Whiten v Pilot Insurance Co [2002] SCC [punitive damages]

- D thereafter pursued a hostile and confrontational policy which jury concluded was calculated to force P to settle her claim at substantially less than fair value

- While there was no evidence of arson, D forced P into trial, forcing her to risk her remaining asset which was the insurance claim and $320k in legal costs she did not have

- TJ awarded $1 mill in punitive damages, CA reduced it to $100k

1. 
   Punitive damages cannot be limited to “categories” since control mechanism lies in rationally determining circumstances that warrant addition of punishment to compensation in civil action
   

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  Punitive damages likely restricted to intentional torts or breach of fiduciary duty
  

2. 
   General objectives of punitive damages are punishment in the sense of retribution, deterrence of wrongdoer and others, and denunciation
   
3. 
   Punitive damages should be used only in exceptional cases and with restraint
   
4. 
   The incantation of the time-honoured pejoratives (e.g. high handed, oppressive, vindictive) provides insufficient guidance
   
5. 
   Should promote rationality in that court should look relate facts to underlying purpose of punitive damage and ask how an award would further objectives of the law, and what is lowest award to serve this purpose
   
6. 
   It is rational to use punitive damages to relieve a wrongdoer of its profit where compensatory damages would amount to nothing more than a license fee to earn greater profits through outrageous disregard of the legal or equitable rights of others (2^nd category of Cassels)
   
7. 
   Proper focus is not on P’s loss, but on D’s misconduct, mechanical or formulaic approach doesn’t allow for many variables that should be taken into account
   
8. 
   Governing rule for quantum is proportionality, punitive damages should be rationally related to objectives for which punitive damages are awarded
   
9. 
   Juries should receive more guidance from judges wr.t. these damages
   
10. 
    Appellate court is entitled to intervene if award exceeds outer boundaries of a rational and measured response to facts of the case
    

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  A breach of contractual duty of good faith is independent and in addition to the breach of contractual duty to pay the loss (indemnity)
  
• 
  The former constitutes an ‘actionable wrong’ which does not require an independent tort
  
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  Takeaway: punitive damages can be awarded for a breach of good faith, both by insurer and insured
  

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  Blameworthiness of D’s conduct
  
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  The degree of vulnerability of P
  
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  The harm or potential harm directed specifically at P
  
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  The need for deterrence
  
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  Proportionate, even after accounting for other penalties, both civil and criminal, which have been or are likely to be inflicted on D for the same misconduct
  
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  The advantage wrongfully gained by D from the misconduct
  

• 
  Jury obviously felt that something more was required to demonstrate to D that its bad faith dealing in dealing with the loss claim was not a wise or profitable course of action
  
• 
  Punitive damages served as a rationally required means to deter anyone from replicating this conduct in the future
  

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  Compensatory damages not enough to deter D since this sum was contractually obligated
  
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  Power imbalance was highly relevant, obligation of good faith dealing meant that P’s peace of mind should have been D’s objective, and her vulnerability should not have been aggravated as a negotiating tactic
  

- In disputes concerning damage to property or economic interests, retributive aspect of law should not play a major role in litigation

• 
  Granting indemnity of x3 the compensation for loss of property under an insurance policy fulfills not rational function
  
• 
  Award fails rationality test since its sole purpose is to punish bad faith and unfair dealing of D’s employees and counsel, however, it doesn’t address any widespread practice in insurance industry
  
• 
  The dispute arose in context of contractual relationship concerning well-defined economic interest, did not involve any moral or dignity interest
  

9. (1) In the event of loss or damage to insured property, the insured must take all reasonable steps to prevent further loss or damage to that property and to prevent loss or damage to other property insured under the contract, including, if necessary, removing the property to prevent loss or damage or further loss or damage to the property

10. After loss or damage to insured property, the insurer has

(a) an immediate right of access and entry by accredited representatives sufficient to enable them to survey and examine the property, and to make an estimate of the loss or damage, and

(b) after the insured has secured the property, a further right of access and entry by accredited representatives sufficient to enable them to appraise or estimate the loss or damage, but

(i) without the insured's consent, the insurer is not entitled to the control or possession of the insured property, and

(ii) without the insurer's consent, there can be no abandonment to it of the insured property.

13. (1) Unless a dispute resolution process has been initiated, the insurer, instead of making payment, may repair, rebuild or replace the insured property lost or damaged, on giving written notice of its intention to do so within 30 days after receiving the proof of loss.