National Bank Financial Ltd. v. Potter

National Bank Financial Ltd. v. Potter

Because Nova Scotia's Judicature Act does not expressly prohibit prejudgment interest on punitive damages but the court retains discretion under s.41 and punitive damages are assessed at judgment as punishment (with the amount reflecting value at judgment and inflation), awarding prejudgment interest on punitive awards would be improper; therefore prejudgment interest on punitive damages was denied. Regarding gross v net, the court held the intent to disgorge NBFL of any benefit from margin debts requires denying NBFL prejudgment interest on those debts and awarding prejudgment interest to Dunham, Weir and Blackwood on the lost value of KHI shares net of proceeds and principal margin debt...

Citation
2013 NSSC 350
Parties
Plaintiff/defendant by Counterclaim in Hfx. No. 174294: National Bank Financial Ltd.; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Daniel Frederick Potter; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Gramm & Company Incorporated; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Starr’s Point Capital Incorporated; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: 2532230 Nova Scotia Limited; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: 3020828 Nova Scotia Limited; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Ronald D. Richter; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Solutioninc Limited; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: John Francis Sullivan; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Linda Fay Sullivan; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Calvin W. Wadden; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Craig Anthony Dunham; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Douglas George Rudolph; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Gerard B. McInnis; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Janine M. McInnis; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Lowell R. Weir; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Blackwood Holdings Incorporated; Defendant/plaintiff by Counterclaim in Hfx. No. 174294: Staffing Strategists International Inc.; Third Party in Hfx. No. 174294: Fiona Imrie; Third Party in Hfx. No. 174294: Donald Snow; Third Party in Hfx. No. 174294: Meg Research.com Limited; Third Party in Hfx. No. 174294: 3027748 Nova Scotia Limited; Third Party in Hfx. No. 174294: Raymond Courtney; Third Party in Hfx. No. 174294: Bernard Schelew; Third Party in Hfx. No. 174294: Blois Colpitts; Third Party in Hfx. No. 174294: Stewart McKelvey Stirling Scales; Third Party in Hfx. No. 174294: Bruce Clarke; Third Party in Hfx. No. 174294: 2317540 Nova Scotia Limited; Third Party in Hfx. No. 174294: Knowledge House Inc.; Third Party in Hfx. No. 174294: The Estate of the Late Michael Barthe represented by Executrix Barbara Barthe; Third Party in Hfx. No. 174294: Lutz Ristow; Third Party in Hfx. No. 174294: Derek Banks; Third Party in Hfx. No. 174294: Plastics Maritime Ltd.
Court
Supreme Court of Nova Scotia
Jurisdiction
Canada
Judgment Date
30 October 2013
Procedural Posture
Civil (debt, Tort and Fiduciary Breach Claims Relating to Share Transactions) / Post Trial Written Submissions and Decision on Prejudgment Interest and Netting/set Off Issues
Outcome
Claim for prejudgment interest on punitive damage awards dismissed; NBFL denied prejudgment interest on margin debts; Dunham, Weir and Blackwood entitled to prejudgment interest on the lost value of their KHI shares net of proceeds and principal margin debt to date of judgment.
Legal Topics
Prejudgment Interest, Punitive/exemplary Damages, Set Off, Disgorgement, Fiduciary Duty, Margin Debt, Loss of Share Value
Source Language
English
Civil Procedure Damages Equity Commercial Law Prejudgment Interest Punitive/exemplary Damages Set Off Disgorgement +3 more

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Parties

National Bank Financial Ltd.

Plaintiff/defendant by Counterclaim in Hfx. No. 174294

Daniel Frederick Potter

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Gramm & Company Incorporated

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Starr’s Point Capital Incorporated

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

2532230 Nova Scotia Limited

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

3020828 Nova Scotia Limited

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Ronald D. Richter

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Solutioninc Limited

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

John Francis Sullivan

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Linda Fay Sullivan

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Calvin W. Wadden

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Craig Anthony Dunham

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Douglas George Rudolph

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Gerard B. McInnis

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Janine M. McInnis

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Lowell R. Weir

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Blackwood Holdings Incorporated

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Staffing Strategists International Inc.

Defendant/plaintiff by Counterclaim in Hfx. No. 174294

Fiona Imrie

Third Party in Hfx. No. 174294

Donald Snow

Third Party in Hfx. No. 174294

Meg Research.com Limited

Third Party in Hfx. No. 174294

3027748 Nova Scotia Limited

Third Party in Hfx. No. 174294

Raymond Courtney

Third Party in Hfx. No. 174294

Bernard Schelew

Third Party in Hfx. No. 174294

Blois Colpitts

Third Party in Hfx. No. 174294

Stewart McKelvey Stirling Scales

Third Party in Hfx. No. 174294

Bruce Clarke

Third Party in Hfx. No. 174294

2317540 Nova Scotia Limited

Third Party in Hfx. No. 174294

Knowledge House Inc.

Third Party in Hfx. No. 174294

The Estate of the Late Michael Barthe represented by Executrix Barbara Barthe

Third Party in Hfx. No. 174294

Lutz Ristow

Third Party in Hfx. No. 174294

Derek Banks

Third Party in Hfx. No. 174294

Plastics Maritime Ltd.

Third Party in Hfx. No. 174294

Procedural Posture

Civil (debt, Tort and Fiduciary Breach Claims Relating to Share Transactions) / Post Trial Written Submissions and Decision on Prejudgment Interest and Netting/set Off Issues

Legal Issues

  1. 1 Whether prejudgment interest is payable on punitive/exemplary damage awards
  2. 2 Whether prejudgment interest should be applied to gross awards or net awards after deduction of margin debts and proceeds (gross v net)

Ratio Decidendi

Because Nova Scotia's Judicature Act does not expressly prohibit prejudgment interest on punitive damages but the court retains discretion under s.41 and punitive damages are assessed at judgment as punishment (with the amount reflecting value at judgment and inflation), awarding prejudgment interest on punitive awards would be improper; therefore prejudgment interest on punitive damages was denied. Regarding gross v net, the court held the intent to disgorge NBFL of any benefit from margin debts requires denying NBFL prejudgment interest on those debts and awarding prejudgment interest to Dunham, Weir and Blackwood on the lost value of KHI shares net of proceeds and principal margin debt...

Court Disposition

Claim for prejudgment interest on punitive damage awards dismissed; NBFL denied prejudgment interest on margin debts; Dunham, Weir and Blackwood entitled to prejudgment interest on the lost value of their KHI shares net of proceeds and principal margin debt to date of judgment.

Orders

  • Prejudgment interest is not payable on punitive/exemplary damage awards in this matter.
  • NBFL is denied prejudgment interest on the margin debts owing to it to the date of judgment (NBFL shall be disgorged of any interest benefit on those debts).