During litigation, punitive damages are not a run-of-the-mill type of relief. They have been described by the Supreme Court of Canada as “very much the exception rather than the rule,” and can only be awarded under particular circumstances – such as when a party’s conduct has been particularly egregious, malicious, oppressive, or high-handed: see Whiten v. Pilot Insurance Co., 2002 SCC 18.
While punitive damages are imposed relatively rarely, the Supreme Court has provided some guidance on how to set an appropriate quantum. In Whiten,the Court noted that “the governing rule for quantum is proportionality” andthat the proportionality of several specific factors is pertinent when setting punitive damages, including 1) the blameworthiness of the defendant’s conduct, 2) the vulnerability of the plaintiff, 3) the harm or potential harm directed specifically at the plaintiff, 4) the need for deterrence, and 5) the advantage wrongfully gained by the defendant from the misconduct.
The appropriate quantum for punitive damages in the specific context of breach of fiduciary duty was recently explored in some depth by the Nova Scotia Court of Appeal in Walker v Walker, 2025 NSCA 16. The appellant in this case sought to increase the punitive damages awarded by the Supreme Court of Nova Scotia for a breach of fiduciary duty from $30,000 to $131,000.
The breach of fiduciary duty in Walker stemmed from a mother’s decision to appoint her son to act as her attorney for property. After the mother died, it came to light that the son had misappropriated over $150,000 from his mother for his own personal use over a five and a half-year period, also leaving her in debt worth approximately $72,000. On behalf of the mother’s estate, the daughter, who had applied for probate, claimed damages for breach of fiduciary duty. Because the brother did not participate during the hearing, the evidence of misappropriation before the court was uncontested. The presiding chambers judge ordered the brother to reimburse the estate for the funds he took, in addition to pre-judgment interest and solicitor-client costs, and also ordered the brother to pay $30,000 in punitive damages. In granting punitive damages, the court noted that case law had been provided to the court, but that “each case is unique” and that no award of damages could actually “remedy the real harm done” or “erase … the egregious conduct and breach of fiduciary duty.”
On appeal, the appellant daughter argued that punitive damages of $131,000 should have been awarded in light of the Superior Court of Justice’s decision in Walling v Walling, 2012 ONSC 6580, a case which she had put before the chambers judge. The court in Walling had granted an award of $100,000 in punitive damages against a rogue estate trustee who had squandered his nephews’ inheritance and converted estate funds for his own personal use over many years. Despite the appellant’s arguments, the decision of the Nova Scotia Supreme Court was upheld on appeal.
First, the Nova Scotia Court of Appeal confirmed that the reasons given for the chambers judge’s decision were legally sufficient when considered functionally and contextually, even though the chambers judge failed to expressly refer to Walling in his reasons. While “[i]t would have been helpful for the judge to have expanded his reasons for distinguishing this case from Walling,” this shortcoming did not justify appellate relief.
Second, the court upheld the quantum of $30,000 in punitive damages, finding that it was within the chambers judge’s discretion to make this award and that it was rationally connected to the award’s purpose. Typically, an award for punitive damages can only be overturned on appeal if either the original trier of fact made an error of law, or the amount awarded is not rationally connected to the purpose for which the damages were awarded: see Bank of Montreal v Marcotte, 2014 SCC 73. Otherwise, the standard of review applicable to punitive damage awards is “increasingly deferential.”
The Court of Appeal identified an “overwhelming frailty” in the appellant’s argument that damages in keeping with the quantum ordered in Walling ought to have been awarded by the chambers judge – her failure to provide the chambers judge with a complete briefing on the range of punitive damage awards in similar cases. In light of the fact that the appellant’s brother did not participate in the proceedings, the Court of Appeal held that there was a clear obligation on the appellant “to fully canvas the range of punitive damage awards in like cases” and that she could not only put Walling before the court for consideration. The Court went on to explain that this duty exists “in circumstances where there is no meaningful adversary. There must be a complete, accurate, and balanced briefing presented to the Court – anything less will be contrary to the interests of justice and may well run afoul of other important duties and obligations.”
The Court of Appeal also noted that, when determining the quantum of punitive damages, precedents can only serve as “guideposts,” and that the damages awarded must reflect the actual conduct before the court rather than “any external benchmark.”
Taking all of the relevant authorities into consideration where punitive damages have been awarded for a breach of fiduciary duty, the Court of Appeal ultimately distinguished Walling. Not only was the award at the top end of punitive damages for breach of fiduciary duty, but the duration of the brother’s misconduct in Walker was much briefer than the misconduct in Walling. In reaching this conclusion, the Court also noted that the mother’s home, the main asset of her estate, was still available for distribution.
The Court’s decision in Walker serves as a powerful reminder that punitive damages are to be determined on a case-by-case basis, and also affirms the importance of fully briefing the court, even if the opposing party chooses not to participate in the proceedings.
Thank you for reading, and enjoy the rest of your day!
Ian.