NCA Remedies Law Exam

CHAPTER 1—General Principles of Damages
1.1 INTRODUCTION
Purpose of award of damages

• Put the party complaining in the position that they would have occupied if the wrong had not
been done. Livingstone v Rawyards Coal Co (1880)
o Restrictions should be placed for perfect compensation
o Tension between position had wrong not been done and adoption of principles capable
of fair application. Remedy from the law should be the precise amount of loss or injury
sustained. The Columbus (1949)
Chief limiting principles are uncertainty, remoteness, mitigation
• P must establish on the balance of probabilities that they suffered loss and that the loss was
caused by D’s wrong
o A limit is necessary so that D isn’t liable for unexpected consequences. British
Columbia and Vancouver’s Island Spar Lumber & Saw-Mill Co Ltd v Nettleship
(1869)
Remoteness and Causation
• Equitable compensation is not subject in the same way to the limitations on recovery resulting
from principles of remoteness and causation as apply in contract and tort damages
1.2 REMOTENESS
H Parsons (Livestock) Ltd. v Uttley Ingham & Co Ltd (1978) (CA)

Facts: D sold hopper for storing pig food, D failed to open ventilator when installing, result that the
pignuts became mouldy and pigs affected by E. coli
Issue: whether the damage claimed arises in the ordinary course of things from the breach
• There is no need to have recourse to the question of the presumed contemplation
Held (Scarman): death of pigs natural result of feeding pigs mouldy food because of lack of top
ventilation in the hopper, consequences flowing naturally and direct. P therefore does not have to prove
results were foreseeable to either party. Appeal dismissed
Reasoning: Important to note the essence and limits of the finding—finding that parties could not
reasonably be supposed to have had in contemplation that there was a serious possibility of mouldy nuts
causing illness in P’s pigs, but not a finding that they could not reasonably have had in contemplation
that hopper unfit for its purpose of storing food might lead to illness
• Hopper should be reasonably fit for the purpose of storing pignuts in a condition suitable for
feeding to P’s pigs—unventilated hopper is not fit, defect was a breach of warranty, pignuts
unfit by reason of breach, loss was caused by the breach of warranty
• Implied term of “pleaded and admitted” that hopper would keep pignuts in condition as to not
make plaintiff’s pigs ill. Specific pigs and intensive nature of farming operation known to D
before contract
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Physical injury
Scarman LJ
Lord Reid in C. Czarnikow Ltd. v. Koufos (1969)
• Under 2nd limb in Hadley v Baxendale it was only necessary that losses were in reasonable
contemplation of the parties as a possible result of the breach. No requirement as to degree of
probability of that loss arising. Since D must have known that market prices fluctuate, loss
would have been in his contemplation as a possible result of the breach
o Parties to contract must have appreciated that if the unventilated hopper proved not to be
suitable for the storage of pignuts to be fed to P’s pig, it was not unlikely (there was a
serious possibility) that the pigs would become ill
o No need to invoke the question of reasonable contemplation in order to make D liable—
natural result of feeding toxic food to animals is damage to their health and may be
death
Mcgregor on Damages: in contract as in tort, it should suffice that, if physical injury or damage is within
the contemplation of the parties, recovery is not to be limited because the degree of physical injury or
damage could not have been anticipated
• It would be absurd to regulate damages in such cases upon the necessity of supposing the parties
had prophetic foresight as to the exact nature of the injury that does in fact arise
• Loss of market and loss of profit cases factual analysis is different from cases of physical injury
but same principles in this judgment apply
o Doesn’t matter if they thought the chance of physical injury, loss of profit, or other loss
was slight or odds against it—provided they contemplated as a serious possibility the
type of consequence, not necessarily the specific consequence, that ensued upon breach
o Judge right to apply the first rule in Hadley v Baxendale and in the case of breach of
warranty, SOGO 1893 53(2)
The Law as to Remoteness
Lord Denning MR
• Semantic exercises should not be contemplated but difference between contract where person
has suffered only economic loss (loss of profit or loss of opportunities for gain in some future
transaction) and injury done to person or damage done to property (including livestock) or for
ensuing expense to which he has actually been put
o In tort there is distinction between economic loss and physical damage Spartan Steel &
Alloys Ltd v Martin & Co (Contractors) Ltd. (1973). Classified recoverable damage as
material, physical damage.
• Finds it hard to apply HoL ruling of C Czarnikow Ltd that there is a difference between contract
and tort
o Breach of contract then the court has to consider whether consequences were the kind
that a reasonable man (at the time of making a contract) would contemplate them as
being of a very substantial degree of probability “not unlikely to occur” or “likely to
result or at least not unlikely to result” “liable to result” “real danger or serious
possibility”. C. Czarnikow Ltd. v. Koufos (1969).
o Case of tort, court has to consider whether consequences were of such a kind that a
reasonable man (at the time of the tort committed) would foresee them as being of a
much lower degree of probability “liable to happen in the most unusual case” “very
improbable case” or “that may happen as a result of the breach, however unlikely it may
be, unless it can be brushed aside as far-fetched”
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Loss of Profit Cases

• Defaulting party liable for consequences if they are such as, at the time of the contract, he ought
rereasonably to have contemplated as
“test of reasonable contemplation and serious possibility should be kept to that type of loss or to
economic loss”
Lord Denning MR
• Defaulting party is only liable for the consequences if they (at the time of the contract)
reasonably contemplated as a serious possibility or real danger
• We must assume that at the time of the contract, he had the very kind of breach in mind, such a
breach as afterwards happened, and also question whether he reasonably should have
contemplated that there was a serious possibility that such a breach would involve the P in loss
of profit
o If yes, contractor is liable for the loss unless he has taken care to exempt himself from it
by a condition in the contract (able to be done if he could reasonably contemplate). Loss
of profit cases are as follows
o Hadley v Baxendale (1854)

§ Facts: The crankshaft broke in the Claimant’s mill. He engaged the services of
the Defendant to deliver the crankshaft to the place where it was to be repaired
and to subsequently return it after it had been repaired. Due to neglect of the
Defendant, the crankshaft was returned 7 days late. The Claimant was unable to
use the mill during this time and claimed for loss of profit. The Defendant
argued that he was unaware that the mill would have to be closed during the
delay and therefore the loss of profit was too remote.
§ Held: The damages available for breach of contract include: 1. Those which
may fairly and reasonably be considered arising naturally from the breach of
contract or 2. Such damages as may reasonably be supposed to have been in the
contemplation of both the parties at the time the contract was made.
§ If any special circumstances exists which were actually communicated to the
Defendant, the Claimant may recover any damages which would ordinarily
follow from a breach of contract under the special circumstances
communicated.
o Victoria Laundry (Windsor) Ltd v Newman Industries (1949)

§ Facts: The claimant purchased a large boiler for use in their dying and laundry
business. The defendant was aware that they wished to put it to immediate use
and knew the nature of their business. The delivery of the boiler was delayed in
breach of contract and the claimants brought an action for the loss of profit
which the boiler would have made during the period in which the delivery was
delayed. The claim contained a sum for a particularly lucrative contract which
they lost due to the absence of the boiler.
§ Held: The claimants could only recover losses which were in the reasonable
contemplation of the parties which included the loss of profit that could be
expected from the lack of use of the boiler, but the claimant could not recover
for the loss of the exceptionally lucrative contract since the defendant was
unaware of this contract.
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Kienzle v Stringer (1981) (CA)

Zuber JA
• Appeal by P from judgment of Mr. Justice Cromarty awarding P with $17,459.48 plus costs on a
solicitor and client basis
Issue at trial: was quantum of P’s damages
Facts: D Stringer is solicitor and P is client. Title to Oxford farm was neither good nor marketable
(despite what D certified), 3 years had expired since Otis Kienzle’s death, no appropriate steps taken,
title to farm vested in the three next of kin, without concurrence of two sisters in personal
capacities=little or no value. P didn’t know about title problems, found a farm with price of 119,800 and
conditional upon being able to sell Oxford farm. Accepted offer to sell farm for 76 000. Lease for
Oxford farm not renewed. Sale collapsed as P lacked funds and purchase was lost.
Held: trial judge thought he was bound by Messineo v Beale (1978) and award of damages limited to
difference between contract price and market value of what was received (15,509.48). Appellant entitled
to costs of appeal.
Reasoning: Appeal judge believes that the law should not support rule that gives exceptional protection
to solicitors from general principles of damages which flow from contractual or tortious responsibilities.
o Hadley v Baxendale (1854): where two parties have made a contract which one of them
has broken, damages which the other party ought to receive in respect of such breach of
contract should be such as may fairly and reasonably be considered either arising
naturally (according to usual course of things, from such breach of contract itself, such
as may reasonably be supposed to have been the contemplation of both parties at the
time they made the contract as the probable result of the breach of it.
§ In tort the measure would be reasonable foreseeability, but in this case Zuber
embraces this as the test in both tort and contract
o Consequential loss items:
§ relying on marketability P shut own effective operation of farm, letting go
leasehold, leading to not being able to do much with the farm, credit position
adversely affected. Profit dropped drastically. P had to mitigate damages for a
year (valued of loss of profits 10 000, direct and immediately connected to the
defective title and consequent lack of marketability of farm). This would have
occurred even if new farm wasn’t purchased.
§ Lost profit on purchase of Kincardine farm, difference of 44 200 for contract
price, and value of oxford farm rose from 76 000 to 100 000.
o Is it reasonably foreseeable? Client relies on solicitor to guarantee title that he certifies.
Fee charged is calculated upon sale price of title certified and size of risk assumed. Not
unreasonable to add to that risk consequential damages immediately concerned with
failure of marketability.
§ It should not, however, extend to loss of profits from secondary transactions
which may be fuelled by funds expected from marketing of subject real property
as it is limitless.
§ P should not recover loss resulting from inability to purchase Kincardine farms.
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Sir Robin Cooke, “Remoteness of Damages and Judicial Discretion” (1978)

Purpose
• P is in same position as he would have enjoyed if his rights had not been violated by D
• Any damage of which D’s tort or breach of contract is a substantial cause is prima facie
recoverable, but there are limitations and main considerations
o Degree of likelihood that such damage (or broadly same kind of damage) would be
caused by such an act or omission
§ Considered from the POV of reasonable man in D’s position immediately
before the act or omission. In contract an assessment as at the date of contract
will also be relevant
§ Directness or otherwise of the causation and potency. Intervening human
action
§ Nature of the damage (person, property or purely economic interests)
§ Degree of D’s culpability (whether action was deliberate or grossly negligent,
breach of minor but strict contractual duty)
§ Whether D had reasonable opportunity of limiting his liability by agreed term
§
Exceptional case is Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) (2009)
• HoL held that charterer of a ship not liable for loss (caused by late re-delivery of ship) of an
exceptionally profitable contract made by the owner with another charterer to start after the end
of the current charter.
• It was readily foreseeable in general terms but held by Lords Hoffmann and Hope not to be the
type of loss for which the charterer could be taken to have assumed responsibility.
Exceptional case because there was legitimate expectation within the trade that a time charterer would
not be liable for a loss of profit suffered by the owner in respect of particular follow-on charter—late
delivery would be liable only on a basis that took account of the difference between the rate and the
market rate
1.3 CERTAINTY AND CAUSATION
Schrump v Koot (1977) (CA)

Lacourciere JA
Issue: Raised directly for the first time in CA is whether “possibilities” as contrasted with “probabilities”
of future loss or damage resulting from present injury are to be taken into account in assessment of P’s
damages
• Appellants claimed that trial judge erred in failing to direct the jury to ignore and disregard
possibility of future surgery. Medical evidence favourable to respondent indicated only a
possibility and not a probability of surgery in the future, jury should have been told to exclude it
from their consideration.
o Contended that damages in PI case should be assessed upon basis of injury suffered as it
manifests itself at date of trial making due allowance for probable future developments
but excluding such matters as remain in the sphere of possibility Corrie v Gilbert (1965)
§ Corrie v Gilbert (followed by many Canadian cases, Davidson v Melendy
(1965)): make due allowance for probable future developments but excluding
matters as remains in the sphere of possibility
o NOT BINDING on this court, Turenne v Chung: CA found that trial judge erred in
principle in considering the mere possibility rather than probability of prospective
damage
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§ Damages should not be awarded on the basis of conjecture or speculation. Mere

possibility of loss, as distinct from a probability, is not sufficient to be awarded
damages
Held: No error in trial judge’s decision not to recall jury, explained to jury that they could draw logical
inferences from the evidence, did not mean that they could make findings on fact on mere speculation or
conjecture. Appeal dismissed and 20 000 not inordinately high one and not a erroneous assessment of
respondent’s general damages
Reasoning: Possibility of future surgery upon respondent’s back was left fairly and properly to the jury
• Must assume that jury considered possibility as a serious factor aggravating respondent’s
permanent disability
• Presiding judge should warn jury to exclude consideration of remote, fanciful or speculative
possibilities, leave consideration for real and substantial risk, higher degree or greater chance or
risk of future development attracting higher reward
o In this case, risk of future surgery substantial and supported by medical evidence.
• When assessing damages for physical injury, one must appreciate that though it may be necessary
for P to prove on b/p that tortious act or omission was effective cause of harm suffered, it is not
necessary for him to prove on b/p that future loss or damage will occur, but only that there is a
reasonable chance of such loss or damage occurring
o 12 Hals, 4th ed. Law of damages is concerned with evaluating in money, future
possibilities and chances, court must make estimate as to what are the chances that a
particular thing will happen or would have happened and reflect those chances, in the
amount of damages which it awards
o P must prove his damage on b/p but often court is called upon to evaluate chances, such
as chance of P suffering further loss or damage in the future. In these cases P only has to
establish that he has a reasonable (as opposed to speculative) chance of suffering such
loss or damage, and court must assess value of that chance
• Proper test is Davies v Taylor (1974): held that P had to prove that there was a significant
prospect as opposed to a mere speculative possibility, of a reconciliation with her husband if he
had lived (damages under fatal accident legislation and wife had left husband some time before
his death)
o Lord Reid: “injury” is loss of a chance, all that you can do is evaluate the chance, absurd
to say that 40 per cent case gets nothing while 60 per cent case gets everything. Rejects
b/p in this case. Mere probability must be ignored, chance must be substantial then
evaluated
• Same approach found in Kovats v Ogilvie (1970)
o Award may cover not only injuries actually suffered but also the risk or likelihood of
future developments attributable to such injuries
o It is not law that P must prove on b/p the probability of future damage—he may be
compensated if he proves in accordance with degree of proof required in civil matters that
there is a possibility or a danger of some adverse future developments
o Trial judge was in error in awarding nothing for future disability of P where medical
evidence placed possibility of disabling arthritis at somewhere between 33% and 50%
o Untrue that damages in respect of things which have not yet developed may only be
awarded if it is probable that they will develop and may not be awarded if it is only
possible that they will develop
o One can decide on b/p that something in future is possibility and it can be taken into
account in assessing damages, but in this case it isn’t essential to decide on b/p that thing
in future is a probability
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Snell v Farrell (1990) (SCR)

