2018 QCCA 2130, 2018 QCCA 2130

Cansica Holding Inc. c. Boidman 2018 QCCA 2130 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-026548-172 (500-17-072333-126) DATE: December 14, 2018 CORAM: THE HONOURABLE MARK SCHRAGER, J.A. SIMON RUEL, J.A. STEPHEN W. HAMILTON, J.A. CANSICA HOLDING INC. APPELLANT – Plaintiff v. JACK BOIDMAN SWEIBEL NOVEK, S.E.N.C.R.L.

RESPONDENTS - Defendants JUDGMENT [ 1 ] The Appellant Cansica Holdings Inc. appeals from the judgment of the Superior Court for the District of Montreal (the Honourable Micheline Perrault) dated November 25, 2016, which condemned the Respondent Jack Boidman to pay the Appellant $82,247.67, with interest at the legal rate and the additional indemnity from June 10, 2011 on $67,247.67 and from April 2, 2012 on $15,000.

The trial judge dismissed the Appellant’s action against the Respondent Sweibel Novek s.e.n.c.r.l. [1] [ 2 ] The Appellant asks the Court to increase the damages payable by the Respondent Boidman to $812,779.77 (which includes interest at the contractual rate from July 21, 2000 to June 10, 2011, and at the legal rate and the additional indemnity from June 10, 2011 to November 25, 2016), with interest at the legal rate and the additional indemnity from November 25, 2016.

The Appellant does not appeal from the dismissal of the action against the Respondent Sweibel Novek. [ 3 ] The Respondent Boidman (hereinafter the Respondent) asks the Court to dismiss the appeal and maintain the trial judgment. THE FACTS [ 4 ] The facts are clearly set out in the trial judgment. It is nevertheless useful for the purposes of the present judgment to set out some of the key facts. [ 5 ] The Respondent is a lawyer and the Appellant [2] was his client.

On September 7, 2000, Mahmoud Baioumy and his wife Andrée Trudeau (the Debtors) acknowledged their personal liability for loans made by the Appellant to their companies, with interest from July 21, 2000. The loans were secured by a hypothec against the Debtors’ house on Nuns’ Island. The net amount outstanding under the loans is $276,300 in capital. [ 6 ] The Respondent was mandated in 2006 to collect the loans on behalf of the Appellant. He took certain steps but did not sue the Debtors until February 17, 2011. It is admitted that the loans became prescribed on May 5, 2007.

The Appellant discontinued its action against the Debtors and did not recover anything from them. [ 7 ] On June 10, 2011, the Appellant sent a demand letter to the Respondent. It filed suit on May 30, 2012, claiming $663,248.85 (the full amount of the loans and interest at the contractual rate (capitalized annually) from July 21, 2000 to March 15, 2012) with interest at the contractual rate from March 15, 2012.

The Appellant also claimed the reimbursement of the legal fees that it paid to the Respondent in the amount of $18,927.44, with interest at the legal rate plus the additional indemnity from March 15, 2012. [ 8 ] The Respondent admitted his fault and his liability to reimburse the legal fees, which the parties agreed to set at $15,000. The only issue at trial was the causal connection between the fault and the other damages claimed.

THE JUDGMENT [ 9 ] The trial judge held that, to succeed in its claim, the Appellant had to show on the balance of probabilities what it would have recovered on its loans had it not been for the Respondent’s fault. [3] She also held that the damages had to be assessed as at May 5, 2007, the date of the fault. [4]

[ 10 ] Applying those principles to the facts of this case, the trial judge concluded: • The Appellant would have recovered the sum of $67,247.67 on the sale of the Debtors’ house on Nuns’ Island; and • The Appellant would not have recovered anything else from the Debtors. [ 11 ] The trial judge therefore maintained the action in part against the Respondent to the extent of $67,247.67 and a further $15,000 for the legal fees charged by the Respondent. She awarded interest from June 10, 2011 on the $67,247.67 and from April 2, 2012 on the $15,000, because those were the dates of the demand letters.

She dismissed the Appellant’s action against Sweibel Novek because the Respondent was only a nominal partner and no one at Sweibel Novek ever led the Appellant to believe that he was an equity partner or an employee of Sweibel Novek. GROUNDS OF APPEAL [ 12 ] The Appellant raises the following grounds of appeal: 1. Did the trial judge err in law in her statement and application of the law of causation where there has been a “loss of chance”? 2.

Did the trial judge err in law in requiring the Appellant to demonstrate a “real and serious” probability of success with respect to each option that may have been available to it to recover all or part of the loans and in assessing the probability of success of those options? 3. Did the trial judge err in law in her assessment and consideration of events subsequent to the date of the fault? 4. Did the trial judge err in law in awarding interest on the amount awarded to the Appellant only from the date of the demand letter of June 10, 2011? 5.

Did the trial judge make manifest and determinative errors in the appreciation of the documentary evidence and testimony in finding that the Appellant would not have recovered all, or even a part, of the balance of the loans? [ 13 ] The Court considers that there are in reality three questions: 1. the first two grounds relate to the legal test applied by the trial judge in determining which damages are recoverable; this is a question of law and the standard of appellate review is correctness; 2. the third and fifth questions relate to the trial judge’s application of that legal test to the facts of the case; these are questions of fact or mixed law and fact and are subject to review only where a manifest and over-riding error is demonstrated; and 3. the fourth question relates to the starting date for the interest calculation and is a question of law.

ANALYSIS 1. Legal test for the recovery of damages [ 14 ] Essentially, the Appellant argues that the trial judge should have applied the notion of “loss of chance” or “ perte de chance ” as set out by the Supreme Court in Laferrière v.

