DTN 726 RECOURS CIVILS

PART I: DAMAGES: GENERAL PRINCIPLES..................................................................2

A) REMOTENESS..................................................................................................3
B) CERTAINTY AND CAUSATION applied to future losses; look for (1) lost opportunity,
(2) chance of loss ...................................................................................................4
C) MITIGATION......................................................................................................4
D) TIME OF ASSESSMENT.....................................................................................5
E) ALTERNATE PERFORMANCE MINIMUM PERFORMANCE PRINCIPLE................8
F) COST OF PERFORMANCE VERSUS DIMINUTION OF VALUE................................9
G) BENEFIT TO THE DEFENDANT.........................................................................11
H) NON-PECUNIARY LOSS IN CONTRACT............................................................14
I) PUNITIVE AWARDS...........................................................................................16
J) PERSONAL INJURY..........................................................................................17
K) COLLATERAL BENEFITS..................................................................................20
PART II: SPECIFIC REMEDIES....................................................................................22
QUIA TIMET INJUNCTIONS..................................................................................23
IRREPARABLE HARM..........................................................................................23
L) INJUNCTIONS VERSUS DAMAGES...................................................................26
M) INTERLOCUTORY INJUNCTIONS.....................................................................26
N) SPECIFIC PERFORMANCE..............................................................................30
Specific Performance of Personal Service Contracts.................................................33
REVIEW QUESTIONS................................................................................................34

PART I: DAMAGES: GENERAL PRINCIPLES

INTRODUCTION
What is a remedy?

Injunctions, damages, specific performance

Constructive trust: respect of property, give an ownership

Accounting damages : figuring out the amount and making the defendant pay it to the plaintiff.
Remedies are about court orders. Some say it's not an area of law because all court orders replicate pre-existing duties that
arise in more substantive areas of law (contract, torts, etc.). This is a very civilist approach and it can't be fully true (think of
prescription, substitute performance, etc.). The law of remedies is also public law in the sense that the orders are given by the
courts, which form part of the State.
Types of Damages
NonPecuniary
Pecuniary:
Capable of mathematical calculation
e.g. pain, suffering

Punitive

Special Damages: Can be calculated with precision. Hv to plead and prove.

General
E.g. lost I, out of pocket ex
(can be difficult to estimate)

Liquidated Damages:
Parties agree in advance on amount. E.g. breach of restrictive covenant, which provided for specific penalty. Must be a t

Nominal Damages Something is actionable without proof of damage. Example: Trespass claims. The Court is
recognizing the legal wrong, but there are no damages to compense. Unusual to sue for this b/c of litigation expenses.
Compensatory Damages Compensatory damages are about comparing life snapshots.
Aggravated / Exemplary Damages (Rare). Awarded to reflect Pl loss as a result of Def conduct. Example: Pl. humiliation
by Def conduct. Battery situation: not only did the D beat up, but said things to humiliate them
Punitive Damages (Rare). Not compulsory. Meant to punish the Def for their outrageous behaviour. It amounts to a fine
payable to the Pl. Ex. Negligence. Leading cases in insurance Cie, when they didnt insure saying the P burned down their
own house ; no basis at all.
Special Damages Capable of precise quantification at the time of trial. They compensate for things already occurred.
Example: out-of-pocket expenses, missed work, travel). They have to be specifically outlined in the claim.
General Damages For things that have not yet happened but will require compensation for the future. This claim is
generally more vague.
Pecuniary Damages Monetary Damages. Examples: lost earnings/capacity, future personal care, repair costs, disability
equipment.
Non-Pecuniary Damages Non-monetary. Examples: Humiliation, loss of enjoyment of life, loss of life expectancy, pain &
suffering

Four limitations on full recovery of damages:

(1) Remoteness, preventing recovery for anything too fanciful;
(2) Certainty, usually applied to future losses, e.g. 15% chance of loss of vision;
(3) Mitigation, referring to Pls responsibility to reasonably minimize damages;
(4) Causation, a limitation on the but for test.

A) REMOTENESS
1ST Question: whether to frame the action in tort or contract.

Tort: what is the reasonable foreseeability of damages?

(Wagon Mound 1: In tort the measure is reasonable foreseeability)

Contract: (a) what damages would ordinarily flow from breach? (b) what was the reasonable contemplation of the
parties at the time of the contract?

Need a higher degree of probability in contract, b/c assumption that parties are equal. In tort, Pl had no
opportunity to protect himself.

Kienzle v Stringer (1981, CA) IN TORT, THE MEASURE IS REASONABLE FORSEEABILITY. It is, I think, apparent that
neither of these tests is a measure of precision and I number myself among those who are unable to see any real difference
between them. . . .For the purpose of simplicity, I shall use the term "reasonable forseeability" as embracing the test in both
tort and contract.
Facts: P bought the Oxford farm. D acted as his solicitor, certifying that the plaintiff had a good and marketable title. Title
was not good or marketable. P later decided to sell the Oxford farm and purchase the Kincardine farm. He conditionally
bought it, conditional on his being able to sell the Oxford farm. He found a buyer for the Oxford farm. In anticipation of the
sales, P shut down his effective operation of the Oxford farm by letting go the surrounding leasehold property. Buyer found
out that there was no good and marketable title and both deals fell through. There were rising land values and the plaintiffs
loss on the Kincardine farm, diminished by his gain on the Oxford farm was $20,200.
This is a case where there was both a breach of contract and tort in negligence because the lawyer also has a duty of care.
Issue 1): Can the plaintiff recover for losses due to shutting down operation of the Oxford farm?

Held: Yes. This loss is directly and immediately connected to the defective title and consequent lack of marketability of
the Oxford farm and would have occurred if the plaintiff had chosen only to sell the Oxford farm without any plan to
purchase another farm.
Issue 2): Can the plaintiff recover for losses due to the rising value of land?

