The Corporation commenced an action against the Insurer (which had refused to pay insurance proceeds on the death of the life of the Insured individual on the grounds that the Corporation had made false representations) to claim the life insurance proceeds. When the action was concluded, the Corporation received from the Insurer a total amount which included an additional indemnity awarded under Article 1619 of the Civil Code of Quebec, which provides that an indemnity may be added to the amount of damages awarded for any reason, to be fixed by applying a referenced interest rate to the amount of the damages, from a referenced date. In finding that the additional indemnity was to be taxed as interest, the Directorate stated:
[T]he courts found that the life insurance policy should be declared valid and the proceeds paid out. On the facts …, we are of the opinion that the Corporation was entitled to receive the life insurance proceeds in … the year of Individual's death. The capital sum insured … can therefore be considered to be an amount of principal owed to the Corporation … on which the Court awarded interest under article 1619 C.C.Q.