One type of damages you may read about in the newspaper, especially about cases in the United States, is punitive damages. As the name suggests, punitive damages are designed to punish a wrongdoer. To meet the test in Canada, the conduct of the wrongdoer must not be ordinary conduct. The conduct must be so high-handed, malicious, vindictive, and oppressive as to offend the court and warrant the court’s censure as being unacceptable to community standards.
One Ontario case of interest dealt with fraudulent transfers of property and mortgages by one of the defendants to his wife, friends, certain companies, and a family trust. The court found that the family trust was a complete sham because that defendant was really the owner indirectly of all of the assets of the trust. What really got the court upset, however, was how the defendants conducted their defence in the litigation. Here are some of the judge’s comments: “In light of the conduct of the defendants throughout the proceedings to obfuscate, delay, be less than forthright in their evidence, their conduct warrants punitive damages . . . This was accomplished through lies, deceit, false affidavits, and fraudulent conduct involving municipal authorities. All of this behaviour, directly or indirectly, had a profound affect on the plaintiffs and the litigation.” The plaintiffs had already been awarded $2 million in general damages. The court added another $200,000 in punitive damages.
In England, punitive damages are more narrowly applied than in Canada. They are limited to situations such as oppressive or arbitrary conduct of government officials or where the defendant’s conduct results in profit that cannot be fully restored to the plaintiff by general damages.
The United States, of course, is notorious for awarding large punitive damages compared to Canada. One reason is that they have more jury trials. U.S. juries hear evidence relating to the harm not only suffered by the plaintiff but also to the harm suffered by third parties from the systemic wrongdoing of the defendant. Recent U.S. examples are the cases of corporate financial wrongdoing where juries are willing to “make an example” by awarding large punitive damages. I wonder what will happen to Lord Black.
