In its decision handed down June 28, 2019 in the matter of Capmatic Ltd. v. American Brands, the Quebec Court of Appeal rejected Capmatic Ltd. ("Capmatic ")'s appeal of the decision rendered October 24, 2016 by the Superior Court of Quebec.

In its decision, the Court of Appeal reiterated certain fundamental principles pertaining to product liability and provided guidance with regard to the possibility of proving financial losses without audited financial statements where other reliable evidence is available.

At trial, the Superior Court had granted the action of the plaintiff, American Brands S.A. ("American Brands"). American Brands was seeking reimbursement of the price paid for a bleach bottle filling and capping system ("Equipment") affected with latent defects and for damages incurred as a result of those defects. The Superior Court ordered Capmatic to pay American Brands $464,599 plus interest and additional indemnity since May 14, 2012.

As evidence of American Brands' financial losses, the trial judge accepted unaudited financial statements, documents reproducing data drawn from its accounting systems, testimony given by the company's president, and an expert report, subject to the Court's evaluation of their probative value. Capmatic objected to this evidence citing the inadmissibility of hearsay and the best evidence rule. The trial judge overruled these objections because she considered the evidence submitted by American Brands necessary and sufficiently reliable, particularly since it would have been unreasonable to require American Brands' employees - who had entered the accounting data and lived in Costa Rica, - to testify at trial. After evaluating the probative value of the evidence provided and hearing both parties' arguments, the trial judge chose to reduce the amount of the claim.

The Court of Appeal held that the trial judge did not err by admitting evidence submitted by American Brands regarding its financial losses and that this decision respected the principle of proportionality as set out in article 18 of the Code of Civil Procedure.

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