2013 QCCA 2058, 2013 QCCA 2058

Multipix Communications Inc. c. Midland Walwin Capital Inc. 2013 QCCA 2058 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-022291-124 (500-05-043916-988) DATE: NOVEMBER 28, 2013 CORAM: THE HONOURABLE NICHOLAS KASIRER, J.A. JACQUES R. FOURNIER, J.A. DOMINIQUE BÉLANGER, J.A. MULTIPIX COMMUNICATIONS INC. CHARLES L. SMILEY APPELLANTS – CROSS-RESPONDENTS – Plaintiffs v MIDLAND WALWIN CAPITAL INC. DENNY C. MATTE RESPONDENTS – CROSS-APPELLANTS – Defendants and MERRILL LYNCH CANADA INC.

RESPONDENT – CROSS-RESPONDENT – Defendant in continuance of suit JUDGMENT [ 1 ] THE COURT: On the appeal from the judgment of the Superior Court, District of Montreal (the Honourable Mr. Justice William Fraiberg), rendered on November 22, 2011, which, following the splitting of the action pursuant to

article 273.1 CCP, maintained the action brought by Multipix Communications Inc. and Charles L. Smiley, in part, and condemned Denny C. Matte and Midland Walwyn Capital Inc. (Merrill Lynch Canada Inc. as defendant in continuance of suit), solidarily to pay Multipix Communications Inc. $33,395.50, with interest and the additional indemnity provided for under

article 1619 C.C.Q., calculated from July 28, 2010, with costs in favour of Multipix Communications Inc., save for costs of experts' reports; [ 2 ] And, on the cross-appeal from the same judgment, as well as from a judgment of the Superior Court, rendered by the same judge on July 18, 2008, which maintained the action of Multipix Communications Inc. and Charles L. Smiley, in part, and declared Denny C.

Matte and Midland Walwyn Capital Inc. (Merrill Lynch Canada Inc. as defendant in continuance of suit) liable only to Multipix Communications Inc.; [ 3 ] For the reasons of Kasirer, J.A., with which Fournier and Bélanger, JJ.A. agree: [ 4 ] DISMISSES the appeal, without costs; [ 5 ] DISMISSES the cross appeal, without costs. NICHOLAS KASIRER, J.A. JACQUES R. FOURNIER, J.A. DOMINIQUE BÉLANGER, J.A. Mtre Philippe Hubert Trudel TRUDEL & JOHNSTON For the appellants and cross-respondents

Mtre Philippe Charest-Beaudry Mtre Pierre Y. Lefebvre FASKEN MARTINEAU DUMOULIN For the respondent and cross-appellant Denny C. Matte Mtre Bernard Jolin Mtre Laurence Bich-Carrière Mtre Marie-Josée Hogue HEENAN BLAIKIE For the respondent and cross-appellant Midland Walwyn Capital Inc. and for the respondent and cross-respondent Merryl Lynch Canada Inc. Date of hearing: October 8, 2013 REASONS OF KASIRER, J.A.

I Background [ 6 ] On August 13, 1998, Multipix Communications Inc. and Charles Smiley, its president and principal shareholder, brought an action in the Superior Court for non-performance of a financing contract against Denny Matte, a retail investment broker, and his employer, Midland Walwyn Capital Inc., an investment brokerage house (which later became Merrill Lynch Canada Inc. and has replaced Midland in these proceedings by continuance of suit).

Multipix and Smiley alleged that Matte and Midland breached an oral agreement arrived at over a lunch in 1994 pursuant to which Matte purportedly guaranteed that he would sell at least $5,000,000 of Multipix securities to his clients. [ 7 ] Together, Smiley and Multipix claimed over $90,000,000 in damages for breach of contract. [ 8 ] The presiding judge of the Superior Court ordered a splitting of the action in 2004.

A first portion of the trial, lasting 17 days, dealt with the liability of the defendants Midland and Matte, and resulted in a 474-paragraph judgment rendered on July 18, 2008 that maintained the plaintiffs' action in part and declared Matte and Midland liable to Multipix for breach of a contractual obligation to inform. [1] The second portion of the trial, extending over three days, concerned the quantum of damages to be awarded.

In a judgment of 80 paragraphs rendered on November 22, 2011, the Superior Court condemned the defendants solidarily to pay $33,395.50 to Multipix alone, with interest and the additional indemnity provided by law, calculated from July 28, 2010, and awarded no damages to Smiley. [2] [ 9 ] All the parties appealed. [ 10 ] In the principal appeal, Multipix and Smiley argue the judge erred in his calculation of damages in the Judgment on quantum. In this Court, Multipix claims $4,713,409.80, with interest and the additional indemnity allowed by law from the date of the notice of default.

Both appellants initially contended the judge also failed to rule on certain heads of damages and that the matter be referred back to the Superior Court on those points but, prior to the hearing, they abandoned this latter submission. [ 11 ] Midland and Matte have filed cross-appeals in which they both ask that the Judgment on liability be set aside. The cross- appellants challenge the judge’s finding of an oral contract pursuant to which Matte undertook to sell private placement units in Multipix to raise money for various film production and distribution ventures.

II The Facts [ 12 ] A lawyer at the time of the relevant events, Smiley was involved in various aspects of the film production and distribution business. To that end, he incorporated Multipix in 1994 and drew up a business plan for the company that required substantial financing from as yet unidentified outside investors. Soon thereafter, Smiley showed the plan to Matte, a retail investment dealer at Midland, with a view to enlisting Matte's aid to secure the necessary financing. Matte in turn showed the plan to Ron Vinet, a senior officer in Midland's corporate finance department.

Later in 1994, Jeffrey Konvitz, an American business executive in the film industry, joined Smiley in the venture of launching the Multipix business plan. [ 13 ] On October 15, 1994, Matte met with Smiley and Konvitz to discuss the Multipix venture over an extended lunch at a restaurant called Guy & Dodo in Montreal. What happened at that lunch is central, as a matter of fact, to the outcome of the appeal and the cross- appeal. The appellants claimed that an agreement was arrived at during this meeting regarding the guaranteed sale by Matte of private placement units in Multipix.

Matte offered a different version of the arrangement. [ 14 ] Smiley testified, as did Konvitz, as to the undertakings made by each side at the lunch. Their testimony is summarized by the judge but not reproduced in the record on appeal. They said that Matte committed himself to raising all or at least a substantial amount of the funds required to finance Multipix and guaranteed his results.

The value of Multipix securities that Matte allegedly guaranteed to sell was initially said to be $22,000,000 but, in the final version of their motion to institute proceedings, Smiley and Multipix contend the guarantee was for $5,000,000 worth of securities. Matte gave evidence that he agreed to raise half of that amount, on a best-efforts basis,

on the condition that Smiley, Konvitz or their associates first matched the funds that Matte would raise. [ 15 ] According to the testimony of Konvitz as reported by the trial judge, Matte resisted a suggestion that the agreement reached during the lunch be reduced to writing, saying that his word was his bond.

The key issue in the portion of the trial leading to the Judgment on liability, and of the cross-appeal, turned on whether an oral agreement was in fact concluded between the parties and, if so, what was its obligational content in light of the competing accounts of the parties. [ 16 ] From the date of the lunch on October 15, 1994 down to December, 1994, Smiley and Konvitz worked on several transactions that were to furnish Multipix with co-production and other business opportunities in the film industry.

