The Court of Queen’s Bench for Saskatchewan has sent a
strong message to insurance companies in the recent Branco v
American Home Assurance Co. decision by setting new high-water
marks for punitive damage awards. After a comprehensive review of
the jurisprudence on punitive damage awards and the specific
behaviour of the insurers involved, Justice Acton held that
insurance companies had not received the message sent by the
Supreme Court of Canada in Whiten v. Pilot Insurance Co.
Using very strong condemnatory language, Justice Acton stated the
purpose of these higher awards was to “gain the attention of
the insurance industry [so that it] … recognize the
destruction and devastation that their actions cause in failing to
honour their contractual policy commitments to the individuals
The plaintiff, Luciano Branco, was a 62 year old Canadian
citizen who was employed as a welder in Kyrgyzstan with Kumtor
Operating Company. In late 1999 and early 2000, Branco was
injured at work. He advised his employer in June 2000. Kumtor
put its’ WCB and disability insurers on notice of
Despite surgery, physiotherapy, and rehabilitation, Branco did
not recover and was deemed unsuitable for vocational
retraining. At the WCB insurer’s request, he traveled to
Canada to undergo medical examinations. The insurer provided Branco
with intermitted WCB benefits, ultimately discontinuing them and
presenting Branco with a settlement offer. The disability
insurer approved Branco’s claim in 2002, but no funds were
paid until 2009.
Both insurers were held to be in breach of both their
contractual obligations to Branco and their duty of good faith and
fair dealing for which both aggravated and punitive damages were
awarded. A $150,000 aggravated damages award was made to
compensate Branco for the mental distress caused by the WCB
insurer. Had the insurer had made the monthly payments, Branco
would have been spared the mental distress and financial hardship
that followed. He was only able to bring this case because of the
financial support of family members and his lawyer’s
agreement not to seek payment until the end of the case.
The fact that Branco was able to
continue to withstand this pressure for so many years from two
different fronts is truly remarkable and almost superhuman, even
though his resistance may have resulted in irreparable mental
distress which may last for the remainder of his lifetime. [The
insurer’s] numerous lengthy and unexplained delays in
payments [...] were malicious and designed and designed to leverage
a reduced settlement of the claim.
An aggravated damages award of $300,000 was made against the
disability insurer. The Court held that the nearly ten year delay
in making payments (for which it had admitted liability) was
“completely reprehensible” and “egregious
In making the punitive damage award against the WCB insurer,
Justice Acton was particularly persuaded by the existence of an
earlier 2003 decision, which had levelled a $60,000 punitive damage
against the same insurer for a claim handled by the same adjuster
with a claimant in circumstances similar to that of
Branco. That decision was rendered in May 2003. In July 2003,
the same flawed techniques were applied to Branco, said Justice
Acton, "Obviously the punitive damages award was not
sufficient to prevent an immediate reoccurrence of the unacceptable
technique”. The Court assessed punitive damages against
the WCB insurer in the amount of $1,500,000.
In making the punitive damage award against the disability
insurer, Justice Acton was particularly persuaded by its refusal to
make any payments to Branco even after admitting
liability. This pattern of conduct went on for approximately ten
years, during which time they made two unconscionably low offers of
settlement and brought continual court applications without
reasonable justification. Citing Whiten, Justice
Acton set the punitive damage award at $3 million:
…the more reprehensible the conduct, the higher the rational
limits to the potential award. The need for denunciation is
aggravated where, as in this case, the conduct is persisted in over
a lengthy period of time … without any rational
justification, and despite the defendants’ awareness of the
hardship it knew it was inflicting (indeed, the respondent
anticipated that the greater the hardship to the appellant, the
lower the settlement she would ultimately be forced to
Prior to this decision, the high-water mark for punitive damages
was the $1 million award in Whiten. Justice Acton’s
view was that this sum had proved deficient as the actions of the
insurers in this case had taken place during the same time period
as when the decision in Whiten was released. Justice
Acton went on to note that while the punitive damage award may not
be particularly significant to the financial bottom line of a
successful worldwide insurance company, he hoped that it would gain
the attention of the insurance industry.
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