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Damages - Loss of Chance (2)

. Ponce v. Société d’investissements Rhéaume ltée

In Ponce v. Société d’investissements Rhéaume ltée (SCC, 2023) the Supreme Court of Canada considered a Quebec fact situation where corporate officers ('presidents'), hearing of third party interest in purchasing shares in the corporation, hid the interest from their shareholders and then purchased the shares personally to resell them to the third parties at a profit. Through this time there was also an 'incentive pay agreement' between the officers and the shareholders, which "governed the parties’ relationship and entailed implied obligations for the presidents."

These quotes touch on 'loss of chance' damages:
[113] In accordance with the presumption helpfully identified by Rothman J.A., where a breach of the requirements of good faith prevents the aggrieved party from proving the injury sustained, it should be presumed that the injury is equivalent to the profits made by the party at fault. However, this presumption is rebuttable, as it can be displaced by evidence to the contrary showing that the quantum of damages differs from the amount of the profits (pp. 443‑44, quoting Rainbow Industrial Caterers, at pp. 14‑16).

[114] The presumption relied upon in Baxter draws from the common law, which has long recognized that where a fact cannot be proved because of a party’s dishonesty, that fact will be assumed to be true in the absence of evidence to the contrary (see Rainbow Industrial Caterers, at pp. 14‑16; Lamb v. Kincaid (1907), 1907 CanLII 38 (SCC), 38 S.C.R. 516, at pp. 539‑40; see also Callow, at para. 116). In both legal traditions, this presumption is consistent with the principle of restitutio in integrum (see Rainbow Industrial Caterers, at p. 16, where Sopinka J. relied on National Bank of Canada v. Corbeil, 1991 CanLII 117 (SCC), [1991] 1 S.C.R. 117, and Provincial Bank of Canada v. Gagnon, 1981 CanLII 195 (SCC), [1981] 2 S.C.R. 98; see also Baxter, at p. 444, citing Andrews v. Grand & Toy Alberta Ltd., 1978 CanLII 1 (SCC), [1978] 2 S.C.R. 229).

[115] The presumption established in Baxter therefore serves as the basis for a method of calculating damages to compensate the aggrieved party for the injury sustained. In this way, it is based on a compensatory objective that is distinct from disgorgement of profits where disgorgement is awarded for a restitutionary purpose in the absence of any injury. It should be noted that this presumption is not a departure from corrective justice, which is the foundation of the general rules of civil liability in Quebec: the sanction dependent on it is not punitive or confiscatory, but compensatory. Applying the presumption set out in Baxter therefore does not amount to awarding punitive damages, since the damages awarded on this basis have reparatory purposes.

[116] In this case, the respondents are seeking disgorgement of profits as the “equivalent” of the “serious loss” they claim to have sustained as a result of the appellants’ breach of the requirements of good faith in the performance of the Agreement (motion to institute proceedings, at paras. 1, 47, 57, 57.1 and 58). That injury is equivalent here to the gain lost by the respondents, which is compensable under art. 1611 C.C.Q. Based on the presumption set out in Baxter, it can be assumed that, had it not been for the appellants’ wrongful omission, the respondents would have sold their interests to IA at the same price the appellants did. This was in fact the premise underlying the analysis by the respondents’ experts, which was accepted by the trial judge, as can be seen from his explanations about calculating the value of the lost advantage (see paras. 598 and 615). Consequently, what the appellants describe as “loss of chance” to negotiate ceases to be hypothetical and becomes simply a “loss” for which the respondents must be compensated in the absence of evidence to the contrary (A.F., at paras. 119‑29; R.F., at para. 117). The onus was therefore on the appellants to establish on a balance of probabilities that the respondents would have sold their interests to IA for a price lower than the one obtained by the appellants.

[117] The appellants did not discharge this burden. The trial judge accepted the assumption put forward by the respondents’ firm of experts, namely that, “had it not been for the acts alleged against the [appellants], the [respondents] would have received consideration equivalent to what IA paid to acquire the [appellants’] interests in Groupe Excellence rather than the amount they obtained from the [appellants]”. At the hearing in this Court, the appellants did not show that this finding of fact, which is entitled to deference, was tainted by a palpable and overriding error (Housen, at para. 10; Grenier v. Grenier, 2011 QCCA 964, at para. 45 (CanLII); M.H. v. Axa Assurances inc., 2009 QCCA 2358, [2010] R.R.A. 15, at para. 19). Therefore, because the presumption in Baxter has not been rebutted, the damages owed to the respondents are equivalent to the difference between the sale price received by the appellants on the resale to IA and the price received by the respondents on the initial sale to the appellants.


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Last modified: 31-10-23
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