Held: No. When courts use the term, reasonably foreseeable, they are not often concerned with what the parties
actually foresaw or contemplated. This is a question of policy. The fee charged by a solicitor is calculated with the risk
assumed by the solicitor in mind. It is not unreasonable to add to that risk consequential damage immediately
concerned with the failure of marketability; however, the range of secondary transactions flowing therefrom is beyond
the ambit of reasonable foreseeability.
Comment: The court backs off from the approach taken in Messineo v. Beale because its embarrassed that lawyers are
treated more tenderly than other contracting parties. Foreseeability is more a question of policy than one of fact.

Hadley v. Baxendale (1854) (mill shut down for 7 days instead of 2 when equipment delayed. New trial ordered.)
Two-part test for remoteness
1) Objective:

What damages arise fairly, reasonably and naturally from the breach?

Damages must reflect the reasonable contemplation of the parties at the time of the contract. (Certainty not
required, just that the parties were aware.) OR
2) Subjective:

If special circumstances were communicated and known to both parties, damages should reflect this. (It wd
be unfair to hold a party liable for sp circumstances of which he was unaware, and might have provided for,
e.g. with insurance, given the opportunity.)

What is the nature of the parties (e.g. in this case the shipper was just a shipper).

What is the relationship between the parties?

Parsons v. Uttley Ingham (1978) (mouldy pig nuts. Denning sympathizes w- Pl and his fine herd of 700 pigs. Scarman
finds for Defendant.)
Denning (dissent):
In loss of profit cases, the Def is only liable for losses that were contemplated as a serious possibility in the event of a breach
of contract.
In physical damage cases, the Def is liable for any loss or expense which he reasonably ought to have foreseen at the time
of the breach, even if it was only a slight possibility.
Scarman:
The Def is only liable for losses that were contemplated as a serious possibility in the event of a breach of contract.
What matters it the type of injury (broad category), not the specific loss.
The test for remoteness is the same in contract and tort reasonably foreseeable and contemplated by the parties at the
time the contract was made.
... the law is not so absurd as to differentiate between contract and tort save in situations where the agreement, or the
factual relationship, of the parties with each other requires it in the interests of justice.
To argue this case is not good law:

The court ignores the obvious fact that lost opportunity to invest is entirely foreseeable.

Dissent of Justice Wilson (only member of the appeal court to go on to the SCC): sale of one piece of property to
buy another is entirely foreseeable, and the lost profits from this sort of secondary transaction may be subject to

damages. After all, if Pl had lost a deposit on the offer to purchase because of the failure of the original sale,
undoubtedly he would have obtained damages for that loss.
Comment: Case where there was both a breach of contract and tort in negligence bc the lawyer also has a duty of care.
B) CERTAINTY AND CAUSATION applied to future losses; look for (1) lost opportunity, (2) chance of loss

Polemis - history-torts and case of ship- directness and causation; law changes for "but for test"

What do we recover?
Loses that happened prior the trial: we recover 100% if proved by balance of probabilities (over 50%)
What about future loses? We cannot prove that a future event will happen in the future How do we assess future loses
then?

Reasonable chance = not fanciful/speculative

Schrump v Koot (1977), 18 OR (2d) 337 (CA) (p. 5) FUTURE OR HYPOTHETICAL POSSIBILITY WILL BE TAKEN INTO
CONSIDERATION AS LONG AS IT IS A REAL AND SUBSTANTIAL POSSIBILITY AND NOT MERE SPECULATION.
F: 60-yr-old woman suffered damaged vertebrae in car accident. In severe pain, but also theres a chance she will face even
greater disability in the future.

For damage already caused, the damage must be proven on a B of P to get 100% of damages.
For likelihood of damage in future, the test is lower. Reasonable likelihood will suffice (25-50%) as opposed to
speculative (<25%). Proportionate recovery: multiply the damages for the percentage of the loss. A plaintiff will get
damages for future suffering in proportion to the likelihood that such suffering will materialize. If 25% chance, .25*
loss; if 1% chance, .1*loss.

Say pl. suing for $100 000 and it is confirmed that there is a 60% chance of the future loss taking place. In 40% of the
changes the loss doesn't happen, the def will loose the 60 000$; in the 60% of the changes the loss does happen, the
pl will loose 40 000. This goes to show that the distribution is not perfect at all.
In area of assessment of damages for physical injury,
a) Pl must prove on bal of prob that the tortious act/omission was the effective cause f the harm suffered
b) Pl DOES NOT need to prove on the bal of prob that future loss / damage will occur, but only that there is a
reasonable chance of such loss or damage occurring. Then, court must assess value of that chance.
Substantial possibilities must be considered in the assessment, regardless of the % or whether possibility is favourable or
unfavourable.
C) MITIGATION
Pl may not recover losses that could have been avoided by taking reasonable steps after the wrong. Principle applies in both
torts and contracts. A Pl cannot recover "avoidable losses".
Reasons underlying the obligation to mitigate:

About fairness (civil remedies are intended to do justice bw the parties; damages should be set at a
level that properly protects the Pls interests without being uwnduly oppressive to the Def; damages are not generally
intended to be punitive).

The rule of mitigation has the effect of minimizing the total cost of the tort or breach of contract. It is
socially desirable to minimize the costs of a civil wrongs.

Also ensures a fair allocation of risks between the parties. Often Pl is in the best (or only) position
to deal with the consequences of the breach of contract or tort. It would thus be wrong to saddle defendants with postbreach risks over which they have no control.
General principles:

Objective of the rule of mitigation is to give Pl an incentive to take steps to minimize the total costs
of the tort or breaches of K + and to avoid unduly burdening to the defendant with avoidable losses.

