As exhaustively set out in TWNA v Clarke 2003 BCCA 670:
"Aggravated damages are compensatory in nature, while punitive damages are awarded as punishment for egregious conduct. The distinction is explained by McIntyre J. in Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085 at 1098-99:
"Punitive damages, as the name would indicate, are designed to punish. In this, they constitute an exception to the general common law rule that damages are designed to compensate the injured, not to punish the wrongdoer. Aggravated damages will frequently cover conduct which could also be the subject of punitive damages, but the role of aggravated damages remains compensatory....
"Aggravated damages are awarded to compensate for aggravated damage. As explained by Waddams, they take account of intangible injuries and by definition will generally augment damages assessed under the general rules relating to the assessment of damages. Aggravated damages are compensatory in nature and may only be awarded for that purpose. Punitive damages, on the other hand, are punitive in nature and may only be employed in circumstances where the conduct giving the cause for complaint is of such nature that it merits punishment."
"Aggravated damages are awarded to compensate for intangible emotional injury: see ... Huff v. Price 51 BCLR 2d 282 (BCCA, 1990), where this Court said, at 299:
...aggravated damages are an award, or an augmentation of an award, of compensatory damages for non-pecuniary losses. They are designed to compensate the plaintiff, and they are measured by the plaintiff's suffering. Such intangible elements as pain, anguish, grief, humiliation, wounded pride, damaged self-confidence or self-esteem, loss of faith in friends or colleagues, and similar matters that are caused by the conduct of the defendant; that are of the type that the defendant should reasonably have foreseen in tort cases or had in contemplation in contract cases; that cannot be said to be fully compensated for in an award for pecuniary losses; and that are sufficiently significant in depth, or duration, or both, that they represent a significant influence on the plaintiff's life, can properly be the basis for the making of an award for non-pecuniary losses or for the augmentation of such an award. An award of that kind is frequently referred to as aggravated damages. It is, of course, not the damages that are aggravated but the injury. The damage award is for aggravation of the injury by the defendant's highhanded conduct.
"Aggravated damages are not a separate head of damages. Rather, they are an augmentation of general damages to compensate for aggravated injury.
"Punitive damages, on the other hand, are an exception to the general rule that damages are compensatory. Their provenance is described in Daniels v. Thompson, [1998] 3 N.Z.L.R. 22 at 28 (C.A.):
"The origin of exemplary damages (probably better described as punitive damages), is usually said to lie in two cases decided in 1763, Huckle v. Money (1763) 2 Wils 205 and Wilkes v. Wood (1763) Lofft 1. In those cases substantial damages awarded by juries for improper interference by public officials with subjects were justified as "exemplary damages". The purpose of the awards was said to punish and deter, and to express the jury's outrage at the defendant's conduct. A related purpose mentioned in subsequent cases was to appease the victim and to discourage revenge: for example Merest v. Harvey (1814) 5 Taunt 442, where the Judge more specifically referred to the undesirable practice of duelling. Punishment and deterrence are of course purposes which are served by the criminal law. The introduction of criminal law purposes into the law of torts did not represent a new development, but reflected the common historical roots of the laws of tort and crime. Both branches of the law being addressed in large parts to same type of conduct, the modern separation of their different purposes and procedures was still being completed at that time."
"Punitive damages are triggered by conduct that may be described by such epithets as high-handed, malicious, vindictive, and oppressive. They are awarded where the court feels that the award of compensatory damages will not achieve sufficient deterrence and that the defendant's actions must be further punished. As explained by the Supreme Court of Canada in Hill v. Church of Scientology:
"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. ...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."