Can punitive damages be awarded in breach of contract cases?

Vorvis v. Insurance Corporation of British Columbia, 1989 CanLII 93 (SCC), [1989] 1 S.C.R. 1085 is the leading case dealing with punitive damages. Mr. Justice McIntyre held that punitive damages can only be awarded in breach of contract cases where the conduct constituting the breach also constitutes: 1. A separate tort for which punitive damages would be recoverable, i.e. an independent actionable wrong; 2. Conduct which is "deserving of punishment because of its harsh vindictive, reprehensible and malicious nature ... the conduct must be extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment".

In Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC), [1995] 2 S.C.R. 1130, the court provided the following general principles with respect to punitive damages at paras. 196-97: ¶ 196 Punitive damages may be awarded in situations where the defendant's misconduct is so malicious, oppressive and high-handed that it offends the court's sense of decency. Punitive damages bear no relation to what the plaintiff should receive by way of compensation. Their aim is not to compensate the plaintiff, but rather to punish the defendant. It is the means by which the jury or judge expresses its outrage at the egregious conduct of the defendant. They are in the nature of a fine which is meant to act as a deterrent to the defendant and to others from acting in this manner. It is important to emphasize that punitive damages should only be awarded in those circumstances where the combined award of general and aggravated damages would be insufficient to achieve the goal of punishment and deterrence. ¶ 197 Unlike compensatory damages, punitive damages are not at large. Consequently, courts have a much greater scope and discretion on appeal. The appellate review should be based upon the court's estimation as to whether the punitive damages serve a rational purpose. In other words, was the misconduct of the defendant so outrageous that punitive damages were rationally required to act as a deterrence?