Sopinka J
Issue: Whether P in a malpractice suit must prove causation in accordance with traditional principles or
whether recent developments in the law justify finding liability on basis of some less onerous standard
• Practical effect of determination of this issue will be whether appellant was liable for loss by the
respondent of the vision in her right eye
Held: Appeal dismissed with costs
Court of Queen’s Bench

Found negligence but no battery
• Turnbull J: once the appellant made decision to proceed with operation (as opposed to aborting
the mission) the onus shifted to him under the doctrine of res ipsa loquitur (without negligence
this would not have occurred, thing speaks for itself). Relied on Finlay v Auld (1975).
o P couldn’t succeed under this doctrine because D had explanation of occurrence with no
negligence
• An emerging branch of the law of causation, onus to disprove causation shifts to D in certain
circumstances, McGhee v National Coal Board (1973)
o Prima facie respondent proved that appellant’s actions caused her injury, appellant did
not satisfy the onus that had shifted to him, therefore causation and negligence was made
out
Court of Appeal
• Hoyt JA for the court: considering McGhee by Mustill LJ, if it is established that conduct of a
certain kind materially adds to the risk of injury, if D engages in such conduct in breach of a
common-law duty, and if the injury is the kind to which the conduct related, then D is taken to
have caused the injury even though the existence and extent of contribution made by the breach
cannot be ascertained
o Conduct of appellant, in not aborting operation, made it made likely that respondent (to
whom the appellant owed a duty) would lose the sight in her right eye
Issues of causation
1. Is the burden of proof of causation in a medical malpractice case on P and if so, how is it
satisfied?
o Causation is expression of relationship that must be found to exist between tortious act of
wrongdoer and injury to victim to justify compensation. Is current requirement too
onerous? No. adoption of alternatives for D to disprove causation would compensate P
where substantial connection between injury and D’s conduct is absent
2. If the burden of proof of causation is on P, did the trial judge infer causation in this case and if
not, ought he to have done so
Causation principles
1. Purports to depart from traditional principles in the law of torts that P must prove on b/p that, but
for the tortious conduct of D, P would not have sustained injury complained of
2. Legal or ultimate burden of proof determined by law upon broad reasons of experience and
fairness J.H Wigmore, Evidence in Trials at Common Law
o Onus is on the party who asserts a proposition, usually P
o Where the subject matter of the allegation lies particularly within the knowledge of one
party, that party may be required to prove it
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• Court may alter incidence of ultimate burden of proof when underlying rationale for allocation is
absent Cook v Lewis (1951) judge applied reasoning in Summers v Tice (1948) that concluded
that if it could not be determined which D fired the gun shot that struck P, both D must be found
liable
o But different in this case to compensate P by reversing burden of proof for injury that
may due to factors unconnected to D and not the fault of anyone
• Physician should know better than patient but in Canada it doesn’t shift the burden of proof
Interlake Tissue Mills Co v Salmon (1948) Jackson v Millar (1973)
• Legal or ultimate burden remains with P, but in the absence of evidence to the contrary adduced
by D, inference of causation may be drawn, although positive or scientific proof of causation has
not been adduced. If evidence to the contrary is adduced by D, judge is entitled to take account
Lord Mansfield’s “it is certainly a maxim that all evidence is to be weighed according to the proof
which it was in the power of one side to have produced, and in the power of the other to have
contradicted”
• Not essential for medical experts to provide a firm opinion supporting P’s theory of causation
o “reasonable” certainties in law is only more probable than 51%
o it is failure to appreciate this distinction that led Lord Wilberforce in McGhee to suggest
bridging evidential gap by reversing burden of proof
Causation in this case

• Anaesthetic (needle that caused retrobulbar bleeding), if it was recognized as an anaesthetic and
operation terminated the bleeding would have stopped—continuing with the operation permitted
bleeding to continue as it was patched
• Appellant in better position to observe what had occurred, and medical standpoint to interpret
situation, continuing operation which was found to constitute negligence, made it impossible for
respondent or anyone else to detect the bleeding which caused the injury—open to trial judge to
draw inference that injury caused by retrobulbar bleeding, no evidence to rebut this inference
• In some circumstances not essential to have a positive medical opinion to support a finding of
causation
Laferrière v Lawson (1991) (SCR)

Facts:
• Legal consequences of doctor’s failure to inform patient of cancerous condition and to follow up
on his patient’s health in appropriate manner
• Court to consider whether action can succeed even where it is not proven that patient’s fate would
have been different absent the doctor’s fault—examine loss of chance
Initial trial
Held: Dismissed on ground that P suffered no loss in consequence of D’s failure to inform the patient (of
the cancer)
Quebec CA
Held: awarded damages for loss of chance of obtaining proper treatment, distress suffered by patient on
learning the truth
o Require proof of fault, causation and damage
o Causation in law not identical to scientific causation
o Causation in law established on balance of probabilities (factual statistical evidence)
o In some cases where fault presents clear danger and where danger materializes, may be
reasonable to presume a casual link, unless demonstration or indication to the contrary
§ Statistical evidence may be helpful as indicative but not determinative
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§ If it doesn’t indicate causation on balance of probabilities, causation in law may

still exist where evidence in the case supports the finding
o Even if evidence does not support finding a causation on balance of probabilities with
respect to a particular damage (death or sickness), evidence can still justify a finding of
causation with respect to lesser damage (slightly shorter life or greater pain)
o If after all consideration the judge is not satisfied that the fault has (on balance of
probabilities) caused any real damage, then recovery should be denied
Supreme Court
Held: Allow appeal in part, ordered appellant to pay respondent $17500 with interest and costs
Reasoning: Not appropriate to focus on degree of probability of success and to compensate accordingly
• Evidence supports trial judge’s finding that appellant’s fault could not be said to have caused her
death 7 years after first diagnosis of cancer
• Convinced of psychological suffering directly related to appellant’s failure to inform patient
o Probable that pain was a result of distress after knowledge
o Denied opportunity and chance to seek best medical evidence (such as her continued use
of birth control)
o Increase amount in question to $10 000, agreeing with Vallerand JA
• Death not caused by appellant’s failure to follow up, probable that she was denied benefit of
earlier treatment which would have translated to real improvement in terminal condition
o $7500 appropriate for damage represented by diminished quality of life
Later reached similar conclusion

• Cottrelle v Gerrard (2003)
• Gregg v Scott (2005) medical negligence case where adverse effect had not materialized at the
time of the judgment, denied recovery for loss of chance
• Resurfice Corp v Hanke (2007) Supreme court reasserted the “but for” test as the primary test of
causation
Sunrise Co Ltd v “The Lake Winnipeg” (1991) (SCR)

Facts:
• Kalliopi L came close to colliding with Lake Winnipeg and ran aground as a result. On its way to
dry docks it ran aground again, but this time no fault of respondents
• If it only suffered initial damage it would have taken 27 days to repair, if it had only suffered
second then it would only required 14 days to repair
• As a result it actually spent 27 days in dry docks
Held: Lower courts found Lake Winnipeg liable for all damages, appeal dismissed
Issue:
• How much of the damage should the Lake Winnipeg be liable for?
Referenced:
• Stene v Evans (1958) doctors had done all they could for him with respect to first accident and he
had made his maximum recovery and started to learn accountancy
• Haversham Grange the ship Maureen was struck by Caravellas and following day struck by
Haversham Grange, damage incurred as result of either collision would have necessitated time in
dry dock
o Repairs carried out at the same time, repairs due to second collision did not increase
amount of time spent in dry dock
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o Second collision not a factor in delay and should bear no responsibility

• The Carslogie the Carslogie ran into Heimgar, admission of liability on part of Carslogie. During
crossing of Atlantic Heimgar encountered heavy weather and sustained damage that rendered
unseaworthy, immediate dry docking
o 50 days in dry dock, Carslogie was not liable for 10 days detention
o it is not enough to consider whether the ship was detained by wrongful act of D. it is
essential to consider whether damages were caused to P by reason of such detention
• More relevant is Performance Cars Ltd v Abraham (1962) issue revolves around property
damage
o Car involved in two collisions, damage was slight but first collision necessitated the re-
spraying of the whole lower part of the car—P unable to recover amount needed for
respraying from first tortfeasor, reasoned that as the damage caused by second torfeasor
would have independently required respraying, look at second tortfeasor for recovery of
this cost
• While second incident caused time in dry dock it did not have as a consequence any loss of
profit—profit making was brought to a halt by meeting with Lake Winnipeg (repairs due to
second incident would have been completed within 27 days detention required by first incident),
second incident had no consequence in profit earning
o Second casualty is irrelevant in this determination
Reasoning:
• No causal link between second incident and loss of porifts suffered by owners of Kalliopi L
(damage only coincidental)
• Lake Winnipeg must bear the responsibility for the full 27 days of detention on the dry dock
• Parties are liable for the direct consequences of actions—In McLachlin’s dissent she says that
however maybe damages should be shared in instances where two defendants share liability,
similar to contributory negligence (one party shares 13 days the second incident liable for 14)
1.4 MITIGATION
Provocation in Intentional Torts
Landry v Patterson (1978) (CA)

Facts:
• Ground of appeal is that revocation so great that assault under circumstances was justified and not
excessive
• Nature of the injury of P should not be the determinative factor
• Disagreed that learned trial judge erred in conclusion that there had been unreasonable and
excessive use of force on part of respondent
Held: Appeal dismissed without costs
Reference: Owen J in Fontin v Katapodis in an action for assault, the conduct and motives of the parties
may be taken into account either to aggravate or mitigate damages
• In a proper case the damages recoverable are not limited to compensation for the loss sustained
but may include exemplary or punitive damages (where D has acted in a high-handed fashion or
with malice)
• But the rule by which D in an action in which exemplary damages are recoverable is entitled to
show P’s own conduct was responsible for the commission of tortious act and use this fact to
mitigate damages has no application to damages awarded by way of compensation
• It operates only to prevent award of exemplary damages OR to reduce amount of such damages
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(which, but for the provocation, would have been awarded)

• Examples are provocation (loses self control)
• Shaw v Gorter binding authority, Court held that provocation could only be argued and used in
mitigation of punitive damages and not of general damages
Evans v. Teamsters Local Union No. 31, [2008] 1 S.C.R. 661; 2008 SCC 20
Held: appeal dismissed
Reasoning: when employee ended employment contract without notice, employer required to pay
damages in lieu of notice, BUT requirement is subject to employee making a reasonable effort to
mitigate damages by seeking alternate source of income.
Employer bears onus of demonstrating both that employee has failed to make reasonable efforts
to find work and that work could have been found. Would a reasonable person take the job?
Relevant factors include salary offered is the same, working conditions, critical element that
employee not obliged to work in atmosphere of embarrassment
Duty of employee claiming wrongful dismissal to mitigate his damages by accepting a job offer
made by the same employer who originally dismissed the employee
Valuation of Chance of Avoiding Loss
Janiak v Ippolito (1985) (SCR)

Issue: How damages for personal injury are to be assessed where the victim of the accident unreasonably
refuses to undergo the recommended surgery
Facts: Respondent sustained back injuries when his car was struck from appellant’s vehicle. Unable to
work as crane operator, liability for negligent driving admitted by appellant and trial confined to issue of
damages
• Main injury required surgical excision of disk with spinal fusion (70% success and 100%
recovery to go back to work)
o Didn’t want to risk unless 100% success
o Still disabled
Held: Appeal and cross appeal dismissed, however should be 96.14k
Trial judge: Callaghan J: found that respondent (P) had acted unreasonably in refusing to undergo
recommended surgery
o Any individual claiming damages for personal injuries has a duty to mitigate his loss by
obtaining proper medical treatment and that he is not entitled to damages in respect of
any pain, suffering, loss of amenities, or loss of earnings consequent upon an
unreasonable refusal to undergo medical treatment or surgical operation
o Had P acted reasonably, he would have been able to return to work by end of March
1978—appellant (D) responsible for P’s loss of income for two years between date of
accident and March 31 1978, which was 33k, damages for pain and suffering for 25k,
reduced to reflect insurance benefits, became 47.9k and interest from Nov 25 1977
CA court, Blair JA: differed in calculation of damages, did not cut off appellant’s responsibility for loss
earnings at the date when respondent might have been expect to recuperate from operation
o Took into account the fact that recommended surgery only entailed 70% chance and
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adjusted award for loss of income upward in order to take into account that even if the
respondent had acted reasonably, recovery wouldn’t have been assured
o Ended up awarding damages for loss of earnings in amount of 81.6k, deducted insurance
benefits and added 25k for pain and suffering, total award for 103.65k
Reasoning: The question of whether a person has been reasonable in refusing to accept the recommended
medical treatment is for the trier of fact to decide.
• Must take into consideration the degree of risk from the surgery, the gravity of the consequences
of refusing it, and the potential benefits to be derived from it.
• If any one of several recommended courses of treatment is followed, a plaintiff cannot be said to
have acted unreasonably.
• The trial judge committed no error of law here and there was no basis on which an appellate court
could interfere with his finding. Damages for aggravated injuries consequent on some pre-
existing infirmity are recoverable even if the infirmity is of a psychological nature.
o A psychological "thin skull" that developed subsequent to the tortious act is not,
however, a factor to be considered in relation to reasonableness. The analytical focus in
each case is on the capacity to make a reasonable choice.
o A line must be drawn between those capable of making a rational choice and those who
cannot due to some pre-existing psychological condition.
• A person capable of choice must bear the cost of an unreasonable decision but a person incapable
of making such a choice due to a pre-existing psychological condition should not bear the cost
when wrongfully injured. The burden of proof of damages lies with the plaintiff but shifts once it
is alleged that the loss should have been mitigated.
• The SCC in Ippolito holds that a defendant must prove, on a balance of probabilities, two points
in order to show that the duty has not been satisfied by the plaintiff: (1) that the plaintiff
acted unreasonably in eschewing the recommended treatment, and (2) the extent, if any, to
which the plaintiff’s damages would have been reduced had she acted reasonably and
accepted the treatment
Unreasonable refusal of treatment

