Whiten v. Pilot Insurance Co. - The Unofficial Death of the Independent Wrong Requirement and Official Birth of Punitive Damages in Contract

Three years have passed since the Supreme Court of Canada rendered its controversial decision in Whiten v. Pilot Insurance Co. In that case, the Court affirmed an almost unprecedented punitive damage award by a jury of one million dollars against an insurance company. More importantly, the Whiten decision appears to be the first attempt by the Supreme Court to construct a comprehensive set of rules and principles in light of which punitive damages cases should be decided in the future. While the extraordinary monetary sanction upheld by the Court has attracted much attention in legal and commercial circles, it seems that other aspects of the decision, especially the question of its impact on the availability and scope of punitive damages, have not so far received the full academic attention they deserve. This article attempts to bridge the gap by analyzing those aspects of the Whiten decision that are relevant to this question. Its object is to demonstrate the various ways in which Whiten transformed the infrastructure of the Canadian law of punitive damages, especially, but not only, in the area of contracts. It should be stressed at the outset that the purpose of the analysis is neither to evaluate the propriety of the Whiten decision itself nor to contribute to the ongoing debate as to the proper role of punitive damages in civil and commercial litigation. Rather, this article attempts to clarify the present state of the law and to speculate on the influence of Whiten on future case law in this area. The analysis starts with a brief discussion of the pre-Whiten case law, and the limitations that were imposed on the availability of punitive damages by the Supreme Court's leading decision in Vorvis and its progeny. Next, I address the Whiten decision itself demonstrating how, without explicitly overruling any of those prior limitations, it actually rejected, relaxed or by-passed most if not all of them, thereby bringing about the unofficial demise of the requirement. Finally, I examine the possible impact of Whiten on future case law. While Whiten significantly expands the potential scope of the punitive damages doctrine, it is difficult to predict the extent to which this potential will actually be realized in subsequent judicial decisions. Nevertheless, it does seem reasonable to expect that, encouraged by the Supreme Court's favorable attitude towards the idea of civil punishment, courts sympathetic to the concept of punitive damages will tend to award or allow them more liberally than before. It also seems reasonable to predict that because of the decline of the independent wrong requirement, the post-Whiten case law will be characterized by a straightforward and substantive approach rather than the more formalistic approach reflected in much of the pre-Whiten case law.

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