The appellant's home was destroyed by fire.
The respondent insurer denied the claim, alleging arson, despite its own experts and investigators concluding the fire was accidental.
The insurer maintained this bad faith defence through a lengthy trial to force a lower settlement.
The jury awarded compensatory damages and $1 million in punitive damages.
The Court of Appeal reduced the punitive damages to $100,000.
The Supreme Court of Canada allowed the appeal and restored the $1 million jury award, holding that the insurer's breach of the duty of good faith was an independent actionable wrong and the jury's award, while high, was a rational response to the insurer's exceptionally reprehensible conduct.
