Are Treble Damages Enforceable In Canada?

Treble damages are a form of damages by which the amount of actual damages is calculated and then multiplied by three.  This head of damages is created by statute and is intended to be punitive in nature.  Treble-damages laws are common in many United States jurisdictions.

A seminal Canadian case raised the question of whether such a high award of damages, one that is deliberately out of proportion to the actual harm suffered, can be enforced in Canada.  This was the Supreme Court of Canada’s decision in Beals v. Saldanha, [2003] 3 S.C.R. 416.

Here the Supreme Court dealt with the case of an Ontario family that had received a judgment against them by a Florida court, in a case concerning a piece of land they had sold in Florida to an American buyer.  The plaintiff in that case sought and won treble damages as permitted by a Florida statute; the jury calculated that the plaintiff was owed $70,000 for “the actual expenditures… plus loss of profit,” and then multiplied that by three.

The plaintiff, Beals, then sought to enforce the judgment in Canada.  The defendants, the Saldanha family, claimed that the judgment could not be enforced in Canada, and part of their argument was that the award of treble damages was unenforceable for reasons of public policy: such a high award of damages, they argued,  contrary to Canadian principles of justice and fairness.

Justice Major, for the majority, dismissed the argument that the extra-large award of damages should be unenforceable for reasons of Canadian public policy.  At paras 73-76 of the decision, he wrote that a very large sum of damages is not, in and of itself, immoral or unenforceable, as long as it is arrived at fairly by a court with a real and substantial connection to the case.  The fact that the damages are higher than they would be in Canada does not, in itself, make them unfair or unenforceable:

[76] The award of damages by the Florida jury does not violate our principles of morality. The sums involved, although they have grown large, are not by themselves a basis to refuse enforcement of the foreign judgment in Canada. Even if it could be argued in another case that the arbitrariness of the award can properly fit into a public policy argument, the record here does not provide any basis allowing the Canadian court to re-evaluate the amount of the award. The public policy defence is not meant to bar enforcement of a judgment rendered by a foreign court with a real and substantial connection to the cause of action for the sole reason that the claim in that foreign jurisdiction would not yield comparable damages in Canada.

Justice Binnie dissented from the majority, but for other reasons; in his dissenting opinion, he also agreed that treble damages were not unenforceable as a matter of public policy.  At paras 246-247, he wrote that since the Florida court’s decision was based on a fair trial and a fair application of Florida law, the high damages were not in and of themselves unfair:

[246] If the defence of public policy is understood as a bar to enforcing immoral or unjust foreign laws, it is not met here. The enforcement of such a large award in the absence of a connection either to harm suffered by the plaintiffs and caused by the defendants or to conduct deserving of punishment on the part of the defendants would be contrary to basic Canadian ideas of justice. But there is no evidence that the law of Florida offends these principles. On the contrary, the record indicates that Florida law requires proof of damages in the usual fashion. Treble damages are only available by statute to victims of crimes. There is no indication that punitive damages are available where the defendant’s conduct is not morally blameworthy.

The rule from Beals v. Saldanha, then, is that if a foreign court orders a very high award of damages, one that is much higher than would be awarded in a similar matter in Canada, it is enforceable in Canada as long as the original civil action was fair and done according to the laws of the original jurisdiction.  Even treble damages, which are by definition three times higher than the actual damage caused, are enforceable as long as they are in keeping with the original jurisdiction’s law.