Law Times

Page 12 FOCUS October 7, 2013 Law Times • Massive punitive damages award in Branco questioned Lawyer suggests high number may dilute court's message to insurers leveraging themselves a better settlement. Acton hit AIG with a $1.5-million punitive damages award plus a further $150,000 in aggravated damages. In addition, he ordered Zurich to Saskatchewan judge who said he hoped pay Branco $3 million in punitive damages plus to "gain the attention of the insurance in$300,000 for aggravated damages. dustry" by ordering two insurance giants Both insurers have since appealed, and Stephen to pay a record $5 million in punitive and Simpson, an insurance defence lawyer with Benaggravated damages may have diluted his message nett Gastle Professional Corp., says the chances by going overboard on the size of the award, acare good that the awards will come down in value cording to a Toronto defence lawyer. on appeal. American Home Assurance Co. (AIG) and Zu"I think the significance is in the quantum. rich Life Insurance Co. Ltd. were on the receiving The court is trying to send a message to the inend of Saskatchewan Court of Queen's Bench Jusdustry at large, but the problem is if an appeal tice Murray Acton's ire as he delivered his March court finds the number too high or unwarranted, 21 judgment in Branco v. American Home Assurthen the whole message gets attenuated or even ance Co. lost altogether in the fact that it was appealed "The industry must recognize the destruction successfully," says Simpson. and devastation that their actions cause in failing He says the aggravated damages will be particto honour their contractual policy commitments to the individuals insured," Acton wrote after tracing 'If there is a message, then it's not to deny ularly vulnerable under the scrutiny of an appeal Luciano Branco's epic decade-long battle to receive a claim in bad faith because you could get court since the normal range for such awards, inwhacked,' says Stephen Simpson. tended to compensate for mental distress caused his disability benefit entitlement. by the defendants, is from $5,000 to $50,000. The welder suffered a permanent disability "These amounts are three to six times the higher end without while working for a mining company in the mountains of Kyrgyzstan in the early 2000s but, according to Acton's decision, had to en- any discussion as to why such a significant departure from the nordure a series of "cruel and malicious" acts from the insurers aimed at mal range is warranted. That's what an appeal court may take issue BY MICHAEL McKIERNAN For Law Times A A concise summARy oF constitutionAl lAw At youR FingeRtips New editioN CaNada's CONstitutiONaL Law iN a NutshELL, FOurth EditiON BErnArD W. FUnSTon AnD EUgEnE MEEHAn, Q.C. Canada's Constitutional Law in a Nutshell, Fourth Edition is a handy resource when you need a quick, authoritative answer to a question on administrative or constitutional law. Written by two leading experts, this popular primer summarizes the key principles, leading case law and relevant issues. It incorporates materials that are often difficult to find and gather, and presents them in one place. The Fourth Edition continues to incorporate the latest developments in constitutional law, presenting the information in a readable, well-organized manner. Highlights include: • An updated discussion of the extra-territorial applicability of the Canadian Charter of Rights and Freedoms, religious freedom, freedom from religion, hate speech and other issues under the Charter • Issues on the constitution and the courts, including an updated review of standing and who may raise issues of constitutionality before the courts • Developments in territorial government institutions and, in particular, the Yukon Devolution Transfer Agreement with the federal government • Updates to the discussion of Aboriginal rights under the Constitution OrdEr # 985540-65203 $110 Softcover approx. 300 pages September 2013 978-0-7798-5540-7 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. AvAilAble Risk-FRee FoR 30 DAys order online: www.carswell.com Call toll-Free: 1-800-387-5164 in toronto: 416-609-3800 with. The decision doesn't identify anything special about the circumstances of this case that would support that kind of increase." Acton's awards for punitive damages also eclipsed previous highs for long-term disability cases, including the Supreme Court of Canada's landmark 2002 restoration of a jury's $1-million judgment in Whiten v. Pilot Insurance Co. "On punitive damages, I think the court is attuned to the fact that it's pushing the limits and gives more detailed reasons for the departure," says Simpson. "But there doesn't seem to be too much justification for a $3-million award versus what the Supreme Court identified in earlier precedents where it said $1 million was at the higher end of the range." In his decision, Acton pointed out that the current value of the Whiten decision after factoring in inflation was more like $1.4 million and that in any case it was "apparent that the $1 million was not sufficient" to express the court's disapproval of bad behaviour by insurers since much of the "reprehensible" conduct in Branco's case took place after the Supreme Court case came down. In addition, the judge noted AIG was a repeat offender given an order to pay $60,000 in punitive damages because of the actions of one of its adjusters in another Saskatchewan case. Two months after that judgment, AIG's very same adjuster "applied the same technique to Branco," wrote Acton. "Obviously the punitive damages award was not sufficient to prevent an immediate reoccurrence of the unacceptable technique," he added. Branco's odyssey began in December 1999 when he dropped a steel plate on his foot during a 28-day rotation at a mine high in the mountains of Kyrgyzstan where he was working for a subsidiary of a Saskatchewan company. Despite worrying he may have chopped off his toes, he packed the foot with ice and carried on working. The following February, he reinjured his foot when he stepped on a piece of steel and has been unable to work since. AIG referred Branco to a doctor in Portugal, where he lived, in 2001, but it eventually cut off benefits. It claimed it was unable to get an update on Branco's condition from his office. Intermittent payments and suspensions continued until 2004 when the insurer again threatened to cut him off unless he took part in vocational retraining, something described by Acton as "inappropriate." Zurich, meanwhile, approved Branco's long-term disability See Insurers, page 13 www.lawtimesnews.com

• Cover