• Noteworthy fact about appeal is that trial judge found respondent to have been unreasonable in
his refusal to accept the recommended medical treatment
• Thin skull doctrine—whether or not his refusal of treatment perceived as objectively reasonable,
source lay innate fear of surgery that could not be expected to overcome
o Wrongdoer must take the victim as he finds him Hay or Bourhill v Young (1943)
analogous to victim with predisposed physiological oversensitivity Bishop v Arts &
Letters Club of Toronto
o It may be recoverable if pre-existing even if it is psychological nature, there is such thing
as psychological thin skill Malcolm v Broadhurst (1970) egg shell personality
o Whether objective test of reasonableness applies to decision made by thin skulled P is: 1.
Timing and 2. Nature of alleged psychological infirmity
1. Timing
• There must be evidence of pre-existing susceptibility otherwise ordinary rules of causation apply
Blckstock v Foster (1938)
• Lip being burned then pre-malignant condition of P burn turns into fatal malignant growth, “thin
skull” serves to displace otherwise applicable rules of causation Smith v Leech Brain & Co Ltd
(1962)
• Marcroft v Scruttons (1954) man was a type who might be more readily affected by accident
than other men would be, but he should have taken advice of medical advisor (Lord Justice
Singleton)
12
o Question was whether to admit subjective condition of his as a reason for refusing
medical treatment. I think not, people with anxiety should be responsible human beings
and expected to behave reasonably
o Refused to permit subjective attributes to enter in question of reasonableness of P’s
refusal of medical treatment
• Elloway v Boomars (1968) psychosis was itself a factor in his refusal and he could not therefore
be held responsible for worsening of his condition
• Mcgrath v Excelsior Life Ins Co (1973) expert medical advice contrasting, therefore refusal is
not unreasonable
• Morgan v T Wallis Ltd (1974) fear refusal to undergo tests and operation is unreasonable
o Genuine but no evidence that this is due to physical or mental or psychological disability
which existed before the accident
o Look at objective standard of the reasonable man, emotional state is no ground for saying
refusal was not unreasonable
2. Nature
• Line must be drawn between Ps who are capable of making a rational decision regarding own
care and those who not capable of making such a decision (pre-existing)
• P cannot be making an unreasonable decision in regard to own medical treatment and unload
upon his D the consequences of his own stupidity or irrational scruples Law of Torts J.G Fleming
Unreasonableness and Conflicting Medical Opinions

• In assessing the reasonableness of P’s decision whether or not to have medical or surgical
treatment is way in which they are expected to handle conflicting medical opinions
• Asamera Oil Corp Ltd v Sea Oil & Gen’l Corp, Baud Corp, Nv v Brook (1979) Estey J: P need
not take all possible steps to reduce his loss, only bound to act like a reasonable and prudent man
o Banco de Portugal v Wterlow & Sons the steps he takes ought not to be weighed in nice
scales
• As long as P follows any one of several courses of treatment recommended by medical advisers
he consults he should not be said to have acted unreasonably
• Darbishire v Warran (1963) while P may have acted reasonably as far he was concerned, the true
question is whether P acted reasonably as between himself and D and in view of his duty to
mitigate the damages
o NOT ADOPTED IN CANADA, Harlow & Jones Ltd v Panet Ltd (1967) P is not bound
to nurse the interests of the contract breaker
• Can also look at degree of risk to P from the surgery, gravity of consequences of refusing it
Masny v Carter-Hall-Aldinger Co Ltd and potential benefits to be derived from it Matters v
Baker & Fawcett (1951)
Onus of Proof of Reasonableness

• P has burden of proving both fact that they suffered damage and quantum of that damage, but
burden of proof moves to D if he alleges that P could have and should have mitigated his loss Red
Deer College v Michaels (1976) and Asamera Oil
o Buczynski v Mcdonald (1971) Walters J: not only must D discharge onus of showing
that P could have mitigated his loss if he had reacted reasonably, but he must also show
how and to what extent that loss could have been minimized
§ P’s duty to mitigate in a case of compensation neurosis included a duty to bring
on the action for an early trial (also open to D)
• Plenty v Argus (1975) Jackson CJ: two aspects of D’s burden of proof (on the b/p)
o D to prove that P acted unreasonably in not submitting himself to advised treatment
o D to prove that treatment could cure or to a certain degree cure P’s condition, or whether
13
P refusing treatment had failed to do something which in reason he ought to have done to
mitigate his damage
Consequences of An Unreasonable Refusal of Treatment

• Pearson LJ in Darbishire v Warran: it is not a duty as a breach of it is not actionable. P not
under any actual obligation to adopt the cheaper method (he can adopt the more expensive
method and commits no wrong against D. True meaning is that P is not entitled to charge D by
way of damages with any greater sum that which he reasonably needs to expend for purpose of
making good the loss. Can be fully entitled to be as extravagant as he pleases but not at expense
of D
• Mitigation relates to post-accident events, the act of claimant
• Plenty v Argus: if a finding is made that P in the face of an uncertain prognosis acted
unreasonably in not submitting himself to surgery or treatment, then it would seem that damages
would be assessed having regard to condition as it is, discounted by evaluation of the lost chance,
or as one would if the assessment were made in advance of carrying out of advised treatment
o Lord Diplock in Mallet v Mcmonagle (1970): in assessing damages which depend upon
its views as to what will happen in the future or would have happened in the future if
something had not happened in the past, the court must make an estimate as to what are
the chances that a particular thing will or would have happened and reflected those
chances, in the amount of damages which it awards
§ b/p test confined to determining what did in fact happen in the past
§ in assessing damages court will look at what would have happened by estimate
chance of relevant event occurring then reflected in damages
Anticipatory Breach
Sells Ltd v Thomson Stationary Co Ltd (1914) (CA)

Issue: Whether or not implied assent of D (to the future appropriation of goods) to the contract was
withdrawn or destroyed by notification that they would not accept the goods
• Whether or not P, after receipt of notification, could proceed to convert executory agreement into
executed one by setting goods apart as applicable to contract and pass property in them to D
against their will
o No appropriation of these had been made prior to receipt of cablegram
o SOGO 1911 5(1): where there is a contract for sale of unascertained or future goods by
description, and goods of that description and in a deliverable state are unconditionally
appropriated to the contract (either by seller with assent of buyer or buyer with assent of
seller), property in goods thereupon passes to buyer. Assent may be express or implied,
given either before or after appropriation is made
Reasoning: Implied assent to appropriation of the goods withdrawn by notice, P could not thereafter
without D’s assent convert executor contract into an executed one
Finelli v Dee (1968) (CA)

Issue at trial:
• Whether cancellation of contract amounted to rescission of simply represented a repudiation by D
Held: Appeal dismissed with costs and counsel fee of 25
Reasoning: White & Carter (Councils) Ltd v Mcgregor repudiation by one party to a contract does not
preclude the innocent party from carrying out the contract and suing for the price, at least where this can
be done without assent or cooperation of the party in breach
14
• Not the case here because P had to enter D’s land to perform construction and they did not give
notice to D that they were going to do the work on a certain day
• Whether cancellation amounts to rescission or repudiation by D, P is not entitled to recover
contract price
Bowes v. Goss Power Products Ltd. (2012), 293 O.A.C. 1; 2012 ONCA 425
Held: appeal allowed, decision set aside, P entitled to amount of salary specified in employment
contract notwithstanding new employer
Reasoning: if employment contract stipulates fixed term of notice or payment in lieu of was to be
treated as fixing liquidated damages or contractual amount. No obligation on employee to
mitigate damages
If parties who entered in employment agreement specifying fixed amount of damages intended
for mitigation to apply upon termination without cause, have to do it in clear and specific
language in contract, not stay silent
Brake v. PJ-M2R Restaurant Inc. (2017) 135 O.R. (3d) 561, 2017 ONCA 402
Reasoning: Brake’s refusal to accept demotion did not constitute a failure to mitigate and does
not disentitle her to compensation for wrongful dismissal. Brake made reasonable efforts to
mitigate damages by increasing work hours and seeking other work. Earnings did not have to be
deducted from damages award, not considered substitute for what Brake would have earned
under contract
Avoided Loss
Erie County Natural Gas and Fuel Company Ltd v Carroll (1911) (PC)
Facts
• D wrongfully withheld supply of gas needed by P for use in business. P acquired other gas leases,
constructed new works to secure supply of gas, later sold at profit
Previous finding
• Lord Atkinson: P entitled to have works operated by them supplied with natural gas, company
consumed 911722303 cubic feet of own gas for that purpose. Gas that Erie County to pay to P
• If D discharged obligation then P would have sufficient to operate plant without extra, BUT, D
failed to discharge for 7.5 years, P constructed works at cost of less than 60k and made 15k profit
when sold
o P received 113k damages, 128k with profit total
• Britton J in Supreme Court: reduced damages to 54k, agreed upon by CA, dismissed appeal
Privy Council
• Unable to adopt previous conclusions, CA didn’t take true view of nature of transaction in
agreement
Reasoning: Amount of gas not specifically set apart for appropriated P’s use, or to become property, if P
tapped to utilize, then liable to be convicted of larceny The Queen v White (1985)
o D broke contract and liable for damages of breach
• Would have been competent for P to abstain from procuring gas in substitution for that which D
15
should have supplied to them, then sued D for damages for breach, but they did not take that
course
o P chose to perform on behalf of D (in reasonable way) that contract for them and get
independent source of sufficient quantity of gas
o Measure of damages is cost of procuring substituted article, not the price that it can then
be sold Hamlin v Great Northern Ry Co (1856) principle is that if party doesn’t perform
contract the other may do so for him and charge him for expenses incurred in so doing
§ Cannot be unreasonable or oppressive Sedgwick on Damages
§ If he purchases sum equal to or less than contract price, he can only recover
nominal damages because cost of procuring substituted article not being greater
than contract price, he has got goods equal to those contracted for and at the same
or less cost, and suffered no loss Valpy v Oakeley (1851)
§ Method adopted to procure goods cannot make any difference
Held: Only entitled to nominal damages
o Actual damage not necessary but actual loss has to be demonstrated if damages are not to
be nominal
o Cannot recover more than they have lost
o Got substituted article, identical in description and quality, used it, failed to shew that it
has not in the result been obtained by them free of cost
Cockburn v Trusts & Guarantee Co (1917) (SCR)

Facts
• P (wrongfully dismissed by employer during liquidation), bought assets at liquidation sale and
sold at profit of 11k
• Trial judge awarded damages for wrongful dismissal but Ontario Appellate Division substituted
for nominal damages
• Further appeal of Supreme Court was dismissed
Ratio
• Fundamental basis of assessment of damages for breach of contract is compensation for
pecuniary loss naturally flowing from breach—P cannot recover damages due to his own failure
to take all reasonable steps to mitigate loss
• Even if there was no duty on him to act, if he has taken action arising out of transaction and that
action can diminish his loss, effect in actual diminution of the loss he suffered can be taken into
account
o British Westinghouse Elec & Manufacturing Co v Underground Elec Rlys Co of
London (1912)
Held:
• 11k profit arose out of former employment (arising out of transaction) Staniforth v Lyall (1830)
• Taking into account the year and 299 days left at disposal, he did not sustain actual damage as a
result of losing his position and probably better off
Jamal v Moolla Dawod Sons & Co (1916) (PC)

Issue:
• Should the purchaser receive the benefit of increased prices which the shares realized by given
him credit in reduction of damages for increased prices in fact realized over market price at the
day of breach
o No, profit accruing should not be deducted from damages for non-acceptance
o Damages for breach of contract such as contract of sale normally assessed as at the date
of breach
• In a contract for sale and negotiable securities, is the measure of damages for breach the
16
difference between contract price and market price at date of breach (with an obligation on the
part of seller to mitigate damages by getting best price he can at the date of breach)? Or is the
seller bound to reduce to damages if he can by subsequent sales at better prices? If yes, and if
purchaser entitled to benefit of subsequent sales, then purchaser should also bear the burden of
subsequent losses?
o Impossible and seller should not recover from the buyer losses, neither should he be
liable to purchaser for profit if market rises
Reasoning:
• Upon breach there was a right to damages
• Seller was selling his own shares (did not belong to purchaser)
• P who sues for damages owes duty to take all reasonable steps to mitigate loss consequent upon
breach and cannot claim as damages any sum due to own neglect
o BUT, loss to be ascertained was loss at date of the breach. If that date P could do
something that mitigated damage, D entitled to the benefit of it Staniforth v Lyall (1830)
o But the benefit of a latter contract due to failure of D to perform initial contract doesn't
entitle D to benefit of that Yates v Whyte (1838)
o Market value at date of breach is decisive element Rodocanachi v Milburn (1886)
• Seller’s loss at date of breach remained difference between contract price and market price at that
date. When buyer committed breach the seller remained entitled to shares, became entitled to
damages. The shares he kept for a time and subsequently sold them in rising market. He received
benefit but his loss at date of breach was unaffected
Held: Appeal should be allowed, orders discharged, judgment for P
Campbell Mostyn (Provsions) Ltd v Barnett Trading Company (1954) (CA)

Facts:
• P sold 350 cans of ham D refused to accept, on date of refusal to accept, market below contract
price, market price rose in Nov, P resold ham above contract price
Held:
• D liable to pay damages on principle from Jamal v Moolla Dawood, Sons & Co (1916)
negotiable securities but should apply to sale of goods
• If market went down then D would not have been liable to pay more than the fixed sum
• There was a market within terms of prima facie rule, appeal fails
Slater v Hoyle & Smith Ltd (1920) (CA)

Facts
• P delivered 1625 pieces of cotton cloth, D refused to accept remaining 1375, alleging cloth not of
quality accordance with contract, entitled to assume future deliveries just as bad, treat P as
repudiating contract
• P sued D for non-acceptance, D sued for damages non-delivery and breach of warranty
• Cotton cloth was sold. The buyer was to use it to fulfil his own contract with a sub-buyer. The
cloth was not of the contractual quality but the buyer was able to perform the sub-contract by
delivering the same cloth. The sub-buyers paid the full price.
Held: The normal measure of damages applied namely the difference between the market price at the time
and place of delivery of cloth of the contractual quality and the market price at the time and place of
delivery of the cloth actually delivered.
Previous courts
• Decided in D’s favour, no damages for non-delivery because market price at date of breach below
contract price, but for breach of warranty he awarded difference between value at date of delivery
17
of goods delivered and value if they had answered to warranty

