In a justice system that largely operates on punishing the perpetrators, punitive damages are one of the clear manifestations of this viewpoint. But although the term itself evokes the harsh side of the law, there’s so much more to this award than what it seems to be.
With this article, we’ll shed light on this kind of damage, including its relations to the parties in a case. This article can be used by lawyers and their clients as an educational piece.
What are punitive damages?
Punitive damages are given to the plaintiff, but only in exceptional circumstances, for two main reasons:
- to punish the defendant in a civil case, based on their conduct
- to deter any future wrongdoers from doing the same act or omission
These damages are usually in addition to other compensatory or non-compensatory damages. Its award is proper only when the defendant acted in a harsh manner or with gross bad conduct.
This is why it’s also called exemplary damages, because it serves as a warning for future offenders that similar acts may be punished with the same amount of damages. However, it’s not all the time that punitive damages are awarded, as it mainly depends on the discretion of the court or the jury.
The video below explains briefly what punitive damages are:
If you need help filing your claim for damages in court, contact any of the best personal injury law firms in Canada as ranked by Lexpert.
Damages in Canadian torts law
Punitive damages are just one of many types of damages that may be awarded in Canada. There are two types of damages that plaintiffs can claim from the defendant:
- compensatory
- non-compensatory
Compensatory or actual damages are those, as the name suggests, that compensates the plaintiff for the defendant’s actions. There are two sub-types of compensatory damages:
- general
- special
Non-compensatory damages are awarded in addition to compensatory damages, based on the special circumstances in the case. Examples of non-compensatory damages are:
- punitive or exemplary
- aggravated
- nominal
- liquidated
What are the highest punitive damages awarded in Canada?
Below are some Canadian cases that awarded high amounts of punitive damages:
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Whiten v. Pilot Insurance Co., 2002 SCC 18: Defendants in this case appealed the $1 million in punitive damages awarded by the jury. The Ontario Court of Appeals then reduced the award to $100,000. However, the Supreme Court ultimately restored the original $1 million, reasoning that, “though high, [it] was within rational limits,” given that the defendant’s conduct was “exceptionally reprehensible.”
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Higginson v. Babine Forest Products Ltd., 2010 BCSC 614: In the case of wrongful dismissal, the plaintiff here was awarded $809,000 for punitive damages. The main factor in the award was that the defendant-company terminated the plaintiff, on a false allegation of just cause, to evade the payment of severance pay, since plaintiff is a long-term employee.
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Baker v. Blue Cross Life Insurance Company of Canada, 2023 ONCA 842: Supreme Court upheld the jury’s award of $1.5 million in punitive damages to plaintiff, who was denied her long-term benefits by defendant-insurer. The Court found that the award was supported by evidence, while also applying test established in the case of Whiten. It was also held that the large award is also necessary to deter similar misconduct, considering that the defendant is a large insurance company.
When are punitive damages awarded?
In Canada, punitive damages may be awarded:
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when the defendant’s acts and behaviour, or its results, were so offensive to the court’s standard of decency or to its victims
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because the conduct of the defendant has been so malicious, shocking, and oppressive to the eyes of society
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when the defendant has been grossly negligent, especially when the law provides that the defendant should have exercised due care and diligence
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as shown by the facts of the case, when the intent to do harm by the defendant has been established
These are just loose standards based on the pattern of how the courts award punitive damages. This is why personal injury lawsuits are carefully made by counsel to validly claim these damages.
Because these are awarded based on a court’s discretion, plaintiffs who claim this type of damage must present evidence proving the defendant’s behaviour. In other words, a simple demand for the award by the plaintiff would not be enough.
If a plaintiff wants to plead the award of punitive damages, checking with a personal injury lawyer is the first best thing to do.
Test for punitive damages in Canada
There are two tests when reviewing the award of punitive damages in Canada; first is called the “rationality test,” while the other is called “proportionality test.”
The rationality test was laid down by the Supreme Court in the case of Hill v. Church of Scientology of Toronto, [1995] 2 SCR 1130. The test is “whether the punitive damages serve a rational purpose” when deciding if the award is proper. The test can also be said in this manner: “was the misconduct of the defendant so outrageous that punitive damages were rationally required to act as deterrence?”