Pl is debarred from recovering losses that could REASONABLY be avoided. What is reasonable is
a question of fact, not of law, and the burden of proof is upon the defendant to demonstrate Pl could reasonably have
avoided a loss or was unreasonable in his or her conduct.

In assessing reasonableness, the context is important. In the commercial context, Pl must do what
an ordinary business person would do in the circumstances take actions consistent with usual practices and not let anger
get in the way.

Pl not obliged to make extraordinary efforts only what is prudent in the circumstances.
Janiak v. Ippolito (1985) SCC (p. 10) Refusal of treatment.
F: Crane operator totally disabled by back injury but refuses surgery with a 70% chance of complete success. Def argues
novus actus interveniens (refusal of surgery) no damages, but court finds proximate cause still the Defs action.

Reasonable steps to mitigate are required of a Pl.

If medical treatment with a high probability of success is recommended, it is unreasonable for a Pl to refuse, and
therefore mitigate damages, therefore:

the failure to mitigate will lead to a reduction of damages, but these will be in proportion to the chance of success of
mitigating factors (as with Schrump v Koot, adjust for percentage of risk). Another way of putting it: where there is a
failure to mitigate but a chance that the proposed operation will fail, the court may allow a percentage of future loss of

income
The test of what is reasonable is objective.
Def is not liable for the loss that the Pl would have avoided by undergoing recommended treatment with a high
probability of success.

If several courses of treatment are recommended, a Plis free to choose one and suffer a potential loss of damages
for failure to mitigate.

The Pl bears the onus of proving damages, but the Def bears the onus of proving failure to mitigate.
HELD: In this case, why can't the Def say he will only pay up to the surgery and nothing after because there is a 70 %
chance of success? The court says yes the Pl should have had the surgery so he would not be given no all the searched
future earnings, but bc even if he had done the surgery, there still would not be guarantee of full recovery, the recovery given
is simple reduced by 70%. Pl gets only 30% of the searched recovery.

Unreasonable Refusal of Treatment

1. Unreasonableness and the Thin Skull Doctrine
a. Timing: a psychological thin skull developed subsequent to the tortious act is NOT a factor that can be considered
in relation to reasonableness: objective test prevails in absence of a pre-existing condition.
b. Nature: we look at the Pls capacity to make a reasonable choice. Not every pre-existing state of mind =
psychological thin skull; there must be a pre-existing psychological condition which makes Pl incapable of making a
choice

You can consider psychological thin skull, but only if it was pre-existing.
A psychological thin skull may be triggered by the tort, lying dormant.
The condition must render the Pl incapable of making a rational decision.
2. Unreasonableness and Conflicting Medical Opinions
Pl need nt take all possible steps to reduce loss, only bound to act like reasonable and prudent man Asamera Oil
Corp. v. Sea Oil
English courts (NOT ADOPTED IN CANADA): Pl should consider Defs interests as well as his own when determining
what steps he should takes Darbishire v. Warran.
Court takes into consideration degree of risk to the Pl fr surgery Taylor v. Addems and Addems.
3. Onus of Proof of Reasonableness
Burden of proof on Def if he alleges Pl could have and should have mitigated his loss Red Deere College v.
Michaels & reaffirmed in Asemara Oil.
Comments:
1. Is it right to say that the Pl has a duty to mitigate damages? Par. 36: it should not be called a "duty" because if it
was so, Pl could be sued for not mitigating damages and this is not the case. Not mitigating does not give right to an
action. Court says the Pl can't recover for loses that they could have taken steps to avoid. Now, why should the Pl
have to mitigate to make the consequences of the damages less? Bc the objective behind compensation is not to
punish Defs. We would expect the reasonable Pl to take the necessary steps to recover. It is about finding a fair
balance. Moreover, as a society, we want less losses overall. Bc the person who is best positioned to keep losses
low are the Pl, they should be responsible for keeping losses as small as possible.
2. Dobbs: the standard is the subjective standard based on what can be reasonably expected of particular Pl (par.
26).

D) TIME OF ASSESSMENT
General rule is that the Pl is only entitled to the difference in price at the time of the breach. Implicitly affirms the Pls
obligation to mitigate damages. Rule assumes, in case of the buyer, that he will purchase a substitute immediately, and if
price rise after that time, there will no additional compensation. Similarly, in case of a seller, assumed he will mitigate by
selling immediately.
The rule that damages are assessed at the date of the breach also a rule of convenience. To crystalize damages at the time
of the breach avoids the necessity of complex investigations into the precise time at which it would be reasonable to assess
damages.
"Difference in value rule": it could have sold to 2 instead of 1 had the breach not taken place. So long as Pl has a sufficient
supply of objects to sell to all its customers, it may claim lost profit. If the demand exceeds supply, resale is possible and lost
profit would be easily replaced = no damages in such case.
Consequential loss of profit is, in principle, recoverable, subject to rules regarding mitigation and remoteness.
Rules regarding the time of assessment of damages + mitigation applied differently in real estate cases: courts + more apt
to award the buyer damages assessed at a time later than the breach, even up to the date of the trial. Among other reasons,
this departure is justified by the fact that the purchaser could be entitled to specific performance and, where the court
award damages in lieu, those damages should put Pl in the same position as though SP had been awarded.
When errors of professionals do not CAUSE a loss, they will not be liable for the damages (33). Same applies when the
loss is too remote.

Why do we care about the date in which the damages are assessed? Bc the value of things changes over time. What is
the rule the courts have adopted for the date to be used to assess damages? It is the date of the breach. (The other
alternative is the date of judgement.)
What about losses between the time of the breach and the time of the trial? The amount of damages plus pre judgement
interest. The interest is supposed to compensate Pl for not having had the money earlier. In a perfect world, the interest
+ the damages should be identical to the value of the damages today. However, we expect things to get more value than
what the interest rate.

