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FOR TORTS - Pure economic loss

Wednesday, March 28, 2018 @ 8:41 AM  

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Appeal by TDC Broadband from the award in its successful claim against the Province for damages for economic loss associated with the Province’s improper use of TDC’s confidential information. TDC, a company that had developed technology to provide broadband internet service to rural consumers, responded to the Province’s 2006 Request for Proposal (RFP) to implement broadband service in a pilot area in Cumberland County. TDC was not successful in obtaining the project, largely because it lacked sufficient capital. The Province was not willing to advance funds to TDC to assist the company, although it was the only bidder with technology that was proven to work in rural areas. By June 2007, when the Province issued another RFP to provide broadband service throughout Nova Scotia, TDC had entered bankruptcy and did not submit a proposal. TDC claimed that the Province used information borrowed from its business proposals and technical specifications to inform the successful bidders for its projects. A judge concluded that the Province had received, in confidence, unique technical and/or business information, which it then used without permission from TDC, constituting a breach of confidence. TDC had claimed $2,495,000 in compensatory damages, but was awarded only $125,000, and was denied any award for special, general or punitive damages. The lower award was based on the judge’s findings that the Province did not disclose the most valuable part of TDC’s delivery system, that none of the successful bidders utilized systems based on the confidential information disclosed, that TDC had failed to show the financial viability of its system, and that TDC failed to meet the criteria for the Cumberland RFP, which included a requirement of a viable business plan. He limited the damages to the value of the information the Province disclosed to TDC’s competitors in the RFPs, rejecting TDC’s position that it was entitled to compensation based on what a buyer would have paid for TDC to complete the entire project.

HELD: Appeal dismissed. The judge was not obliged to use any particular assessment approach in determining the damages to which TDC was entitled. His award was appropriate given his factual findings about the use to which the Province put TDC’s confidential information. The judge did not err in declining to award damages to TDC for all of its research and development costs. There was no clear error in the judge’s denial of TDC’s claim to punitive damages. Malicious, outrageous and egregious conduct was not proven.

TDC Broadband Inc. v. Nova Scotia (Attorney General), [2018] N.S.J. No. 68, Nova Scotia Court of Appeal, P. Bryson, C.A. Bourgeois and E. Van den Eynden JJ.A., March 8, 2018. Digest No. TLD-March262018010