229 (SCC) [Andrews]; Thornton v. School District No. The “exceptional circumstances” phrase gave an opportunity for particular cases to ignore the upper limit as we have seen with the defamation, loss of reputation, and sexual assault cases. Non-pecuniary damages were meant to provide a substitute for loss of amenities and to make the plaintiff’s life more bearable. However, this limit for punitive and aggravated damages was recently challenged in a 2013 insurance case from Saskatchewan. 216). The judge in the Merrifield case observed that it is similar to the tort of harassment, but with a couple of distinctions. Levy and Monty Verlint on. In our view, the case for imposing a cap in cases of negligence causing economic loss is not made out here either. 30 [S.Y. No. The Supreme Court of Canada restored the $1 million award having found that the insurer attempted to take advantage of the plaintiff’s financial difficulties, its superior resources, and bargaining power to obtain a favourable settlement. Non-pecuniary damages were not, in the direct sense, compensatory in nature as no amount of money can replace the pain and suffering of the plaintiff. 679 (BCCA)) with the main argument being that the upper limit violated Section 15 of the Canadian Charter of Rights and Freedoms (the right to equality). ← Previous Post She is also Vice Chair of DRI International for the Defense Research Institute. Mr. Justice Spence noted that part of the exercise undertaken was a social and economic attempt to prevent runaway insurance premiums: The very real and serious social burden of these exorbitant awards has been illustrated graphically in the United States in cases concerning medical malpractice. 209 (BCCA) at para. Here, the Court found that the defendant insurance company had failed to assess the plaintiff’s Own Occupation and Any Occupation claims in a fair and balanced manner and that these failures went beyond mere errors of judgment or misunderstandings. Currently, the typical range for aggravated damages in Canada is $10,000 to $100,000 but most of the awards fall on the lower end of the spectrum. In the 1981 Supreme Court of Canada decision of Lindal v. Lindal ([1981] S.C.J. Moreover, the Court awarded damages for mental distress in the amount of $30,000 and punitive damages of $30,000. Slip-and-falls or trip-and-falls; 3. The courts recognize emotional distress as a type of damage that can be recovered through a civil lawsuit. With respect to non-pecuniary damages, the Supreme Court of Canada, Canada’s highest court, implemented a series of rulings in the late 1970s which affected the way non-pecuniary damages were awarded. The plaintiff suffered severenervous shock and emotional distress when he witnessed his wife and three children caught in a fire and explosion which destroyed their house. Emotional distress is a type of mental suffering or anguish induced by an incident of either negligence or through intent. The obligation of good faith dealing means that the insured’s peace of mind should be the insurer’s objective, and the insured’s vulnerability ought not to be aggravated as a negotiating tactic. The insurer made a single payment of $5,000 to the insured for living expenses under the policy but refused to provide further coverage on suspicions of arson. As mentioned in Andrews, the upper limit may not be surpassed “save for exceptional circumstances”. CRY ME A RIVER: RECOVERY OF MENTAL DISTRESS DAMAGES IN A BREACH OF CONTRACT ACTION A U.S./CANADA COMPARISON by Ronnie Cohen* and Shannon O’Byrne** I. Submitted: 10 years ago. Fidler v. Sun Life Assurance Co. of Canada – Supreme Court of Canada – June 29, 2006 An employee is only able to recover damages for mental distress due to the breach of a contract if it can be shown that such damages were within the reasonable contemplation of the parties at the time the contract was formed.. 287 (SCC) [Arnold]) (the “Trilogy”). Mental anguish lawsuits seek damages for the pain and suffering resulting from another person’s negligent or intentional conduct. You may also be able to recover punitive damages against your abuser as in two cases discussed above: $10,000 in … Suing for emotional damages, or “pain and suffering,” has long been a routine tag-on in personal-injury cases. In awarding punitive damages, the Court found that the claims examiner’s rejection of the Own Occupation coverage was severely flawed, as it imported improper considerations and concluded without any foundation that motivational factors were dominating the claim. The development of three areas of damages in Canada is of particular interest: non-pecuniary, punitive, and aggravated