Some of these were agreed to upon the condition that Multipix obtain start-up financing. [ 17 ] On December 13, 1994, Midland management circulated an internal memorandum to its financial advisers, including Matte, entitled "Compliance Monitor". The Compliance Monitor directed that Midland financial advisers were not authorized to sell their clients more than 10% of a new issue that was not subject to the control of Midland's corporate finance department, and only then if the issue had undergone a due diligence review by a member of the Investment Dealers' Association.

At trial, Matte claimed that he showed the Compliance Monitor to Smiley in December of 1994. Smiley and Konvitz said that they first learned of it on September 18, 1995 when Matte sent them a copy of the Compliance Monitor by fax. [ 18 ] In June 1995, lawyers worked to prepare an offering memorandum for the Multipix financing. At the same time, Matte sought authorization from Midland management to sit on the company board as a director and to sell the issue. The authorization was granted.

The memorandum was circulated on June 27, 1995 and the closing scheduled to occur no later than August 31, 1995. [ 19 ] In July 1995, a merger opportunity arose with respect to an American public company called Communications and Entertainment Corporation (“ComEnt”). The boards of Multipix and ComEnt agreed to a reverse takeover conditional on successful financing of Multipix, which would effectively make Multipix a public company. Midland brokers were not permitted, however, to sit on the boards of public companies. At the direction of a Midland compliance officer, Matte withdrew from the Multipix board.

Plans for the closing continued with Matte’s involvement, however, with a new closing date set for September 22, 1995. [ 20 ] On September 13, 1995, Matte departed abruptly from a meeting convened prior to closing at which Smiley and Konvitz, as well as some financial and legal advisers were in attendance. Matte said that he did so because Multipix had no audited financial statements and that the principals had raised no funds.

Five days later, Matte sent Smiley the Compliance Monitor by fax. [ 21 ] The closing never occurred such that the financing did not materialize. [ 22 ] On September 20, 1995, Multipix sent a letter of default to Matte and Midland alleging breach of the contract supposedly concluded over the lunch the previous October. [ 23 ] During the period that followed, Smiley and Konvitz sought alternative sources of financing for Multipix but these efforts proved unsuccessful.

On May 17, 1997, Smiley and Konvitz signed a settlement agreement as between themselves whereby Multipix transferred back to Konvitz the literary property he had invested in the company.

Konvitz transferred his shares in Multipix to Smiley. [ 24 ] Just over a year later, Smiley and Multipix filed suit against Matte and Midland for an aggregate amount of $91,312,706 representing lost profits, damage to reputation and loss of salary and expenses for breach of the financing contract that, they alleged, was formed at the lunch on October 15, 1994. [ 25 ] The plaintiffs filed an amendment to the declaration two days before the Judgment on liability was rendered in 2008.

In it, Multipix presented an alternative claim arising out of an alleged breach of the contractual obligation of information owed to the company for damages for expended time and effort, as well as incurred expenses and transaction costs, tied to the failure to disclose the Compliance Monitor in a timely fashion. The quantum would be established at the damages phase of the trial.

III The judgments III.1 Judgment on liability [ 26 ] After the first portion of the trial, the judge rendered the Judgment on liability in which he held Matte and Midland liable for breach of contract to Multipix alone. [ 27 ] The judge decided that Smiley and Multipix had failed to prove the oral contract they alleged pursuant to which Matte guaranteed to sell at least $5,000,000 of Multipix placement units. [ 28 ] The judge held that the plaintiffs had failed to produce a commencement of proof or demonstrate that a contract for the guaranteed sale of securities was arrived at in the ordinary course of Matte’s business.

Smiley and Multipix were thus precluded from proving the oral contract they alleged by testimony.

In any event, the judge did not believe their story of the guarantee and the contract with the guarantee as alleged by the plaintiffs would have been contrary to public order. [ 29 ] The judge decided as well that the contract alleged by Matte, according to which Smiley and Konvitz would contribute matching funds as a condition for Matte selling the securities on a best-efforts basis, was not concluded at the lunch on October 15, 1994. [ 30 ] While the judge found that there was no meeting of the minds upon which either parties' versions of the contract could rest, he had no doubt that some agreement was arrived at between the parties at the October lunch.

After rejecting their respective accounts, the judge wrote that the parties’ obligations could be identified as those ascertainable in "the residue of their contract that is proved or admitted and valid" (para [439] of the Judgment on liability). That contract had as its principal object, according to the judge, Matte's sale of private placement units in Multipix, with no limit on his authority to do so, but with no guarantee as to the amount of units sold.

[ 31 ] In the Judgment on liability, the judge summarized his reasons for finding Matte and Midland responsible for violating the duty to inform Multipix of the Compliance Monitor inherent in this oral contract as follows: [13] The Plaintiffs’ action nonetheless succeeds in part since the Court concludes from Matte’s testimony and the conduct of all the parties that even if there was no meeting of the minds to form the contract of guaranteed sale the Plaintiffs allege, all parties believed and acted as if some contract existed, having as its principal object Matte’s sale of private placement units with no limit on his authority to do so from the Plaintiffs’ perspective.

Matte had to be aware that Multipix was incurring expenses and making commitments on the strength of that belief. [14] Yet, an internal memorandum of Midland issued on December 13, 1994 (the "Compliance Monitor", P-20) barred its retail brokers, also referred to as investment advisers, from selling more than 10% of any issue whenever, as was the case here, another investment dealer was the offering agent instead of Midland. [15] Matte failed to inform Multipix of this limitation on his authority until only four days before the scheduled closing of the private placement, after Multipix had already spent heavily on professional fees and entered business contracts in the expectation that he would be available to sell the entire issue, since it had no other source of funding. [16] Matte testified that he could have obtained a waiver of the restriction to permit him to sell up to 50% of the issue, but the Court does not believe his claim that he communicated this possibility to the Plaintiffs. [17] Furthermore, even if he had done so, the waiver would not have been enough to enable Multipix to raise the initial capital of $5,000,000.

The Court then concludes that the Plaintiffs would not have continued the project with Matte if they had been aware of the restriction earlier. [18] He is therefore liable to either or both of the Plaintiffs for the resulting damages in an amount yet to be determined. [19] Under

article 2163 C.C.Q., Midland is likewise liable for Matte’s omission because it allowed the Plaintiffs to believe that there was no limit on his authority and did not take appropriate measures to prevent their error, which was foreseeable. [Emphasis in original.] [ 32 ] Importantly, the liability was based not on Matte’s failure to bring any particular amount of financing to the table, but instead stemmed from his failure to inform Multipix – the other contracting party – that he knew he could not sell more of the securities than the Compliance Monitor allowed.

Damages were owed to plaintiff Multipix as the contractual beneficiary of the duty to inform and not Smiley personally. [ 33 ] Midland, as Matte's employer, was solidarily liable under

article 2163 CCQ because it had allowed the principals of Multipix to believe that there was no limit on Matte's authority and did not take appropriate measures to prevent them from assuming that the authority was unlimited. [ 34 ] The judge accordingly maintained the plaintiffs' action in part only in the Judgment on liability.

