Court File and Parties

Telus Communications Ltd., 2009 ONCA 111

Date: 2009-02-05

Docket: C48532

Court of Appeal for Ontario

Before: Laskin, Feldman and Cronk JJ.A.

Between:

Metropolitan Toronto Police Widows and Orphans Fund, Vancouver Island Multiple Sclerosis Society, Sons of Scotland Benevolent Association, Sun Life Assurance Company of Canada, The Canada Life Assurance Company, The Standard Life Assurance Company, Commercial Union Life Assurance Company of Canada, The National Life Assurance Company of Canada, The Province of Alberta, Metropolitan Life Insurance Company, Zurich Life Insurance Company of Canada, Yield Management Ltd., Empire Life Insurance Company, Cumis Life Insurance Company, The Mutual Life Assurance Company of Canada, Dofasco Employees’ Savings and Profit Sharing Fund, Dofasco Supplementary Retirement Income Plan, Canadian Medical Protective Association, Chevron Master Trust, The Contributary Pension Plan for Salaried Employees of McMaster University, Memorial University of Newfoundland, Abitibi Consolidated Inc. Master Trust Fund, Integra Capital Financial Corporation, Integra Capital Management Corporation

Plaintiffs/Respondents

and

Telus Communications Inc.

Defendant/Appellant

Counsel: Johanna Braden and Andrea Gonsalves, for the appellant Michael E. Barrack, Cecilia V. Hoover and Julie K. Parla, for the respondents

Heard and released orally: February 2, 2009

On appeal from the judgment of Justice Joan L. Lax of the Superior Court of Justice dated February 19, 2008.

Endorsement

[1] The sole issue on this appeal is whether, on the evidence in this case, the trial judge erred in awarding pre- and post-judgment interest at the rate of 5.59% compounded on a semi-annual basis. The appellant acknowledges that if it knew or should have known that the cash flow amounts in question would, if received by the bondholders, have been reinvested on the basis of a compounded return, it was open to the trial judge to award compound interest as she did on the authority of Bank of America Canada v. Clarica Trust Company, 2002 SCC 43, [2002] 2 S.C.R. 601.

[2] The trial judge found that the appellant knew that the funds in question would be reinvested to earn a compound return. Contrary to the appellant’s submission, we are satisfied that this finding was open to the trial judge on the evidential record before her. In particular, the evidence of: (i) the method by which the appellant priced its bonds; (ii) the manner in which the representative plaintiff invested funds generated from its bond investments; and (iii) the testimony of the parties’ experts – including the appellant’s expert – regarding the expectations for reinvestment of the cash flow amounts in investments similar to the Telus bonds, support this critical finding by the trial judge.

[3] We note also that the parties’ experts agreed that the bondholders in this case would have reinvested the cash flow amounts at a compound rate had they received those amounts when due. Indeed, it appears that there was no evidence at trial that the cash flow amounts would have been reinvested other than on the basis of a compound return.

[4] Bank of America holds at paragraph 55:

An award of compound pre- and post-judgment interest will generally be limited to breach of contract cases where there is evidence that the parties agreed, knew, or should have known, that the money which is the subject of the dispute would bear compound interest as damages.

[5] In this case, the appellant breached its contract with the bondholders. As a consequence of that breach, the bondholders were deprived of interest and funds that they would have earned on the reinvestment of that interest, which they would have received if the contract had not been breached. The appropriate measure of damages, therefore, could properly include pre- and post-judgment interest on a compounded basis as ordered by the trial judge.

[6] For these reasons, the appeal is dismissed. The respondents are entitled to their costs of this appeal, fixed in the total mount of $16,500, inclusive of disbursements and G.S.T.

“John Laskin J.A.”

“K. Feldman J.A.”

“E.A. Cronk J.A.”