damages. No. (3rd) 266 (Ont. Before 1996, all “personal” damages were tax-free, so emotional distress and defamation produced tax-free recoveries. ), Kogan v. Chubb (2001), 27 C.C.L.I. We will review the history behind bad faith claims in Canada and analyze the current amounts which Canadian courts have been awarding for punitive and aggravated damages. Finally, the plaintiff was said to have misapprehended the reason behind the upper limit, which was to prevent excessive awards and the societal consequences stemming from them. “Everyone in Canada, wherever he may reside, is entitled to a more or less equal measure of compensation for similar non-pecuniary loss” (Andrews at pp. Notwithstanding the striking of the award of damages for negligent and intentional infliction of mental distress, the court awarded damages for Ayotte’s assault and battery in the amount of $15,000.00, and for mental distress in the amount of $45,000.00. Employees who are wrongfully dismissed may be entitled to damages for mental distress if they can show that the manner of dismissal caused them mental distress that was in the contemplation of the parties. As a body of jurisprudence emerges, courts rely on previous case law to determine the appropriate award. It requires an “actionable wrong” in addition to the breach of contract. ); and Fowler v. Maritime Life Assurance Co. (2002), N.J. No. Interestingly, the court in Whiten chose not to follow the U.S. Supreme Court’s model of using a 1:1 ratio between compensatory and punitive damages. Generally, punitive damages are imposed in rare circumstances where there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs markedly from ordinary standards of decent behaviour. 57 (Prince George) et al., [1978] 2 S.C.R. Although not a Supreme Court of Canada case, the British Columbia Court of Appeal refused to impose the cap on damages for civil sexual assault cases (S.Y. It is challenging to determine compensation for such cases because there are non-economic damages. British Columbia, Canada: Court of Appeal Sets Aside Aggravated Damages Award in Wrongful Dismissal. The more devastating the loss, the more the insured may be at the financial mercy of the insurer, and the more difficult it may be to challenge a wrongful refusal to pay the claim. Not surprisingly, the insurers in Branco have appealed the case to the Saskatchewan Court of Appeal. ter Neuzen’s “rule of law”judgment most likely contributed to the dearth of awards exceeding the upper limit due to the “exceptional circumstances” of the plaintiff. Category: Canada Law. The plaintiff argued that less injured persons who fell below the upper limit would be entitled to full compensation, whereas catastrophically injured persons would be limited by the cap imposed by the trilogy. However, Fenn was an exceptional circumstance in its own regard. It must not deny coverage or delay payment in order to take advantage of the insured’s economic vulnerability or to gain bargaining leverage in negotiating a settlement. In addition to the contractual obligation to pay the claim, insurers have a distinct and separate obligation to deal with its policyholders in good faith. The British Columbia Court of Appeal reversed this decision, ruling that the trial judge had erred in awarding these kinds of damages without medical evidence of a recognisable psychiatric illness. Damages may be awarded in other headings to provide equality in the amount of compensation a plaintiff receives in a negligence case. Justice Acton believed the $1 million award in Whiten was not sufficient to capture the attention of the insurance industry and hoped a larger award would help them “recognize the destruction and devastation that their actions cause in failing to honour their contractual policy commitments to the individuals insured” (Branco at para. November 18, 2020. All this would change when the Supreme Court of Canada released a judgment awarding $1 million in punitive damages in a first party bad faith insurance case (Whiten v. Pilot Insurance Co., 2002 SCC 18 [Whiten]). A psychiatrist hired by the insurance company conducted an Independent Medical Evaluation (IME). Unintentional torts, which are more common, occur when a person injures another through negligence. Justice Acton, a judge on the Saskatchewan Court of Queen’s Bench, handed down punitive damages totaling $4.5 million and aggravated damages of $450,000 against two insurance companies (Branco v. American Home Assurance Company, 2013 SKQB 98 [Branco]). Traditionally, contractual damages were awarded for … The presence of these attributes provided the potential for an increasingly substantial and excessive