On the other hand, the proportionality test was enumerated by the Court in Whiten. It is said that punitive damages must be rationally proportionate, in relation to their purposes (as discussed below). To check if the award is proportional, there are several “dimensions” of proportionality that can be looked at.
In the words of the Court, the award must be proportionate to the following:
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blameworthiness of the defendant’s conduct
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degree of vulnerability of the plaintiff
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harm or potential harm directed specifically at the plaintiff
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need for deterrence
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even after considering the other penalties, both civil and criminal, that have been or are likely to be inflicted on the defendant for the same misconduct
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advantage wrongfully gained by a defendant from the misconduct
When punitive damages cannot be awarded
Generally, punitive damages may not be awarded in an action based on a contract. However, some cases provide that damages can be awarded, not just for tort actions, but also for breach of contract actions. Here, it must be established that there’s an independent actionable wrong that has arisen along with the breach of contract.
Defendants, through their personal injury lawyers, can raise the defense that punitive damages are improper in their case. It must be actively objected to; otherwise, challenging it will be difficult, even on appeal.
Here’s a short video of one of the limitations when courts award punitive damages in Canada:
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How are punitive damages calculated?
There’s no clear-cut rule when it comes to the amount of punitive damages that should be awarded in a particular case. This is because many cases show us that the courts and jurors are granted more leeway in deciding a specific amount, based on the case at hand.
As such, the issue of whether the punitive damages awarded is sufficient is left to the courts of first instance. Courts and juries must also be guided by the rationality test. However, it’s not to say that it cannot be appealed.
Standards given by the Whiten case
One way of measuring if one’s claim for this type of damage is possible is by looking at common law. The leading case for measuring punitive damages in Canada is still Whiten, which has also referred to Hill several times.
In this case, the Supreme Court emphasized 11 key points that juries and courts may consider when computing the award of punitive damages. We summarized these points into the following:
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An exception: Rather than the rule, punitive damages are very much the exception. If it cannot “be approached rationally,” then it’s better to not be awarded at all.
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Based on defendant’s conduct: Punitive damages can be imposed if there has been “high-handed, malicious, arbitrary or highly reprehensible misconduct,” which is too far “from [the] ordinary standards of decent behaviour.”
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Must be proportionate: If punitive damages are awarded, its amount should be proportional to the following factors: “the harm caused, the degree of the misconduct, the relative vulnerability of the plaintiff and any advantage or profit gained by the defendant.”
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Based on other penalties: An added factor for calculating the award of punitive damages is that it must consider the other fines or penalties to be suffered by the defendant for the same misconduct. Also, it is awarded only if the defendant’s misconduct is unpunished, or if the other penalties are inadequate to serve its purposes.
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Related to compensatory damages: Since punitive damages are based on other damages, it is awarded if compensatory damages are insufficient to carry out its purposes.
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Purpose of punitive damages: Its purpose is not to compensate the plaintiff, but for:
- retribution: to give the defendant their just punishment
- deterrence: to prevent the defendant and others from similar misconduct in the future
- denunciation: as a sign of the community’s collective condemnation of the wrong committed
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Recipient of the damages: Normally, it’s the government that receives the fine or penalty for misconduct. However, in punitive damages, it’s the plaintiff who will keep them as a “windfall,” in addition to compensatory damages.
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Moderate punitive damages: Most judges and juries found that moderate awards are enough, since it carries with it “a stigma in the broader community.”
The Court said that these key points or expressions are not obligatory. Each case should be measured based on its circumstances, the nature of the remedy, and fairness for all parties. As said in Whiten and Hill, punitive damages are “not at large,” as compared to compensatory damages.
In addition, the Court said that in figuring out the amount of punitive damages, jurors “should not be left in any doubt about what they are to do and how they are to go about it.”
Punitive damages: preventing present and future wrongdoers
The awarding of punitive damages is a clear application when we say that those who have caused injury to another must be punished. However, this does not only stop on that; they also dissuade other people from committing the same mistakes in the future.
While it places a huge responsibility on the defendant once adjudged by the court, there’s also an equal burden on the part of the plaintiff to prove such an award. In all of these, it’s important to have a personal injury lawyer by one’s side.
If you need help with your personal injury case, or are curious about punitive damages, reach out to a Lexpert-ranked best personal injury lawyers in Canada.