Wild Justice on the Compensation/Punishment Frontier: An Attempt to Make Some Sense of Aggravated and Punitive Damages after Whiten
| Author | Kirk F. Stevens |
| Pages | 427-463 |
Wild
Justice
on the
Compensation/
Punishment Frontier:
An
Attempt
to
Make Some Sense
of
Aggravated
and
Punitive Damages
after
Whiten
Kirk
F.
Stevens"
A.
INTRODUCTION
Revenge
is a
kind
of
wild
justice,
which
the
more man's nature runs
to, the
more
ought
law to
weed
it
out.
—
Francis
Bacon,
Essays,
Of
Revenge1
This paper will examine
the law of
punitive
and
aggravated
damages,
largely through
the
lens
of the
Supreme Court
of
Canada's
2002 deci-
sion
in
Whiten
v.
Pilot
Insurance
Company.2
The
majority
of the
court
in
that case attempts
to
impart
a
"more principled" approach into this wild
domain whose hallmark
is the
"incantation
of the
time-honoured pejo-
ratives"
and
"dyslogistic judicial
epithets."3
My
basic thesis
is
that,
even
Kirk
F.
Stevens,
LL.M,
is a
partner with Lerners
LLP in
Toronto.
Susan Jacoby,
Wild
Justice:
The
Evolution
of
Revenge
(New
York:
Harper
&
Row, 1983)
ati.
Whiten
v.
Pilot
Insurance
Company,
[2002]
i
S.C.R.
rev'g
(1999),
42
O.K.
(3d)
641
(C.A.),
allowing,
in
part,
an
appeal
from
[1996]
O.J.
No. 227
(Gen. Div.)
[Whiten].
Unless
otherwise indicated,
all
subsequent
references
to
this case
are to the
S.C.C.
Ibid,
at
636,
referring
to
Cassell
& Co. v.
Broome,
i
All
E.R.
801
(H.L.),
Lord
Diplock
at
1129
(A.C.)
[Cassell
&
Co.].
427
*
i
2
3
428
KIRK
F.
STEVENS
after
Whiten,
the law is
still
in a
state
of
incoherence.
Indeed,
by
failing
to
recognize
the
inevitable
and
inherent arbitrariness
of
punishment,
Whiten
probably intensifies
the
confusion.
Whiten
marks
a
seismic
shift
in the law of
punitive damages
in
Can-
ada.
In
that case,
an
Ontario jury
"stung"
an
insurer
in
1996 with
an
award
of $1
million
in
punitive damages
for its
denial
of a
claim
on a
residential
fire
policy
on the
basis
of an
arson defence, which
the
jury
ob-
viously found
to
have been concocted.
The
award
exceeded,
by a
factor
of
approximately sixty-seven times,
the
previous Canadian high-water
mark
in a
"first
party
claim"4
for
punitive damages
for
breach
of the in-
surer's
duty
of
"good
faith."5
More
significantly,
the
award exceeded
the
amount
of
indemnification under
the
insurance policy
itself
($318,252.32),
contrary
to the
pattern
in
previous cases where punitive awards
func-
tioned
as a
modest
"top-up"
to
compensation awards. While
the
Court
of
Appeal,
by a
two-to-one
majority,
reduced
the
award
of
punitive dam-
ages
to
$100,000,
a
six-to-one
majority
of the
Supreme Court
of
Canada
restored
it.
This paper will
first
review
the
debate between
the
majority
and
the
dissent
in the
Supreme Court
of
Canada
in
Whiten
on the
proper
role
of
punishment
in
private
law
where
the
emphasis
has
been
on the
concept
of
"corrective justice"
6
and
compensation.
I
will
then
assess
the
state
of the law of
aggravated damages
in the
light
of
that debate. Then,
the
particularly
difficult
relationship between aggravated
and
punitive
damages
and the law of
contract will
be
addressed. Next,
I
will evaluate
the
claim made
by the
majority
in
Whiten
that punitive damages
can be
meted
out in a
rational manner.
Finally,
I
will conclude with some obser-
vations about
the
general direction
the law
appears
to be
taking.
A
"first
party" claim
is a
claim
by an
insured against
her or his
insurer,
as
opposed
to a
"third
party claim" against
an
insured
by a
third party which
is
defended
by a
liability insurer.