CA
• Sub contracts had 691 pieces where D suffered no damage
• Two sub contracts (one before date of contract)
• Was the learned judge right in course he took?
• Lord Esher MR in Rodocanachi v Milburn (1886) in an action for non-delivery or non-
acceptance of goods under a contract of sale the law does not take into account in estimating the
damages anything that is accidental as between P and D, such as an intermediate contract entered
into with 3rd party for purchase or sale of the goods
o The elements for comparison are the contract price and market price at date when goods
should have been delivered
o Goods were not identical in sub contract to head contract
• Wertheim v Chicoutimi Pulp Co (1911) action for delayed delivery of goods
o Shouldn’t apply here because purchaser in Wertheim received inferior goods of smaller
value than he ought to have received, lost difference in two values
o Contract price does not enter into calculation here at all
Reasoning:
• Judgment leaves party in approximately the same position as if the contract had been performed
• Prefer rule that is more generous to seller, buyer should be limited to damages actually suffered
without distinguishing between events occurring before or after the date of breach
• Cotton sold off by buyer did not change value, situation with sub buyer made no impact on first
contract, should not displace difference in market value
John Hallam Ltd. v. Bainton [1920] 54 D.L.R. 537, 60 S.C.R. 325

Facts: acceptance of goods refused, vendors wouldn’t take it back, resold over contract price
Reasoning: where on a sale according to sample, goods delivered are of quality inferior to that
warranted the purchaser is entitled to recover as damages the difference between market value of
goods received and those which should have been supplied
Resale by purchaser at price less than difference does not debar him from recovering full amount
but affords some evidence of market value
• Williams Brothers v Agius [1914]: the law does not take into account in estimating the
damages anything that is accidental as between P and D (such as in a contract entered
into by P with 3rd party)
• Wertheim: should not be compensated for loss not suffered and be put in a much better
position
Nesi Energy Marketing Canada v. NGL Supply Co. (2001), 94 Alta. L.R. (3d) 216, 2001
ABCA 168 (paras. 38-46)
Held: appeal is allowed, no reduction of NGL’s claims for buy losses by deducting sell gains.
Reasoning: Innocent party entitled to benefit of its contracts individually, “but for” analysis fails
because sell side gains would have occurred even if NESI had not breached buy side contracts,
NESI not entitled to benefit from P’s gas marketing successes because it became bankrupt. No
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entitlement to benefit from P’s mitigative conduct with respect to another contract.
Rule as to avoided loss provides that benefit or profit will be taken into consideration to diminish
damages owing to a party in respect of particular breach if benefit stems from steps taken to
mitigate the loss consequent on that breach British Westinghouse Electic & Mfg Co v
Underground Electric Railways Co of London, “he who has suffered breach to be placed as far
as money can do it, in as good a situation as if contract had been performed.
1. Compensation for pecuniary loss naturally flowing from breach, but qualified by
2. Which imposes P the duty of taking all reasonable steps to mitigate loss consequent on breach,
debars him from claiming part of damage which is due to negligent to take such steps.
No obligation for P to take step that reasonable man would not take in course of business, but
when in the course of business he has taken action arising out of transaction, which action
diminished loss, effect in actual diminution of loss he has suffered may be taken into account
even though there was no duty on him to act”
Application of this rule to avoided loss limited to cases where benefit arose as a result of
mitigative conduct undertaken in consequence of breach—one arising out of consequences of
breach and in the ordinary course of business. But for the breach, the benefit would not have
occurred.
Collateral Benefits
Ratych v Bloomer (1990) (SCR)

Held: Supreme Court held continued pay had to be taken into account, no damages recoverable from D in
respect of lost pay
Reasoning:
• P injured by D’s negligence, continued pay during unable to work period
• Sick leave benefits deducted from damage otherwise payable for loss of earning by party whose
negligence was responsible for injuries
• Might have been diff if receipts of gift, insurance or if employer had right to repayment from
proceeds of award
• Since Ratych and Cunningham, I find the law in terms of deductibility of collateral benefits can
be summarized:
1. McLachlin J.'s rule in Ratych states that when a plaintiff receives a wage benefit under an
agreement from which no direct cost to the plaintiff can be traced the benefit should be
deducted, unless the court is satisfied that the employer or fund which paid the wage benefit
is entitled to be reimbursed for it on the principle of subrogation.
2. When a plaintiff receives a wage benefit at an actual cost then the benefit should be deducted
minus the actual cost (see Ratych p. 972). For example, if a plaintiff had to give up sick days
in order to receive a benefit then the plaintiff would be compensated for the lost sick days.
3. When a plaintiff receives collateral benefits from an insurance policy in which direct costs
can be traced to that plaintiff then such benefits are not deductible. This is the "insurance
exception".
• When a plaintiff receives collateral benefits from a charitable source this is not deductible. This is
19
the "charity exception".” (QL at paras. 307-308)
1. Cunningham v Wheeler (1994) (SCR) three appeals heard together

Issues at Trial:
• Should payments received by P pursuant to private policy of insurance be deducted from amount
recovered for loss of wages?
• If private policies of insurance exempt from deduction, should disability benefits negotiated
under a collective agreement be exempted?
• If disability benefits provided by collective agreement exempt, what proof is required of payment
for benefits by P-employee?
Facts
• P collected 5.3k disability benefits
• Collective bargaining agreement employees entitled to receive hourly wage package that would
be proportionately higher if disability benefits abandoned
Held:Weekly disability payments should not be deducted in calculating amount payable by D for wages
lost by P as a result of injuries
CA
Cory J
• No subrogation right in employee, direct funding for disability benefits came from employer, plan
not in nature of private insurance policy
o Funds received should be deducted from damage award
o Exemption for private policy of insurance should be maintained, based on fairness
• Refused to exempt disability payments received by P because obtained as a result of collective
bargaining agreement, rather than direct deduction from pay
o They were bargained for and obtained and paid for by P just as much as if he had bought
and privately paid for a policy of disability insurance
• In Ratych v Bloomer there was no evidence put forward that P had paid for disability benefits
o There should be evidence adduced of some type of consideration given up by employee
in return for benefit (trade offs in collective bargaining process, forgone higher wages or
other benefits in return for disability benefits, evidence of payments by employee for
benefits made on behalf of employee which shows that those payments were part of
employee’s wages and employee provided for employer in order to have premium paid)
• Evidence here that P paid for benefits pursuant to his collective agreement through trade-off of
reduced hourly wage rate, there is evidence to bring him within the insurance exception
CA held:
• Collateral benefits obtained by Cunningham as result of collective bargaining agreement are in
the nature of a private policy of insurance
• Benefits obtained under collective agreement (like private policy of insurance) should not be
deducted from claim for lost wages
• P should have costs throughout
Referenced
• Bradburn v Great Western Rail Co (1874) no justice in setting off an amount to which P entitled
himself under a contract of insurance such as any prudent man would make
• Paid for insurance benefit and that benefit should not enure to the benefit of D Shearman v
Folland (1950)
• Parry v Cleaver (1969) P has bought them and that it would be unjust and unreasonable to hold
20
that money which he prudently spent on premiums and benefit from it should enure to the benefit
of the tortfeasor
• Quebec legislators decided no deductibility Civil Code of Quebec SQ (1991) c64. Negative
answer to question of whether debtor’s obligation to compensate may be reduced or altered by
payments the creditor receives from a third party (but so as to avoid principal cases in which
double compensation would result, it expressly excludes situations where 3rd party is legally or by
agreement subrogated to the creditor’s rights)
2. Miller v Cooper
Facts:
• Member of collective bargaining agreement, provided both long and short term disability plans
(30% by means of deduction from pay)
• Before trial she received 26k in short term disability and entitled to further sums if disability
continued, P not obligated to repay benefits
Trial judge and appeal

• Trial judge: disability provisions paid in part by employee and by employee pursuant to collective
bargaining agreement. Benefits should not be deducted from recovery for lost wages
o Company deducted costs of disability benefits from hourly wage paid to employees, no
subrogation provision but as a result of payment by P of 30% she was within category of
those who bought insurance
CA: disability benefit provisions in nature of private contract of insurance and should not be deducted
from recovery for loss of wages
3. Shanks v McNee
Facts:
• Unable to return to work for 2 years
• 30% through payroll deductions for long term disability, then from 1988-1991 50%
• Collective agreement for short term if it met standard requirements for full premium reduction for
wage loss replacement plan under unemployment insurance act
o Requirements met and employer kept premiums
• Subrogation clause in long term disability but not short term disability
Trial judge:
• Trial awarded 73k for lost wages, no deduction made for disability benefits
• Disability payments in nature of insurance paid for by employee, did not deduct benefits received
from wages lost
• No deduction from lost wages for income tax which would have been paid on lost wages if he
received while working
CA
• Since employees contribute 30%, benefits in nature of insurance paid for by employee and should
not be deducted (employer subrogated)
o No direct contribution made by employee to short term disability, no subrogation clause,
not in nature of insurance and should be deducted
o No deduction for income tax
History:
Cory J: recovery in tort action to compensate P as fully as money may do for the loss suffered as a result
of tortfeasor’s negligence, not entitled to double recovery but case governed by exception for private
insurance
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IBM Canada Ltd v Waterman (2013) (SCR)

Facts:
• IBM pension plan (employer contributed % of salary over years) two months notice of dismissal
and entitled to full pension
• Wrongful dismissal trial judge found 20 months was appropriate notice period, made no
deduction for pension benefits
• Appeal to CA and Supreme Court dismissed
Issue at trial
• Whether receipt of pension benefits reduces damages otherwise payable by IBM for wrongful
dismissal
Held:
• General rule of contract damages is to place them in same economic position had there been no
breach of contract (D performed the contract)
• If IBM gave him reasonable working notice then received only regular salary and benefits during
period of notice
o BUT, employee pension payments (including payments from defined benefit plan) type
of benefit that should not generally reduce the damages payable for wrongful dismissal
o Pension benefits form of deferred compensation for service and retirement, not to
subsidize wrongful dismissal
o Retirement pension benefits (not indemnity for loss of wages resulting from inability to
work and to which employee contributes directly or indirectly, held to fall within private
insurance exception)
Reasoning:
• Strength of connection to D’s breach
o Private insurance benefits should not be deducted because they result from P’s contract of
insurance and not from D’s wrongful act Bradburn v Great Western Railway Co (1874)
• Nature and purpose of benefit
o Whether benefit is indemnity for loss caused by D’s breach and whether P directly or
indirectly paid for benefit
o Benefits have not been deducted if (a) they are not intended to be an indemnity for the
sort of loss caused by the breach and (b) the plaintiff has contributed to the entitlement to
the benefit: Gill ; Guy.
o Benefits have not been deducted where the plaintiff has contributed to an indemnity
benefit: Jack Cewe ; Cunningham .
o Benefits have been deducted when they are intended to be an indemnity for the sort of
loss caused by the breach but the plaintiff has not contributed in order to obtain
entitlement to the benefit: Sylvester ; Ratych .
• Broader policy considerations

o In general, benefit will not be deducted if it is not an indemnity for loss caused by breach
and P has contributed in order to obtain entitlement to it
o There is room in analysis of deduction issues such as desirability of equal treatment of
those in similar situations, possibility of providing incentives for socially desirable
conduct, need for clear rules that are easy to apply
Collateral benefit
• Collateral benefit: gain or advantage flowing to P and connected to D’s breach (either with a but
for causal link or benefit was to provide indemnity for loss)
• There is a “but for” causal link because P would not have received pension benefits and full
22
salary but for the dismissal
Compensation principle
• D should compensate P only for actual loss? Looking at P’s losses is general rule
o Bank of America v Mutual Trust Co (2002) (SCR) Need to look at not only P’s losses
but also gains flowing from D’s breach
• Exceptions exist, insurance benefits = pension payments (where employee has contributed that
was not intended to be indemnity for type of loss suffered as a result of D’s breach)
• Mitigation is concerned with whether P acted reasonably after D’s breach to reduce losses.
Collateral benefit is concerned with whether some compensating advantage that was in fact
received by P should be taken into account in assessing P’s damages
o No problem if party supplying benefit is subrogated to (steps into place of) P and
recovers value of benefit
§ D would pay damages and party who supplied benefit reimbursed out of damages
and P retains compensation only to extent that they actually suffered loss
(Cunningham v Wheeler)
Compensating advantage problem

• If P receives benefit that would result in compensation of P beyond his loss and either a) P would
not have received benefit “but for” D’s breach or b) benefit intended to be indemnity for sort of
loss resulting from D’s breach
• Canadian Pacific Ltd v Gill (1973) (SCR) applied insurance exception to prevent deduction of
present value of Canada Pension Plan benefits available to surviving dependents from damages
awarded in fatal injuries claim
o Payments so much of the same nature as contracts of insurance that they also should be
excluded from consideration when assessing damages under provisions of that statute
• Sylvester non contributory disability benefits received during notice period deducted from
wrongful dismissal damages otherwise payable
o Benefits were intended to be indemnity for lost wages while P was unable to work, P had
not contributed to acquire benefit, policy considerations favoured deduction
o Jack Cewe unemployment insurance benefits not deducted from wrongful dismissal
damages, benefits were consequence of contract of employment, similar to contributory
pension benefits, no deducted from wrongful dismissal damages (even though arose as a
consequence of same contract)
1.5 TIME OF ASSESSMENT
Classic statement of aim • Parke B in Robinson v Harman (1848): the rule of the common law
of contract damages is, that where a party sustains a loss by reason of a breach of contract,
he is, so far as money can do it, to be placed in the same situation with
respect to damages as if the contract had been performed
Asamera Oil Corp Ltd v Sea Oil & General Corp; Baud Corp, NV v Brook (1979) (SCR)
Baud (subsidiary of Asamera) v Brook (president of Asamera) (July 26 1960)
Dismissed and appeal dismissed
• Sought return of 125k Asamera shares from Brook, claimed damages of 150k representing
difference in market value of 125k shares between date upon which they were to have been
returned and date of writ
Asamera Oil v Sea Oil and Baud (July 27 1960)
23
• Dismissed and appeal dismissed

• Asamera sought rescission of each basic agreement between Baud and Brook, which would lead
to cancellation of treasury shares issued by Asamera to Baud and Sea Oil
Baud v Brook (December 6 1966)

• Asked for specific performance and return of 125k Asamera shares (usually can exercised where
damages would be inadequate to compensate P for loss)
• Claimed 1st action was premature because date for return of shares was extended until Dec 31
1960
• Claims return of shares and damages in sum of 400k
Breach of contract limitations

