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Damages - Hypothetical Negotiation as Measure of Damages. SS&C Technologies Canada Corp. v. The Bank of New York Mellon Corporation
In SS&C Technologies Canada Corp. v. The Bank of New York Mellon Corporation (Ont CA, 2024) the Ontario Court of Appeal dismissed a contractual appeal, and here considers hypothetical 'negotiation' settlement results as a measure of damages:(i) Negotiating Damages
[119] The leading case on negotiating damages or negotiated damages is from the Supreme Court of the United Kingdom in Morris-Garner and another v. One Step (Support) Ltd., [2018] UKSC 20, [2018] 3 All E.R. 659. There, the court recognized that in limited circumstances, a court may award damages based on what the parties might have negotiated as an acceptable price for an asset that has been wrongfully acquired. In Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, [2020] 2 S.C.R. 420, the Supreme Court of Canada recognized the availability of such damages in Canada.
[120] It is beyond dispute that SS&C was initially seeking damages on this basis, but it later advised the court unequivocally that it was not claiming negotiating damages. In a lengthy ruling on objections, the trial judge found that SS&C was not seeking damages based on this theory and, therefore, prohibited BNY from adducing evidence in this regard: 2022 ONSC 5834. BNY submits that the trial judge erred because, having rejected the applicability of negotiated damages, he proceeded to award damages on that basis. It argues that the trial judge calculated damages based on what the parties would have negotiated had BNY sought SS&C’s authorization to share the data.
[121] I do not find this argument persuasive. I note first that negotiating damages were unavailable in the circumstances of this case. At para. 92 of Morris-Garner, the court described the circumstances where such damages could be awarded:As the foregoing discussion has demonstrated, such circumstances can exist in cases where the breach of contract results in the loss of a valuable asset created or protected by the right which was infringed, as for example in cases concerned with the breach of a restrictive covenant over land, an intellectual property agreement or a confidentiality agreement. Such cases share an important characteristic with the cases in which Lord Shaw’s “second principle” and Nicholls LJ’s “user principle” were applied. The claimant has in substance been deprived of a valuable asset, and his loss can therefore be measured by determining the economic value of the asset in question. The defendant has taken something for nothing, for which the claimant was entitled to require payment. [Emphasis in original.] [122] Thus, this type of damage award may be applicable in cases where a contract creates or protects an asset, and its breach deprives the wronged party of the use of the asset. In this case, the contract was for the supply of a service. Even if it could be argued that the data is property that is protected by the contract, there is no suggestion that SS&C was deprived of that asset.
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