His conclusions limited the grounds upon which he found Matte and Midland liable – a contractual breach of the duty to inform of the Compliance Monitor – and only recognized their liability to Multipix: [472] [THE COURT] DECLARES that the Defendants are liable to Multipix for damages caused as a result of their failure to inform it in good time of the Compliance Monitor (P-20) limiting the authority of the Defendant Matte to sell its securities that were to be issued in the private placement scheduled for September 22, 1995; […]. [ 35 ] He continued the trial for proof and hearing of Multipix's damage claims, described as time and effort, as well as incurred expenses and transactions costs, arising from the breach of the contractual obligation to inform.

The judge also reserved his decision as to costs. III.2 Judgment on quantum [ 36 ] While the plaintiffs were successful in establishing their claim based on Matte's contractual breach of an obligation to inform, they fared much less well in the Judgment on quantum rendered in 2011. The judge dismissed most of the claims for damages sought by Smiley and Multipix. In particular, he awarded no compensation for lost time and effort because he did not consider it to be a loss.

He dismissed the better part of the other claims, including the losses associated with returned literary properties to Konvitz, as insufficiently connected to the contractual breach. [ 37 ] The judge did award $33,395.50 for professional fees incurred by Multipix towards the private placement, saying that these fees would not have been incurred if Multipix had known of Matte's limitation. [ 38 ] In addition, he found losses in the amount of $1,358 arising from the expenses relating to a single project, the failed merger between Multipix and ComEnt.

The company had proved, in his view, that these expenses were incurred after February 20, 1995, the time at which Matte had the duty to inform Multipix of the limitation under the Compliance Monitor. On this point, he wrote: [49] The only expenses that the Court believes were lost because Multipix learned too late that Mr.

Matte could not act were those it incurred in its attempt to merge with Communications and Entertainment Corporation ("ComEnt") in August and September 1995, the one deal it had not landed at least provisionally before February 20, 1995. [ 39 ] The judge found, however, that this amount fell within a category of expenses that was prescribed. [ 40 ] The judge awarded costs in favour of Multipix, save for costs of its experts' reports.

IV Analysis [ 41 ] Because the principal appeal brought by Smiley and Multipix bears only on the quantum of damages awarded, it will be considered after the cross-appeal, brought by Matte and Midland, in which the basis for the contractual liability is challenged. IV.1 The Cross-Appeal [ 42 ] Cross-appellants Matte and Midland contest the trial judge's conclusion in the Judgment on liability that they are contractually liable to Multipix on three principal grounds: (

i) that the judge erred in holding that there was a valid oral contract between the parties; (ii) that the judge should have held that either they had no contractual obligation to inform Multipix of the Compliance Monitor or that Matte did not breach that obligation; and (iii) that the judge erred in finding a causal link between the fault alleged and the losses sustained by Multipix. [ 43 ] For the reasons that follow, all of these arguments are unfounded.

IV.1.1 The existence of a valid oral contract [ 44 ] Midland and Matte argue that whatever the applicable standard for intervention by the Court, the judge erred, "in logic if not in law", in finding that an oral contract was concluded by the parties at the October lunch after refusing to recognize both the contract alleged by Smiley and that alleged by Matte. The judge erred because, as a matter of logic, there is no room for a meeting of the minds in the "residue" of these two incompatible positions. [ 45 ] The cross-appellants have chosen not to dispute the judge’s findings of fact.

More precisely, in their written arguments, Matte and Midland declare that for the purposes of the cross-appeal, they accept the facts as stated by the trial judge in paragraphs [20] to [185] of the Judgment on liability and paragraphs [1] to [5] of the Judgment on quantum.

It bears immediate mention that the judge made additional findings of fact, as well as mixed findings of fact and law, elsewhere in the judgments but these were not subject to the same concession on appeal. [ 46 ] As noted above, the trial judge was of the view that the parties had agreed to some "residue" contract upon which the plaintiffs' action could rest. Speaking of his view of what occurred at the October lunch, the judge wrote that "[t]here is no question that the parties had some agreement.

What they differ over are its scope and duration" (para [436], Judgment on liability). [ 47 ] The judge based his finding on his reading of the evidence at the 17-day trial, in particular what he styled as an "admission" by Matte as to the existence of a meeting of the minds with Smiley and on his view of the conduct of the parties thereafter. At paragraphs [439] to [442], ibid. , he explained: [439] Their obligations are therefore limited to those ascertainable in the residue of their contract that is proved or admitted and valid, even if in the result the Plaintiffs are entitled to far less than they demand.

Matte admitted agreeing to at least use his best efforts to sell the issue for a consideration of a standard broker’s commission, provided that a due diligence was conducted by Midland or by another IDA member firm. In the proceedings, he has not contended that such consideration was inadequate to validly support such an undertaking.

It has always been his alleged guarantee that is problematic. [440] Even if he and Multipix differ over the extent of his obligations and the consideration that he was to be paid, his admission and the contract itself, as admitted, are binding on him and inure to Multipix’s benefit because selling securities on a best efforts basis is what Midland’s retail brokers normally did, were held out as doing and what he agreed to do in this case. [441] It is his alleged obligation to make up any shortfall that he denies, which cannot be proved, and which would be invalid if it could, that cannot be applied. [442] Midland is responsible under

article 2163 C.C.Q. because the prejudice was caused by Matte in the performance of his duties. It was aware that he would seek out other investment firms to act as offering agent and that he would remain actively involved in the proposed Multipix financing. [ 48 ] The cross-appellants explain their position as follows.

By accepting the judge’s "intermediate findings of fact" that neither of the competing versions of the oral contract alleged by Smiley or Matte had a basis in evidence, they are free to argue on appeal, as a matter of logic alone, that the judge’s "final finding" – i.e . that there was a meeting of the minds on the "residue" of the two different positions – is what they call a "normative" impossibility. [ 49 ] They note that Smiley said the financing contract carried with it an obligation of result whereby Matte would guarantee the sale of a fixed number of units. The judge rejected that view.

Matte said he agreed only to sell the securities on a best efforts basis if the principals invested an equivalent amount of matching funds, sometimes referred to as "mirror financing", into the venture.

The judge rejected that view as well, at least insofar as he did not accept that, at the October lunch, Smiley and Konvitz agreed to invest, themselves, an equivalent amount in Multipix as would the eventual outside stakeholders. [ 50 ] According to the cross-appellants, the incompatible character of the two positions means it is logically and juridically impossible that the parties agreed to a common object of the contract as required by

article 1385 CCQ. The "intermediate findings of fact" that neither version of the contract was supported by the evidence precluded the judge from arriving at the "final finding" that a meeting of the minds on a common object occurred between Smiley and Matte at the October lunch. There is therefore an error of logic, they say, underlying the syllogism upon which the judge’s conclusion that a contract was formed rests. Without even challenging the judge’s findings of facts, they say, it is impossible that a contract could have been concluded that day. [ 51 ] I disagree.

In my view, the cross-appellants have failed to meet their burden of showing that the judge made an overriding error in deciding that the parties concluded an oral contract. The judge’s conclusion is neither a legal nor a logical impossibility but a plausible consequence of his reading of the facts.

