KSV Advisory Canada’s Leading Boutique Advisory, Restructuring and Valuations Firm.

Interesting Valuation Cases

Damages for Misrepresentation

We were recently retained to quantify damages in a claim by a municipality against a contractor for, inter alia, fraudulent misrepresentation pertaining to the transportation and processing of organic waste. Damages were awarded for the full amount paid by the plaintiff for the services not provided in accordance with the contract.  This differs from the more typical damages approaches based on the additional costs paid, or lost profits.

In this case, the defendant, WeCare Organics LLC et al, (“WeCare”), was deemed to admit the allegations of fact in the statement of claim. The plaintiff, the Regional Municipality of York (“York”), commenced a claim for, among other things, fraudulent misrepresentation and breach of contract after WeCare disposed of organic waste in a regular landfill, rather than processing and converting this waste into compost, for which York contracted.  York paid a premium to WeCare to dispose of the waste organically; however, only a small portion of it was disposed as compost.

Damages were calculated based on the following three approaches:


Approach 1:
The full amount paid to WeCare ($6.7 million).


Approach 2:
The amount paid to WeCare for the portion of the organic waste not processed into compost ($5.8 million).


Approach 3:
The difference between the price paid to dispose of the organic waste as compost and the price to dispose of it as regular landfill ($2.4 million).

The Court awarded damages of $5.8 million to York based on Approach 2.  In this instance, the Court accepted the rationale to reimburse the municipality for the waste not processed as it contracted, rather than the more common approach of reimbursing the premium, which in this case would have been more aligned with Approach 3. This illustrates an alternate approach to valuing damage in misrepresentation and breach of contract cases.

See: The Regional Municipality of York v. LeBlanc (CV-13-114630).

Managing Disputes with Minority Shareholders

In a recent dispute among shareholders of a family owned manufacturing company operating in Canada and the US, we were retained to value the interest held by a minority shareholder whose shares were being purchased.  This matter was resolved prior to trial near the value we calculated. Significant time and professional fees were incurred before this case was resolved in part because of a large gap between the minority shareholder’s value expectations and the fair market value of the business. 

This is a situation that we see frequently. In many instances, disputes can take longer to resolve if the minority shareholders lack an informed understanding of the value of their investment.  While there can be disputes about the value of the shares of a private company due to different value perspectives, there is an opportunity to minimize conflicts with the following general approaches:

  1. providing regular financial information and updates on the business operations to all shareholders, including regular meetings with management and the shareholders, or their advisors;
  2. obtaining independent valuations annually or every few years, to provide the shareholders with updates about the value of their shares, as determined by an independent third party; and
  3. specifying a valuation approach and/or a valuation process in the event of a dispute among the shareholders, including the applicability of minority and marketability discounts.