Inflation and Interest: while damages are ordinarily assessed at the date of the breach, Pl will not collect them
until much later when the legal dispute is settled or the matter reaches the trial. Pl may, therefore, have to use her
own funds / borrow money in order to mitigate, so incurs additional interest costs. In every province Pl entitled to
pre-judgment interest on the amount owing. Moreover, if the money has been eroded by inflation, the pl has been
deprived of the opportunity to invest that money in the interim; he would be entitled to interest as compensation for
this.

Ex: someone steals shares. If I sue for the value of them, we get value as of the date that they were stolen from me,
which is no good for me because I expected their value to keep increasing. What do we do? Get new shares right
after they have been stolen (paying the value as per the day of breach) and then that price is what we ask for in
damages when we sue the person who stole the shares. If one had to incur costs to mitigate, that costs will also be
repaid by Def. Pl must mitigate and not just do nothing and then ask for whole value of the shares later on.

Jens v Mannix Co (1979), 30 DLR (4th) 260 (BCCA) (p. 29)

Facts: Oil spill makes house uninhabitable; will have to dig up overburden and replace all contaminated soil, then build entirely
new house. Property could likely be sold for more w/o house, since zoned commercially and has greater value as such. Pl
lived in uninhabitable house polluted by crude oil pipeline break for 4 years after damage b/c had business on adjacent
property. Sued Def intended to rebuild but hadnt yet. Trial judge awarded replacement costs at 1977 values, year of trial and
year in which liability by Def was admitted, even though accident in 1973. Court of App. overturned date of assessment to the
date of the loss (1973) because it was not convinced arguments presented were strong enough to depart from the general
rule, and deducted for depreciation from that date.

Assess loss as of date of loss.

If the Pl has not shown a manifest intention to improve, court may deduct for depreciation between date of damage and
date of trial.

**Jens is Canadian: accepts that in certain circumstances there could be deviation to the date of breach rule. The
question is: what triggers the exception? Here the answer will be based on the argumentPl will make the best
argument as to why the date should be extended and the Def will have to try to find stronger argument.
Dodd Properties v Canterbury City Council, [1980] 1 All ER 928 (CA) (p. 24)
Facts: 2 neighboring buildings, 1 damaged during construction. Value over time, by ~30k. Year of breach was 1968. Pl
wanted damages calculated at the later date, to account for the decline in value. Def position: have damages assessed as of
1970, bc Pl would have started the work tht year. However, we must keep in mind that Pl are free to do what they want with
the $$. As inflation goes up, interest rates go up. Damages in 1970 + low interest rate was then much lower than the
damages calculated in 1978. The C of A reverses the trial decision and awards the 1978 number. Why? The rule for damages
(date of breach) is normally the answer, but it is not always the answer and the court has flexibility to give damages as of
another date. .
Issue: When is the cost of the repairs to be ascertained? / By reference to what date is the amount of the recoverable loss to
be calculated, during a period when the cost of the necessary work is rising as time goes on?
Held: damages assessed at later date (1978).

THE RULE: where there is material difference btw cost of repair at date of wrongful act & cost of repair when repairs can,
having regard to all relevant circumstances, 1st reasonably be undertaken, it is the latter time by reference to which the
cost of repairs is to be taken in assessing damages.

There are circumstances in which he proper amount of damages where, as here, the damages are to be computed by
reference to the cost of repairs, have to be computed by reference to that cost at a date later than the date of the
wrongdoing which caused the damaged. So, exception to the general rule which states damages assessed at date
of breach (Miliangos v. George Frank).

Here, damage to building; Pl, in a time of rising prices, should not be limited to recovery on basis of prices of repair at the
time of wrongdoing, before the time when, acting with all reasonable speed, he was able to put repairs in hand.

It was reasonable for the Pl to postpone incurring expense of the repairs up to the time when action was heatd and
liability decided.

There will always be some reasonable period in which for Pl to organize finances, arrange contractors etc. to move
on from the breached K.

Court allowed Pl to wait 8 yr in this case, during which time the cost of repairs massively increased.
o Pl argued it wasnt reasonable for them to put their own $ at risk doing repairs at earlier date, for several
reasons (none of which are especially convincing):
1. Def were denying liability

Thats sort of ridiculous, since Pls deny liability all the time and it doesnt typically let you off the hook for
mitigation.

Maybe because it was government, in this case? Not at all clear from the judgment, though.
2. Pl didnt want to spend their own money because (a) they had a cash problem, and (b) even if they didnt,
director testified that they still wouldnt have spent the money before they were sure of recovering cost
from Def.
Duty to mitigate: Pl not obliged, in order to reduce damages, to do wht he cannot afford to do; especially like here
where Pls financial stringency arose as a matter of common sense, solely bc of the Defs wrongdoing.

Semelhago v Paramadevan, [1996] 2 SCR 415 (p. 31) SP shouldnt be granted as a matter of course absent evidence
that the property is unique to the extent that its substitute would not be readily available. (Damages in lieu = date of
trial / judgment ; Regular damages = time of breach)
Facts: Pl sought specific performance for home purchase (didnt do anything to mitigate their loss so there was no oblig to
mitigate). In meantime, he kept his own home, and it increased in value substantially. The difference in the increase in value
as between the homes was $10,000 and Def claimed that it is what Pl was entitled to. Court awards damages in lieu of SP
and says Pl is entitled to full value of increase on home he didnt get.
P agrees to sell house for 205k (at the time of sale). S was going to pay 75k in cash, the remainder from a 2 nd mortgage of his other house,
tht he had to sell after 6 m. S breached, doesnt want to sell anymore. S remains in old house, worth 190k. By the time trial occurred,
house was worth 325K$. S sued for specific performance but opted for damages in lieu.

