Punitive damages in Ontario: Key cases, standards, and how courts decide

While punitive or exemplary damages may not get daily attention from legal professionals, recent court decisions show that this type of damages remains a live issue in Ontario litigation.

In this article, we’ll discuss the basics of punitive damages, including recent cases that applied them. This guide is written for lawyers, but plaintiffs and defendants can also use it to learn what these damages are and how they work.

What are punitive damages in Ontario?

Punitive damages are a type of damages awarded by the court in exceptional circumstances, based on the facts and the defendant’s actions. While they are awarded at the discretion of the court, their goals are:

• to punish the defendant for their outrageous conduct and deter them same defendant from repeating it
• to send a warning to other persons or organizations that comparable conduct will be met with punitive damages

Also known as exemplary damages, punitive damages are often awarded alongside other non-compensatory damages, such as:

• nominal damages
• restitutionary damages

However, punitive damages focus on the defendant’s actions, not on the plaintiff’s losses. This sets them apart from compensatory damages, which are based on the plaintiff’s actual harm.

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In what cases will Ontario courts award punitive damages?

While punitive damages are generally available in civil lawsuits, there are common cases where Ontario courts have awarded them:

• breach of contract with actionable wrong
• disputes with insurance companies
• medical malpractice and negligence
• wrongful dismissals and labour issues

We’ll discuss each of them below.

Breach of contract with actionable wrong

Common law states that awarding punitive damages is possible in a case involving a contract, but only when:

• there is a breach of contract
• it is in addition to an “actionable wrong”

These damages are only awarded when both elements are present.

Kovacevic v. Griva: Punitive or exemplary damages as an exceptional award

Courts have set a high bar for awarding punitive damages. Take the case of Kovacevic v. Griva, 2024 ONSC 2979, which denied the plaintiff’s claim for damages.

In this case, the Ontario Superior Court of Justice entirely dismissed Mira Kovacevic’s claims for damages against Slobodan and Milena Griva. As for the punitive damages, the Court found that:

• the documents submitted by Kovacevic, which included invoices and timesheets, were exaggerated or fabricated
• the Grivas’ refusal to pay the invoices or settle the Kovacevic’s claim is neither an actionable wrong, nor it is the level misconduct that would warrant punitive damages
• allegations made in the Grivas’ Statement of Defence are not grounds to claim punitive damages, since the appropriate remedy is to have them struck under the Rules of Civil Procedure

This case reminds lawyers and plaintiffs that punitive damages must be prayed for properly, using the standards set by common law. Otherwise, it may well be denied, just like in the case of Kovacevic.

Disputes with insurance companies

Intentionally denying an insured’s claim without any legal grounds, stalling a decision, or engaging in bad‑faith conduct can put insurers at risk of punitive damages.

Insurers have a legal duty to deal with their policyholders in good faith. A breach of that duty can expose them to punitive damages.

Whiten v. Pilot Insurance: The classic case for damages

The case of Whiten v. Pilot Insurance Co., 2002 SCC 18, is one of the leading cases for punitive damages that were imposed against an insurance company. The Supreme Court upheld a $1 million punitive damages award against Pilot Insurance, one of the largest at the time.

The Court based its ruling on Pilot Insurance’s conduct, which was exceptionally reprehensible towards Daphne Whiten, the insured. It said that:

• Pilot Insurance’s conduct against Whiten was “planned and deliberate,” which “forced her to put at risk her only remaining asset”
• this conduct continued for over two years, while Whiten’s financial situation grew “increasingly desperate”
• Pilot Insurance violated its obligation to deal with its policyholders, like Whiten, in good faith

The Court held that punitive damages in breach of contract cases are possible, though rare, and require an actionable wrong on the part of the defendant in addition to the breach itself. It also said that the defendant’s conduct must:

• be high-handed, malicious, arbitrary or highly reprehensible; and
• that it largely departs from ordinary standards of decent behaviour

Hear more from a top personal injury law firm as ranked by Canadian Lawyer, whose work included the case of Whiten:

Head over to our Practice Management page for more articles and insights from legal experts for lawyers and law firms in Ontario.

Medical malpractice and negligence

Like in personal injury cases, medical malpractice and negligence cases are common situations where courts award punitive damages, especially when insurers are also involved.

Defendants in these cases include medical professionals, hospitals, and insurers whose conduct may justify punitive damages.

Baker v. Blue Cross: Largest punitive damages award in Canada

The largest punitive damages award in Canada to date comes from Baker v. Blue Cross Life Insurance Company of Canada, 2023 ONCA 842. Here, Blue Cross was held liable for punitive damages of $1.5 million.

The Court of Appeal found that:

• Blue Cross stopped the payment of benefits on three separate occasions to Sara Baker, the insured in this case
• each denial by Blue Cross was followed by requests for Baker to submit more documents, instead of warning her of a potential cut-off
• Blue Cross relied on the opinions of its contracted general practitioners, which it knew were incorrect
• Blue Cross also used selective evidence to support the denial of Baker’s benefits, despite conflicting medical evidence

In the end, the Court held that the large punitive damages are warranted, given the Blue Cross is a large insurance company, and to deter it and other insurers from similar conduct.

Wrongful dismissals and labour issues

Employers are also exposed to punitive damages, as courts have held them liable in wrongful dismissals and other labour cases.

Wilds v. 1959612 Ontario: Punishing employers through damages

In Wilds v. 1959612 Ontario Inc., 2024 ONSC 3452, defendant Gibson was held liable for $10,000 in punitive damages for its wrongful dismissal of Barbara Wilds, its 52-year-old executive assistant.

In allowing the damages, the Court held that Gibson terminated Wilds without cause and without notice. The Court pointed to specific facts that warranted punitive damages:

• Gibson committed several violations of Ontario’s Employment Standards Act (ESA); for instance, it failed to pay Wilds her minimum entitlements under the ESA
• Gibson failed to correct these various violations, even if these were repeatedly brought to its attention, both before and after the case was filed

The Court also found it particularly egregious that Gibson’s affiant appeared for cross-examination without knowing whether the company had paid Wilds her ESA minimum entitlements and other reimbursements.

How do courts calculate punitive damages?

The law does not set a fixed amount that courts should award when punitive damages are justified. Instead, common law provides guidance for courts when calculating the amount, and for lawyers when pleading punitive damages.

Standards provided by Whiten in assessing punitive damages

Whiten remains the leading case for assessing punitive damages. For years, it has been repeatedly cited, not only by Ontario’s courts, but also by the courts of other provinces.

Whiten set out some principles on how to determine whether punitive damages are proper and how to award. The Court said that punitive damages must be assessed in an amount reasonably proportionate to the following:

• the harm caused by the defendant
• the degree of defendant’s misconduct
• the plaintiff’s relative vulnerability
• any advantage or profit gained by the defendant
• the other fines or penalties on the defendant for the same misconduct

These standards, along with the cases citing Whiten, help courts and lawyers determine whether a punitive damages award is proportionate or excessive.

Punitive damages: When a defendant’s conduct crosses the line

Punitive damages remain widely discussed, not just in Ontario courts but also across other Canadian jurisdictions. Over time, courts have refined how they apply these damages, from the foundational case of Whiten through to the recent decisions discussed above.

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