, the insurer often issues a “reservation of rights letter”. Currently, the leading decision in this area is Whiten v. Pilot where Justice Binnie laid out the following principles: The claim for punitive damages was advanced on the basis that Canada Life acted so inappropriately punitive damages were required. Your email address will not be published. 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. 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). The purpose of a punitive damage award is to punish the defendant. What about the rise in punitive damage claims in other areas? Punitive damages remain rare in any type of Canadian tort case. In 1969 the House of Lords in Rookes v. Barnard. 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. The fast pace of technology and consolidation. 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. Courts in Canada tend to be conservative with awarding punitive damages, however. Why should a punitive damage claim be an exception? ordinarily be covered by a policy wording covering liability to pay compensation. The insurer, try as they may to dispel the insured’s fears, can not state that they are defending the punitive damages claim. Punitive damages Are punitive damages insurable? 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. Insurers anxiously await the ruling, which may not be released until late spring or early summer. The worst aspect of this harsh reality is that the insured wonders why his insurer is not fully supporting him. Thankfully, there’s a way to keep your brokerage and level the playing field. Aggravated damages, as distinguished from punitive. The 2018 Punitive Damages Review provides an overview of constitutional and statutory limitations on punitive damages and summarizes the laws of each state, including: This is cold comfort to a nervous insured who sees the six-figure damages claims under the heading of punitive damages. Your email address will not be published. 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. 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. 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. Provide insurance coverage on all professional liability and CGL policies for defence costs for punitive damage claims. , “ The Expanding Availability of Punitive Damages in Contract Actions ” (1975)8 Indiana L. Rev. Characteristics of Medical Malpractice Punitive Damages that are Awarded in Canada. Punitive damages have been part of the common law for hundreds of years. 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. Binnie J. laid out the following principles in relation to punitive damages: (i) Unlike in Britain where there are only specific categories for punitive damages, in Canada punitive damages can be awarded to: Punish the defendant, Deter the defendant and others; Denounce the … ; pecuniary By accepting this notice and continuing to browse our website you confirm you accept our Terms of Use & Privacy Policy. (1981)685. 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. Canada's FCA refuses to intervene in trial judge's decision with respect to punitive damages. This is an unsettled area of law in Canada. Therefore, whether or not punitive damages can be reinsured is ultimately determined by the terms of the policy. At the Supreme Court of Canada, the Insurance Council of Canada (ICC), representing the majority of property and casualty insurers, intervened and was allowed to argue before the court. vated damages where the defendant's conduct was particularly blameworthy. Twenty-three states permit insurance coverage for punitive damages assessed against the party that committed the egregious act. The Court held that to determine the amount of punitive damages an employer is … Search by keyword, across entire website. 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. 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 … 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. 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. 1. ; pecuniary. 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