amount of damages to be awarded. S.C.J. The rulings have had longstanding social implications. S.C.J. Aggravated damages cover intangible injuries such as mental distress, pain, anguish, grief, anxiety, vexation, humiliation, indignation, outrage, wounded pride, damaged self-confidence or self esteem, loss of faith in friends or colleagues, and other similar matters. The trial judge lowered the jury award to the upper limit as suggested under ter Neuzen, which amounted to $294,000 after it was adjusted for inflation. Diane Teno, the four year old plaintiff, was crossing the road with her brother when she was struck by a vehicle driven by the defendant Brian Arnold. Defective produc… On this basis, he awarded $100,000 in damages for mental injury. Cases that are Exempted from the Upper Limit Cap. The cap established for all non-pecuniary damages, which is periodically adjusted to account for inflation, is currently near $360,000. 263-264). Bell Mobility was found vicariously liable for the torts committed by Ayotte. In these types of contracts, aggravated damages would be allowed. For now, however, the decision of the Saskatchewan Court of Queen’s Bench is not binding on other provincial courts in Canada. Damages for mental distress can be claimed when the breach of contract by one party causes the other party an intangible injury, such as additional stress, anxiety, frustration, humiliation, and emotional or psychological distress. In June of last year, the Supreme Court of Canada released their unanimous decision in Saadati v Moorhead dealing with the proof required to establish “mental injury” in the context of tort claims. The awarding of non-pecuniary damages in a civil action is by no means unique to Canada. However, it also left the potential to exceed the limit if the plaintiff experienced more pain and suffering than that of the plaintiffs in the trilogy cases. She defends individuals and companies against claims for personal injury, particularly claims involving complex medical issues, brain injuries, auto-immune diseases and psychological and psychiatric claims. Action justified the large aggravated damages award by stating that had: AIG made the monthly payments on a regular and timely basis as required under the policy there would in all likelihood not have been the significant amount of mental distress which has virtually destroyed Branco’s life over the last 13 years (Branco at para. These situations created inequality which breached Charter values and rights. [1] Godwin v Desjardins Financial Security Investments Inc., 2018 BCSC 99 (CanLII), [2] Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 SCR 3,  2006 SCC 30 (CanLII), Frequently Asked Questions regarding Canada Pension Plan Benefits, Seeking punitive and mental distress damages in a Long-Term Disability (LTD) Claim, James Cameron and Morgan Rowe Present on LTD Benefits, RavenLaw to Host Conference on LTD Claims in the Federal Public Service. Many other jurisdictions around the world seek to compensate a victim from loss arising from pain and suffering. The History and Treatment of Damages in Canada, Patricia J. Armstrong In citing the Supreme Court of Canada Fidler decision[2], which sets out the rationale for mental distress damages caused by breach of a disability insurance policy, the Court awarded mental distress damages of $30,000 and another $30,000 for punitive damages. Justice Acton showed an immense amount of disapproval for the actions of the two insurance companies. As a breach of the duty of good faith is a separate actionable wrong, it is not dependent on the claim for coverage or compensation under the insurance policy. The claims examiner denied the plaintiff’s claim on the basis that her condition was not severe enough to cause significant and prolonged psychiatric impairments, despite the fact that the phrase “significant and prolonged psychiatric impairment” is not found in the definition of Total Disability set out in the insurance policy. By Admin // In ter Neuzen, a jury awarded $460,000 in non-pecuniary damages. In contrast, aggravated and punitive damages in bad faith claims have not been limited by the courts. The fire department, police, and independent adjusters retained by the insurer concluding that it was an accidental fire. See our article: “Frequently Asked Questions regarding Canada Pension Plan Benefits”. Depression. In Quach v. Mitrux Services Ltd., 2020 BCCA 25 (Quach), the British Columbia Court of Appeal overturned the trial court’s decision to award aggravated damages to an individual whose job was terminated before his … Had the insurance company been responsible for the entirety of