[ 52 ] What the cross-appellants fail to appreciate is that the judge rejected the two versions because he did not believe them to be true accounts of what was agreed to at the lunch. [ 53 ] He instead based his finding of fact that there was nevertheless a meeting of the minds on an admission by Matte in his testimony and the subsequent conduct of the parties. He reiterated this point in his

summary of the first judgment at paragraph [9] in the Judgment on quantum: [9] The action partially succeeded because even if there was no meeting of the minds to form a contract of guaranteed sale, all parties believed and acted as if some contract existed, having Mr. Matte's sale of private placement units as its principal object, with no limit on his authority to do so from the Plaintiffs’ perspective. [Emphasis in original.] [ 54 ] Neither party gave a proper picture of his side of the meeting of the minds.

The judge found, however, evidence beyond their accounts that supported his conclusion that an oral contract existed. [ 55 ] Matte was not an entirely reliable witness. [3] The judge specifically rejected Matte’s position that at the October lunch he had insisted that matching funds be contributed by Smiley and Konvitz as a condition of Matte selling securities to his clients (Judgment on liability, paras [211] to [225] and para [337]). On the contrary, he held that there was no way of determining whether the matching funds were agreed to at the time of the formation of the contract.

Moreover, after the time of the October lunch, the issue of the matching funds was far from settled, but instead "in flux" and that the judge found that parties "never agreed on what the concept meant" (see paras [213], [214], [217] and [413], Judgment on liability).

In my view, the cross-appellants have cited various extracts from the judgment out of context to suggest, wrongly, that the judge held the mirror financing requirement to be part of the obligational content of the contract agreed to on October 15, 1994. [4] [ 56 ] The judge also rejected the account of the agreement offered by Smiley that Matte had guaranteed, at the lunch, that he would sell a minimum of $5,000,000 of the securities. He called the plaintiffs’ contention "not credible" and "disingenuous" (para [407], Judgment on liability).

Even if the testimony of Smiley and Konvitz had been admissible to prove an oral contract, the judge wrote "the Court would not believe them" (para [225], ibid ). [ 57 ] The judge did decide, however, that the parties agreed that the financing should proceed and that Matte undertook to make best efforts to sell the securities, for a commission, and that he established no predetermined limit as to how much he would sell. This, for the judge, was the "residue" agreement that he gleaned from otherwise admissible and credible evidence.

Importantly for our purposes, as a matter of fact he found the proof of the meeting of the minds over the object of this contract in Matte’s admission and in the evidence of the conduct of the parties. [ 58 ] The argument of the cross-appellants, based on logic alone, says nothing about the explicit basis of this finding of fact.

In particular, the cross-appellants say nothing about the judge's highly factual measure of the parties' conduct. [ 59 ] In the latter regard, the judge observed the conduct of the parties from the testimony of Smiley and Konvitz as well as that of "an impressive number of witnesses whom they and Matte encountered in their discussions with other investment firms or film production companies" (para [415], Judgment on liability).

The judge did not cite the testimony of third parties as direct evidence of the agreement, but as one facet of proof of the parties’ subsequent conduct. [ 60 ] What the cross-appellants characterize as the judge’s final determination – the existence of a meeting of the minds between Smiley and Matte over lunch that day – is a finding of fact based on the judge’s view of the evidence, in particular the admissible testimony of the parties and his evaluation of the evidence of their subsequent conduct. [ 61 ] Was the judge mistaken on his reading of the evidence that a meeting of the minds took place at the lunch on that October afternoon in 1994? [ 62 ] That burden rests with the cross-appellants. [ 63 ] The cross-appellants challenge the judge’s finding that there was a meeting of the minds at the October lunch but provide this Court with none of the evidence the trial judge used to observe that fact.

The first paragraph of

article 507 CCP requires the parties to attach to their written arguments "the documents and extracts from the evidence that are necessary to determine the questions at issue/des pièces et des extraits de la preuve nécessaire à la détermination des question en litige". [ 64 ] This, in my view, required them to submit transcripts of Smiley and Konvitz's testimony regarding that lunch and a full record of Matte’s version of the events to the Court for review.

The cross-appellants chose to forego this opportunity. [ 65 ] The record on appeal should have included the evidence the judge used to measure the conduct of the parties in which he found confirmation of the meeting of the minds he saw as the basis of the oral contract arrived at during the October lunch. The record contains no testimony from Martin Heppner, Martin Caan, Robert Hesse, Robert Rivard, Steve Abrams, or Shane O’Neil, all of whom were mentioned by the judge as part of the "impressive number of witnesses" he referred in his reasons (paras [415] and [419], Judgment on liability).

Numerous exhibits, including letters and memos from Matte’s office, are referred to by the judge and absent from the materials submitted in support of the cross-appeal. [ 66 ] The meeting of minds was a finding of fact – or at best the factual side of a mixed question of law and fact – that can be overturned only if the cross-appellants show where in that evidence the judge committed a palpable and overriding error.

Their failure to do so results in their failure to meet their burden on appeal and the dismissal of the cross-appeal. [5] My colleague Bich, J.A. recently explained the rule in Droit de la famille – 112606 [6] in the following terms: [21] Le plaideur qui se demande ce qu'il doit joindre à son mémoire, au

titre de l'annexe III, doit se poser la question suivante : de quoi

la Cour a-t-elle besoin pour résoudre adéquatement les questions en litige? Il s'agit donc de répondre à cette question en fonction des besoins de la Cour et non selon la seule perspective de la

partie que représente le plaideur. Par exemple, celui qui affirme que le tribunal de première instance a mal évalué l'ensemble de la preuve a tout intérêt à soumettre l'entièreté de celle-ci en

annexe à son mémoire. De même, si l'on reproche au tribunal de première instance des erreurs dans l'appréciation du témoignage d'un témoin particulier, il est téméraire de ne reproduire que des extraits de ce témoignage (ce qui peut laisser sous-entendre qu'on cherche à cacher ce que le témoin aurait dit par ailleurs et qui pourrait contredire la thèse qu'on cherche à faire valoir en appel). [22] La jurisprudence de la Cour sur ce point est constante. [23] Le fardeau de reproduire toute la preuve dont la Cour aura besoin pour résoudre le litige repose en premier lieu sur les épaules de la

partie appelante. Si elle ne le fait pas (soit qu'elle ne produise rien ou ne produise que des extraits insuffisants), la

partie intimée n'est pas tenue de suppléer au défaut, quoiqu'elle puisse décider de le faire en produisant elle-même le complément de preuve nécessaire. Dans le premier cas, il se pourrait qu'elle obtienne pour cette raison le rejet de l'appel; dans le second cas, elle permettra à la Cour de statuer sur le fond en toute connaissance de cause. Il y a là pour la

partie intimée un choix stratégique. [ 67 ] The cross-appellants have failed to discharge their burden to show that the judge committed a palpable and overriding error allowing this Court to disturb his finding of fact that the meeting of the minds he described actually occurred. [ 68 ] I hasten to say that the cross-appellants' "normative" argument, as an alternative means of pointing to an overriding factual error, is a theoretically serious one. [ 69 ] They are right to say a condition for the valid formation of the oral contract requires that the meeting of the minds bear on the object of the contract (article 1385 CCQ), i.e. the juridical operation envisaged by the parties at the time of formation (article 1412 CCQ).