RATIO:
1) You dont get SP automatically w land, must show its unique.
2) When theres an order for damages in lieu, valuation determined at the time of trial. Value of the house, for
damages in lieu, should be determined at the date of trial. Buyer gets difference of the houses value increase (in this
specific case, SP is available).
Where vendor reneges, purchaser has two options
a. Accept repudiation and treat agreement as being at an end (sue for damages);
b. Decline repudiation and insist on performance. Claim for SP can be seen as reviving the K; def who failed to
perform can avoid a breach if, up to the date of judgment, performance is tendered.

Time of assessment: A claim for spec. perf. postpones assessment until date of judgment.
o Pl cares about getting damages in lieu as of the trial date because this means he will get the real value of the
property (likely would have increased).
o Damages in lieu of specific performance thus also assessed at time of judgment.
(note: this is for breach of contract of sale of goods.)

When do you get Specific Performance? SP should not be granted as a matter of course unless there is evidence
that the property is unique. If it was desired for investment purposes, then not automatic.

A Pl may elect damages in lieu of specific performance.

Comment: Specific performance was an equitable remedy, and couldnt order payment of sums of money. After, it
became possible. Once the Courts of equity got this power, wht u can do:
1) Seek equitable remedy
2) Inform court you want money instead.
Different from claim in damages, where you determine value of loss first. Damages in lieu: get order fr Court and then ask
them to determine wht monetary value. Tho this wont give you the same thing.
Asamera Oil Corp Ltd v Sea Oil & General Corp, [1979] 1 SCR 633 (p. 34) Normal rule is that mitigation period starts
at time of br, but not always the case. In such circumstances, the normal rule that the damages are calculated at the
time of the br is modified/delayed/discovered.
Ratio: Held that damages are adequate remedy since Asamera shares are listed on public stock exchange.
(1) In order to seek specific performance as opposed to damages, must have a legitimate and substantial interest
(can justify ones inaction and mist recover losses) onus is on P to prove legitimate interest.
o If not legitimate and substantial must claim damages and have duty to mitigate (general principle = date of
breach)
(2) There are special circumstances which render the p to not have a duty to mitigate, especially where a
reasonable person would not put themselves at risk (date in which it became reasonably in the economy to buy back
in if one wanted the gain in value, that was the time to buy back in).
Facts: In this SCC case, a 1957 contract to return shares in 1960 was breached. Def argued that once it became clear that
the shares were not forthcoming, Pl should have bought other shares to mitigate his damages, particularly since the value
had increased so much that had the plaintiff of done so, the profit would have covered any subsequent loss.
Issue: How to assess damages when shares were never returned, and varied in value?
Held: Agree w Pls arguments that shares are highly speculative investments and that to mitigate by buying other shares
would have been extremely risky. Duty to mitigate, in ordinary sale of goods cases, was clear: "a Pl is entitled to recover
damages for the losses he has suffered but the extent of those losses may depend on whether he has taken reasonable
steps to avoid their unreasonable accumulation" and "it is for the defendant to carry the (evidentiary) burden of that issue."

One of the hallmarks of a claim in specific performance is that it tends to have more value when the thing is unique.
Here, there is a problem because there are millions of Asamera shares. So, court says that this is not like Samelhago.

Pl wanted SP because at the time of trial the shares were worth much more than the price at which they were sold
(sold = time of breach).
o Counter-argument:

What Pl should have done was buy more shares at the time of breach and then get paid
for the amount of the shares. He would have been able to make gain regardless of the sale of his initial
shares.

Def says if Pl wanted to really hold to the shares, one would have bought; otherwise the
intention to hold on to the shares can be questioned.
Court accepts that Pl might have sold shares at higher value than at date of breach, but not so high that they would get
the full highest price.
o

Analysis & principles

1. Court endorses theory of damages put forward by Pl; damages are measured by the lost opportunity to sell the
shares i.e. to realize their value on sale.
2. The typical starting point for damages under a loan is at the time of breach. Assess as though Pl disposed of
property on the date of breach, or as soon after as they were realistically able to do so.
3. Sometimes, though, we will move the date of breach.
4. If Pl is seeking/entitled to SP, they are entitled to hold off on mitigation, so long as they have a real/substantial
interest in specific performance.

Just because its in your writ doesnt mean its a real/substantial interest.
Typically cant get SP for shares theyre fungible.
5. Pls may also be entitled to hold off on mitigation depending on the state of the market (e.g. volatile or illiquid)
reasonableness depends on context

Even though SP, Pl was entitled to wait before buying new shares. Successfully argued it wouldnt be
reasonable to go buy new shares right away, due to the illiquidity of the market.

Pl argued they didnt have to mitigate because shares were too risky now, but they had wanted SP. So, if
they wouldnt have bought the shares, they wouldnt have held the shares, so those arguments contradict in a rational
commercial sense. (Supposedly.)
[The same principles of remoteness will apply to claims made in tort or contract subject only to special knowledge,
understanding or relationship of the contracting parties or to any terms express or implied of the contractual arrangement
relating to damages recoverable on breach.]

The Supreme Court determined that case law holding that the appropriate time of assessment in wrongful detention of shares
cases would be as of the date where the shares attained their highest value between the date of the breach and the end of the trial
should not be followed.
The rationale for this decision is that these older cases left no room for the principles of mitigation.
The general rule of mitigation would require the Plaintiff to purchase replacement shares in the open market on the date of the
breach time of assessment would therefore be at the date of the breach.
HOWEVER, the principles of mitigation require that a Plaintiff do only what is reasonable to avoid aggravation of loss.
The obligation to mitigate by purchasing replacement shares can therefore be pushed back to a time where it is reasonable to
impose that obligation.
In some cases, the reasonable time to purchase replacement shares can be the conclusion of a legal action seeking to recover
the shares or to recover damages equivalent to their value at that time, instituted and prosecuted with reasonable speed.

