July 1, 2015

Canadian appellate court reduces record-setting $4.5 million punitive damages award

The StarPhoenix of Saskatoon reports that an appellate court in Saskatchewan has reduced an "unprecedented" $5 million damages award in an insurance bad faith case.

The plaintiff claimed that two insurance companies unreasonably denied his claims for workers' compensation benefits. The trial court (Justice Murray Acton of the Saskatoon Court of Queen's Bench) awarded him $450,000 for emotional distress and $4.5 million in punitive damages.  At the time, Justice Acton said he hoped the large award would gain the attention of the insurance industry.

Instead, the award attracted the attention of the Court of Appeal, which issued a 94-page opinion that dramatically reduced the "extravagant" damages.  The three-judge panel reduced the emotional distress damages to $45,000 and reduced the punitive damages to $675,000.

The opinion is an illustration of the stark contrast between Canadian courts and American courts when it comes to damages.  We are long past the time in this country when anyone would call a $5 million damages award in a bad faith case "unprecedented" or "record-setting."

Will American-style damages awards gain a foothold in Canada?  Perhaps, if this story is any indication.  But for now at least, the Saskatchewan Court of Appeal is holding the line.