Legal Blog

Damages – General

Rougemount Capital Inc. v. Computer Associates International Inc. 2016 Ont CA

Investor breached the contract in which it was to invest in corporation and continue a business arrangement with the corporation for the benefit of both the investor and the corporation. The corporation, which had been in a precarious financial situation, almost immediately went bankrupt. The plaintiff, one of the creditors, bought the cause of action against the investor from the trustee in bankruptcy for $5,000. The trial judge awarded $11 million in damages on the assumption that the joint 5-year business plan would have been successful. The Court of Appeal reduced the damages to $1.3 million, holding the damages should be calculated as of the date of the breach, not as of some date years hence. Calculation of damages at the date of the breach meant that the corporation had to be placed in the position in which it would have been if the contract had been performed – and this meant accounting for costs as well as the benefits of the new business venture and discounting that amount as a result of the financial uncertainty of the new venture. Ultimately, the plaintiff did not get the bonanza it had hoped for, but $1.3 million was a good return for a $5,000 investment.

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.