• The limitations on damages recoverable in contract were discussed in Victoria Laundry
(Windsor) Ltd. v. Newman Industries Ltd. , [1949] 2 KB 528 (CA), wherein Asquith LJ, at p.
539, went to great lengths to explain such limits.
• (1.) It is well settled that the governing purpose of damages is to put the party whose rights have
been violated in the same position, so far as money can do so, as if his rights had been observed: (
Sally Wertheim v. Chicoutimi Pulp Company , [1911] AC 301 (PC (Que.)). T his purpose, if
relentlessly pursued, would provide him with a complete indemnity for all loss de facto resulting
from a particular breach, however improbable, however unpredictable. T his, in contract at least,
is recognized as too harsh a rule. Hence,
• (2.) In cases of breach of contract the aggrieved party is only entitled to recover such part of the
loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result
from the breach.
• (3.) What was at that time reasonably so foreseeable depends on the knowledge then possessed
by the parties or, at all events, by the party who later commits the breach.
Held:
• Allow appeal and vary judgment below by awarding damages payable by Brook to Baud in
amount of 800k with costs to Baud throughout
• Damages are adequate remedy since Asamera shares are listed on public stock exchange
Issue at trial
• What damages is Baud entitled—did he have a duty to mitigate?
Reasoning
• In order to seek specific performance as opposed to damages, must have legitimate and
substantial interest (being able to justify one’s inaction and must recover losses)
o Onus is on P to prove legitimate interest
o If not legitimate and substantial must claim damages and have duty to mitigate
• Special circumstances which render P to not have duty to mitigate, especially where reasonable
person would not put themselves at risk
• Reasoning: non breaching party facing losses must take reasonable steps to minimize losses right
away—P does not need to put money at unreasonable risk to mitigate losses
o Duty to mitigate occurs from time of breach
o Damages measured by determining how much the purchaser would have to pay in market
at time of breach minus contract price
o P has right to recover all losses which are reasonably contemplated by parties as liable to
result from breach
o P has a duty to mitigate his losses—here mitigation would require that P purchase like
24
shares in the market on date of breach or within a period thereafter which is reasonable in
all circumstances
o Court did not award highest amount per share to P because it puts all responsibility on D
o It awarded price per share of medium price in 1967, factoring in brokerage and
commission fees and made allowance for upward market pressures
Dodd Properties v Canterbury City Council (1980) (CA)

Issue:
• Which two dates is the cost of repairs to be ascertained, for purposes of arriving to amount of D’s
liability for tort? P says date of hearing (1978 prices relevant), D says 1970 prices
• Because of inflation, difference is very large, 30k vs 11k
Previous court:
• Cantley J: judgment given on 1970 basis and interest, total payable by D to 1st and 2nd P 22k
o The Liesbosch: in the case of destruction of chattel, normal measure of damage is the
market value at the time of the loss
o Philips v Ward: assessed as at the date when damages occurs, which is usually the same
day as the cause of action arises (a fall thereafter in the value of money does not in law
affect the figure, for the simple reason that sterling is taken to be constant in value
§ No longer good law Miliangos v George Frank (Textiles) Ltd (1976)
o East Ham Corporation v Bernard Sunley & Sons (1966): damage may be concealed by
some fault of wrongdoer or not reasonably discoverable by victim until some time after it
has first appeared
o Repairs may require inspections and specifications and tenders and nature and
circumstance of damage may be such that it would be imprudent to begin work before
ensuring other damage won’t develop
o Reasonable for P not to begin repairs until 197 even though damage known in 1968
• Held: P appealed and D cross appealed
o Appeal allowed and cross appeal dismissed
o 30k substituted for 11k
• P asked for interest from earlier date/higher rate
• Accept that if they are right and 1978 price is accepted then will not claim interest
• D believes second P should only have gotten 60% (chance that loss would in fact occur was no
greater than chance of that order)
CA
• Lord Blackburn in Livingstone v Rawyards Coal Co (1880): where there’s a material difference
between cost of repair at date of wrongful act and cost of repair (when the repairs can first
reasonably be undertaken), it is the later time by reference to which the cost of repair is to be
taken in assessing damages
o Measure of damages is the sum of money which will put the party who has been injured
(or who has suffered) in the same position as he would have been if he had not sustained
the wrong for which he is now getting his compensation or reparation
o Halsbury’s Laws of England: put in same position as if tort had not been committed
against him
• Lord Wright in The Liesbosche, accepting Clippens Oil Co Ltd v Edinburgh and District Water
Trustees (1907): the wrongdoer must take his victim talem qualem, and if the position of the
latter is aggravated because he is without the means of mitigating it, so much the worse for the
wrongdoer
• Repairs should be assessed at date of action in 1978 but they may be assessed as at some later
25
date
o Reasonable to defer cost of repairs if it was going to increase their annual losses
o Damage and cost of repairs should be assessed at the earliest reasonable date, which does
not always mean the date damage occurred
o The appropriate damages are the cost of repairs at the time when it was reasonable to
begin repairs
o Reasonable to defer the cost of repairs if it was going to increase their annual losses
• Purpose of damages is meant to be compensatory and should put the injured party back into the
same position they would be in if the damage had not occurred
ft. general principle for assessment of damages is compensatory

• The innocent party is to be placed so far as money can do so, in the same position as if the
contract had been performed
• (applies here as well) Where the contract is one of sale, this principle normally leads to
assessment of damages as at the date of breach (principle embodied in s51 of Sale of Goods Act
1893) but it’s not absolute
o If to follow it would give rise to injustice, court has power to fix such other date as may
be appropriate in the circumstances
o Where breach of contract for sale has occurred, and innocent party reasonably continues
to try to have the contract completed, it would appear more logical and just rather than tie
him to the date of the original breach, to assess damages as at the date when the contract
is lost
§ Ogle v Earl Vane (1867): date was fixed by reference to the time when innocent
party (acting reasonably) went into the market
§ Hickman v Haynes (1875): date after last request of D to withhold delivery
§ Radford v De Froberville (1977): damages held measurable as at the date of
hearing rather than date of D’s breach, unless P ought reasonably to have
mitigated the breach at an earlier date
Perry v Sidney Phillips & Sons (1982) (CA)

Issue:
• P put the cottage on market without doing any repairs and sold for 43k
• How should damages be assessed
o Repairs didn’t happen so can’t be the appropriate measure, more appropriate is the
difference between price paid by P and value at the date of acquisition (the property’s
actual worth)
o Based on Philips v Ward (1956) and Ford v White & Co
Trial judge:
• Judge found D (surveyors) negligent in making their report, damages assessed according to cost
of repairing defects in 1981 when action was tried, P awarded damages for vexation (worry,
discomfort and distress)
• D appeals
o Appeal allowed for date of damage but not on question of vexation damages
CA
• Where there is contract to build a wall or do repairs on house and contractor does it badly,
employer entitled by way of damages, to recover reasonable cost of doing such work as is
reasonable to make good the breach
o Assessed at time when it would be reasonable for employer to do it
o Work may not have been done even up to date of trial
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o If cost is increased in meantime since breach, then increased cost is recoverable, but no
interest is to be allowed for intervening period Radford v De Froberville (1977), William
Cory & Son Ltd v Wingate Investments (1980)
o Same if wrongdoer damages neighbour’s house by negligence and neighbour put to
expense in repairing of it Dodd Properties Ltd v Canterbury City Council (1980)
• Where there is contract by prospective buyer with surveyer under which surveyor agrees to
survey a house and make report on it, and makes it negligently, and client buys house on faith of
report, damages are to be assessed at the time of breach, according to difference in price which
buyer would have given if report had been carefully made from that which he in fact gave owing
to negligence of surveyor
o Surveyor gives no warranty there are no defects other than those in his report, no question
of specific performance, contract was performed even though negligently
o Buyer not entitled to remedy defects and charge cost on surveyor, only entitled to
damages for breach of contract or negligence Philips v Ward (1956) and Simple Simon
Catering Ltd v Binstock Miller & Co (1973)
Held:
• D made negligent report, P acted on report when he bought the house
• Take difference between what a man would pay for the house in condition in which it was
reported to be and what he would pay if the report had been properly made showing defects (date
of acquisition)
o Difference in value taken at date of breach in 1976, interest 9/10/11% from 1976 until
date when damages paid
• The Liesbosch (1933): loss due to impecuniosity of P not recoverable? But not general
application
o Not applicable here, P entitled to damages fro vexation, distress and worry which has
been caused by reason of negligence, modest compensation Jarvis v Swans Tours Ltd
(1973)
• Satisfied that he has not acted unreasonably and has not failed to mitigate his damage and that the
consequences which have flowed from D’s breach of contract/negligence were foreseeable and
direct and have not been diminished by failure of P to mitigate his loss
Courts of Justice Act (RSO 1990)

Damages in lieu of • Court that has jurisdiction to grant injunction or order specific
injunction or specific performance may award damages in addition to (or substitution for) the
performance injunction or specific performance
• Fritz v Hobson (1880): damages awarded under 1858 act in substitution
for injunction were not confined to damages down to issue of the writ, as
at law, but included damages down to the hearing
Wroth v Tyler (1974)

Issue:
• Is P entitled to specific performance of the contract with vacant possession? if yes, form of order
is sought that will require D to make application to court for order against his wife terminating
her rights of occupation under Matrimonial homes act 1967
o No specific performance granted
o Damages awarded not limited to 1.5k that is appropriate to the date of the breach, but
extended to 5.5k that is appropriate at the present day, when they are being awarded in
substitution for specific performance
• Is P, as an alternative, entitled to specific performance of the contract subject to the rights of
27
occupation of D’s wife, with damages?

• If P entitled to an order for specific performance under either of those two heads, is their right to
it barred by delay?
• If P have no right to specific performance, it is common ground that they are entitled to damages.
Which figure should damages for loss of bargain be assessed?
o Bain v Fothergill (1874): D need only release deposit to P and pay their costs of
investigating title, not liable to them for more than nominal damages for loss of bargain.
Applicable?
§ Case about equitable title to the lease that he contracted to sell, failed to obtain
lessor’s consent to assignment that would have enabled him to convey what he
contracted to sell. Rule is justified by difficulties in shewing a good title to real
property, ought not to be extended to cases in which the reasons on which it is
based do not apply. Should be defect in title. Founded on the difficulty that a
vendor often finds in making a title to real estate, not from any default on his
part, but from ignorance of strict legal state of title.
§ Contrasted with Day v Singleton (1899): lessor’s consent was requisite for
assignment of lease which had been sold, vendor did not really try to obtain
consent or induced lessors to withhold it, CA held damages for loss of bargain
were recoverable because vendor failed in his duty to obtain consent
• Normal rule that general damages to which purchaser entitled for breach of contract for sale of
land are measured by difference between contract price and market price of land at date of
breach/date fixed for completion
o Robinson v Harman (1848) where a party sustains a loss by reason of a breach of
contract, he is so far as money can do it, to be placed in the same situation with respect to
damages, as if the contract had been performed
Facts
• D exchanged contracts with claimant and agreed to sell matrimonial home to him, wife was
against it, failed to make husband aware as to how she was feeling, secretly put in a notice of her
rights of occupation under Matrimonial Homes Act 1967, claimants attempted to enforce remedy
of specific performance
• Date of repudiatory breach value of house was 7.5k, date of order the value of house was 11.5k
Held:
• 5.5k damages awarded in lieu of specific performance
o P was unable to raise another 1.5k to purchase equivalent house forthwith and mitigate
loss
o How would 1.5k in damages place them in same situation?
• Refused on two grounds
o Undesirability of making the husband litigate against his wife in order to secure specific
performance
o Probability that the family would split up if specific performance was granted, as the
wife’s right of occupation would allow eviction of the husband and daughter from family
home
• Order for specific performance may be refused if such an order would result in genuine hardship
Patel v Ali (1984)
o Severe hardship for wife and 3 children and cancer despite being unrelated to the contract
• Second rule of Hadley v Baxendale: P invoking this need show only contemplation of
circumstances which embrace the head or type of damage in question, and need not demonstrate a
contemplation of the quantum of damages under that head
o Great Lakes Steamship Co v Maple Leaf Milling Co (1924): contemplation only
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included delay in lightering might cause vessel to rest on bottom—no one contemplated
anchor but damages recoverable included those stemming from anchor
Reasoning:
• Presence of class F land charge registered against a property was breach of condition requiring
vacant possession, solicitor failing to complete a registration becomes liable to his client in
negligence
• Equity follows the law, and will in general apply the common law rules for assessment of
damages, but subject to overriding statutory requirement that damages shall be in substitution for
the injunction or specific performance
• Court has jurisdiction to award such damages as well put P into as good a position as if the
contract had been performed
o Even if to do so means awarding damages assessed by reference to a period subsequent to
the date of the breach
o Consonant with the nature of specific performance, which is a continuing remedy and
designed to secure that the purchaser receives in fact what is his in equity as soon as the
contract is made
Metropolitan Trust Co of Canada v Pressure Concrete Services Ltd (1973)

Issue at Trial
• Specific performance of an agreement of purchase and sale between Montreal Trust Comp as
trustee, purchaser and Pressure Concrete Services Limited, vendor, agreement dated July 22 1970
OR damages for breach of the agreement
• Did D (vendor) have an obligation to obtain the consent?
o Yes
• Is failure for D to perform implied obligation (and get consent) the same as breach of obligation
to complete the transaction?
o Since IAC consent would be granted, damages for breach of obligation is assessed on
same basis as if D breached obligation to complete transaction
Facts
• Agreement by D to sell land to P was conditional on obtaining consent of 2nd mortgagee
• Agreement provided that the vendor “shall deliver…the consent” of the mortgagee
• Consent was not secured but P purported to waive this consent and require closing
Reasoning:
• Holland J: the vendor was in breach of its obligation…to deliver the consent of the 2nd mortgagee
to the surrender of the existing lease and was in breach of an implied obligation to use its best
efforts to obtain such consent. If vendor had used its best efforts the consent would have been
forthcoming and assessed damage for the breach of the obligation to obtain consent on same basis
as if he had breached the main agreement
• Foster Prof: vendor did not take any steps to secure the mortgagee but the purchaser wanted to
waive this requirement. Court recognized the obligation that vendor was to use his best efforts to
secure this mortgage. Court cannot award specific performance as 2nd mortgagee had to give
approval. The court found that mortgagee would have given approval if approached, so damages
awarded to P for breach of main agreement by D
• Implied obligation that party will use its best efforts to obtain and company with a condition
precedent
Held:
• P entitled as part of damages to any increase in value of property from Aug 31 1970 (repudiation
of contract by D) to this date of judgment
• Modern doctrine in Fry: as the consent of a 3rd party is a thing that may be impossible to procure,
29
a D who has entered into a contract to the performance of which such consent is necessary, will
not, in case such consent cannot be procured, be decreed (ordered) to obtain it, and thus perform
an impossibility
o Specific performance should therefore be refused, but entitled to damages for breach of
obligations undertaken by vendor
• Wroth v Tyler: Megarry J applied common law principle that if party sustains loss by breach of
contract then he is so far as money can do it, be placed in same situation in damages as if the
contract had been performed, damages as the difference in value from date of breach to the date
of judgment
Johnson v Agnew (1980) (HL)

