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Punitive Damages II

. McFlow Capital Corp. v. James

In McFlow Capital Corp. v. James (Ont CA, 2021) the Court of Appeal considered the criteria for awarding punitive damages:
[43] As noted by the trial judge, in deciding whether to make an award of punitive damages, the question is whether the defendant’s conduct was so outrageous that punitive damages are rationally required for deterrence. Trial courts have latitude in determining punitive damages, provided the amount serves a rational purpose, namely prevention, deterrence and denunciation: Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, at paras. 94-100; Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265, at para. 190; Cinar Corporation v. Robinson, 2013 SCC 73, [2013] 3 S.C.R. 1168, at para. 134.

[44] Appellate courts should only intervene “where there has been an error of law or a wholly erroneous assessment of the quantum” of punitive damages, that is, if the amount awarded was not rationally connected to the purposes in awarding punitive damages: Richard, at para. 190; Cinar, at para. 134.
. Eynon v. Simplicity Air Ltd.

In Eynon v. Simplicity Air Ltd. (Ont CA, 2021) the Court of Appeal considered the awarding of punitive damages in a jury trial:
(a) The issue of punitive damages was properly left with the jury

[11] The trial judge properly told the jury they could award punitive damages “if the wrongful acts of the [appellant] toward [the respondent] were outrageous or reprehensible and offensive to ordinary standards of decent conduct in the community.” He told them: 1) that an award of punitive damages was very much the exception; 2) that such damages should be awarded only if there has been “high-handed, malicious, arbitrary, or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour”; 3) that the purpose of punitive damages is to deter similar misconduct in the future rather than provide compensation to the plaintiff; and 4) that punitive damages are generally given only when “misconduct would otherwise be unpunished or when other penalties suffered by the defendant are unlikely to adequately achieve the objectives of retribution, deterrence, and denunciation, which are normally the preserve of the criminal law”. He also told the jury that punitive damages should only be awarded in an amount that was no greater than necessary to rationally accomplish their purpose. The trial judge identified aspects of the defendant’s conduct that were relevant to the claim for punitive damages, as well as the evidence of the defendant’s witnesses denying or explaining that conduct. The trial judge referred to the factors relevant to the determination of a proportionate amount of punitive damages.

[12] There was sufficient evidence that a properly instructed jury, acting reasonably, could have awarded punitive damages. The supervisors’ instructions to an injured employee to falsely report that he was injured at home, without more, warranted an award of punitive damages. The jury could properly regard these instructions as misconduct offensive to ordinary standards of decent conduct expected of an employer and could be properly described as highly reprehensible. Such instructions contravene s. 22.1 of the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sched. A. (“WSIA”), and constitute an offence under s. 155.1 of WSIA. Had the appellant been prosecuted and a penalty imposed under s. 158(1) of WSIA the need for punitive damages would have been lessened: see Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, at para. 123.

(b) There was no error in the trial judge’s instructions on punitive damages

[13] The appellant recognizes that the trial judge cited the boilerplate punitive damages elements listed in Whiten, but submits he failed to give the jury guidance on how to apply those elements to the facts of this case. We disagree.

[14] The trial judge’s instructions, summarized above, adequately equipped the jury to assess the appellant’s conduct. The appellant’s reliance on Ferme Gérald Laplante & Fils Ltée v. Grenville Patron Mutual Fire Insurance Co. (2002), 2002 CanLII 45070 (ON CA), 61 O.R. (3d) 481, leave to appeal refused, [2002] S.C.C.A. No. 488, a breach of contract case, is misplaced as no independent actionable wrong was required in this tort case: Whiten, at para. 149, per LeBel J. (dissenting, but not on this point).

[15] The appellant also submits that the trial judge erred by failing to provide any guidance on what an appropriate range for punitive damages would be. The appellant argues the failure to provide such guidance invites disproportionate awards.