Exam notes (other notes)

As Asamera Oil Corp. shows, time of assessment is linked to the timing of Plaintiffs obligation to mitigate.

General rule for time of assessment is the time of the wrong although in reality, rule is that mitigation must be expeditious,
within a reasonable time following the wrong.

Also prevents plaintiff speculating at defendants risk however, plaintiff retains any gains made after the time of wrong.

If the Pl is not subject to a duty to mitigate, or if that duty to mitigate is not immediate, then time of assessment is at the time where
mitigation steps are in fact taken (or the later date where they should have been taken), with Def bearing risk of aggravation of loss
but also benefiting from any gains.

The main example of a Plaintiff not being subject to the duty to mitigate is where it is reasonable to pursue a claim of
specific performance.

This is risky; HOWEVER, see Asamera there has to be some fair, real and substantial justification for the specific
performance claim.

General tendency in equitable remedies: Courts are becoming more restrictive with respect to awards of specific performance
while real estate was previously considered as a matter where it was nearly automatic, that is no longer the case.

E)

ALTERNATE PERFORMANCE MINIMUM PERFORMANCE PRINCIPLE

Hamilton v Open Window Bakery, [2004] 1 SCR 303 (p.47) ALTERNATIVE PERFORMANCE. Minimum performance
principle.

Some contracts provide the defendant discretion regarding mode of performance.

In such situations, damages are to be assessed based on the minimum level of performance provided in the
contract / Least burdensome kind of performance used against the defendant.

Facts: K for 3 years (representative from 22 months to 36 months), but termination provision to allow either party to
terminate with 3 months notice. Def terminated with no notice due to a misunderstanding (so, wrongful repudiation). Breach
of k. How do we calculate damages?
Held: "Damages are assessed on the bases that the defendant will perform the k in the way most beneficial to himself and
not in the way that is most beneficial to the Pl."

In the ex the difference would be only for 800 tons; in this case, the Def was forced to pay the equivalent of 22 months
because of the early termination clause: the contract could be terminated b the defendant "with notice to the agent
effective after the commencement of the 19th month of the term herein, on 3 months notice" (certain minimum
performance)

Say def says he'll sell bw 800 and 1200 tons and then breaches. Pl, looking for his benefit, goes to buy tons at a higher
price in the market and then asks for difference to the price the defendant initially offered. Would this be accepted by
the court? NO.

In contract law, the law does not force the defendant to do anything more than the minimum required / General
principle is that you adopt the mode of performance that is least profitable to and least burdensome to ,
and calculate damages on that basis.
o Dif from tort law, where unliquidated damages are awarded to a pl on the bases that the pl has suffered a loss
though some wrongful interference by the def--- what would have been but for the tort

SCC upheld CA: Early termination clause with three months notice constituted the minimum guaranteed benefits
under the K (aprox total of 22 months of service). As such, this was considered to be the maximum liability to which
Def could be exposed, and the appropriate measure of damages.

Note: much of the litigation in this area is trying to confine the rule and find exceptions to it.

Policy

Can allocate risk in K if they have set up their reasonable expectations in the K, its fair to enforce that.
Note: The test is not how the defendant would likely have performed its obligations under the contract but for its repudiation.
The non-breaching party need not be restored to the position it would likely have been in but for the repudiation, but rather to
the position it would have been in had the contract been performed. While the test for remoteness may be similar in both
contract and tort, ordinarily the measure of damages is quite different, with tort cases generally based on restoring the
plaintiff to the position it would have been in but for the tort a reliance like measure while contracts-based damages are
expectation-based.
F) COST OF PERFORMANCE VERSUS DIMINUTION OF VALUE
Diminution of value: generally refers to a reduction in the worth of something caused by an action of a 3rd party or entity.
A common issue, in the assessment of damages, is whether, damages should be assessed according to the cost of procuring
substitute performance, or instead, on the basis of the diminution in the Pls wealth as a result of the breach . Courts are likely
to award only the diminished value of the land when the cost of performance would over-compensate the Pl, who could be put
in a much better position financially than before the breach/wrong. Difficulty with this result: appears to permit the Def
deliberately to breach K / commit wrongs and escape its obligations.

No absolute rule that damages are measured by either the cost of performance or the diminished value of the property.
Only rule: Pl is entitled to be put in as good a position as before the breach/tort. Will sometimes be measured by the cost
of performance, sometimes by the diminished value of the property, and sometimes by a different amount all together.
The proper measure of the damages will depend on the circumstances of each case.
o Factors to be considered:

What is important is court's assessment of the Pls true interest in the property and the Pls actual loss. Where
that interest is purely financial, as where the property is held only as an investment, it will be difficult for Pl to
argue that the loss is greater than the diminished value of the property. However, where Pl has other interests
(functional, aesthetic, or sentimental), cost of actually performing the work may be justified even though it is
otherwise uneconomic.

Also of relevance the question of whether Pl has already done the work or genuinely intends to do so. If Pl
intends to do the work, this shows that he does in fact value the property by the amount that will be spent. Also
assures court that Pl will not simply be pocketing a windfall.

Considerations of economic reasonableness and unjust enrichment. Where the cost of doing the work is
completely out of proportion to the benefit to be achieved, the work will be economically unreasonable, which
would weight against awarding the full cost of performance.
CR Taylor (Wholesale) v Hepworths, [1977] 2 All ER 784 (QB) (p. 51) (Mitigation, Efficient Breach, and the Measure of
Damages)

Def were liable to Pl (or rather, through the wonders of subrogation, Pls insurer) for a fire which had caused significant
damage to an unoccupied billiard hall.

Repairing the billiard hall to its previous state would have cost nearly 29,000 pounds.

HOWEVER, the premises were unoccupied and slated for future development.

