When Should Entitlement to Punitive Damages be Determined?

Eurocopter v Bell Helicopter Textron Canada Limitée 2012 FC 113 Martineau J
 
Yesterday’s post addressed the question of whether it appropriate to hold that Eurocopter was entitled to punitive damages. A preliminary question is whether it appropriate to make this determination prior to the actual assessment of damages. In Apotex v Merck / Vasotec 2003 FCA 291, [34], Sharlow J stated(emphasis added):

The purpose of punitive damages is to punish, to deter the wrongdoer and others, and to denounce wrongful behaviour. Punitive damages are awarded only where compensatory damages and other normal civil remedies are insufficient to accomplish those objectives, and in an amount that is no greater than necessary to accomplish that objective: Whiten, supra; Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130. It is axiomatic that until all the ordinary civil remedies are finally determined (which in this case would include a determination as to whether the remedy is an award of damages or an accounting of profits, and the quantum), it is impossible to determine whether punitive damages are required to meet the objectives of punishment, deterrence and denunciation.

Martineau J distinguished Vasotec on the basis that in that case there had been a de facto bifurcation of liability and remedies generally, not just quantum. That is true, but it is not clear that this distinction addresses the FCA’s point, which is that the court cannot tell whether compensatory damages are sufficient for deterrence until the court knows the quantum of those compensatory damages. Martineau J responded by stating that in his view of the evidence, ordinary damages were likely to be minimal and “will simply not be enough to achieve the goal of punishment and deterrence” [455]. In other words, even without a full determination of damages, he was nonetheless in a position to make the determination that ordinary damages would be insufficient for deterrence. I have argued in yesterday’s post that this is not persuasive.

Martineau J also justified his decision on the much more persuasive ground that entitlement to punitive damages was dependent in large measure on the conduct of the infringer. This was a matter that had been thoroughly canvassed at trial, and delay would make determination of this issue all the more difficult [454], and therefore he was best placed to make the determination. This is a compelling point which is complementary to, rather than inconsistent with, the FCA’s point in Vasotec: whether punitive damages are appropriate depends on both the quantum of compensatory damages and the conduct of the parties, so in principle a determination as to entitlement should not be made until both have been addressed. The problem remains, as Martineau J pointed out, that because of the bifurcation, both factors cannot be determined in the same proceedings. In principle, perhaps the best course would have been for Martineau J to have made findings as to whether the conduct is of the type that would warrant punitive damages, and then leave it for damages phase to determine whether punitive damages are warranted, in light of those findings and the quantum awarded as compensatory damages. In practice, given that Martineau J did not actually specify the quantum, which will only be determined at the damages stage, his holding that Eurocopter is entitled to punitive damages is not so different from merely making findings as to the relevant facts.

For an overview of this decision, see here.