[16] Absent the agreement of counsel on a range for punitive damages, it would have been improper for the trial judge to suggest one to the jury. We note that the appellant’s trial counsel did not ask for the jury to be given guidance on a range of punitive damages, nor did he provide one to the jury himself in closing submissions, despite confirming with the trial judge that he would be permitted to do so. We do agree it would have been preferable for the trial judge to have asked the jury to briefly indicate the basis for their award of punitive damages as he had asked them to indicate the basis for their award of general damages.

(c) The appellant is liable for punitive damages resulting from the conduct of its employees

[17] The appellant advanced the proposition that an award of punitive damages had to be based on its own conduct and could not be based on the conduct of its employees (in this case the supervisors Gary and Doug). The appellant relied on this court’s decision in Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419, 120 O.R. (3d) 481, where Laskin J.A. distinguished between “reprehensible conduct specifically referable to the employer” and the conduct of its supervisor: at para. 82. The employer and the supervisor were both defendants in Boucher and the damage awards against each were discussed separately. The problem in that case was that the trial judge invited the jury to base its award of punitive damages against Wal-Mart on its vicarious liability for an independent actionable wrong that was committed by its employee – the intentional infliction of mental suffering (and in respect of which the employee defendant was found liable for $100,000 in damages). Laskin J.A. commented that this wrong was never tied by the trial judge to Wal-Mart’s own conduct in failing to enforce its workplace policies. After considering that conduct, he concluded that Wal-Mart’s own conduct warranted an award of punitive damages, but he reduced the punitive damages awarded by the jury after considering the significant compensatory amounts awarded, including aggravated damages, and the fact that Wal-Mart was vicariously liable for the amounts awarded against its employee.

[18] In the present case, by contrast, only the employer was named as a defendant. There was no obligation to find an “independent actionable wrong”, and the conduct of Gary and Doug occurred in the course of their employment as the respondent’s supervisors who had been left in charge of the workplace in the absence of the appellant’s owners. There was no question that the conduct of the supervisors was the conduct of their employer, the appellant. Moreover, the actions of Gary and Doug occurred within what the jury had determined was “a culture within the company whereby employees failed to place adequate importance on best safety practices”. Accordingly, we do not give effect to the argument that the award of punitive damages against the appellant was unwarranted because the focus was on the misconduct of its supervisory personnel.

(d) The quantum of the award is not irrational and inordinately large

[19] The appellant properly points out that a less deferential standard applies to appellate review of jury awards of punitive damages than to jury awards of general damages: Rutman v. Rabinowitz, 2018 ONCA 80, 420 D.L.R. (4th) 310, at paras. 56-58. Appellate review of a jury award of punitive damages furthers the coherence of the administration of justice by ensuring that the award serves a rational purpose. However, in order to interfere with a jury punitive damages award, the reviewing court must regard the award, when added to the compensatory damages, to be so “inordinately large” that it exceeds what is rationally required to punish the defendant: Rutman, at para. 58; Whiten, at paras. 109, 128.

[20] In this case, we are not persuaded the jury’s award of punitive damages is so inordinately large that it exceeds what is rationally required to punish the appellant. As noted, the evidence was that the appellant had not been penalized in another forum for instructing the respondent to falsely report the accident happened at home. The jury could properly regard this conduct as sufficiently illegal and reprehensible to warrant an award of this magnitude to deter similar misconduct in the future.

[21] This is one of those exceptional cases in which the relationship between the punitive damages award and the general damages award is weak. In this case, the trial judge’s instructions premised the punitive damages award on the appellant’s conduct after the accident and not on its negligence which contributed to the accident. In that sense, the punitive and general damage awards had separate bases. The focus of the award of punitive damages was on the appellant’s misconduct in the context of the surrounding circumstances, and not on the circumstances leading to the respondent’s injury. This is however entirely proper. Punitive damages are awarded to sanction a defendant’s misconduct, and not to compensate a plaintiff: see Whiten, at paras. 94, 127.

(e) The punitive damages award should not be reduced by contributory negligence

[22] In awarding punitive damages, the jury was instructed to consider the supervisors’ conduct after the accident. The respondent’s contributory negligence leading to the accident was properly not part of the determination of whether punitive damages were warranted. There is no basis for reducing the punitive damages award based on contributory negligence.




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