I recently received a call from the representative of a U.S. corporation concerned about possible litigation in Canada. This person had good reason to think that a lawsuit against the company was imminent. However, this person was unsure whether the lawsuit would be filed in the U.S. or Canada given the unique circumstances of the case.
While its never good to be a defendant anywhere, I provided a brief overview of the comparative differences between damages in the the U.S. and Canada.
Of the two jurisdictions, chances are (and every case is different) any damages award will likely be less in Canada than in the United States. With substantially lower damages awards, litigation is less risky, and settlements of claims tend to be much less costly for defendants in Canada than they are in the U.S.
A number difference help explain why this is so.
1, General Damages are Capped at the Federal level
The biggest difference between the two jurisdictions is that general damages awards in Canada are substantially lower than those in the U.S., even in cases tried by jury. In 1978, the Canadian Supreme Court limited damages for pain and suffering. Adjusted for inflation, the cap now is just over $300,000. The United States has no federal cap on damages, though a few states, including Florida, have imposed them.
In the case of medical malpractice, for example, defendants are more likely to prevail, and if they don’t, damages are far less than in the U.S. Of the cases tried in 2007, judgments went in the patient’s favor 25 times and the doctor’s 70 times. The median amount of damages was about $91,000.
2. Special damages are Limited
Punitive damage awards in Canada are also less common and tend to be smaller than they are in the U.S. In addition, Canada has no statutes providing for treble damages, as antitrust and RICO statues do in the United States. When awarded, punitive damages typically do not exceed $50,000. With substantially lower damages awards, litigation is less risky, and settlements of claims tend to be much less costly for defendants in Canada than they are in the U.S.
3. Plaintiff May Need to Post a Security
As a further protection for defendants, Canadian courts in most jurisdictions may order a plaintiff to post a security for potential award of costs. Security may be required if the plaintiff is outside the province (an important facts for potential U.S litigants). The court has discretion to deny a request for the posting of security. If requiring security would have the effect of preventing prosecution of a meritorious claim. In addition , courts often order that security costs be posted in installments as the litigation proceeds, rather than as one up-front lump sum.
4. Jury Trials are Infrequent.
A party may request a jury, but the courts have broad discretion to deny a jury trial if the legal or factual issues are complex o if a defendant might be prejudiced. Thus, civil jury trials tend to be rare in Canadian except in personal injury and insurance litigation.
The infrequency of civil jury trial sin Canada results in greater certainty in litigation outcomes, less bias against deep-pocket or foreign defendants and lower damage award, all of which are strategic considerations for all sides.
It pays to be a defendant in Canada.