Appeal court chops damages in Purina case

Thursday, June 23, 2011

by SUSAN MANN

An Ontario Appeal Court has slashed the amount of monetary damages Agribrands Purina Canada Inc. will have to pay for breach of contract with a former Halton region feed dealer.

Last year, Superior court Judge Michael Quigley awarded Walter Kasemekas and his brother, the late Raymond Jackson, more than $2 million in damages in their suit against Purina as well as Ren’s Feed Supplies Ltd., Walter Rendell Job and the Estate of Edward James McGrath. The brothers claimed that Purina had breached its contract and engaged in a conspiracy with the others named in the suit that contributed to the failure of their business, Raywalt Feed Sales Ltd.

In their unanimous written decision released June 20, Ontario Appeal Court justices S.T. Goudge, E.E. Gillese and R.G. Juriansz called Purina’s actions “deceitful,” as well as “reprehensible and deserving of sanction.” But they overturned much of Judge Quigley’s decision and chopped out a hefty three quarters of the amount in damages previously awarded. The justices heard the appeal Feb. 14.

The Appeal Court upheld the trial judge’s $30,000 award for punitive damages noting “(1) punitive damages are very much the exception rather than the rule, (2) imposed only if there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour.”

Kasemekas estimates the Appeal Court judgment means Purina will now only have to pay about $411,000 in damages. The decision is not totally unexpected, Kasemekas says. “But I’m not happy about it.”

Kasemekas says he won’t appeal the decision to the Supreme Court of Canada.

Purina president and general manager Charles Lapointe couldn’t be reached for comment.

During the Superior Court hearing in Milton in 2009, the court was told that Purina terminated its dealership agreement with Ren’s in July 1990 and signed a dealership agreement in 1991 with Kasemekas and Jackson to supply Ren’s former territory. But throughout the year Kasemekas and Jackson were in business (1991 to 1992), Purina continued to supply Ren’s with Purina products at preferred costs only available to dealers.

While Judge Quigley, found this was one of the reasons that caused the brothers’ business to fail, the Appeal Court justices concluded only Purina engaged in any unlawful conduct. “As a consequence the finding of unlawful conduct conspiracy and the damages flowing from it must be set aside,” it says in their written decision.

They set the breach of contract damages at $198,665.83 plus a prejudgment interest rate of 5.1 per cent and kept the punitive damages against Purina at $30,000. That’s the same amount Judge Quigley set in his Jan. 6, 2010 decision.

Purina and the others appealed the finding of unlawful conduct conspiracy. They also said the trial judge made mistakes in calculating damages for that finding and in the rate he applied for prejudgment interest. Judge Quigley applied a prejudgment interest rate of 6.65 per cent. But the Appeal Court judges say in their written decision he erred in using that rate and the proper applicable rate that should be used is 5.1 per cent.

Purina didn’t contest the breach of contract finding against it, but it did question the method used to calculate the damages for that breach. Purina also appealed the finding of punitive damages against it. BF