the plaintiff’s psychiatric symptoms, an appropriate award would have been approximately $70,000 to $80,000. Doe claimed damages from Etihad for physical injury, emotional distress, and mental anguish. Since the Trilogy, the Supreme Court of Canada has exempted the application of the upper limit cap in particular types of cases. Introduction If someone were to complain of mental distress due to breach of contract, the response might well be “cry me a river.” Aggravated damages cover intangible injuries such as mental distress, pain, anguish, grief, anxiety, vexation, humiliation, indignation, outrage, wounded pride, damaged self-confidence or self esteem, loss of faith in friends or colleagues, and other similar matters. This area is open to widely extravagant claims. Patricia Armstrong practices civil litigation, exclusively as insurance defence counsel. Automobile accidents; 2. Unintentional torts include things like: 1. Such damages may arise where the employer attacks the employee’s reputation, misrepresents the reason for the dismissal, or terminates the employee to deprive them of a particular right, such as … From the above cases, it is clear that the court considers the social implications of a high damage award when deciding whether to apply the cap. A breach of the duty of good faith may result in an award of punitive and/or aggravated damages. 170-76. A tort claim is a legal claim for damages caused by the wrongful act (or tort) of another person. Deterrence is required. 267 (SCC) [Thornton]; and Arnold v. Teno, [1978] 2 S.C.R. With intentional infliction of mental suffering, in addition to being “outrageous”, the defendant’s conduct must also be “flagrant”. In most cases and states, suing for emotional distress damages must be done in conjunction with a physical injury lawsuit, as opposed to emotional distress that was not caused by an injury or accident. The Court found that the claims examiner denial of benefits was severely flawed as “she was looking for reasons to deny coverage, even to the point of manufacturing reasons, rather than trying to find a basis in the evidence for paying the claim”. For a brief period after the Supreme Court of Canada handed down the trilogy judgment, there was uncertainty as to whether the upper limit was a strict rule of law or merely a guideline to be used in future cases. As of the writing of this paper in April 2014, the upper limit is calculated to be approximately $360,000. Only time will tell whether the Canadian courts will limit the maximum amount of punitive and aggravated damages awarded in the future. In contrast, emotional distress claims in Canada are subject to limits established by the Supreme Court in the 1970s. During the 20th century, Canadian courts remained modest in their punitive damage awards against an insurer for acting in bad faith. 146). Currently, the range for punitive damages in Canada is between $50,000 to $1 million. Her husband claimed loss of consortium. AIG’s actions established a pattern of abuse as punitive damages of $60,000 had previously been awarded against AIG for undertaking a similar action in another case. The law of damages in Canada has undergone unique changes over the past 50 years which have helped shape the actions of Canadian society. The exception to this rule is in cases where the purpose of the contract was to offer “peace of mind” such as a vacation holiday package or an insurance contract. But given the inherently volatile and distressing context of almost every family law proceeding, it will be interesting to see where the court will draw the line on culpable behaviour by separating and divorcing spouses. No. The psychiatrist found that the plaintiff’s symptoms might include more occupational (issues with her employer) and motivational factors than a severe and limiting psychiatric impairment. We will discover how the rule has been treated in subsequent cases and predict how it will likely fare in the future. The professor reported her suspicions to a number of authorities and community figures but was later discovered to be wrong in her finding. The case involved damages being sought on behalf of the Plaintiff for being wrongfully dismissed. As explained by Mr. Justice Dickson: The sheer fact is that there is no objective yardstick for translating non-pecuniary losses, such as pain and suffering and loss of amenities, into monetary terms. In addition, victims of defamation were not limited by the cap but victims of negligence, as was the case in Lee, were limited. In provinces such as British Columbia, the highest award has only been $35,000 (Asselstine v. Manulife, 2005 BCCA 292). The Court also noted that the claims examiner’s notes do not give any weight to the fact that the plaintiff’s disability was recognized by Canada Pension Plan Disability benefits. Notably, the Court held that had the insurance company’s conduct only marginally aggravated the plaintiff’s symptoms. ), Fidler v. Sunlife, 2004 BCCA 273, Fernandes v. Penncorp Life Insurance Company, 2013 ONSC 1637). 