The fire had only caused the premises to drop in value by 2,500 pounds. The fire had therefore been beneficial since they
were building new condos.


What is the appropriate measure of damages? The cost of reinstating the billiard hall or the drop in value?

Normally, loss of value would have been granted as the appropriate measure of damages.
Repair costs out of the question because Plaintiff had no intention of ever re-letting the premises as a billiard hall or even
otherwise.

Loss of value not even attributed because development of the premises would entail clearing the buildings and the fire
had taken care of clearing at to an extent least equal to the drop in property value.

Only cost of necessary remedial work awarded.

Held: McGregor on damages: in deciding between diminution in value and cost of reinstatement the appropriate test was the
reasonableness of the Pl desire to reinstate the property and remarked that the damages to be awarded were to be
reasonable as between plaintiff and defendant. Court concludes that in the case before him to award the notional cost of
reinstatement would be unreasonable since it would put the plaintiffs in a far better financial position then they would have
been before the fire occurred.
There isnt a rule, always depends on the case. We can at least say Pl will always get at least the diminution of value (2.500
pounds). Then, Pl should say why he should get more (cost of repair).

One of the considerations is that there must be a likelihood that the repairs will be done. In this case, almost no
likelihood / plausibility that it will be repaired (p. 58). If the repair is ACTUALLY done, its even better! (Ex. he comes to
trial with receipt I paid already 28!)
This is one factor in Taylor. But what else might a court think about?

The damages have to be reasonable (so not just a question of doing the math).

Also, how big is the spread between the 2 numbers? If it isnt that big, the Def should get higher value. The bigger it
is, the more questions will be asked by the Court.
None of these factors are determinant. We would say What are the arguments?

Another factor: uniqueness of the property. You should not get a cost of repair when its less than buying it new.

If we know Pl got cost of repair from his insurance? It wasnt a gift for the Pl, he purchased it.
Ruxley Electronics and Construction Ltd. v Forsyth Diminution in value may be the appropriate measure if
unreasonable to award the cost of restitution.

Plaintiff contracted with Defendants for the construction of a swimming pool the contract provided of a specific depth,
BUT the pool was constructed 6 inches too shallow.

The breach had no impact on the value of the pool, but cost of re-doing to the pool six inches deeper in excess of 20,000
pounds.

The Trial Judge had awarded 2,500 pounds for loss of amenity but the Court of Appeal reversed this and awarded
damages based on cost of performance.

The House of Lords restored the Trial Judgment.

o Issue: Is the cost of rectifying the defect (i.e. of rebuilding the pool at the specified depth) recoverable? That is, is
the cost of reinstatement the appropriate measure of damages?
o Decision: NO. The expenditure for doing so is way out of proportion to the benefit to be obtained. The appropriate
measure of damages is the diminution in the value caused by the breach.
Ratio: Where the loss suffered by a party due to malperformance or incomplete performance of a K cannot be commercially
quantified, the injured party should still be entitled to a remedy: damages are meant to place the injured party in the same
position as if the contract had been performed. It is unreasonable to award the pary nothing. On the other hand, it is
unreasonable to award the cost of restitution if that cost far exceeds the (non-monetary) loss suffered or the benefit that
would have been obtained under the contract. There CAN be a middle ground: diminution in value may be the appropriate
measure. The choice will be based on what is reasonable. If reinstatement is not the reasonable way of dealing with the
situation, then diminution in value, if any, is the true measure of the plaintiffs loss. If there is no diminution in value, the
plaintiff has suffered no loss. His damages will be nominal.
Reasoning:
The Lords are balancing
1) the principle that a person who suffers losses due to breach of contract is entitled to a remedy, and that it would be unfair
to deny them that remedy just because the commercial value of the loss is not quantifiable (non-monetary), and
2) the principle that it would be unreasonable to award damages measured by cost of reinstatement where it would be way
out of proportion to the non-monetary loss suffered
Comments:

Expectation principle. But this doesnt mean that cost of cure is the norm! Most cases, market value is norm. If it doesnt
get you anything, its bc its unique so you should sue for spec perf.

Especially if you dont inform the other party.

NOTE: There is a subjective reason of why someone might want a 7 inch pool = consumer surplus OR loss of amenity.

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VS in the previous case, it was reasonable to award value of performance.

Jens v Mannix Co (1979), 30 DLR (4th) 260 (BCCA) (p. 29) Pl gets cot of repair (building a new house) cost at the time
of the breach. Court reduces amount bc of depreciation.
Facts: Oil spill makes house uninhabitable; will have to dig up overburden and replace all contaminated soil, then build entirely
new house. Property could likely be sold for more w/o house, since zoned commercially and has greater value as such. Pl
lived in uninhabitable house polluted by crude oil pipeline break for 4 years after damage b/c had business on adjacent
property. Sued Def intended to rebuild but hadnt yet. Trial judge awarded replacement costs at 1977 values, year of trial and
year in which liability by Def was admitted, even though accident in 1973. Court of App. overturned date of assessment to the
date of the loss (1973) because it was not convinced arguments presented were strong enough to depart from the general
rule, and deducted for depreciation from that date.

Assess loss as of date of loss.

If the Pl has not shown a manifest intention to improve, court may deduct for depreciation between date of damage and
date of trial.

**Jens is Canadian: accepts that in certain circumstances there could be deviation to the date of breach rule. The
question is: what triggers the exception? Here the answer will be based on the argumentPl will make the best
argument as to why the date should be extended and the Def will have to try to find stronger argument.

What is depreciation? Pl had a house that was old (before oil spill). Wasnt a brand new house. This is often the case
for properties. It is the loss in a piece of property over time. Real estate (exception) increases in value. (p. 65)

Betterment / depreciation issue p. 62 = new for old.

