July 2002

Commentary - Punitive Damages

Because of the Whiten v. Pilot Insurance and subsequent cases, there has been much discussion and writing about punitive damages.

The Court of Appeal has recently reaffirmed that two requirements have to be met before a consideration of punitive damages is proper.

In Marshall v. Watson Wyatt & Co., the plaintiff brought an action for wrongful dismissal. At trial, damages alone were an issue. The case was tried before a jury and it found that the plaintiff was entitled to compensation and also awarded punitive damages of $75,000.00. The defendant appealed.

The Court of Appeal set aside the award of punitive damages. The plaintiff had not shown that the defendant's conduct was exceptionally harsh, vindictive, reprehensible or malicious.

In addition, the plaintiff had not established that the defendant committed a separate or independent actionable wrong that caused damage to the plaintiff.

The trial judge also had not instructed the jury to consider whether or not the compensatory damages awarded were in some way insufficient to express repugnance at the defendant's conduct and to punish and to deter.

In the end result, the failure of the defendant to pay commission revenue acknowledged to be owing was not an actionable wrong separate from the plaintiff's wrongful dismissal.

The Court noted that an award of punitive damages generally should serve some rational purpose. In this particular case, the Court commented that the jury's award of punitive damage served no rational purpose.

It is suggested that notwithstanding the controversy and considerable discussion about punitive damages, our Courts are not about to let awards for punitive damages run rampant and will carefully scrutinize both the principles behind such awards as set out above as well as the monetary amount of any such awards.

JGN