What Are “aggravated Damages”?

February 13, 2017

By Brian Babcock

Aggravated damages are intended to compensate for an actual loss such as anxiety or nervous shock beyond economic losses, or in rare cases, beyond general damages for pain and suffering and loss of enjoyment of life. Aggravated damages are awarded in certain types of contract cases, where there are almost never damages for pain and suffering. They also are sometimes awarded where a tort was intentional or malicious.

Examples of situations where aggravated damages are most often awarded are for breach of an employment contract; denial of an insurance claim; or other contracts involving “peace of mind”. A power imbalance and bad faith are frequent features of aggravating circumstances. Where the other damages are modest, it is more likely that aggravated damages will be awarded to discourage the bad behaviour in the future.

Conduct which might lead to aggravated damages include actions leading to humiliation, degradation, violence, oppression, inability to complain, or reckless conduct which displays a disregard of the victim, and post-incident conduct which aggravates the harm to the victim.

In some situations, instead of a separate award of aggravated damages, the conduct of the defendant which increases the damages is taken into account to increase the general damages for mental distress or psychological injury.

The amount of aggravated damages may vary widely from tens of thousands of dollars for a bad faith denial of insurance coverage to hundreds of thousands when a corporation behaves abusively toward an employee or former employee over a long period of time.

Aggravated damages are also sometimes confused with punitive damages, the subject of an earlier article. Although both involve the court showing disapproval for the defendant’s conduct, aggravated damages are compensation for actual harm suffered, while punitive damages are awarded on top of full compensation. Punitive damages also have a tougher standard to meet before they are awarded- the conduct must be “malicious, oppressive and high-handed” and represent “a marked departure from the ordinary standards of decent behaviour.”

Another source of confusion is that in older cases, the traditional British term of “exemplary damages” was used, which was an umbrella term covering both aggravated and punitive damages, now falling out of use in Canada. However, the sweeping generalizations of those decisions still influence the current state of the law and make it difficult to predict when aggravated damages will be awarded.

It is possible that both punitive and aggravated damages may be awarded in the same case, even for the same actions, but in those situations, the courts try to consider the total size of the damages, and punitive damages may be lowered.

The law governing aggravated damages is still very much a developing area, and we expect to see more changes as additional cases are decided. Until then, they are an issue that must be considered in any litigation where aggravating circumstances may exist, and an important reminder to potential defendants that misconduct is becoming increasingly costly.