In
1995,
the
"record"
was a
mere
$15,000:
see
Kusalic
c.
Zurich
Cie
D'Assurances
(1995),
37
C.C.L.I. (2d)
120
(Que. S.C.).
In
Whiten,
supra
note
2 at
661-62,
Binnie
J.
states
that
the
largest award against
an
insurer
to
that date
was
$50,000.
This,
however,
appears
to be a
reference
to
awards
in
that amount
in
Ribeiro
v.
Canadian
Imperial
Bank
of
Commerce
(1992),
13
O.K.
(3d)
278
(C.A.)
and
Francis
v.
Canadian
Imperial
Bank
of
Commerce
(1994),
21
O.K.
(3d)
75
(C.A.),
in
which
the
same bank made unfounded
allegations
of
criminality against
two
wrongfully
dismissed employees, which
was
behaviour similar
to
that found
on the
part
of the
insurer
in
Whiten.
Ernest
J.
Weinrib,
The
Idea
of
Private
Law
(Cambridge: Harvard University Press,
1995)-
Wild
Justice
on the
Compensation/Punishment Frontier
429
B.
SCOUTING
THE
"FRONTIER"
BETWEEN
COMPENSATION
AND
PUNISHMENT?
While
Whiten
represents
a new
departure
for the
quantum
of
punitive
damages
in
Canada,
it may be
that
its
more enduring significance will
derive
from
the
exploration,
by
both
the
majority
and
dissent,
of the
pur-
pose
and
justification
of
punitive damages.
For
Binnie
J.,
who
wrote
the
majority
judgment,
the
jury's award
of $1
million
did
not,
in the
con-
text
of
that particular case, transform
the
purpose
of
civil litigation
from
compensation into punishment.
In his
lone dissent,
LeBel
J.
accepted
that Canadian
law
has,
for
good
or
ill,
embraced punitive damages.
Nevertheless,
LeBel
J.
concluded that
an
award
of
punitive damages that
dwarfed
the
compensatory
award
turned
tort
law
"upside
down,"8
shift-
ing the
focus
from
compensation
to
punishment.
Perhaps
the
most intriguing aspect
of the
majority
judgment
in
Whiten
is its
unapologetic emphasis that punishment
is a
legitimate
ob-
jective
of
private
law.
In
itself,
the
recognition that punishment
has a
rightful
place
in
civil
law is not
novel.
As
Binnie
J.
observed, Lord
Wil-
berforce,
who
opposed
the
restrictive approach
to
punitive damages that
English
law
took
in
Lord Devlin's speech
in
Rookes
v.
Barnard
(i964)9
and
Cassell
& Co. v.
Broome
(-1972)™
questioned
the
assumption that, "even
as
a
matter
of
theory,"
the
purpose
of
tort
law is
exclusively
compensatory."
Whiten
is the
first
explicit attempt
in
Canadian jurisprudence
to
justify
a
role
of for
punishment
in
private
law on
historical
and
philosophical
grounds.
The
historical scope
of the
analysis extends much
farther
back
than
the
origins
of the
common
law
—
Binnie
J.
drew
on
legal sources
stretching back
to the
Codes
of
Hammurabi
and of
Manu; Babylonian,
Hittite,
Greek,
and
Roman
law;
and
Exodus 22:1:
If
a man
shall steal
an
ox,
or a
sheep,
and
kill
it, or
sell
it, he
shall restore
five
oxen
for an ox and
four
sheep
for a
sheep.12
His
stress
on the
legitimacy
of
punishment
finds
its
counterpoint
in the
dissenting analysis
of
LeBel
J.,
who
posits that
the
size
of the
jury's puni-
7
Whiten,
supra
note
2 at
617.
8
Ibid,
at
665.
9
Rookes
v.
Barnard,
1129,
[1964]
i
All
E.R.
367
(H.L.).
10
Cassell
&
Co.,
supra
note
3. In
that case,
the
House
of
Lords
re-affirmed
Rookes
and
rebuked
Lord Denning M.R.,
who,
in the
Court
of
Appeal
had
warned that
Rookes
was
"bound
to
lead
to
(C.A.).
11
Whiten,
supra
note
2 at
617-18;
Cassell
&
Co.,
ibid.,
Lord Wilberforce
at
1114
(A.C.).
12
Whiten,
ibid,
at
619-22.
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