British American Tobacco hit with £436m damages claim from Canada court cases

Joe Curtis
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The damages claim follows an unfavourable ruling on Canada class action cases (Source: Getty)

British American Tobacco (BAT) has taken a £436m charge related to Canadian court cases, it said today.

Read more: No smoke without fire in BAT boardroom

The tobacco giant must pay the money to smokers from Quebec who said cigarette firms did not warn them of the risks associated with smoking.

The companies at fault included BAT subsidiary Imperial Tobacco Canada (Itcan), Rothmans Benson & Hedges and JTI-MacDonald.

The ruling against Itcan means the fine will hit BAT’s consolidated income statement in 2019, listed as an adjusting expense. However, it will not affect net debt or cashflow.

Itcan said it intends to file for an appeal of the judgement to the Supreme Court of Canada.

Plaintiffs in the class action lawsuit claimed the companies had known since the 1950s that smoking had damaging health consequences and did not tell smokers.

But the companies had argued that Canadians had a high level of awareness of the risks of smoking.

Last Friday the Quebec Court of Appeal opted to uphold a 2015 lower court decision that companies had not given adequate warnings about the “safety defect” in their products.

Rothman parent company Philip Morris cut full-year guidance last week as it prepared to pay out CA$257m (£157m) over the case.

Read more: Philip Morris cuts forecasts after CA$15bn court ruling

The class action lawsuits originally date back to 1998.