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. Therefore, whether or not punitive damages can be reinsured is ultimately determined by the terms of the policy. What is the solution? The insured wonders about the potential of a punitive damage award that not only might irreparably damage their reputation but cause financial ruin. It is an exception to the general principle that the purpose of a civil action is to compensate the plaintiff for his or her loss, not to punish the defendant. Can he trust the counsel appointed by the insurer? Canada's FCA refuses to intervene in trial judge's decision with respect to punitive damages. When the statement of claim is passed to the insurer, the insurer often issues a “reservation of rights letter”. explore whether Mr. Smith is entitled to recover punitive damages, and if so, in what amount. 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 … • Punitive damages may only be awarded for breach of an independent actionable wrong. Because they are usually paid in excess of the plaintiff's provable injuries, punitive damages are awarded only in special cases, usually under tort law, if the defendant's conduct was egregiously insidious. This is cold comfort to a nervous insured who sees the six-figure damages claims under the heading of punitive damages. Punitive damages in Canada Punitive or exemplary damages are generally only available in Canada where there is proof of malicious conduct on the part of the defendant. a breach of the contractual duty of good faith is independent of and in addition to the breach of contractual duty to pay the loss) • Punitive damages may be awarded in situations where the defendant's misconduct is so Both the Applicant and Respondent cited Stegenga v Economical Mutual Insurance Company 2 in their submissions as to whether the LAT has jurisdiction to award punitive damages. Trans Canada Insurance Marketing (TCIM) is the proud recipient of the 2016 Five Star MGAs Award as published in Insurance Business Canada, Copyright © 2020. Some states prohibit insurance of punitive damages on the grounds that spreading the risk of punishment for willful misconduct lessens the deterrent effect. by Jim Cameron of Cameron & Associates Insurance Consultants Ltd. Just before Christmas, the Supreme Court of Canada heard argument in the case of Whiten v. Pilot. In the last few decades, the SCC has repeatedly confirmed and approved the use of punitive damage awards in Canada. 1. Insureds may even be willing to pay a small additional premium for this added protection and peace of mind. As the term implies, “punitive” damages are meant to punish the offending party rather than to compensate the plaintiff. Trans Canada Insurance Marketing Inc. 595 is a leading Supreme Court of Canada decision on the availability of punitive damages in contract. Punitive or exemplary damages are generally only available in Canada where there is proof of malicious conduct on the part of the defendant. All Rights Reserved.   Some of these states bar insurance if the act was intentional. ordinarily be covered by a policy wording covering liability to pay compensation. 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. The fast pace of technology and consolidation. Twenty-three states permit insurance coverage for punitive damages assessed against the party that committed the egregious act. Thus, whether punitive damages are insurable in Indiana may not be a yes or no question. 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. The laws regarding the insurability of punitive damages vary from state to state. Thankfully, there’s a way to keep your brokerage and level the playing field. The insurer needs the full commitment, cooperation and trust of the insured to properly investigate and defend the covered allegations. 670; Cooper-Stephenson, K. and Saunders, I., Personal Injury Damages in Canada. 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. Smith must Why should a punitive damage claim be an exception? The insurer, try as they may to dispel the insured’s fears, can not state that they are defending the punitive damages claim. Learn more and download a copy.. And where punitive damages are concerned, Canadian courts usually can be characterized as follows. As the term implies, “punitive” damages are meant to punish the offending party rather than to compensate the plaintiff. The natural fear of being involved as a defendant in a lawsuit is not allayed. The purpose of a punitive damage award is to punish the defendant. 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. Compensatory damages 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. Search by keyword, across entire website. The reasoning of the majority of the Ontario Court of Appeal explores the history of punitive damage awards in Canada and appears to follow a rationale that such awards should be restricted to the most severe cases. 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. 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. If the defence is going to be picked up anyway, why not provide for it specifically in the policy? ; pecuniary. A pandemic. 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. To attempt to do so seems very arbitrary. 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. It requires an “actionable wrong” in addition to the breach of contract. Although no rule prohibits punitive damag-es in negligence, the authorities are few and cautious. The amount awarded, $1 million, was the highest punitive damage against an insurance company in Canadian history. 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. 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. Your email address will not be published. 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. 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. On September 23, 2020, the License Appeal Tribunal (“LAT”) released a ruling that it does not have jurisdiction to award punitive damages. We use cookies to make your website experience better. The Attorney General of Canada and two RCMP officers were ordered by the Quebec Court of Appeal to pay $400,000 in punitive damages after they published and disseminated false information about a Laval couple who were wrongly charged in Canada’s first human trafficking case. 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. This is an unsettled area of law in Canada. Ctrl+F while in that page are two sources of punitive damages in.! Defence of the common law for hundreds of years be released until late spring early. Pay compensation contract disputes contract disputes 's decision with respect to punitive damages rare... 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