As authors Didier Lluelles and Benoît Moore have written, one of the prime functions of the rule stipulating that the object of a contract is of the essence of contract is to allow for a court to verify, in law, that the contract was properly concluded. [7] [ 70 ] Circumstances may indeed exist where the accepted evidence of parties’ respective positions is so incompatible in respect of the object of the contract that the judge is precluded – logically, juridically and, no doubt, "normatively" – from correctly finding a meeting of the minds.

Such incompatibility may be characterized in different ways: some scholars view it as merely an absence of consent as to the object of the contract, others style it a "common error as to the object of the contract", [8] or an "error as to the nature of the contract", [9] or even an error in negocio . [10] Whatever the proper tag, however, the result is the same. In all of these cases, the contract cannot be the basis of civil liability because it is either null or non-existent as a matter of law.

The cross-appellants are not wrong, then, at least in theory, to suggest that circumstances may exist where a meeting of the minds' is "normatively" impossible. [ 71 ] However, in the factual setting of this case, and notwithstanding the able arguments brought to bear on this point by counsel, the cross-appellants' "normative" argument must fail. [ 72 ] This case bears no resemblance to circumstances where admissible and credible evidence as to the parties' intentions in negotiating a contract is accepted as true such that, given the incompatibility of the two positions so proved, the trier of fact is forced to observe an absence of agreement as to the object of the contract or a common error as to its nature.

Each of the above noted theories – error in negocio, erreur obstacle, or an absence of meeting of minds as to the object or the nature of the contract – is predicated on the parties presenting reliable evidence of their respective versions of the proposed contract. [ 73 ] In our case, however, the judge disbelieved the parties as to what they described as their intentions at the October meeting.

Without reliable evidence from the parties as to what happened that day, the judge was left to discern whether there were intentions common to both parties, suitable for forming the object of a contract, from the remaining admissible evidence brought before him. [ 74 ] The judge plainly identified the object of the contract on which the meeting of minds took place: it is the "sale of private placement units with no limit on the broker's authority to do so" (paras [13], [439] of the Judgment on liability, para [9] of the Judgment on quantum).

He is clear too that he based this finding on proof of the conduct of the parties and Matte's admission.

To say that this was not the basis of a meeting of the minds required the cross-appellants to attack the judge's finding of fact that the aforementioned object was agreed to at the October lunch. [ 75 ] It bears noting that his conclusion as to the substance of the agreement, as the judge explained at length in his reasons, was consonant with what he found to be the industry standard for these kinds of financing contracts: that the retail investment broker would agree to sell the securities in question, on a best efforts basis without any guarantee as to results, and that he would do so without a limit as to how many units he could sell.

This suggests to me that the judge’s factual conclusions are not unreasonable on their face. [ 76 ] As a final matter, the cross-appellants point to two paragraphs in the judge’s 66-page opinion that, they say, conflict with the judge’s conclusion that there was a meeting of the minds between the parties.

In particular, they argue that sentences in paragraphs [429] [11] and [438] [12] of the Judgment on liability suggest that the parties had different understandings of the object of the contract that necessarily precludes any finding that they arrived at a meeting of the minds. [ 77 ] The parties disagreed as to what the judge meant in these two paragraphs. It is, however, very plain from the rest of the judgment that he held there was a meeting of the minds between the parties based on the sum of the admissible evidence before him.

The cross-appellants propose a reading of these paragraphs that takes insufficient account of the whole of the judgment, in particular paragraphs [13] in which the judge self-consciously summarizes his findings after the labours of a long trial.

In short, when these stray sentences are read in light of the judgments as a whole and not in isolation, whatever infelicities of language they may contain – if they are infelicities – have no relevance on appeal. [ 78 ] In concluding this part of the analysis, I noted that the cross-appellants – in particular Midland – argue that the application of the doctrine of "apparent mandate" set forth in

article 2163 CCQ depends in the circumstances on the existence of a valid contract between the third party in good faith (Multipix) and the apparent mandatary (Matte). They say the absence of a valid contract between Multipix and Matte precludes the application of the apparent mandate doctrine to Midland. Insofar as the judge found a valid contract to

exist and that the cross-appellants have failed to show this to be palpably wrong, the argument on apparent mandate also fails. IV.1.2 The non-performance of the contractual obligation to inform [ 79 ] As an incident of the oral contract agreed to at the October lunch, the judge found that Matte had a contractual obligation to inform Multipix on limits to his authority to sell securities in a timely fashion. This was based on the duty of good faith in contract set forth in Bank of Montreal v.

Bail . [13] Specifically, the judge was of the view that it was incumbent on Matte to inform Multipix of the limit on his authority to sell more than 10% of the issue according to the Compliance Monitor put in place by Midland for its retail brokers no later than February, 1995. [ 80 ] Matte claimed at trial that he informed Multipix’s representatives of the limitation in the Compliance Monitor soon after the policy was adopted in December, 1994.

The judge did not believe him (paras [277] and [430], Judgment on liability). [ 81 ] Instead, the judge found, as a matter of fact, that Matte only informed Smiley of the Compliance Monitor on September 18, 1995, when he sent him a copy of the document by fax, on the eve of the aborted closing of the financing. This was too late: as of February, 1995, the rule in the Compliance Monitor that limited Matte’s ability to sell more than 10% of the issue without special permission applied since Midland was not the lead broker in managing the financing.

The judge explained that this was a breach of the contractual obligation to inform: [432] By failing to inform the Plaintiffs that his employer's policy prevented him from selling more than 10% of the private placement or even 50% except with a waiver that was not assured, Matte induced them to continue a course of action after February 20, 1995, that they would not likely have otherwise pursued.

That omission was an actionable fault under the contract he admits was formed. [ 82 ] As the judge wrote at paragraphs [446] and [447] of his reasons in the Judgment on liability, Matte’s failure to inform the Plaintiffs of the quantitative limit on his authority to sell the issue was a breach of a contractual obligation to act in good faith imputable to Midland because Matte acted as its agent at all times in offering and providing his services to Multipix. [ 83 ] Cross-appellants Matte and Midland raise two grounds of appeal on this point, both of which are without merit. [ 84 ] First, they argue that Matte had no duty to inform Multipix of the Compliance Monitor because the judge was mistaken in finding a contract between the parties.

Given my conclusion that the cross-appellants failed to show the judge erred in holding that a contract was concluded on October 15, 1994, this argument necessarily fails.

The judge was plainly correct in holding that, as an incident of the duty of good faith and on the strength of the reasons of Gonthier, J. of the Supreme Court in Bail that Matte had a duty to inform Multipix that there was a limit on the number of securities he could sell without obtaining special permission from his superiors. [ 85 ] Second, the cross-appellants argue that even if such a duty existed, Matte could not be held responsible for its breach.

They contend that Smiley – trained as a lawyer and versed, through personal experience, in film financing – should have acted prudently and, in the event, he failed to inform himself of any limits the broker may have had in securing financing for Multipix. [ 86 ] This second argument should be dismissed by reason of the cross-appellants failure to show where the judge erred in his reading of the facts.

