A British Columbia appeal court has thrown out Sun Life Assurance Co. of Canada appeal of an award of aggravated damages against it, while granted punitive damages to a policyholder on cross appeal.

In the case, Connie Fidler v. Sun Life Assurance Co. of Canada, Sun Life appealed a lower court’s ruling giving Fidler $20,000 in aggravated damages.

According to the judgement, Sun Life had terminated the payment of long-term disability benefits to Fidler as of April 1997 in large part on evidence it obtained through a covert video surveillance. Fidler sued the insurer to confirm her entitlement to the disability benefits. She also sought aggravated damages, damages for mental distress and punitive damages.

Having refused to pay for five years, Sun Life reinstated Fidler’s benefits in May 2002 approximately one week before the trial was scheduled to commence. The trial proceeded solely on the issue of her entitlement to aggravated and punitive damages.

The appeal court rejected the firm’s appeal, saying, “The evidence of mental distress that the wrongful termination of benefits caused to Ms. Fidler was a sufficient basis for the trial judge to conclude that she was entitled to aggravated damages. The quantum of these damages is not so inordinately high as to warrant interference.”

The appeal court upheld Fidler’s cross-appeal requesting punitive damages against the firm. The court found, “I conclude that the trial judge erred to the extent that he did not find that Sun Life had breached the duty of good faith owed to Ms. Fidler. In my opinion the insurer’s breach of the duty of good faith is an independent actionable wrong which warrants condemnation through an award of punitive damages.” It awarded punitive damages of $100,000.

Dissenting from the majority, Honourable Madam Justice Ryan, said that Sun Life’s appeal should be dismissed, but she also wrote that Fidler should not be entitled to punitive damages. “The trial judge properly considered the issues before him and concluded that this was not a case for punitive damages. In doing so, in my view, he committed no error in law or fact,” she said.