Aggravated and Punitive Damages

• Aggravated Damages: There was a case for the jury based upon the allegation of arson and the ultimate finding of bad faith on the part of Wawanesa by the jury. However, the award of $175,000 was grossly excessive and reduced to $50,000.
   
• Punitive Damages: Appeal of $525,000 in punitive damages dismissed. Court concluded that the bare and unproven suspicion of arson by insurer was sufficient to support punitive award.
   
• Conduct: Wawanesa maintained its denial of coverage on suspicion of arson. Implicit to the decision is that something more than bare suspicion is required.

• Aggravated Damages: The award for aggravated damages was justified despite the lack of evidence of Fidler's financial
  hardship, because Fidler had suffered mental distress due to
  the discontinuance of her benefits. $20,000 awarded.
   
• Punitive Damages: Sun Life's conduct was arbitrary and highhanded. It breached the duty of utmost good faith to Fidler by a sufficient degree to be deserving of the punishment of punitive damages. $100,000 awarded.
   
• Conduct: Sun Life terminated her benefits on the basis of videotape surveillance conducted in 1996. When Fidler protested, Sun Life informed her that she should undergo an independent medical exam. Although Fidler consented to the IME in October 1997, Sun Life did not schedule the examination until September 1998. The 1998 IME was unclear as to Fidler's ability to return to work. In December 1998, Sun Life presented Fidler with a cheque for three months' benefits as a good will gesture, and informed her that her file was closed. That decision resulted in significant financial hardship to the Fidler.
   
• Note: Trial judge did not find that Sun Life’s conduct amounted to bad faith. It was the Court of Appeal that awarded $100,000 in punitive damages.
   
• This case is under appeal to the Supreme Court of Canada

• Aggravated Damages: Court awarded DE $15,000. Unum
  breached the contract when it insisted on objective clinical
  evidence of DE's disability. The trial judge also rejected
  Unum's argument that DE had failed to mitigate her damages
  because she did not lose weight or quit smoking. Per Court of
  Appeal: There was significant evidence to conclude that DE
  was disabled. She did not have to establish the precise cause of
  her disability, and she satisfied the requirements of the policy.
   
• Conduct: Unum’s medical advisor failed to take any reasonable
  steps to assess disability claim. Medical advisor ignored
  evidence supplied by DE in favour of informal assessment
  performed by an I.E. physician. Unum held DE to an
  inappropriate standard of proof.

1996

• Aggravated Damages: Court awarded $10,000. Trial judge
  found that "something more than mere failure to pay" was
  necessary for a "lack of good faith and fair dealing" to be
  shown.
   
• Conduct: The trial judge found that the insurer had
  discontinued the payment of benefits after two weeks when it
  was "aware, or ought reasonably to have been aware, that the
  plaintiff was entitled to benefits under the terms of the policy"

• Aggravated Damages: Court set aside jury award of $235,000
  on grounds that the judge’s charge failed to adequately address
  issue of award. New trial ordered.
   
• Punitive Damages: Court set aside jury award of $25,000on
  grounds that the jury had not been properly charged. New trial
  ordered.
   
• Conduct: The claim for aggravated damages was based on the
  fact that as a result of breach of contract by Canada Life and its
  failure to make payments, Lyons's depression was aggravated.
  The claim for punitive damages was advanced on the basis that
  Canada Life acted so inappropriately punitive damages were
  required.

• Punitive Damages: Jury award of $725,000 set aside. Court
  concluded that jury could reasonably have concluded that
  insurer breached its duty to act fairly and in good faith in
  failing to pay promptly those amounts it reasonably believed
  were owing under policy but no reasonable and properly
  instructed jury could conclude that insurer's conduct was so
  outrageous or extreme as to warrant punishment or that award
  of punitive damages was rationally required to punish insurer's
  misconduct.
   
• Conduct: The jury may have felt strongly against the defendant
  for what it found to be its wrongful denial of the plaintiff's
  claim for substantial amounts. There was little evidence beyond
  speculation to support the contention that the defendant
  abused its position or power and purposely set out to force the
  plaintiff into an unreasonable settlement. The record
  suggested, rather, that this was a hard-fought commercial
  dispute between two sophisticated parties. Although it was
  open to the jury to disapprove of the position taken by the
  defendant in the overall negotiation of the contentious parts of
  the claim, and even to find that in some respects it had
  breached its duty of good faith in failing to pay what was
  clearly owed under the policy, the evidence could not
  reasonably support the finding that an award of punitive
  damages.

• Punitive Damages: Court restored jury award of $1 million.
   
• Conduct: The appellant's family was in very poor financial
  shape. Ultimately this confrontation led to a protracted trial
  based on the respondent's allegation that the family had
  torched its own home, even though the local fire chief, the
  respondent's own expert investigator, and its initial expert all
  said there was no evidence whatsoever of arson. The
  respondent's position was wholly discredited at trial and its
  appellate counsel conceded that there was no air of reality to
  the allegation of arson.

• Aggravated Damages: Judge awarded $8,500 for mental
  distress.
   
• Conduct: The intention or motivation of Sun Life in terminating the total disability benefits is immaterial to the claim. That is, the relevant questions are whether the contract is one for which a claim for mental distress can be made and whether the refusal to pay the benefits caused the Plaintiff mental distress. The Court amplified the reasons in Warrington.
   
• Note: Application for Leave to Appeal dismissed

• Punitive Damages: Jury award of $250,000 set aside as untenable.
   
• Conduct: Appears Jury advised that Zurich had failed to
  respond in timely manner, did not instruct insured on reason
  for denial, agent for Zurich trespassed on property. None of
  those grounds were sufficiently particularized to support award
  of punitive damages.

• Punitive Damages: Trial judge awarded $2,000,000 to Mazza
  and $500,000 to Pereira. Court of Appeal ordered new trial.
   
• Conduct: No basis that insureds committed fraud in proof of
  loss forms. It appears that there was evidence demonstrating
  that the insurer prejudged the merits of the claims; evidence
  that the insurer conducted a biased investigation; and evidence
  suggesting that at least some of the defences relied on were
  without merit. However, the amount awarded by the jury was
  irrationally high.

• Punitive Damages: No award for punitive damages made by judge. Decision upheld on Appeal.
   
• Conduct: The breach by Lloyd's of its duty of good faith was
  an independent actionable wrong from its failure to indemnify
  under the policy. However, Court of Appeal concluded that
  the breach did not cause damage to the appellants.
  Consequently, first part of Whiten test not met.

• Punitive Damages: No award made for punitive damages because of finding that insured not entitled to disability coverage.
   
• Conduct: The trial judge stated that had he found that the
  appellant was entitled to the disability insurance he would have
  awarded punitive damages as a result of the behaviour of the
  respondents, basically because they provided insurance in this
  jurisdiction and failed to deal with the claim of the appellant in
  a reasonable manner, given the nature of the insurance.
   
• Note: Application for Leave to Appeal dismissed

• Punitive Damages: Award by Jury of $200,000 affirmed on appeal.
   
• Conduct: Independent adjuster retained by insurer acting
  unreasonably and in bad faith in doggedly pursuing his belief in
  suspicious origins of fire while ignoring evidence to contrary.