The judge decided that Smiley could not have been reasonably expected to investigate whether Midland had put in place limitations such as those contained in the Compliance Monitor – apparently an extraordinary limitation on the authority of retail brokers to sell securities – in connection with an arrangement where one would have expected Matte to have acted to maximize sales for his own benefit.

Commenting on the application of the doctrine of the duty to inform in Bail , the judge wrote: [435] In the present case, it would be unreasonable to impose the qualification Gonthier J. expresses at the end of the foregoing citation on the Plaintiffs. The Court believes that in the circumstances they should not have been expected to check with Midland as to whether there was any limit on the portion of any securities issue that Matte could sell.

Unlike an outright promise to sell an entire issue, that would not be something that any sensible person placed in the same circumstances would be expected to verify. [ 87 ] The judge specifically held that Matte, and by extension Midland, acted in a manner that allowed Smiley and Multipix to believe that the broker was authorized to sell more than 10% of the issue.

He wrote in paragraph [448] of the Judgment on liability that " [t]he latter were in good faith and as prudent as could reasonably be expected in this respect since they had no reason to believe otherwise and therefore to inquire." [ 88 ] The cross-appellants have failed to show a reviewable error in the judge’s finding that Matte committed a fault in failing to inform Multipix of the limitation in the Compliance Monitor or that it was unreasonable for Smiley to rely on Matte and Midland in this regard.

Having failed to show those findings to be mistaken, the cross-appellants’ argument on this point shall be dismissed. IV.1.3 Causation [ 89 ] The judge found that plaintiffs Smiley and Multipix established a causal link between the contractual fault associated with Matte’s failure to inform and the damages claimed.

As noted above, he held that the failure to inform Multipix of the rule set forth in Midland’s Compliance Monitor barring retail brokers from selling more than 10% of the issue without special permission was the cause of compensable losses. [ 90 ] In paragraphs [14] through [19] of the Judgment on liability quoted above, he explained that Matte’s failure to inform Multipix of this limitation on his authority until only four days before closing gave rise to damages in an amount as yet to be determined at the time of that judgment.

At paragraphs [468] and [469], the judge explained that Midland and Matte were liable for the damage caused: [468] The damages caused in the present case by the Defendants’ failure to inform Multipix of the Compliance Monitor earlier would ostensibly consist of at least the wasted professional fees and other expenses it incurred working on the assumption that there was no internal corporate obstacle to Matte's availability to try to sell the entire issue.

[469] The Defendants are ultimately liable, not because Matte failed to deliver on any promise imputed to him, but because he continued, at least after February 20, 1995, to maintain a relationship that could not possibly bring Multipix's expectations to fruition when he knew or should have known it could not and failed to tell them so. [ 91 ] The Judgment on quantum confirmed that the defendants’ fault only caused compensable losses to Multipix and, even then, only based on their failure to provide Multipix with information relating to the Compliance Monitor in a timely manner, and not a failure to finance the venture (paragraph [69] of the Judgment on quantum). [ 92 ] This finding on causation is, of course, one of fact. [ 93 ] The cross-appellants attack the judge’s conclusion on causation not by showing a palpable and overriding error of fact, but once again by alleging theoretical errors that, they say, are fatal in law to the judge’s conclusion. [ 94 ] First, they argue that any failure to disclose the limitation in the Compliance Monitor could not preclude Matte from fulfilling his obligation of means, especially when one considers that his obligation was limited to half of the financing by the matching funds requirement to be fulfilled by the principals in Multipix.

Moreover, they say, the evidence adduced at trial showed that up to 50% of an issue could be sold with easily-obtained permission. [ 95 ] Both of these arguments are without merit. [ 96 ] First, the judge decided that Matte encouraged Multipix’s principals to believe that he was available, on a best efforts basis, to sell the private placement units without limit. After February 1995, Matte knew or should have known that the Compliance Monitor precluded that; in other words, that his best efforts would be capped by the limit in the Compliance Monitor.

The judge also concluded, on the basis of the evidence, that Multipix’s principals would have pursued a different course of action had Matte advised them in a timely fashion, thereby finding a causal link between Matte's failure to disclose and the losses – notwithstanding the character of the underlying contract as one of means rather than result.

A best efforts contract is compatible, therefore, with conduct that wrongfully causes damage. [ 97 ] Second, as noted, the judge did not decide that the matching funds requirement was part of the contract. [ 98 ] Thirdly, while it may have been possible for Matte to obtain a waiver of the 10% rule so that he might sell 50% of the issue, he did not obtain that waiver. In any event, he did not inform them of the 50% limit either.

The judge noted both these points. [ 99 ] The judge decided, after a long trial, that but for the failure by Matte to inform them of the limit of his authority to sell shares, Multipix and its principals would have behaved differently. His view was that the information, properly conveyed, would have permitted Multipix to "cut its losses earlier" (paragraph [69] of the Judgment on quantum; see also paragraph [432] of the Judgment on liability).

Multipix still had to prove the amount of its damages, but it had succeeded, on the balance of probabilities, in showing that a causal link existed between Matte’s conduct and at least some of the losses claimed. The cross-appellants have failed to show a reviewable error made by the trial judge on this point.

IV.2 The Principal Appeal [ 100 ] The principal appeal brought by Smiley and Multipix deals only with the quantum of damages awarded by the judge, i.e. $33,395.50 to Multipix alone, with interest and the additional indemnity provided by law from the date of the notice of claim, and nothing to Smiley. [ 101 ] In their re-amended declaration, Multipix and Smiley presented an alternative claim to apply if the judge limited his finding on liability to a breach by Matte and Midland of a contractual duty to inform Multipix of the Compliance Monitor.

This amendment to the declaration reads as follows: 136A) Alternatively, as a direct and immediate consequence of the Defendants' breach of their contractual obligation of information towards Multipix, Multipix claims damages comprising time, effort, incurred expenses and transactional costs, the quantum of which will be proved at the damages phase of the trial; […]. [ 102 ] The judge declared Matte and Midland liable to Multipix alone for failure to disclose the Compliance Monitor and continued the trial to determine Multipix’s damages for time and effort, as well as expenses and transactions costs incurred as a result of that breach. [ 103 ] In the Judgment on quantum, damages were awarded only to Multipix, and only on the basis of paragraph 136A quoted above.

Of the amounts claimed under that head, the judge only awarded $33,395.50 representing fees that Multipix actually paid to legal and accounting firms that it would not have incurred in the run up to closing had the Compliance Monitor been properly disclosed (paragraph [24], Judgment on quantum). This amount had been admitted by Midland during the course of the hearing on quantum and is not now in dispute. [ 104 ] Smiley and Multipix appealed, but later abandoned grounds asking for the file to be sent back to the Superior Court to adjudicate on heads of damages they said the judge had wrongly omitted.

Instead, they argue only that the judge erred in failing to award Multipix $4,713,409.50 of damages for time and effort, expenses made and transactions costs incurred as a result of the breach of the contractual duty to inform. [ 105 ] They allege the judge erred (

i) in his measure of lost time and effort incurred; (ii) by declining to compensate Multipix for the assets returned to Konvitz; (iii) in his measure of prepaid expenses; (iv) in respect of the losses sustained in the ComEnt merger; and (

v) in the date for interest and the additional indemnity provided by law. [ 106 ] For the reasons that follow, all the arguments advanced in support of the principal appeal should be dismissed.

