Skip to content

Client Update: Supreme Court of Canada dismisses appeals in punitive damages cases

The Supreme Court of Canada has dismissed the appeals in Bruce Brine v. Industrial Alliance Insurance and Financial Services Inc.1 (with costs) and Luciano Branco, et al. v. Zurich Life Insurance Company Limited, et al.(without costs). Both of these cases dealt with large awards for punitive damages and mental distress damages which were substantially reduced at their respective Courts of Appeal.

The Courts of Appeal decisions therefore stand. In Brine, the Nova Scotia Court of Appeal reduced damages for mental distress from $180,000 to $90,000, and punitive damages were reduced from $500,000 to $60,000. In Branco, the Saskatchewan Court of Appeal reduced damages for mental distress from $450,000 to $45,000 and punitive damages were reduced from an unprecedented $4.5 million to $675,000.

Please see our previous Client Update on Brine, which set out the following lessons learned:

  • The standard of good faith applies to discretionary services like rehabilitation once offered. In general, insurers must carefully consider how they are handling their files, be able to back up their conclusions with reasonable and rational evidence, and remain forthright in communications with the insured – especially in contracts meant to protect the insured’s “peace of mind.” Insurers will have to be cautious when deciding to commence rehabilitation benefits, as they will not be permitted to stop them even in the face of it appearing the insured will not return to work (without risking a finding of bad faith, and a corresponding award of damages). Insurers may need to consider more explicit provisions in the contract to mitigate what could be a significant change in the way rehabilitation benefits have been engaged in the past.
  • Courts in Nova Scotia are not hesitating to award large damages awards against insurers, whether they are contractual damages for the insured’s mental distress, or punitive damages for particularly egregious conduct by the insurer. Further, if an insurer has a history of such awards imposed against them in other cases, this will likely increase the frequency and amount of punitive awards against the same insurer.

Although Stewart McKelvey was not involved in the Brine or Branco cases, if you would like to discuss the implications of these Court of Appeal decisions in greater detail, or would like advice on avoiding bad faith damages, please contact Patricia MitchellMichelle Chai or the other members of the Stewart McKelvey Life & Disability Insurance Practice Group.


1 Interestingly, before the Supreme Court of Canada dismissed the appeal in Brine, the Court considered whether the Plaintiff Insured was allowed to file an affidavit from a professor which made a number of statements about misconduct by insurers being exacerbated by low punitive damages. The Court held the affidavit did not assist the Court in determining if the appeal dealt with matters of public importance, and commented the affidavit amounted to an “improper attack on the correctness of the Court of Appeal decision below”. The decision is not publicly available, but can be found on Westlaw at 2016 CarswellNS 205.

SHARE

Archive

Search Archive


 
 

Client Update: Truth or Consequences – The New Duty of Honest Performance in Commercial Contracts

November 17, 2014

The Supreme Court of Canada’s unanimous decision in the breach of contract case Bhasin v Hrynew, 2014 SCC 71 was released on November 13, 2014. The case is important in the law of contracts because…

Read More

Client Update: Recent Changes to the Temporary Foreign Worker Program

August 28, 2014

On June 20, 2014, the Government of Canada announced a series of reforms to overhaul the Temporary Foreign Worker Program (“TFWP”). These reforms, many of which are effective immediately, function to: Re-organize the TFWP  The…

Read More

Atlantic Employers’ Counsel – Summer 2014

August 1, 2014

The Editor’s Corner Clarence Bennett Summer is halfway over, but we know you will want to take this edition along with you while you enjoy more summer weather and time out of the office. Employers…

Read More

Client Update – Tsilhqot’in Nation – An East Coast Perspective

July 9, 2014

On June 26, 2014, the Supreme Court of Canada released one of the most significant aboriginal law decisions since Marshall – Tsilhqot’in Nation v. British Columbia, 2014 SCC 44 (also known as the William decision).  This decision could have…

Read More

Client Update: Nova Scotia Supreme Court awards $500,000 in Punitive Damages in LTD case

July 9, 2014

In Industrial Alliance Insurance and Financial Services Inc. v. Brine, 2014 NSSC 219, National Life (and later its successor Industrial Alliance) alleged Brine had received undisclosed CPP and Superannuation disability benefits resulting in a substantial overpayment of…

Read More

Client Update: One final reminder – Are You Ready for Anti-Spam?

June 20, 2014

Any individual, business or organization that uses email, text messages or social networks to promote their products and services should take note of Canada’s Anti-Spam Legislation and its accompanying regulations. Effective July 1, 2014, the…

Read More

Doing Business in Atlantic Canada (Summer 2014)(Canadian Lawyer magazine supplement)

June 17, 2014

IN THIS ISSUE: Consistent Use: The Collection of Union Members’ Personal Information by their Union by Alison Strachan and Jonah Clements. Single Incident of Offensive and Threatening Facebook Post is Just Cause by Harold Smith, QC. The New Anti-Spam Law –…

Read More

Surprise Amendments to the Newfoundland and Labrador Labour Relations Act

June 3, 2014

 Yesterday, Monday June 2, 2014, the Government of Newfoundland and Labrador introduced brand new (and unexpected) amendments to the Labour Relations Act. The full text of the proposed amendment can be accessed here. Bill 22, if it…

Read More

Doing Business in Atlantic Canada

May 26, 2014

Download as a PDF

Read More

Doing Business in Atlantic Canada

May 26, 2014

Download as a PDF

Read More

Search Archive


Scroll To Top