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Insolvency (BIA) - 'Claim Provable in Bankruptcy' (2). YG Limited Partnership and YSL Residences Inc. (Re) [remoteness]
In YG Limited Partnership and YSL Residences Inc. (Re) (Ont CA, 2025) the Ontario Court of Appeal dismissed an appeal, here from an earlier appeal which reversed "the Trustee’s decision disallowing [the respondent employee's] profit-sharing claim"."
Here the court considers whether an employee's profit-sharing involvency claim is 'too remote and speculative', and thus not allowable as a 'claim provable' in bankruptcy:(ii) Ms. Athanasoulis’ claim is not too remote or speculative
[76] The Trustee’s argument that Ms. Athanasoulis’ profit-sharing claim is too remote and speculative is primarily based on its position that it is a contingent claim.
[77] As noted by the appeal judge, once it is determined that the profit-sharing claim is not a contingent claim, remoteness is only a bar to the recovery of damages if, as a matter of contract law, the type of loss at issue is too remote. There are two branches to the remoteness test: damages may be recoverable if (a) in the “usual course of things”, they arise fairly, reasonably and naturally as a result of the breach of contract, or (b) they were within the reasonable contemplation of the parties at the time of contract: The Rosseau Group Inc. v. 252801 Ontario Inc., 2023 ONCA 814, 169 O.R. (3d) 192, at para. 68. Damages that fall outside of either branch are not recoverable because they are too remote: Rosseau, at para. 68. Importantly, remoteness in a breach of contract case deals with the “type” of loss that is recoverable, not with the measure or quantification of the loss: Rosseau, at para. 70. Damages that are difficult to calculate are not inherently too remote: General Mills Canada Ltd. v. Maple Leaf Mills Ltd. (1980), 1980 CanLII 4566 (ON SC), 52 C.P.R. (2d) 218 (Ont. H. Ct.), at p. 219; Jason W. Neyers, Fridman’s The Law of Contract in Canada, 7th ed. (Toronto: Thomson Reuters, 2024), at §22:24.
[78] In applying these principles to this case, the appeal judge found:The type of loss at issue here is in respect of the lost opportunity to contribute to and eventually share in the profits that the parties anticipated would eventually be earned by YSL when the YSL Project was completed. The remoteness concerns identified by the Proposal Trustee are in respect of the measure of damages, not the type of loss. [79] I see no error in the appeal judge’s determination that the type of loss claimed by Ms. Athanasoulis is not the type of loss that is too remote for recovery. At the time of the breach, she lost the opportunity to work towards and share in YSL’s profits. Her lost opportunity flowed naturally from the breach and was within the reasonable contemplation of the parties when the profit-sharing agreement was formed.
[80] As noted by the appeal judge and already stated above, quantifying the loss in this case may be complicated and may involve taking many different factors into consideration, but this does not make the type of loss too remote as a matter of contract law. As the appeal judge stated, quantifying damages will be “an issue for another day in these proceedings”.
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