Punitive damages are distinct from aggravated damages. These damages are designed to punish an employer, and as such are an exception to the general rule that damages are to compensate an injured party. Punitive damages go beyond compensatory damages.
Starting at paragraph 67 of Whiten v. Pilot Insurance Co., , S.C.R. 595, Binnie J. describes punitive damages as an award designed to meet the objectives of punishment, deterrence and denunciation rather than compensation. Binnie J. goes on to provide that punitive damages cannot be limited to specific categories but should be resorted to only in exceptional cases. At paragraph 94 his Honour offers eleven descriptive points on punitive damages:
(1) Punitive damages are very much the exception rather than the rule,
(2) [They are] imposed only if there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour.
(3) Where they are awarded, punitive damages should be assessed in an amount reasonably proportionate to such factors as the harm caused, the degree of the misconduct, the relative vulnerability of the plaintiff and any advantage or profit gained by the defendant,
(4) [In awarding punitive damages, the court must have] … regard to any other fines or penalties suffered by the defendant for the misconduct in question.
(5) Punitive damages are generally given only where the misconduct would otherwise be unpunished or where other penalties are or are likely to be inadequate to achieve the objectives of retribution, deterrence and denunciation.
(6) [The purpose of punitive damages] … is not to compensate the plaintiff, but
(7) [Their purpose, rather, is] to give a defendant his or her just desert (retribution), to deter the defendant and others from similar misconduct in the future (deterrence), and to mark the community’s collective condemnation (denunciation) of what has happened.
(8) Punitive damages are awarded only where compensatory damages, which to some extent are punitive, are insufficient to accomplish these objectives, and
(9) [Punitive damages] … are given in an amount that is no greater than necessary to rationally accomplish their purpose.
(10) … while normally the state would be the recipient of any fine or penalty for misconduct, the plaintiff will keep punitive damages as a “windfall” in addition to compensatory damages.
(11) Judges and juries in our system have usually found that moderate awards of punitive damages, which inevitably carry a stigma in the broader community, are generally sufficient.