Facts
• An owner of land contracts to sell it to a purchaser; the purchaser fails to complete the contract;
the vendor goes to the court and obtains an order that the contract be specifically performed; the
purchaser still does not complete; the vendor goes back to the court and asks for the order for
specific performance to be dissolved, for the contract to be terminated or “rescinded,” and for an
order for damages.
• Nov 1974 obtained specific performance, but order wasn’t carried out, July 1975 proceeds
realized by mortgages inadequate to discharge mortgages
• CA allowed appeal, court held order for specific performance discharged and damages awarded
instead
o D appealed in HL
Reasoning:
• Vendors acted reasonably in pursuing specific performance, date which remedy became aborted
should be fixed as date on which damages should be assessed (in substitution for specific
performance), April 3 1975 the date on which mortgagees contracted to sell portion of property,
same date for purpose of limiting respondents’ right to interest on damages
• Initial breach was continuing and still capable of being remedied by compliance with the order
for specific performance. Seller entitled (after buyer failed to comply with order) to apply to court
to put an end to contract and claim damages for breach
o P who is refused specific performance or an injunction is left to his damages in contract
or tort. Measure for such damages the same as what it would be at common law
• Lord Wilberforce: argument based on irrevocable election by appellant’s counsel in present
appeal is unsound
o Election is a doctrine based on simply considerations of common sense and equity
o A party who has put an end to a contract by accepting the other party’s repudiation can’t
afterwards seek specific performance—contract is gone and dead is dead
o Party who chose specific performance may (if specific performance fails) say that the
contract should be regarded as terminated
• Vendor who gets specific performance is electing for a course which may OR MAY NOT lead to
implementation of the contract
o Simply a continuance of the contract under control of court which control involves the
power to also terminate it
• Where breach of contract for sale has occurred, and innocent party continues to try to have
contract completed, may be more logical to assess damages as at the date when the contract is lost
(rather than tie him to date of original breach) Ogle v Earl Vane (1867) date fixed to when
innocent party went into the market Radford v de Froberville (1977) damages held measurable as
at the date of hearing rather than date of D’s breach, unless P ought reasonably to have mitigated
the breach at earlier date
30
o Date of breach rule not absolute if following it would give rise to injustice, court has
power to fix such other date as appropriate
Steps for contract for sale of land

• After time has been essence of the contract, if purchaser fails to complete, vendor can either
o Treat purchaser as having repudiated contract, accept repudiation and proceed to claim
damages for breach of contract or
o Seek from court an order for specific performance with damages for any loss arising from
delay in performance
o Has to elect which remedy to pursue in trial
• If vendor treats purchaser as having repudiated contract and accepts it, he cannot therefore seek
specific performance—both parties are discharged from further performance
o Rescission different than rescission ab initio: when fraud or mistake makes it so contract
never came into existence
o Heyman v Darwins Ltd (1942): injured party is absolved from future performance of his
obligations under the contract
• If order for specific performance is sought and made, contract remains in effect and not merged in
judgment for specific performance
o Sir Wilfred Greene MR in Austins of East Ham Ltd v Macey (1941): contract is still
there, vendor to obtain the normal remedy of party to a contract that other party
repudiated. He can’t treat it as repudiated except by order of court and the effect of the
order is that the contract is brought to an end. Instead of enforcing specific performance,
elects to ask court to put end to contract
• If specific performance not complied with by purchaser, vendor may either apply to court for
enforcement or apply to court to dissolve order and ask court to put end to contract Austins of
East Ham Ltd v Macey
• Dixon J in McDonald v Dennys Lascelles Ltd (1933): But when a contract, which is not void or
voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because
the other has not observed an essential condition or has committed a breach going to its root, the
contract is determined so far as it is executory only and the party in default is liable for damages
for its breach.
o Holland v Wiltshire (1954): the proper conclusion is that vendor proceeded not under the
contractual provision but on the footing that the purchasers had discharged him from the
obligations of the contract. It follows that he is entitled to sue for unliquidated damages.
Some suggestion was made for the defendants appellants that once the contract was
treated by the vendor as discharged he could not recover for breach.
§ This notion, however, is based on a confusion with rescission for some
invalidating cause. It is quite inconsistent with principle and has long since been
dissipated. It is enough to refer to the note upon the subject in Mr. Voumard’s
Sale of Land in Victoria (1939)
o Mckenny v Richey (1950): But if D continues unwilling to perform her part of the
contract, then, if for any reason the contract cannot be specifically enforced, Pvmay, in
my opinion, turn round and say: “Very well, I cannot have specific performance; I will
now ask for my alternative remedy of damages at common law.”
§ equally applicable both before and after decree whether the reason for the refusal
or the failure of the decree of specific performance is due to inability of D to give
any title to the property sold, or to the conduct of P which makes it inequitable
for the contract to be specifically enforced. … It is an appropriate case for a court
of equity to say: “As a matter of discretion, this contract should not now be
enforced specifically, but, in lieu of the decree for specific performance, the court
will award the P damages as have been suffered by her in consequence of D’s
31
breach. That is the best justice that can be done in this case.”
§ Principle for assessment of damages is compensatory
§ General principle: innocent party placed in same position as if contract had been
performed—when contract is of sale, normally leads to assessment of damages as
at date of breach but it’s flexible
Semelhago v Paramadevan (1996) (SCR)

Facts
• Paramadevan agreed to buy house for 205k from Semelhago but S backed out, by the time of trial
the house was worth 325k
Issue at Trial
• What should Paramadevan get?
• Appeal dismissed
Ratio
• Remedy of specific performance (traditionally available for breach of contracts involving sale of
land) should only be awarded when land in question is sufficiently unique
Finding
• Assessment of damages is date of trial found by trial judge, date upon which specific performance
is ordered, legal fees and appraisal fees of $673
• Paramadevan seeked damages instead of specific performance, but different considerations must
apply where things are unique
o Property classically always regarded as unique
o Where thing is unique, not appropriate to assess damages from date of breach but
assessed based on date of judgment to account for potential change in value of asset
• Paramadevan got difference of house’s value increase (120k)
o Same conclusion won’t apply if property isn’t unique
o They may not get specific performance if land isn’t unique and damages will be assessed
as date of breach
• Party entitled to specific performance is entitled to elect damages in lieu thereof, upheld by Leeds
Industrial Co operative Society Ltd v Slack (1924) HL
When vendor backs out, purchaser has two options
1. Accept repudiation and treat agreement as being at an end
2. Decline repudiation and insist on performance
o Specific performance
o Vendor can avoid a breach of (up until date of judgment) performance is tendered
o Therefore better to assess damages for unique objects at date of judgment
1.6 MITIGATION, EFFICIENT BREACH AND THE MEASURE OF DAMAGES
Richard A Posner
Economic Analysis of Law
Circumstances • A party may be tempted to breach contract because his profit from breach
would exceed his expected profit from completion of the contract (and if
damages are limited to loss of expected profit)
Precedent • Groves v John Wunder Co: D agreed to level land owned by P, failed to
carry out agreement, court awarded P 60k despite that after the leveling the
land would only have been raised 12k, he didn’t use $ for leveling land
o Where breach is willful, damages equal cost of performing contract,
not difference between value of property at time of contracting and
value of property would have had if D fully performed
32
Why the lost- • Assure only breaches made are those that promote efficiency
profit method? • On average, lost-profit method will give a better approximation than the
reliance measure to the actual social costs of contract breach
• In long run total revenues of sellers are equal to total costs
Example • Tenant defaults and landlord rents property to another tenant at rental slightly
lower, should landlord deduct rental of substitute tenant?
o Yes because the rental is enabled by breach of contract of first tenant
(can’t add room)
• Manufacturer of widgets receives order from X but X refuses to accept
delivery, manufacturer resells widgets to Y at price slightly lower than X,
should he be required to deduct profits he received on substitute sale
o No because he could have supplied Y with widgets regardless,
breach didn’t enable him
Radford v DeFroberville (1977)

Facts
• D (purchaser) undertook to build house on plot and build wall to specification on plot to separate
it from P’s land
• P obtained judgment against D for damages for breach of contract for failure to erect wall, issue
arose as to measure of damages
• P wanted to build own wall and charge D, but D said that appropriate measure is consequent
diminution in value of P’s property (which was 0)
Held: P gets cost of performance

Reasoning by Oliver J
• The principle is to put π (as far as money can) in the same pos’n he would have been in had the K
been fulfilled. Note: this is not necessarily the same as putting π in as good a financial position.
• Distinguishes Wigsell: in this case, there was convincing evidence that π did have a real interest
in having a fence.
• To assess whether a π wants to complete the work:
o 1. Does π have genuine/serious intention of doing the work?
o 2. Is carrying out the work reasonable for the π to do?
• In this case:
o 1. Court found the requisite ‘fixity of intention’. Plus π gave undertaking anyway. Court
accepted that π wanted to do work and found that the appropriate measure of damages
was the cost of completion.
o 2. Reasonable to carry out work?
§ This is really a question of mitigation. D argued prefab fence would be just as
effective and less expensive.
§ But, court did not accept this argument:
o Prefab fence ≠ permanent and π would have to maintain it
o Prefab fence ≠ what the π asked for.
o Although D argued future owner might not want a fence there, so
they could build another house in a corner of the lot, court said there
was no indication of that, and in fact thought it might not be possible
to get planning permission anyway.
§ “A plaintiff may be willing to accept a less expensive method of performance,
but I see nothing unreasonable in his wishing to adhere to the contract
specification.”
33
o Note: Court asked a third question: Does it matter that π is not personally living on the
land but wants to do the work for benefit of his tenants?
§ Apparently not.
Finding
• Blackburn J in Lock v Furze (1866): person injured by breach to be placed as far as money can
do it in the same position as he would have been if the contract had been fulfilled
• OLD APPROACH: Wigsell v School for Indigent Blind (1882):
o Facts: π partitioned property and sold half to build a school; part of the deal was that
buyer would build a fence between the partitions. School never built, no more need for
fence, and it never got built. No evidence that D land was worth any more with or
without the fence, but the cost of building was several thousand pounds.
o Held: court awarded lost value.
o Note: Posner would say that building the fence was an inefficient use of the resources.
• Contrasts with Megarry VC that even if not suing for specific performance if he wants $ equal to
wall he should get it
o 1. The principle is to compensate π by putting him as much as possible in same pos’n as
had he not suffered the wrong. It’s not about making the D pay what he has saved, but
about compensating the π.
o 2. If π has suffered monetary loss, then that is obviously recoverable. If D has saved $ by
not doing what he K’d to do, that is irrelevant to the calculation of damages, as it was not
a loss by the π.
o 3. If π can establish that his loss includes the cost of doing work D failed to do (in breach
of K), then that sum is recoverable. Onus is on π to establish what his loss was.
o 4. π has a number of ways to establish that loss includes cost of work:
§ Work was done before action brought.
§ OR, work will/must be done. This Can be indicated through:
• An action for specific performance,
• Or by the fact that π is obligated to a 3rd party to complete the work,
• Or perhaps by the existence of a statutory obligation;
• Could also be indicated simply by π proving he wants/intends to complete
the work.
Groves v John Wunder Co (1939)

Facts
• D entered into contract with P to remove sand from P’s premises and leave it at uniform grade
• D paid P 105k but D intentionally failed to leave property uniform grade, took rich and best of
gravel out
• Cost of bringing land into compliance would be 60k, but if D had performed and left land
uniform grade, it would have only been worth 12k more
Issue at Trial
• Is P entitled to damages equal to reasonable cost to him of doing work called for by contract
rather than difference between value of land at time of contract and value the land would have,
had D fully performed?
Held:
• Where breach is willful, damages equal the cost of performing contract, not difference between
value of property at the time of contracting and the value the property would have had if D fully
performed
34
• In reckoning damages for breach of building or construction contract, law aims to give
disappointed promisee, so far as money will do it, what he was promised
• Damages awarded for cost of performance, even though this was grossly disproportionate to the
value of land
Reasoning:
• While in certain cases there is measure of inequity in forcing breaching party to tear down nearly
completed structure to remedy a breach Jacobs & Youngs v Kent (1921)
o Homebuilder failed to install only reading pipe and CA refused to impose entire pipe to
be replaced, unnecessary waste
• However, damage awarded must equal cost of remedying the defect, otherwise breaching party
could strategically breach a contract to save money without having to pay out significant damages
• D not permitted to escape obligations and is liable to P for cost of leaving property at uniform
grade (60k)
Dissent
Willfulness of breach should not affect measure of damages, calculation of damages should be diminished
value of property resulting from breach unless evidence shows that completed product was to satisfy
personal tastes of P
Miles v Marshall (1975)

Fact
• Damages for tenant failure to give land back in good repair. Some repairs not necessary for
enjoyment of property
Issue at Trial
• The proper method of assessing damages (whether full cost of repairs should be given even if
some unnecessary for enjoyment)
Held: P’s claims not accepted, held for D, awarded diminution in market value
Reasoning
• Assess damages at diminution of the value of property by reason of non-repair (not exceeding the
cost of doing repairs)
• Rule is that when there is a lease with covenant to leave premises in repair at the end of term, and
covenant broken, lessee must pay what lessor proves to be reasonable and proper amount for
putting premises into state of repair in which they ought to have been left
• Not necessary to say that it’s absolute rule but likely so
o Avoids subtle refinements and avoids extensive and costly inquiries which they would
involve
o Damages limited to actual loss sustained by injured party Montreal Trust Co v Hercules
Sales Ltd
• Cited Joyner v. Weeks [1891]: two ways to measure cost of damages for repair
§ (1) cost of doing repair
§ (2) cost of diminution in market value
• Court says that generally, the rule is #2: we look at diminution of market value.
• Basically, the rule in Radford exists, but we’re going back to Wigsell.
• Comment: this was decided after Sunshine, but that was an SCC case so maybe we should trust
that.
35
Dewees v Morrow (1932) (CA)

Facts
• Put car back in same condition as before the injury, but it will cost more than the car was worth
• If car was destroyed the measure of damages would be the fair market value of the car at the time
Reasoning
• If the value of repair far exceeds fair market value and no sentimental value, then the difference
between the value of whole and damaged goods awarded
Finding
• $900 for market, repair would be $1458, P can replace car by another equally as good for $900,
$100 is worth as scrap, $800 for P in damages
• Not applicable in this case to go to the market and buy similar article and claim difference in the
cost, impossible to find article of this kind and condition in market, such cars can be bought at the
market for much lower than cost of repair
• Lodge Holes Colliery Co v Wednesbury Corp (1908)
o HL held cost was the measure of damages
o P entitled to raise road to old level and charge D with cost, but road may not be so
commodious to public if made up on lower level at smaller cost, even those who have
been wronged must act reasonably
CR Taylor (Wholesale) Ltd v Hepworths Ltd (1977) (QB)

