Compensation for Harm to Intangible Interests: Non-pecuniary and Aggravated Damages

• Author: Jamie Cassels
• Pages: 240-278

240

CHA PTER 6

COMPENSATION

FOR HARM TO

INTANGIBLE INTERESTS:

NON-PECUNIARY A ND

AGGR AVATED DA M AGES

A. INTRODUCTION AND TERMINOLOGY

Non-pecuniary da mages are an important head of compens ation for

civil wrongs. These da mages are available in both tort and contract

actions for intangible losses such as pain and suffering, mental d is-

tress, and emotional shock. There are severa l subheadings of non-

pecuniary damages. The most common non-pecuniar y damage awards

are those made in personal injury actions to compensate the plain-

tiff for the “pain and suffering” and “lost enjoyment of life” that may

accompany serious physical injury. The principles governing these

awards are fully discussed in Chapter 4 in t he context of personal

injury damages. There are, however, many other situations in wh ich

non-pecuniary losses are compensable, in both tort and contract ac-

tions, and these form the subject matter of t his chapter.

The terminology and theoretical ba sis of non-pecuniary damages

can be confusing. One important subcategory of non-pecuniar y dam-

ages is “aggravated dam ages.” While the term is not used uniformly,

aggravated damages generally refer to damages that are awa rded in

contract or tort actions to compensate the plaintiff for a civil wrong

that is committed in a pa rticularly callous, high-ha nded, or malicious

fashion. In other words, the manner of the defendant’s wrongdoing “ag-

gravates” the damages suffered by the plaintiff. A good example is a

defamation case where the defendant persists in maki ng defamatory

Compensation for Ha rm to Intangible Interest s 241

comments about the plaintiff even after there is reason to desist, or

refuses to make an apology after it is clear that a wrong has been done.

However, non-pecuniary damages are not conf‌ined to situ ations

where the manner of the breach is harsh or malicious. There is an-

other category of cases where the non-pecun iary damages f‌low from

the content of the duty breached rather than t he manner of its breach.

An example would be the “holiday cases.” Here plaintiffs a re awarded

damages in contract for their di sappointment, anxiety, and frustration

resulting from spoiled holidays, t hough there is nothing malicious

about the breach. The damages compensate for the lost benef‌it suffered

by the plaintiff rather than the way in which the benef‌it was withheld.

Such damages are also, on occasion, referred to as “aggravated dam-

ages,” but this is an unfortunate use of the ter minology. It is better to

consider these damages as a separate head of compensation for non-

pecuniary loss.

Particularly when discussing aggravated damages, it is important

to keep in mind that they are to b e distinguished from punitive dam-

ages (which are discussed in Chapter 8). Non-pecuniary dam ages, in-

cluding aggravated damages, are compensatory. Even though an award

of aggravated damage s may be triggered by harsh or malicious conduct,

it is not designed to punish that conduct but rather to compensate the

plaintiff for the additional harm caused by th at conduct. In Vorvis v

Insurance Corp of British Columbia, the Supreme Court of Canada ex-

plained the distinct ion:

Punitive dam ages, as the name would indic ate, are designed to pun-

ish. In this, t hey constitute an exception to the gener al common law

rule that da mages are designed to compe nsate the injured, not to

punish the wrongdoer. Agg ravated damages w ill frequently cover

conduct which could also be the s ubject of punitive damages, but the

role of aggravated dam ages remains compensatory.

Aggravated d amages are awarded to compen sate for aggravated

damage. As ex plained by Waddam s, they take account of intangible in-

juries and by def‌in ition will generally augment da mages assessed u nder

the general rule s relating to the as sessment of damages. Ag gravated

damages are compe nsatory in nature and may only be a warded for that

purpose. Pun itive damages, on the other h and, are punitive in nat ure

and may only be employed in ci rcumstances where t he conduct giving

the cause for complaint is of s uch nature that it merits punishme nt.1

1 [1989] 1 SCR 1085 at 1098–99 [Vor vi s]. See also Whiten v Pilot In surance Co,

[2002] 1 SCR 595 at paras 116 and 156–57; Fidler v Sun Life Insurance Co of

Canada, [2006] 2 SCR 3 at para 61 [Fidler].

REMEDIES: THE L AW OF DAMAGES242

The distinction between agg ravated (compensatory) damages and

punitive damages ha s been adopted throughout Canada. Obviously,

however, the distinction can be blurred in pract ice, since the same con-

duct may give rise to both aggravated and punitive damages, and it is

likely impossible (especially in a jur y trial) to keep punitive motives

entirely at bay when assessing aggravated damages.

B. NON-PECUNIARY DA MAGES IN TORT LAW

1) Compensation for Non-pecuniary Losses as a Separate

Head of Damages

In tort law, non-pecuniary losses m ay be compensated in a number of

ways. First, physical pain and suffering, and the accompanying psycho-

logical pain, are compensated directly as a separate head of damages

in personal injury cases. Whatever the cause of action (negligence or

an intentional tort), where the gist of the wrong is physical injur y to

the plaintiff, consequential non-pecuniary los ses are compensable as

“pain and suffering” and “lost enjoyment of life.” These losses are com-

pensated according to the funct ional approach discussed in Ch apter 4.

In addition, where a person has been di rectly involved in a traumatic

accident caused by the defendant’s negligence, and suffers psychi atric

illness as a re sult, she will be compensated for that illness even if her

other physical injuries are mi nor.

Beyond torts where the essenti al harm is physical injury, non-pecu-

niary da mages as a separate head of dam ages are rare. Until relatively

recently, tort law offered no compensation for emotional and mental dis-

tress that wa s not accompanied by physical injur y. First, courts were con-

cerned not to open the f‌loodgates of liability for claims to hurt feelings

and emotional or mental harms resulting from various form s of inter-

personal conf‌lict short of physical violence. Second, they were concerned

with the evidenti ary diff‌iculties of assessing such “intangible” injuries.

However, there are now several causes of action that directly com-

pensate non-pecuniar y harm even though it is not the consequence

of physical injury. Intentional inf‌liction of nervous shock or mental

suffering is now a dist inct cause of action in tort.2 Maliciou s practical

jokes, sexual harassment, battery, and knowingly maki ng false accusa-

tions against a person may give rise to this act ion. Similarly, negligent

2 Wilkinson v Downton, [1897] 2 QB 57. See AM Linden & Bruce Feldthusen ,

Canadian Tort Law, 8th ed (Markh am, ON: Butterworths, 2006) at 54 –57.