Whiten v. Pilot Insurance is the leading Canadian case on the role of punitive damages when an insurer acts in bad faith when dealing with a claim. The award to the plaintiffs of CAD 1 million was, at the time, ten times larger than any other punitive damages award in Canadian history and was four times larger than the amount at issue in the lawsuit.
The Case[]
The Whitens suffered a total loss of their property in a fire that, including their personal property, exceeded their policy limit of approximately CAD 250,000. They had to move into alternative housing which, at first, was paid for by their insurer, Pilot. However, aparently in an attempt to get them to settle for a smaller amount, Pilot's lawyer built a case for arson and instructed his client to stop paying for the Whiten's alternative accommodation.
The Trial[]
The case was tried before a jury. Although Pilot said it would prove the Whitens were under financial pressure and burned down their home to recover the insurance proceeds, the evidence supporting arson was poor and, in the final summing up, Pilot's lawyers did not press the arson defence. The jury awarded the Whitens the entire amount of the policy limits. Based on the fact that the arson defence was contrived merely to put pressure on the Whitens to settle, the Whitens also asked for punitive damages. The jury returned an award of CAD $1 million. In addition, the trial judge awarded the Whitens full indemnity costs in the amount of about CAD $600,000. Trial judgment at CanLII
The Appeal[]
Pilot appealed to the Ontario Court of Appeal. At the appeal, the sole issue was whether the CAD 1 million punitive award was excessive. In a 2-1 decision, the court ruled that it was out of proportion to the amount at issue and reduced the amount to CAD 100,000. Appeal judgment at CanLII
The Further Appeal[]
The Whitens appealed to the Supreme Court of Canada, which restored the jury's punitive damages award. The court ruled that although the amount was 4 times greater than the amount of the insurance claim, when the costs the Whitens had to incur were included, it was only about 20% larger than the entire amount that the Whitens had to put at risk to recover an amount they were rightfully owed. The Supreme Court also noted that Pilot had refuse to allow the trial judge to put any arguments forward about the proper amount that should be awarded and they could not now complain that the jury, acting without guidance of the court or Pilot, had erred. Supreme Court judgment at CanLII
Legacy[]
The case has become the leading case on this issue in Canada and is cited by other cases over 60 times a year. Punitive damage awards in such matters now regularly exceed CAD 100,000 and are commonly in the range of CAD 500,000.