Facts
• Oct 26 1970 fire got out of control and did substantial damage to various premises of P
• Oct 8 1976 liability admitted by D
Issue at trial
• What the correct measure of damages in law to which P is entitled in respect of the very
substantial damage that fire caused to billiard hall
• P contends that proper measure of damages for loss is theoretical cost of reinstatement (32k)
• D contends that P had no intention of reinstating, proper measure of damage not estimate
theoretical cost but the diminution in market value of those premises caused by fire
Reasoning:
• Awarding notional cost of reinstatement in this case would be unreasonable since it would put P
in a far better financial position than they would have been before the fire occurred
• May J: in deciding between diminution in value and cost of reinstatement the appropriate test was
the reasonableness of P’s desire to reinstate property
• Damages to be awarded are to be reasonable as between P and D
Basic principles
• Whenever damages are awarded against man who has broken contract or tortfeasor, damages
should (as far as money can), put P in same position as he would have had tort or breach not
occurred
• Damages to be awarded are to be reasonable, reasonable that is between P and D
• Jones v Gooday (1841)
• Moss v Christchurch Rural District Council (1925)
o P could reasonably be put back in same position by award of diminution in value of
property caused by far which was subject matter of the case
Held:
• P’s premises was potential redevelopment site, more valuable before fire than after, realistic view
36
is that value was 42.5k before fire and 40k after, 3k to do immediate works and safety
• Prima facie of damages, the amount of the diminution of the value of land Jones v Gooday (1841)
cost of replacement or repair may be inappropriate measure because it is out of all proportion to
the injury of P
o The test is the reasonableness of P’s desire to reinstate the property, judged in part by
advantages of reinstatement in relation to the extra cost to D in having to pay damages for
reinstatement rather than damages calculated by diminution in value of land
• Salmond on the law of torts: when trespass has caused physical damage to the land, the measure
is the loss thereby caused to P, which in all ordinary cases is measured by resulting diminution in
the value of property.
o Measure of damages is not the cost of reinstatement…a cost which may greatly exceed
the actual diminution in the value of the land. If an old building is pulled down the P
cannot recover cost of putting up a new one, but merely the value of the old, unless his
house was unique
• Other option is measure of damages held to be actual cost of reinstating land and buildings,
whether or not credit is given for what is described betterment
o Hollebone v Midhurst and Fernhurst Builders Ltd (1968)
§ P was owner of damaged premises and in occupation, house was unique, in order
to repair premises and allow his family to occupy home, 19k (repairwould have
been 15k). Referred to Admiralty Commissioners v SS Susquehanna (1926) no
rigid rule or rules that apply in all cases can be laid down, but one must consider
all relevant circumstances
o Harbutt’s Ltd v Wayne Tank and Pump Co Lt (1970)
§ Only diminution in value caused by fire would not have been reasonable, it was
factory premises, in production and reasonable that they should get back into
production as soon as possible
§ Didn’t try to obtain anything better or more valuable than before fire, judge
found reasonable to award rebuilding
Clark v Macourt (2013) (HCA)

Facts
• Dr Clark purchased business and assets of fertility (included sperm) but vendor gave incomplete
records that didn’t allow sperm to be used
• Cost to replace sperm 1.2mill but Dr Clark passed on cost of sperm to clients (professional and
ethical standards prevented her from profiting from sale of sperm so she couldn’t)
Ratio
• Dr succeeded because standard measure of damages for breach of warranty is difference between
value of goods (0) and value had warranty been answered
• Rejected argument that loss had been mitigated
514953 B.C. Ltd. (Gold Key Construction) v. Leung (2007), 64 B.C.L.R. (4th) 76, 2007
Held: appeal dismissed, Gold Key entitled to 58k
Reasoning: judge permitted to draw inference that appellant had no present intention of
remedying the alleged deficiencies, appropriate for judge to determine that necessary test to
adopt was diminution in value and, no such diminution being proved, no award of damages
could properly be made under that head
37
McGarry v Richards, Ackroyd & Gall Ltd [1954]:

• that the measure of damages for breach by D of contract to perform work on P’s land is
actual pecuniary loss sustained by P as a result of such breach (difference between what
would have been value of premise had work constructed for been done and value with it
unperformed) cases may arise where damages for default should be measured by cost
making good the default.
• This will be so if cost of performing work or making good defect is less than diminution
in value of property caused by default.
o In such cases it is P’s duty to take reasonable steps to mitigate his damage by
doing what is required. Cost of reinstatement not proper measure of damages
where owner does not intent to rectify defective work, or where he would be
acting unreasonably in doing so
Westinghouse Electric and Manufacturing Co v Underground Electric Railways Co:
• in assessing damages for physical injury to land or buildings, no doubt a useful prima
facie measure of the plaintiff's loss will be the amount by which the injury has diminished
the value of the land as a commodity
o but that is by no means universal and the question of the appropriate measure
cannot be divorced from the plaintiff's personal position and obligations, both
legal and moral, or from what the plaintiff ought reasonably to do by way of
mitigation.
o If, for instance, the building is his family dwelling-house (as in Hollebone v.
Midhurst & Fernhurst Builders) [1968] 1 Lloyd's Rep. 38, or the factory where he
carries on business (as in Harbutt's Plasticine Ltd. v. Wayne Tank & Pump Co.
Ltd.) [1969] 1 Q.B. 447, there may be grounds for adopting as the appropriate
measure the cost of reconstruction.
o As it was put by Denning J. in Duke of Westminster v. Swinton: The real
question in each case is: What damage has the plaintiff really suffered from the
breach?',
§ In building cases, the pecuniary loss is almost always measured in one of
two ways;
• either the difference in value of the work done or
• the cost of reinstatement.
• Where the cost of reinstatement is less than the difference in value,
the measure of damages will invariably be the cost of
reinstatement. By claiming the difference in value the plaintiff
would be failing to take reasonable steps to mitigate his loss. In
many ordinary cases, too, where reinstatement presents no special
problem, the cost of reinstatement will be the obvious measure of
damages, even where there is little or no difference in value, or
where the difference in value is hard to assess.
• This is why it is often said that the cost of reinstatement is the
ordinary measure of damages for defective performance under a
building contract.
Ruxley Electronics and Constructive v Forsyth: pool was perfectly safe and no evidence that it
decreased value of pool, unreasonable for householding to take course of action, damages for
38
loss of amenity vs demolition, merely lack of depth, substantial gratuitous benefit.
1.7 PUNITIVE DAMAGES
Introduction • Exemplary damages intended to punish D and seek to effect retribution,

concerned to deter D from repeating the outrageously wrongful conduct and
others from acting similarly
How? • Categories test (conditions) from Rookes v Barnard 1964
o Where there has been oppressive or arbitrary conduct by D
o D’s conduct has been calculated by him to make a profit for himself
which may exceed compensation payable to P
• Cause of action test AB v South West Water Services Ltd 1993
o Damages not available in causes of action where such damages had
not been awarded prior to case of Rookes v Barnard, including public
nuisance and negligence
• Court still has discretion to refuse award even though criteria have been met
Cassell & Co Ltd v Broome (1972) (HL Eng)

Facts
• P awarded damages for defamation 40k (25k exemplary), D pleaded justification
Held:
• Award of exemplary damages remains discretionary and court has more control over punitive
damages than compensatory
• Appeal dismissed
Reasoning:
• Tort wrongdoers would be the one who would benefit in event of outrageous tort committed, if
there were to be profit involved, then better that it goes to the P who is prepared to be financially
exposed and file a case
o If sum awarded by way of compensation inadequate to punish D then jury might mark
disapproval of conduct and award larger sum
• Damages for tort are fixed at sum that will compensate P for injury suffered, where injury is
material it is possible to assess damages with precision, but not so when P has been caused mental
distress or reputation attacked.
o Impossible to ascertain how far other people’s minds have been affected, but impossible
to equate damage to sum of money
• Ley v Hamilton: incorrect view of assessment of damages for defamation. they did not arrive by
determining the “real” damage and adding a sum by way of vindictive or punitive damages. It is
precisely because real damage cannot be ascertained and established that the damages are at
large.
• It is impossible to track the scandal, to weigh at all closely compensation which will recompense
a man for insult offered or false accusation
Whiten v Pilot Insurance Co (2002) (SCR)

Facts
• Jury outraged by tactics by Pilot Insurance Co following refusal to pay appellant’s claim under
fire insurance policy (345k)
o Allegation that family torched own home discredited
o Pursued hostile and confrontational policy to force family to settle
39
• Conduct was planned and deliberate and continued for two years
• Jury added award of punitive damages of 1 mill, providing appellant with windfall that added
something less than treble damages to her actual out of pocket costs
• Respondent argues punitive damages is outrageous
o D wanted P to spend 320k to recover 345k
• Majority of CA allowed appeal to reduce punitive damage to 100k
Issue in Trial
• Whether 1 mill in punitive damages is appropriate
1. Punitive damages for breach of contract
2. Was jury charge adequate? Argues judge didn’t give adequate guidance to assess punitive
damages
3. Reviewing jury award: were punitive damages rational response to respondent’s misconduct?
Issues
1. Even though Vorvis says that it requires a tort, in this contractual duty case it constitutes an actionable
wrong within the Vorvis rule that does not require an independent tort
• Central Trust Co v Rafuse (1986): common law duty of self care sufficient to find an action in
tort can arise within a contractual relationship
2. Jurors should not be left to guess what their role and function is. Punitive damages are exception rather
than rule, imposed only if high-handed malicious and arbitrary misconduct, assessed in amount
reasonably proportionate to factors such as harm caused and profit gained by d, where compensatory
damages are insufficient to accomplish objectives.
• Hill: punitive damages not at large and unless they can approached rationally they ought not to be
awarded at all
3. Hill: based upon court’s estimation as to where it serves rational purpose, D so outrageous that punitive
damages rationally required to act as deterrence? This relates to whether they should be applied at all and
quantum
• Applicable here because of the bad faith of Pilot, exceptional case that justified exceptional
remedy
• P’s emotional distress would have to be aggravated damages and not punitive damages (to avoid
being double compensated)
Held:
• Award of 1 mill in punitive damages is at upper end of sustainable award on these facts but not
beyond it
• Appeal allowed and restore jury award of 1 mill punitive damages
• Cross appeal dismissed
Reasoning:
• Punitive damages are awarded against D in exceptional cases for “malicious, oppressive and high
handed” misconduct that “offends the court’s sense of decency” Hill v Church of Scientology of
Toronto (1995) (SCR)
o Test limits award to misconduct that represents marked departure from ordinary
standards of decent behavior
o Objective to punish D rather than compensate P, punitive damages straddle frontier
between civil law (compensation) and criminal law (punishment)
o Serves a need that is not met by civil law or criminal law
o 800k punitive damages for intentional torts
• Overcompensation given in exchange for appellant’s rational expenditure of legal costs of 320k
40
• Wilkes v Wood (1763) a jury have it in their power to give damages for more than injury
received. Damages designed not only as satisfaction to injured person but likewise as punishment
to the guilty, to deter from such proceeding for the future, and as proof of detestation of jury to
the action itself
o Three objectives is punishment, deterrence and denunciation (proof of the detestation)
• 1. Vorvis v Insurance Corp of BC (1989): control mechanism lies not in restricting category of
case but in rationally determining circumstances that warrant addition of punishment to
compensation in civil action. Punitive damages recoverable in cases where D’s conduct gives rise
to claim that is an actionable wrong
o Robitaille v Vancouver Hockey Club Ltd: BC CA awarded punitive damages in
negligence case on principle that they ought to be available whenever the conduct of D
was such as to merit condemnation by the court
• 2. General objectives of punitive damages are punishment, deterrence and denunciation (the
means by which jury or judge expresses its outrage in egregious conduct)
• 3. Primary vehicle of punishment is criminal law and punitive damages should be resorted to only
in exceptional cases and with restraint
• 4. All jurisdictions seek to promote rationality and court should relate all facts of particular case
to underlying purposes of punitive damages (and ask whether higher award would be irrational),
“if, but only if” test from Rookes and Hill
o “if but only if” test is that punitive damages should be awarded but if but only if
compensatory award is insufficient
• 5. Rational to use punitive damages where compensatory damages would amount to nothing more
than licence to earn greater profits through outrageous disregard of legal and equitable rights of
others
• 6. Punitive damages are not at large (Hill) appellate court entitled to intervene if award exceeds
outer boundaries of rational and measured response to facts of case
Controversy of punitive damages

• That is should belong to one jurisprudential field or another, criminal is better for conveying
social disapproval Broome v Cassell & Co (1972)
• Quantum of damages also an issue—because punishment tailored to fit not only crime but the
financial circumstances of D (to ensure that it’s a big enough sting), D complains that they are
being punished for who they are rather than what they have done
o BMW of North America, Inc v Gore (1996) 4 mill in punitive damages against BMW for
failure to disclose a minor paint job to fix a cosmetic blemish on a new vehicle
o Liebeck v McDonald’s Restaurants (1995) 160k in compensatory damages and 2.7 mill
for punitive damages for burns resulting from a spilled cup of coffee, notwithstanding
that she tried to open the cup while balancing it on her lap in passenger seat of a car
Performance Industries Ltd v Sylvan Lake Golf & Tennis Club Ltd (2002) (SCR)
Finding
• Court decided concurrently with Whiten case, upheld setting aside of award of 200k punitive
damages for fraud, on ground that award would serve no rational purpose
Binnie J: fraud is generally reprehensible, but only in exceptional cases does it attract punitive damages
1.8 COMPENSATION FOR LOSS OF MONEY
Damages and Inflation
41
Leitch Transport Ltd v Neonex International Ltd (1979) (CA)

Issue at Trial
1. Whether award to compensate for inflation is justified in law
Issue finding
1. Genessee Holdings Ltd et al v West York Motors Canada (Ltd) (1978): P had new muffler installed on
truck by D, truck took fire and lost with cargo, P paid for repairs to truck and paid customers whose
goods were lost in fire. He sued D, damages assessed by master. Master made reference where P asked to
be paid in dollars which included sum for inflation, which occurred since he paid out these monies,
moneys expended in 1970, Master made allowance for inflation, “dollar of loss” of 1971 dollar
compensated in that dollar, 1.44 in today’s standard.
• Court unanimously of view that judgment couldn’t stand, principle never applied to damages for
moneys expended or advanced in the past
• Court found Master’s assessment in awarding less than half of actual decline in value of dollar
was arbitrary
Trial judge finding