IV.2.1 Time and Effort [ 107 ] In his reasons in the Judgment on quantum, the trial judge dismissed the appellants’ claim for damages based on the time and effort invested in the financing of the company by Smiley and Konvitz as well as that of employees Eric Favreau and Lise Thiffault. In his view, the appellants had failed to establish that the time and effort expended represented a compensable loss for Multipix.

In the hands of the company, explained the judge, the time and effort expended was in fact a benefit, not a loss: [30] By claiming for "lost" time and effort Multipix is really asking to be compensated for the waste of a benefit it received rather than of a cost it expended. [31] By this the Court means that while Multipix may have received 10,945 hours of services it values at $2,594,657.30 without charge (at least none it claims or has proven), it complains that it could not realize that value because the Defendants did not inform it on time of the limit on Matte's authority, thereby preventing it from obtaining an alternate source of financing that would have assured the realization. [32] This, however, is nothing more than an oblique claim for loss of profit.

Having received $2,594,657.30 of services for nothing, it not only incurred no loss but also received value. Its position was improved. [33] In that sense, it did indeed realize value.

By now claiming the same value as damages, however, it wants to be indemnified for deprivation of a gain of which the value of the services is the measure. [ 108 ] The appellants submit that the judge was mistaken in characterizing the value of time and effort as a gain or a wasted benefit for Multipix, rather than a loss for work done in pursuit of Multipix’s financing that did not materialize by reason of the fault of Matte and Midland. [ 109 ] In service of this argument, the appellants submitted evidence of the hours that, they say, Smiley and Konvitz (as unpaid investors in Multipix), and Favreau (a manager on salary) and Thiffault (an executive assistant on salary) variously contributed to the venture so that the financing of Multipix agreed to on October 15, 1994, would come to fruition by September 22, 1995, the designated date for the closing of the transaction. [ 110 ] In my view the judge made no reviewable error in dismissing Multipix’s claim for lost time and effort. [ 111 ] As a first-order point, one must bear in mind that pursuant to the Judgment on liability, the judge held damages were owed only to Multipix and only for Matte’s breach of the duty to inform the company of the Compliance Monitor in a timely manner.

Smiley has no basis in law, based on the Judgment on liability, for claiming his own losses. Nor does Multipix have a basis in law for claiming lost profits. [ 112 ] Smiley and Konvitz were entrepreneurs in a speculative business venture into which they invested time and money. They did so as all entrepreneurial investors do: in the hope that their investment of time and money would yield a return. Multipix ultimately did not realize those profits.

But the judge held, in the Judgment on liability, that the company’s failure to turn a profit was not due to Matte’s inability to bring outside investors into the project. [ 113 ] The various contributions in money and in kind made by the principals in Multipix were not even shareholder loans – that was not alleged, much less proved – but investments that proved to be unsuccessful. Because Multipix incurred no debt to secure these contributions, they represented net gains to the company’s balance sheet or, at worst, contributions having no value at the end of the day.

The salaries of Thiffault and Favreau were indeed paid, but they were paid by Smiley and not by Multipix. They were part of Smiley’s personal investment in the venture, alongside his own time and effort and that of Konvitz. From the point of view of Multipix’s balance sheet, these investments were also notional assets, not losses. The judge made no mistake here.

Indeed if the Court were to award compensation to Multipix for the investments made by the principals, it would be obliquely awarding it for lost profits associated with a breach of the obligation of result that the appellants failed to establish in the Superior Court. [ 114 ] The judge could only award damages for the losses Multipix actually sustained, and only those that are a direct and immediate consequence of the breach of the duty to inform.

He rightly applied these principles, set forth in articles 1611 and 1607 CCQ respectively, and rightly saw the "lost" time and effort it claimed as a "wasted benefit" rather than as a cost it expended. [ 115 ] The judge held that the collapse of Multipix’s financing efforts after September 1995 was not Matte’s fault. Whatever the value of Smiley and Konvitz’s contribution to Multipix – in time and effort, however measured, or for contributions in hard cash – this was a lost investment in a speculative venture that cannot be blamed on Matte and Midland.

Moreover, Smiley and the other owners of Multipix still owned the company after September, 1995, and whatever assets remained on its balance sheet. [ 116 ] It is not enough to say, as the appellants plead, that the value of the services provided by Smiley and Konvitz, had those services been outsourced, would have cost Multipix thousands of dollars. They were not outsourced, however, and had they been, the lawyers, accountants and other service-providers would no doubt have asked, in the absence of a third-party guarantee of payment, for a stake in the company in lieu of payment for services rendered.

The principals did not do that and, instead, chose to contribute their time and money as part of their investment in the company which, they hoped, would bring them a rich return. Matte cannot be blamed if it did not. [ 117 ] The judge wrote that, for Multipix, this investment was a gain and "proof of its value is moot" (paragraph [39], Judgment on quantum). [ 118 ] Both Midland and Matte rightly add that the proof of the time and effort and salaries claimed by Multipix was inconclusive or very weak. The claim for secretarial and like services rendered by Ms. Thiffault is a case in point. Ms.

Thiffault worked and was paid by Smiley. Multipix alleges that, in 1994 dollars, in less than one year, she provided Multipix, in addition to whatever other work she undertook for Smiley, with $91,875 of secretarial services. Not only is there no proof that she provided those services to Multipix and not

to Smiley – she herself was not called to testify – but, apart from a document prepared by Multipix in connection with its action, there was no proof brought of the value of these services to Multipix. The amount of the claim, on its face, defies belief and falls well short of the best evidence required by law. In any event, she was paid by Smiley who decided to provide those services to Multipix without charge, at his own risk. [ 119 ] The time and effort claimed by the principals also rests on very thin evidence.

Even if Smiley worked seven days a week on the project, to the exclusion of other ventures and activities, it is hard to believe that the many hours claimed were properly logged. It is not plain why the value of his services and those of Konvitz – which as executives of Multipix would have been $250,000 per year had the project succeeded – were worth double or more in connection with the financing.

True, he and Konvitz hoped for a substantial return on investment, but the appeal is not one for lost profits – assuming those were established – but for a miscalculation by the judge of damages associated with a breach of the duty to inform owed to the company. [ 120 ] The appellants point to authorities that, they argue, lend support to their claim based on lost time and effort. None of these are of assistance to them. In Purkinje , [14] this Court confirmed a finding by an arbitral tribunal awarding damages for time and effort, but in that case the Court was constrained on appeal by

article 947.2 CCP not to review the arbitral decision on the merits. Moreover, the injured party in Purkinje , unlike Multipix, was a going concern with a genuine payroll and established, well-documented losses based on real salaries of company employees, and not of shareholders or entrepreneurial investors as in our case. In Anastasiu [15] and Habib , [16] courts awarded damages for time and effort in very different contexts to a party who directly expended that effort.

In the present case, only Multipix, and not Smiley, had the right to claim damages for breach of the contractual obligation to inform, and in Multipix’s hands the time and effort expended by others is a gain, not a loss. [ 121 ] In sum, the claim by Multipix for lost time and effort fails. IV.2.2 Value of the literary assets contributed by Konvitz [ 122 ] Smiley bought out his partner’s stake in Multipix by returning to Konvitz the literary assets he had transferred to the company in exchange for his shares in Multipix. The appellants claim compensation from Matte and Midland for that expenditure.