Lawson . [5] According to the Appellant, once the trial judge concluded that it lost a “real and serious chance” to sue the Debtors, she should have assessed each of the options available to it to collect on the judgment it would have obtained and awarded it an amount equal to the percentage chance of recovery under each option multiplied by the amount that could be recovered under each option, irrespective of whether that chance of recovery was assessed at probable (in other words, the chance of recovery was greater than 50%) or not.

Instead, the trial judge assessed whether recovery under each option was probable (greater than 50%). If such was the case, the trial judge awarded the amount that could be recovered. Otherwise, the trial judge awarded nothing. [ 15 ] The Court is of the view that the trial judge’s approach was correct in law.

The majority of the Supreme Court in Laferrière upheld the traditional Quebec approach to civil responsibility of indemnifying actual damages caused by the defendant’s fault, rather than the chance of their realization: … I am inclined to favour an approach which focusses on the actual damage which the doctor can be said to have caused to the patient by his or her fault, and to compensate accordingly. … [T]here is no theoretical imperative directing courts to abandon traditional causal analysis and to adopt instead an essentially artificial loss of chance analysis. [6] [ 16 ] The Supreme Court further held that the doctrine of “loss of chance” has a very limited application in Quebec law: … it is only in exceptional loss of chance cases that a judge is presented with a situation where the damage can only be understood in probabilistic or statistical terms and where it is impossible to evaluate sensibly whether or how the chance would have been realized in that particular case .

The purest example of such a lost chance is that of the lottery ticket which is not placed in the draw due to the negligence of the seller of the ticket. … To transform this exceptional case into the theoretical basis for recovery in all loss of chance situations would be unnecessarily abstract, and, more importantly for the case before us, would give the mistaken impression that the court is more interested in the certainty of statistical chances than in the probable results which those chances represent. [7] (Emphasis added) [ 17 ] The limited application of the doctrine of “loss of chance” in Quebec law has been confirmed by a number of judgments and authors, including the recent judgment of this Court in Lemieux c.

Aon Parizeau inc. [8] [ 18 ] The doctrine of “loss of chance” has no application in the present matter. This is not a situation where “the damage can only be

understood in probabilistic or statistical terms” or where “it is impossible to evaluate sensibly whether or how the chance would have been realized”. 2. Application of the legal test to the facts [ 19 ] The trial judge analyzed the likelihood of recovery pursuant to various options open to the Appellant. She concluded that it was likely that the Appellant would have recovered $67,247.67 by exercising its hypothecary rights against the Debtors’ house and she therefore awarded damages in the amount of $67,247.67.

That conclusion is not challenged by either party in this appeal. [ 20 ] The Appellant argues that it could have recovered something in 2007 from the shares of Bay and Sons Export Corporation and other companies owned by one or both of the Debtors as well as from the Debtors’ wages and from a building (the “Egyptian Building”) owned by one of the Debtors in Egypt. It also argued that, based on previous experience, if pressure was brought to bear then the Debtors would have found a way to pay the Appellant. [ 21 ] The trial judge reviewed the evidence.

Her conclusion was that “the Court is not satisfied that there is a reasonable probability that Cansica could have recovered all or part of the Loan by executing a judgment against the Egyptian Building, or against any of Mr.

Baioumy’s assets, other than the Property.” [9] She therefore did not award any damages in relation to those other options. [ 22 ] The Appellant argues that she was wrong. [ 23 ] These are issues of fact, or at least mixed law and fact, and the standard of appellate review is therefore the standard of manifest and over-riding error. [ 24 ] With respect to the sources of recovery other than the Egyptian Building, the trial judge summarized the relevant evidence at paragraphs 31 to 35 of her judgment, including the fact that both the Respondent and the Appellant’s office manager advised the Appellant against making additional loans to the Debtors in 2004 because of the Debtors’ financial position, and that in 2006-2007, the Debtors’ companies and restaurants had either filed for bankruptcy or had ceased their operations. [ 25 ] The Appellant points to the rather vague testimony of one of the Debtors on the sales and profit margins of Bay and Sons Export Corporation prior to its bankruptcy and to unaudited financial statements for the year ended December 31, 2004 for three companies.

This evidence is insufficient to establish any manifest and over-riding error by the trial judge in concluding that no recovery was probable from these sources. [ 26 ] With respect to the possibility of realizing anything against the Egyptian Building, the trial judge reviewed the relevant evidence at paragraphs 36 to 47 of her judgment. She noted the 2016 evaluation of the Egyptian Building at its highest possible market value and the evidence as to the Debtors’ ownership.

However, she concluded that there was no reasonable probability of any recovery from the Egyptian Building based on (1) the difficulties in executing a foreign judgment in Egypt, (2) the facts that the rentals from the Egyptian Building are only $30 and that it is difficult to increase the rent under Egyptian law, and (3) her conclusion that the Debtors would not have cooperated.

She quotes the representative of the Appellant, who when asked why he had not made any efforts to recover the loans through the Egyptian Building, responded spontaneously “Have you been to Egypt?” [ 27 ] Again, the Appellant demonstrates no manifest and over-riding error by the trial judge that would justify the intervention of this Court. 3. Interest [ 28 ] The trial judge calculated interest from June 10, 2011 on the amount representing the proceeds from the house and from April 2, 2012 on the legal fees, because those were the dates of the demand letters with respect to those amounts. This is consistent with

Article 1618 of the Civil Code of Quebec and there is no basis for any intervention by this Court. FOR THESE REASONS, THE COURT: [ 29 ] DISMISSES the appeal, with legal costs. MARK SCHRAGER, J.A. SIMON RUEL, J.A. STEPHEN W. HAMILTON, J.A. Mtre Daniel F. O’Connor DANIEL F. O’CONNOR, AVOCATS For the Appellant Mtre Élisabeth Laroche ROBINSON SHEPPARD SHAPIRO For the Respondents Date of hearing: October 23, 2018