John Howard Society of Peel-Halton-Dufferin v Pennock, 2023 ONSC 2839.
Reading Time: 4 minutes (approx.)
By: Weston McArthur (Articled Clerk)
On May 12, 2021, the John Howard Society of Peel-Halton-Dufferin (the “Plaintiff”) filed a motion for default judgement against two of the defendants named in the action: Darren Pennock and Nancie Parker (the “Defendants”). Because the Defendants’ Statement of Defence was struck out, they were “deemed to have admitted all of the facts asserted against them in this action” [para 6].
In the Plaintiff’s Amended Statement of Claim, it claimed punitive damages against Defendant Pennock. Justice Daley still had to determine if the Plaintiff was eligible for such an award, notwithstanding that the Defendants’ Statement of Defence was struck out. At paragraph 6, Justice Daley explained that “it must still be proven that the breaches alleged as against the Defendants formed an evidentiary foundation for the legal relief sought by the plaintiff.”
Canadian courts rarely award punitive damages. They are reserved for only the most reprehensible conduct. Unlike other heads of damages, punitive damages are not meant to compensate a party; rather, they are used by courts to punish the wrongful party for their conduct.
To determine the quantum of an award for punitive damages, courts consider the following: “(a) the degree of misconduct; (b) the amount of harm caused; (c) the availability of other remedies; (d) the quantification of compensatory damages; and (e) the adequacy of compensatory damages to achieve the objectives of retribution, deterrence, and enunciation” [para 47].
In this case, Defendant Pennock had committed fraud in his role as the Plaintiff’s Chief Operating Officer. As a result, Defendant Pennock breached the fiduciary duty that he owed to the Plaintiff. Justice Daley explained that, ultimately, “[t]he financial harm caused to the plaintiff is in the amount of $327,045.00” [para 48]. Even though the Defendants had paid back approximately $100,000, there was still “a balance outstanding of $239,388.50” [para 48].
At paragraph 51, Justice Daley determined $35,000 to be a just quantum for punitive damages in this case and explained that the sum was justified, given “the circumstances of Pennock’s breach of fiduciary duty and fraudulent conduct which significantly harmed the plaintiff taxpayer-funded and charitable organization” [para 51].
Link: John Howard Society of Peel-Halton-Dufferin v Pennock, 2023 ONSC 2839.
