Why appeal court quashed this punitive damage award

If your client is successfully sued for being vicariously liable for the behaviour of a sexual offender, should that client have to pay punitive damages simply for not admitting liability before the trial?

Judges are not unanimous on this issue.

In a ruling released Tuesday March 19, the Court of Appeal for Ontario ruled partly in favour of The Roman Catholic Episcopal Corporation for the Diocese of Toronto, which was successfully sued by a sexual assault victim, whose assailant was a priest.

Lawsuits arising from sexual abuse on the part of priests has cost churches – and their insurers – millions in recent decades. Often the plaintiffs allege the church corporations were negligent in failing to prevent the abuse.

The lawsuit against the Diocese of Toronto arose from the 1963 sexual assault by Father Alphonse Robert of the victim, who was an 11-year-old altar boy at the time. The perpetrator has since died.

In 2017, a jury ruled that the diocese was vicariously liable for Father Robert’s behaviour. The victim was awarded $550,000, which include $15,000 in punitive damages. The rest of the award – which was upheld on appeal – was comprised of $250,000 in general and aggravated damages of $280,000 for loss of income and treatment expenses of $5,000.

The diocese, which admitted it was vicariously liable, appealed the damage award and was partly successful. By the time the trial started, the only dispute was on how much money the victim should be awarded.

In its divided ruling released March 19, 2019, two of the three appeal court judges quashed the $15,000 in punitive damages. The majority ruled that Justice Gordon Lemon of the Ontario Superior Court of Justice should not have let the jury decide whether to award punitive damages.

Not all plaintiffs who win lawsuits are awarded punitive damages, which are only intended if the defendant’s actions were “egregious, high-handed and outrageous,” Justice Lois Roberts of the Court of Appeal for Ontario wrote.

It was not improper or malicious for the diocese to not admit liability before the trial, Roberts wrote on behalf of herself and Chief Justice of Ontario George Strathy.

Justice Mary Lou Benotto had a different take, in her dissenting ruling.

It was reasonable for trial judge Lemon to ask the jury whether the failure of the diocese to admit liability before the trial warrant an award of punitive damages, Justice Benotto wrote.

The failure of the diocese to admit liability was making the plaintiff’s trauma worse, a forensic psychologist testified during trial. This was why Justice Lemon put the decision of punitive damages to the jury.

But no reasonable jury, properly instructed, could make such an award, Justice Roberts countered.

“There was no basis in fact or law for this claim that punished the appellant for not making an earlier admission of liability. Punitive damages cannot be awarded solely for the failure or delay of a defendant to admit liability. To create such a category of punitive damages would completely undermine the foundation of the litigation process,” wrote Roberts.

Litigation is an adversarial and expensive process, Justice Roberts added.

“Regardless of the underlying cause of action, all parties find the litigation process enormously stressful, especially plaintiffs who bear the burden of proving liability and damages because they commence the proceedings.  In sum, while a defendant’s failure or delay to admit liability may give rise to an adverse costs award, it does not serve as a standalone basis for punitive damages.”