595, 2002 SCC 18 [Whiten] explained the role of punitive damages in bad faith claims: An award of punitive damages in a contract case, though rare, is obtainable. Emotional or psychological injuries that could give rise to a claim for compensation include: Anxiety and stress. Their purpose is not to compensate the plaintiff, but to give the defendant his or her just dessert (retribution), to deter the defendant and others from similar misconduct in the future (deterrence), and to mark the community’s collective condemnation (denunciation) of what has happened (Hill v. Church of Scientology). In the early 2000s, aggravated damages in bad faith claims increased and reached amounts of up to $75,000 as was awarded in both Ontario and Newfoundland cases (Clarfield v. Crown Life (2000), 23 C.C.L.I. H.C.J.). The $100,000 upper limit was again imposed in Arnold. Consequently, Justice Dickson for the Supreme Court of Canada imposed a conservative upper limit on non-pecuniary damages: I would adopt as the appropriate award in the case of a young adult quadriplegic like Andrews the amount of [CDN]$100,000. No. Therefore, an individual may be awarded punitive damages even if the court rules that the insured is not entitled to any form of coverage (seeSaskatchewan Government Insurance v. Wilson, 2012 SKCA 106). Chastain v. U.S. Dep’t of the Navy, EEOC Appeal No. If you have suffered emotional distress, you are entitled to compensation for your distress and the physical and mental injuries suffered. What is the Process of Suing For Emotional Distress Canada? Save in exceptional circumstances, this should be regarded as an upper limit of non-pecuniary loss in cases of this nature (Andrews at p. 21). In Godwin v Desjardins Financial Security Investments Inc.[1], the Supreme Court of British Columbia found that the Insurer breached its duty of good faith by failing to assess the plaintiff’s disability claims in a fair and balanced manner. C.A.) He awarded punitive damages of $1.5 million and aggravated damages of $150,000 against AIG, and punitive and aggravated damages of $3 million and $300,000 respectively against Zurich. Nonetheless, the insurer held on to its arson theory and relied on the help of an aggressive and confrontational legal counsel. 79 at p. 29 [ter Neuzen]). In Whiten, the plaintiff and his family sought insurance coverage after the plaintiff’s house completely burned down on a cold winter night in Ontario. Medical malpractice; 4. Mr. Justice Dickson found there would not be any unfairness to the plaintiff if an upper limit was imposed. 287 (SCC) [Arnold], the plaintiff was a similarly young individual who suffered a catastrophic injury, albeit with different injuries. Mental anguish damages are usually connected to cases involving wrongful death, disfigurement or serious bodily injury that led to profound sadness and distress for the injured individual. Vancouver, British Columbia V6B 2L3 The court further justified the award by reasoning that, due to inflation, the same monetary value was worth less than at the time of the trilogy. [Fenn]). It is in this area that awards in the United States have soared to dramatically high levels in recent years. At the time, Fenn appeared to have expanded the upper limit on non-pecuniary damages for personal injury cases, which could have potentially led to an escalation of awards. On the other hand, a recent 2013 Ontario case awarded $100,000 in aggravated damages on a disability insurance claim (Fernandes v. Penncorp Life Insurance Company, 2013 ONSC 1637). Slightly over a year after the trilogy, the Ontario Court of Appeal awarded a plaintiff $125,000 in non-pecuniary damages for nervous shock (Fenn v. City of Peterborough, [1979] O.J. 4312 (Ont. 1000 – 564 Beatty Street In Canada, the factors which are analyzed to determine an appropriate award are: 1) the plaintiff’s age, 2) the nature of the injury, 3) the severity and duration of the pain, 4) the level of the disability, and 5) the loss of lifestyle or impairment of life (Stapley v. Hejslet, 2006 BCCA 34 at para. Juries have awarded punitive damages as high as $2.5 million, but this award was later overturned by the appeal court (see Plester v. Wawanesa Insurance, [2006] O.J. 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