Punitive Damages

• Author: Jamie Cassels
• Pages: 320-353

320

CHAPTER 8

PUNITIVE DAMAGES

A. INTRODUCTION AND TERMINOLOGY

1) Punitive Damages Distinguished from Compensatory

Damages

Punitive, or exemplary, damages are distinct from compensatory, and

even aggravated, damages. They are awarded against a wrongdoer after

full compensation has a lready been made for the harm caused. They are

intended to punish the wrongdoer for particularly egregious conduct,

to promote respect for the rule of law, and to provide additional deter-

rence.1 Punitive damages, then, are not grounded in compens ation or in

corrective justice. They are grounded in retributive just ice and serve the

goals of punishment, deterrence, and denunciation.2 An award should

promote one or more of these objectives.3 The Supreme Court of Canada

explained, in Vorvis v Insurance Corp of British Columbia:

Punitive damages, as the name would indicate, are designed to pun-

ish. In this, they constitute an exception to the general common law

rule that damages are designed to compensate the injured, not to

1 See Whiten v Pilot Insurance Co, [2002] 1 SCR 595 at para 36 [Whiten]; Kud dus v

Chief Constable of Le icestershire, [2001] UKHL 29, [2001] 3 All ER 193 at para 79

(HL), Lord Hutton [Kuddus].

2 Whiten, ibid at par as 43 and 68.

3 Ibid at para 71.

Punitive Damages321

punish the wrongdoer. Aggravated damages will frequently cover

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

role of aggravated dam ages remains compensatory.4

As the Court noted, punitive damages will often arise out of the

same malicious conduct that gave ris e to aggravated damages. However,

they are conceptually distinct, since aggravated damages are compen-

satory. One court has suggested that the distinction can be stated thus:

“aggravated damage for conduct that shocks the plaintiff: exemplary (or

punitive) damages for conduct which shocks the jury.”5 In comparing

aggravated damages and punitive damages in Whiten,LeBel J stated:

Aggravated damages served the t raditional corrective purpose of t he

common law: to make the plaintiff whole for injuries to interests

that are not properly compensable by ordinary damages. Punitive

damages target not loss, but conduct . . . . The defendant’s wrong

must then be considered d irectly and separately in order to ass ess its

severity and, accord ingly, the appropriate degree of puni shment. The

other forms of damages look to the loss of the plaintiff, but punitive

damages refer essentially to the degree of culpability of the defend-

ant’s action.6

2) General Principles of Availability

Punitive damages are awarded where the combined effect of compensa-

tory, including aggravated, damages will not achieve suff‌icient deter-

rence, and the defendant’s actions must be further punished.7 They are

triggered by conduct that is so high-handed, malicious, vindictive, and

4 [1989] 1 SCR 1085 at 1098–99 [Vorvis].

5 Muir v Alberta (1996), 132 DLR (4t h) 695 at 714 (Alt a QB), citing Salmond on

the Law of Torts. See also Tomah v Sylliboy,2010 NSSC 439 [Tomah], where the

defendants con fronted the plaintiff, dou sed her with gasoline, set her on f‌i re,

followed her to her bathro om, and prevented her from putting out the f‌ir e in

the presence of her t hree children. In award ing aggravated dam ages, the court

noted: “the attack on t he plaintiff by the defend ants was sudden, unprovoked

and brutal a nd that the plaintiff s uffered loss of dignity an d humiliation.” Ibid

atpara 3 0.

6 Whiten,above note 1 at para 157.

7 See Farallon Mining Ltd v Arnold, 2011 BCSC 1532 at para 112, involving

Internet defam ation, where the plaintif f was awarded $40,000 in genera l dam-

ages. The court rejected t he plaintiff’s cla im for punitive damages bec ause,

among other thi ngs, an award of general dama ges would have had a signif‌icant

impact on the defenda nt’s already diff‌icult f‌in ancial situation, and ther e was no

need for deterrence or denunc iation.

REMEDIES: THE LAW OF DAMAGES322

oppressive as to “offend the court.” In Hill v Church of Scientology of

Toronto,the Supreme Court of Canada explained that

[p]unitive damages may be awarded in situations where the defend-

ant’s misconduct is so malicious, oppressive and high-handed that

it offends the court’s sense of decency. Punitive damages bear no re-

lation to what the plaintiff should receive by way of compensation.

Their aim is not to compensate the plaintiff, but rather to punish

the defendant . . . . They are i n the nature of a f‌ine which is meant to

act as a deterrent to the defendant and to others from acting in this

manner. It is important to emphasize that punitive damages should

only be awarded in those circumstances where the combined award

of general and aggravated damages would be insuff‌icient to achieve

the goal of punishment and deterrence.8

The forms of action continue to make a difference when it comes to

the common law approach to punitive damages. Historically, punitive

damages were never available in a simple breach of contract c ase unless

the facts could also support a tort act ion. Even today, punitive damages

are practically never avail able in simple contract actions. They are more

widely available in tort claims, though still on a restricted basis. There-

fore, this chapter will deal with tort and contract separately.

3) Reasons for the Limited Availability of Punitive

Damages

The very limited availability of punitive damages in the common law is

because they deviate from the primary purpose of the common law,

which is simply to compensate plaintiffs. Simple breaches of contract,

and many inadvertent torts such as negligence, rarely involve serious

moral turpitude. Where the defendant inadvertently harms the plain-

tiff, the goals of both corrective justice and deterrence are fully served

by a compensatory damages award.

Even where the defendant’s conduct is morally blameworthy or rep-

rehensible, it is generally not the domain of the civil lawsuit to punish.

Where wrongful activities may merit additional punishment, the mat-

ter is typically thought to be within the domain of criminal law and

covered by the exhaustive provisions of the Criminal Code. Indeed, in

Canada, common law criminal offences have long been abolished by

the Criminal Code.9

8 [1995] 2 SCR 1130 at 1208 [Hill].

9 Criminal Code,RSC 1985, c C-46,s 9(a).