Pilots factum establishes that the upper management of the company had acquired

Pilots factum establishes that the upper management

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Pilot's factum establishes that the upper management of the company had acquired actual knowledge of the mishandling of the Whiten claim by its local manager and the lawyer he had retained. In addition, no suggestion has been made that such behaviour is widespread in the insurance industry in Ontario or elsewhere in Canada. 160 What, then, are the purposes of an award of punitive damages in this context? Once the purposes are determined, what should be a reasonable and proportionate award? Some might think that the prospect of punitive damages could perhaps strike fear into the hearts of cold- blooded bean counters lurking somewhere in the basement of insurance companies' head offices. The terrible swift sword of the law might draw blood from a company used to turning a blind eye to abuses by its middle managers. In the absence of evidence about the flaws of the entrepreneurial culture of Pilot Insurance, the situations or the particular evils rampant in the [page672] insurance industry, if any, what is left is a desire to punish adequately acts of bad faith and unfair dealing by a manager and counsel of an insurance company. (As my colleague indicates, this remark does not apply to counsel who represented Pilot in the Court of Appeal and in this Court.) 161 In this case, the sole narrow purpose of an award for punitive damages appears to be the punishment of the bad faith of the insurer in the discharge of its duties under what should be a good faith contract on both sides. The insurer must compensate in a timely manner. It has the right, even the duty, to investigate claims, but must do so fairly and diligently. For his or her part, the insured must file his or her claims promptly and assess his or her losses as accurately as he or she can. Given the nature of the contract, bad faith may constitute an actionable wrong and attract the sting of punitive damages. The challenge remains to assess them properly, in a manner consistent with the basic purposes of tort law. In the present appeal, an award of damages must reflect first of all the narrow objective defined by the facts of this case; as well, it must also reflect the relational nature of tort law, although, at times, such an award may be viewed as a deterrent to others. (See Hill, supra, at para. 196, per Cory J.; Vorvis, supra, at p. 1108, per McIntyre J.) But the need for general deterrence is far from clear in the present case. The requirement of a proper connection between award and conduct requires a close fit between the amount of the award and the misbehaviour of the respondent. An important consideration remains the nature of the dispute, which arose in the context of a contractual
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Page 42 of 44 Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595 relationship concerning well-defined economic interests and not with respect to moral or dignity interest as in the case of an action for defamation. In addition, concerns about industry practices should mainly be addressed through the appropriate regulatory and penal regimes, rather than through haphazard punitive damages awards.
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