The duty of good faith was established by the 1997 Wallace decision. The examples set out in this decision of unfair conduct remain good law. The application of this duty was modified by Honda and expanded in Bhasin.

Prior to Honda in 2008, there was also two other important decisions by the Supreme Court in Whiten and in Fidler.

Whiten v Pilot 2002

This case became the leading authority on punitive damages. The facts of Whiten related to a claim by the insured against its insurer for the policy proceeds and an award of punitive damages.

The majority of the Supreme Court determined that a success in a punitive damage claim does still mandate an “independent actionable wrong”, but this may be established by a breach of the contractual duty of good faith. This need not be an independent tort.

Fidler v Sun Life 2006

This was a claim against the insurer for disability benefits, aggravated and punitive damages. The benefits arrears had been paid prior to the trial, leaving only the incremental damage claims. Notwithstanding the finding made that an insurance policy was indeed a peace of mind contract, the remedy of aggravated damages was determined not to hinge on this finding, but rather as an application of the general rule of reasonably foreseeable damages:

We conclude that the “peace of mind” class of cases should not be viewed as an exception to the general rule of the non-availability of damages for mental distress in contract law, but rather as an application of the reasonable contemplation or foreseeability principle that applies generally to determine the availability of damages for breach of contract.