• 1.149 mill to compensate fact that damages under first five heads of damage assessed as of date
of breach, but judgment was not being given under 1978
• Inflation eroded value of Canadian dollar and giving 1978 dollars would not compensate for
actual loss
• Awarded inflationary allowance for 4 years at 3.5% per annum, not compounded, upon sum total
of five heads of damages
Appeal and cross appeal

• Mr Carthy took position that nothing should be allowed
• Mr Thomson cross appeal and submitted allowance should have been calculated at rate of 7.5%
for part of 7 year period since breach (4% per annum for 4 years and 7.5% per annum for further
3 years)
• P tried to support factually second rule in Hadley v Baxendale, P sought to prove that to
reasonable businessmen it would have appeared not unlikely at date of making of contract that if
either party failed to carry it out, effect of inflation would erode dollar amount of damages that
might be occasioned to innocent party
o 1970 reasonably foreseeable to businessman that 4% rate of inflation would continue into
next number of reasonable foreseeable years but NOT 7.5% which in fact occurred
Held:
• Award of trial judge in this regard must be set aside (reversed) and no allowance for inflation
upon damages to be awarded to P
• No case in which allowance made for inflation with respect to damages for breach of contract,
assessed as at the date of breach but payable at or after judgment
o Only recent made for inflation with respect to future pecuniary loss (Supreme Court of
Canada Teno v Arnold and Andrews v Grand & Toy), no suggestion for special damages
incurred to date of trial (pecuniary losses and expenditures)
• In this case, actual evidence as to approximate rate of inflation from 1970 to date of trial, but trial
judge thought only part of such decline was foreseeable, no accurate way to measure rate of
inflation of 7.23%
• If such award allowed, consideration would have to be given to question of how measure of
inflation is to be determined
• Is the court to have primary regard to consumer price index? Rate of interest from time to time?
42
• Bound by authority to disallow claim for allowance for inflation
Pre judgment Interest
Courts of Justice Act (1990)

Prejudgment and Postjudgment Interest Rates Definitions
• 27(1) In this section and in sections 128 and 129,
• “bank rate” means the bank rate established by the Bank of Canada as the minimum rate at which
the Bank of Canada makes short-term advances to banks listed in Schedule I to the Bank Act
(Canada);
• “date of the order” means the date the order is made, even if the order is not entered or
enforceable on that date, or the order is varied on appeal, and in the case of an order directing a
reference, the date the report on the reference is confirmed;
• “postjudgment interest rate” means the bank rate at the end of the first day of the last month of
the quarter preceding the quarter in which the date of the order falls, rounded to the next higher
whole number where the bank rate includes a fraction, plus 1 per cent;
• “prejudgment interest rate” means the bank rate at the end of the first day of the last month of the
quarter preceding the quarter in which the proceeding was commenced, rounded to the nearest
tenth of a percentage point;
• “quarter” means the three-month period ending with the 31st day of March, 30th day of June,
30th day of September or 31st day of December.
Calculation and Publication of Interest Rates
• (2) After the first day of the last month of each quarter, a person designated by the Deputy
Attorney General shall forthwith,
• (a) determine the prejudgment and postjudgment interest rate for the next quarter; and
• (b) publish in the prescribed manner a table showing the rate determined under clause (a) for the
next quarter and the rates determined under clause (a) or under a predecessor of that clause for all
the previous quarters during the preceding 10 years.
Regulations
• (3) The Attorney General may, by regulation, prescribe the manner in which the table described
in clause (2)(b) is to be published.
Prejudgment Interest
• 28(1) A person who is entitled to an order for the payment of money is entitled to claim and have
included in the order an award of interest thereon at the prejudgment interest rate, calculated from
the date the cause of action arose to the date of the order.
Exception for Non-pecuniary Loss on Personal Injury
• (2) Despite subsection (1), the rate of interest on damages for non-pecuniary loss in an action for
personal injury shall be the rate determined by the rules of court made under clause 66(2)(w).
Special Damages
• (3) If the order includes an amount for past pecuniary loss, the interest calculated under
subsection (1) shall be calculated on the total past pecuniary loss at the end of each six-month
period and at the date of the order.
Exclusion
• (4) Interest shall not be awarded under subsection (1),
• (a) on exemplary or punitive damages;
• (b) on interest accruing under this section;
• (c) on an award of costs in the proceeding;
• (d) on that part of the order that represents pecuniary loss arising after the date of the order and
that is identified by a finding of the court;
43
• (e) with respect to any advance payment that has been made towards settlement of the claim, for
the period after the advance payment has been made;
• (f) where the order is made on consent, except by consent of the debtor; or
• (g) where interest is payable by a right other than under this section.
Discretion of Court
• 130(1) The court may, where it considers it just to do so, in respect of the whole or any part of
the amount on which interest is payable under section 128 or 129,
• (a) disallow interest under either section;
• (b) allow interest at a rate higher or lower than that provided in either section;
• (c) allow interest for a period other than that provided in either section.
Idem
• (2) For the purpose of subsection
• (1), the court shall take into account
• (a) changes in market interest rates;
• (b) the circumstances of the case;
• (c) the fact that an advance payment was made;
• (d) the circumstances of medical disclosure by the plaintiff;
• (e) the amount claimed and the amount recovered in the proceeding;
• (f) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the
proceeding; and
(g) any other relevant consideration.
Foreign Currency Obligations
Miliangos v George Frank (Textiles) Ltd (1976) (HL)

Facts
• Swiss textile producer sold and delivered textiles to England, England refused to pay, Miliangos
sued for amount of debt in currency was contract (which was Swiss francs)
o During litigation the exchange rate between francs and pounds dropped, traditional rule
would require that debt in francs be converted to pounds on date of breach, Miliangos
would have lost a significant amount
• Debt in foreign currency came to be enforced in England
Issue at trial
• Whether an English court is able to award damages in Sterling only
Finding
• Lord Wilberforce: debt could be paid in Swiss francs or whatever currency specified in the
contract, overruled rule (Re United Railways 1961 that judgment debt expressed in foreign
currency must be converted into sterling for enforcement purposes on the date when the court
authorizes enforcement of the judgment) General rule in tort is that damages should be assessed
as at the date of breach
o Claimant applying for payment of foreign currency must show reasons for it based on
losses suffered outside domestic jurisdiction
• Considered whether it was obliged to follow own previous decisions
o Since 1966 Lordships have power to depart from previous decision of Lordships’ house,
but Judicial Precedent Lord Gardiner asserted that it was not intended to affect the
operation of the rule of precedent elsewhere than in Lordships’ House, and it is clear law
that the CA is bound by decision of Lordships’ House and (in civil cases) by previous
44
decision of CA Young v Bristol Aeroplane Co Ltd (1944)

o Rare occasion where Lords overturned previous precedent which has held that all debts
are to be paid in sterling
• Substance of debtor’s obligations depends on proper law of contract. If means exist for giving
effect to the substance of foreign obligation, conformably with the rules of private international
law, procedure should not unnecessarily stand in the way.
o Objections based on authority against making an order in specie for the payment or
delivery of foreign money, are not, on examination, found to rest on any solid principle or
indeed on more than Court’s discretion
o Lloyd Royal Belge SA v Louis Dreyfus & Co (1927): courts have power to order what is
adequate remedy, but in present case it is not adequate in floating currencies
Miliangos Rule
• Creditors under a contract can obtain judgment under a foreign currency
• Date of payment would be date of conversion for foreign currency
Batavia Times Publishing Co v Davis (1978) (HC)

Facts
• P sued in Ontario on judgment rendered in state of Pennsylvania in US dollars
Issue in Trial
• Proper date for conversion from US to Canadian, choice between date judgment was given in
Pennsylvania (date of breach) and date of judgment in Ontario Court (date of judgment)
Ratio
• Justice should not require that a creditor suffer by reason of a depreciation of the value of
currency between due date on which debtor should have met his obligation and date when
creditor was eventually able to obtain judgment
• Custodian v Blucher (rate of exchange for conversion into Canadian currency of dividends
payable in US funds to respondent was rate prevailing at time when each dividend became due
and payable to Custodian, not date when respondent became entitled to receive them), Gatineau
Power v Crown Life (conversion to be made as of date of breach), The Celia v The Volturno
cannot be applied for cases involving enforcement of foreign judgment
o No authorities to bind in determining conversion date, free to adopt that date that “avoids
an injustice” and is “in step with commercial needs”, neither parties should be adversely
affected
• Judgment is appropriate date for currency conversion
Held:
• 16.9k with 5% interest per annum from Aug 26 1970-Dec 21 1977, as of Dec 21 1977 (judgment
date), judgment for P
• Considered the two English cases before Miliangos where date of breach was adopted, but they
didn’t involve foreign judgments so not binding
o Miliangos reversed English cases and although it did not overrule decisions in Supreme
Court, English cases should not be applied in lower courts
o Breachday rule no longer exists in England
• Scott v Bevan (1831): earliest decisions on this subject of conversion rate. Precedent for holding
in cases involving action to enforce foreign judgment that date as of which the exchange rate is to
be applied is the date of the foreign judgment
• East India Trading Co Inc v Carmel Exporters & Importers Ltd (1952): followed Scott v Bevan,
P sued on foreign judgment obtained in NY awarding damages for breach of contract. Sellers J
accepted date of foreign judgment as relevant date
45
Clinton v Ford (1982) (CA)

Facts
• D alleged that Judge Sullivan should not have used exchange rate for South African rand as at the
date of statement of claim. Argued that amount of judgment should have been converted into
Canadian dollars at the conversion rate existing on the date of judgment
• 1.49 CAD for 1 South African Rand vs 1.577 (statement of claim)
Reasoning
• Batavia Times Publishing Co v Davies: judge granting judgment on foreign judgment free “to
adopt that date which avoids an injustice and is in step with commercial needs”.
• Unable to say that on the material before him, that trial judge erred in using rate prevailing at the
date of statement of claim.
Held: Appeal dismissed
Courts of Justice Act (1990) C.43

Foreign Money Obligations
• 121(1) Subject to subsections (3) and (4), where a person obtains an order to enforce an
obligation in foreign currency, the order shall require payment of an amount in Canadian
currency sufficient to purchase the amount of the obligation in the foreign currency at a bank in
Ontario listed in Schedule I to the Bank Act (Canada) at the close of business on the first day on
which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day
payment of the obligation is received by the creditor.
Multiple Payments
• (2) Where more than one payment is made under an order referred to in subsection (1), the rate
of conversion shall be the rate determined as provided in subsection (1) for each payment.
Discretion of Court
• (3) Subject to subsection (4), where, in a proceeding to enforce an obligation in a foreign
currency, the court is satisfied that conversion of the amount of the obligation to Canadian
currency as provided in subsection (1) would be inequitable to any party, the order may require
payment of an amount in Canadian currency sufficient to purchase the amount of the obligation in
the foreign currency at a bank in Ontario on such other day as the court considers equitable in the
circumstances.
Other obligations that include conversion
• (4) Where an obligation enforceable in Ontario provides for a manner of conversion to Canadian
currency of an amount in a foreign currency, the court shall give effect to the manner of
conversion in the obligation.
Enforcement by seizure or garnishment
(5) Where a writ of seizure and sale or notice of garnishment is issued under an order to enforce an
obligation in a foreign currency, the day the sheriff, bailiff or clerk of the court receives money under the
writ or notice shall be deemed, for the purposes of this section and any obligation referred to in subsection
(4), to be the day payment is received by the creditor.
46

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CHAPTER 1—General Principles of Damages

Purpose of award of damages

H Parsons (Livestock) Ltd. v Uttley Ingham & Co Ltd (1978) (CA)

The Law as to Remoteness

Loss of Profit Cases

o Hadley v Baxendale (1854)

o Victoria Laundry (Windsor) Ltd v Newman Industries (1949)

Kienzle v Stringer (1981) (CA)

Issue at trial: was quantum of P’s damages

Sir Robin Cooke, “Remoteness of Damages and Judicial Discretion” (1978)

1.3 CERTAINTY AND CAUSATION

Schrump v Koot (1977) (CA)

§ Damages should not be awarded on the basis of conjecture or speculation. Mere

Snell v Farrell (1990) (SCR)

Held: Appeal dismissed with costs

Court of Queen’s Bench

Causation in this case

Laferrière v Lawson (1991) (SCR)

§ If it doesn’t indicate causation on balance of probabilities, causation in law may

Later reached similar conclusion

Sunrise Co Ltd v “The Lake Winnipeg” (1991) (SCR)

o Second collision not a factor in delay and should bear no responsibility

Provocation in Intentional Torts

Landry v Patterson (1978) (CA)

(which, but for the provocation, would have been awarded)

Valuation of Chance of Avoiding Loss

Janiak v Ippolito (1985) (SCR)

Held: Appeal and cross appeal dismissed, however should be 96.14k

Unreasonable refusal of treatment

Unreasonableness and Conflicting Medical Opinions

Onus of Proof of Reasonableness

Consequences of An Unreasonable Refusal of Treatment

Sells Ltd v Thomson Stationary Co Ltd (1914) (CA)

Finelli v Dee (1968) (CA)

Held: Appeal dismissed with costs and counsel fee of 25

Held: appeal dismissed

Cockburn v Trusts & Guarantee Co (1917) (SCR)

Jamal v Moolla Dawod Sons & Co (1916) (PC)

Held: Appeal should be allowed, orders discharged, judgment for P

Campbell Mostyn (Provsions) Ltd v Barnett Trading Company (1954) (CA)

Slater v Hoyle & Smith Ltd (1920) (CA)

of goods delivered and value if they had answered to warranty

John Hallam Ltd. v. Bainton [1920] 54 D.L.R. 537, 60 S.C.R. 325

Held: appeal dismissed

Ratych v Bloomer (1990) (SCR)

the "charity exception".” (QL at paras. 307-308)

1. Cunningham v Wheeler (1994) (SCR) three appeals heard together

Trial judge and appeal

IBM Canada Ltd v Waterman (2013) (SCR)

• Broader policy considerations

salary but for the dismissal

Compensating advantage problem

1.5 TIME OF ASSESSMENT

Asamera Oil v Sea Oil and Baud (July 27 1960)

• Dismissed and appeal dismissed

Baud v Brook (December 6 1966)

Breach of contract limitations

Dodd Properties v Canterbury City Council (1980) (CA)

ft. general principle for assessment of damages is compensatory