They say that Multipix was compelled to return the literary assets to Konvitz worth $2,000,000 by reason of Matte and Midland’s failure to inform them of the limit on Matte’s authority to sell Multipix shares. [ 123 ] The judge dismissed this claim as unrelated to Matte and Midland’s failure to provide Multipix with information relating to the Compliance Monitor (paragraphs [59] to [72], Judgment on quantum). [ 124 ] The appellants have shown no reviewable error by the judge on this point. The settlement with Konvitz related to a dispute he had with Smiley, not Multipix.

He alleged that his partner had misrepresented the viability of the venture. The settlement was a voluntary one and, as the judge points out, it was not the direct and immediate consequence of Matte and Midland’s duty of information owed to Multipix (paragraph [71], Judgment on quantum). IV.2.3 Prepaid expenses [ 125 ] The appellants claim the judge erred in refusing the better part of the expenses, including those that were prepaid, that were incurred by Multipix.

They say that these expenses would not have been incurred had Matte not committed a fault. [ 126 ] The judge refused to honour the claim for the majority of expenses because, in his view, the appellants failed to show them to be causally connected to the failure to inform owed to Multipix. At paragraphs [43] to [45] of the Judgment on quantum, he wrote that it is probable that the expenses would have been incurred anyway for the start-up of an international film production business and that, based on the evidence presented before him, they were expended before the breach of the duty to inform.

There is no mistake here that is reviewable on appeal: the appellants did not demonstrate why expenses claimed were incurred, or when they were incurred, so that the causal link could be made out.

The judge was not shy to award some damages even on the basis of imperfect documentary evidence, presumably given his sensitivity to the problem of the passage of time, but his refusal to do it here should not be disturbed on appeal. [ 127 ] Finally, the judge held at paragraph [76] that the prepaid expenses that were not reimbursed were prescribed in favour of Multipix and that Matte and Midland are entitled to invoke that prescription to their advantage, pursuant to

article 2887 CCQ. The appellants argue that the expenses were in fact loans without a term and, as such, were not prescribed. The judge expressly rejected this characterization of these claims as loans without a term, on the basis of the evidence, albeit fragmentary, before him. The judge decided that whether they were characterized as demand loans repayable as of the date they were made, as loans with a suspensive term (due no later than the planned date for the closing on September 22, 1995), or as conditional loans (due when it became clear that there would be no financing at any time), they were prescribed.

The appellants have not shown reviewable error. IV.2.4 Damages relating to the ComEnt transaction [ 128 ] The judge did find damages connected to Matte's fault among the prepaid expenses incurred by the appellants in respect of one transaction – the "ComEnt takeover" – which, he found, would not have been incurred if Multipix had known earlier of the limitation on Matte’s authority (paragraph [49], Judgment on quantum).

He estimated these expenses to be $1,358, but found them prescribed along with the rest of the prepaid expenses for the reasons given above. [ 129 ] The appellants seek to increase the claim based on the aborted ComEnt transaction to include the time and effort invested by Smiley and Konvitz in this specific venture. They base their argument in large part on the following comment by the judge: [53] The Court is satisfied that Multipix and its principals would not have worked toward the ComEnt merger in August and September 1995 and incurred expenses for that purpose if they had known that Mr.

Matte was unavailable to sell more than 10% of the proposed placement. [ 130 ] Indeed, if Multipix is awarded damages for out-of-pocket expenses arising out of the ComEnt merger, is it not true that the

judge should have also recognized the wasted time and effort of the principals on this project as causally connected to Matte’s failure to inform the company of the limitation on his authority? [ 131 ] Here again, the claim of the appellants must fail, but in this case it is by reason of their failure to prove adequately the amount of the losses in this connection. [ 132 ] Recall that employees Favreau and Thiffault were paid by Smiley.

Not only does the record not show whether or not they worked on the ComEnt transaction, but there is no evidence that the work resulted in a debt to the company that Multipix could now claim as an expense. [ 133 ] What about the time and effort of the principals wasted in the ComEnt transaction? [ 134 ] The reasons given above as to the time and effort claims still apply. If this Court were to award any amount to Multipix for the time and effort made by the principals towards the ComEnt transaction, it would be a gain for Multipix.

It is true that, had Matte fulfilled his obligation to inform, the principals would have behaved differently, which in the case of the ComEnt transaction means that they would likely not have pursued the opportunity.

But that does not in itself demonstrate that Multipix suffered a loss itself. [ 135 ] The claim stands in contrast to the amount of $1,358 found compensable by the judge with respect to the expenses relating to the ComEnt transaction, as this amount constituted an advance from shareholders to the company and as such counted as a liability for Multipix – a liability it would not have incurred had Matte fulfilled his obligation to inform. [ 136 ] In any event, the proof of the time invested in this aspect of the venture is weak or non-existent.

Unlike the expenses of $1,358 for which proof was made, the record indicates nothing to explain reliably the number of hours either Smiley or Konvitz worked on the ComEnt transaction. There is nothing to suggest reliably what the value might be of whatever time they did invest in the venture. Importantly, it is unclear what the ultimate value to Multipix of the ComEnt transaction was had it been realized.

This Court has rightly declined to award damages where evidence brought in support of a claim is "gravement déficiente" or "chaotique". [17] Beyond a plea to reward the time investment based on an hourly rate that has no apparent basis in reality and came at no cost to the company, the appellants seek compensation for losses based on high estimates in the faint hope that the Court will "arbitrate" some amount in their favour. I would respectfully decline to do so based on the record before me.

IV.2.5 Date for interest and additional indemnity [ 137 ] The appellants argue that the appropriate date for calculating interest and the additional indemnity provided by law is December 11, 2001 – the date the re-amended declaration was filed – and not July 28, 2010, the date of notification of the claim designated by the judge.

On that latter date, the appellants filed details of the amounts claimed on the basis of the judge’s conclusion in the liability phase of the trial. [ 138 ] The appellants say that choice should be reviewed because the judge failed to explain the date later than that of default. [ 139 ] I disagree. The judge exercised his discretion under articles 1618 and 1619 CCQ and chose the date at which damages were ascertained and the information was available to the debtor.

In the circumstances of this case, it was reasonable for the judge to assume that this was sufficiently plain to the parties and that it needed no fulsome explanation in his reasons. I see no reviewable error. [ 140 ] In sum, all grounds advance in support of the principal appeal should be rejected. [ 141 ] At the hearing on appeal, counsel for the appellants implored the Court to provide some measure of damages for his clients’ broken dreams.

But at the end of the day, as the judge plainly understood, the claims dismissed in Superior Court were for hypothetical profits that, even if they are the proper stuff of entrepreneurial dreams, were not lost by Multipix because of the fault the judge laid at the feet of Matte and Midland. *** [ 142 ] To conclude, I would dismiss the appeal and the cross appeal. While I would leave the judge's order as to costs undisturbed, I propose that no costs be awarded on appeal by reason of the divided outcome of the principal appeal and the cross appeal. NICHOLAS KASIRER, J.A.