What is the test for determining the proper measure of damages for third tier lending?

Manitoba, Canada


The following excerpt is from 5976511 Manitoba Ltd. et al. v. Taylor McCaffrey LLP et al., 2020 MBQB 48 (CanLII):

The plaintiffs state in paras. 43 and 45 of their brief as follows: 43. … The question is properly, which methodology reflects the proper measure of damage or loss to the plaintiffs. It is respectfully submitted that this would entail among other things an exploration of the principles of third tier lending where increased risk is rewarded by higher returns, the expectations of the parties regarding this risk/return consideration and reliance on legal counsel and representations by borrowers or their “agents” where repayment is not completed in accordance with the loan agreement, and where the plaintiff could have placed those funds in another tansaction so as ot generate further profits, conceivably at those same rates. … . . . 45. The above is advanced to highlight for the court that the complete elucidation of the facts by viva voce evidence including cross-examinations, argument, reference to case law and considerations generally of the nature of third tier lending, are required at trial in order for a trier of fact to properly exercise discretion in assessing the proper measure of all foreseeable damages, and ultimately, the amount of damages, and costs flowing from judicial findings required in the circumstances, rather than the bald selection of one methodology over the other, related only to interest rates where concurrent liability allows for the choice of the plaintiff to choose whichever legal remedy is most beneficial. More importantly, however, is the court’s recognition that the inherent justice of the matter might properly compel the trier of fact to award losses that are causally and directly connected to the contract, where the contract is causally connected to the negligent misrepresentation, by which the appropriate damages were foreseeable. (see Rainbow Industrial Caterers v. CN Rail, pg. 5)

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