James St. Hardware (1987) Ont CA (p. 61): DESTRUCTION OF PROPERTY Is replacement reasonable? Should
improvement be accounted for? Is it a case of forced modernization?
Pl rebuilt, b/c location crucial to business. New building had extra capacity. Deduction of 10% for improvements /
enhancement. Here, no deduction for betterment. So, here and in Harbutt there are no deductions.

Consider whether it is reasonable to replace, or compensate for value of loss.

Onus to show not reasonable is on the Defendant.

Enhancements to building will normally be deducted.

In cases of forced modernization, Pl shd not hv to borrow to modernize.

W- evidence, cost of compliance with building codes will not be deducted.

Where no replacement, damage will be the value of what was lost. (obiter)
Plaintiff: The trial judge erred in (a) deducting $34,000 from the replacement cost; and (b) refusing to allow the $49,394 as
the cost of compliance with the Building Code Act.
Defendant: The trial judge erred in (a) not deducting $95,000 for depreciation; and (2) not reducing the damage to inventory
($140,000) by a profit of $124,925 received on sale of the inventory.
Issue: How should the betterment/depreciation issue be dealt with?
Reasoning: Damages should put Pl in the same position as it would occupy if it had not sustained the wrong.

McGregor on Damages states that test which appears to be the appropriate one is the reasonableness of the
plaintiffs desire to reinstate the property; this will be judged in part by the advantages to him of reinstatement in
relation to the extra cost to the defendant in having to pay damages for reinstatement rather than damages calculated
by the diminution in value to the land.

On the question of betterment, McGregor states that the law will not place on Pl the cost of betterment when Pl
incidentally derives a greater benefit than mere indemnification, due only to the impossibility of effecting indemnification
without betterment.

Waddams states, suggested, therefore, that an anticipated benefit accruing to the Pl on repairing damaged property
ought to be taken into account to reduce damages, with compensation, however, for the cost to the Pl of the
unexpected expenditure required of him, and with the onus of proof upon the Def in case of doubt on this question, or
on the value of the benefit.

In fact, the court finds that Def must prove that the Pl benefits; however, the Pl must show that he bears a loss
from having to expend on this benefit early.
Application: The defendant did not adequately prove the depreciation or the $34,000 benefit. Pl did not adequately prove
how much of the cost of complying with the new building code was relevant (i.e., flowed from the breach, rather than from the
change in floor plan they used upon rebuilding). If it had been able to prove it, it would have been recoverable (or if he had
merely rebuild along the old plan).
This case demonstrates that the issue is often a question of burden of proof. There is more thoughtful consideration of the
issue of betterment in this case than in Harbutts.
Harbutts Plasticine Ltd (1970) C.A.: factory burnt down b/c of negligence. Was replacement reasonable? No
alternative to keep business viable. New bldg 2 storeys, old 5; capacity the same, no extras. Only upgrades were
those required by code. Value of old: L45,000, new: L68,000. Pl got full replacement b/c reasonable to mitigate lost

11

profit. No deduction for betterment.

Where no substitute for the damaged property is available, and there is no realistic alternative, Pl will get
replacement cost.
Added improvements result in a deduction from replacement cost equal to cost of such improvements. (obiter)
Substantially different design okay if net result is not an overall improvement.
Improvements that are required to fulfill building code requirements should not result in a deduction from the
damage award.
G) BENEFIT TO THE DEFENDANT
Restitutionary damages
Restitution is about someone give something back to someone else (the former owes a duty of restitution to the latter).
Restitution is unchartered territory: we are leaving the relatively well-known areas of causes of action such as contracts and
torts and moving into trusts and unjust enrichment, securities and secured transactions or proprietary claims.
Restitutionary relief can arise in three mutually exclusive situations:
1) traditional unjust enrichment;
2) unjust enrichment for services;
3) enrichment through wrongdoing.
Whitham v Westminster Brymbo Coal & Coke Co, (1896, Ch, CA) (p. 69) Way-leave cases: if one person has without
leave of another been using that others land for their own purposes, he ought to pay for such user.
Facts: The defendant dumped slag onto the plaintiffs land. The damage suffered by the plaintiff was less than the market
value of a contract for slag dumping.
Damages:
1) Pl gave had the value of their land diminished;
2) Pl lost the use of their land, and Defs had it for their own belefit.
Held: A proper scale of damages is the higher sum, since the trespasser should not be allowed to make use of anothers land
without compensating for the use.
Notes: how do we compensate such loss? We ask for the Defs gain from going across the land. Ex. he would have otherwise
had to take a longer route, business 25% more efficient its what the Pl can ask. Also, what would have been the license fee/
permission fee? (Fee he would have had to pay to use the land in this way.) It is a gain-based remedy.
Strand Electric and Engineering Co v Brisford Entertainments Ltd, [1952] 2 QB 246 (CA) (p. 70) Wrongful detention
of goods / Detinue. Pls are entitled to compensatory damages calculated as a reasonable hire charge for the period of
detention. Hiring charge runs up to the date when goods were returned, starts when Def took possession of goods. No
deductions by judge.
Facts: Def misappropriated Pls electronic control panels, and ultimately refused to return them.
Issue: Pl would have trouble proving what was lost (would it have used circuit boards, rented them out, etc.?) (Def argues a lot
more to rent so no lost opportunity).
Held: Def to pay reasonable cost of renting circuit boards for period in which it retained them (rental/license fee). Court flips
the onus and assumes 100% utilization, gives Pl remedy measured by whole notional benefit which is probably far more
than Pl could have proved on compensatory damages.
Wrotham Park Estate Co Ltd v Parkside Homes Ltd, [1974] 2 All ER 321 (HC) (p. 73) Restrictive covenant imposed on
land. Gain-based calculation. When the breach of a duty gives the breachor an advantage and doesn't disadvantage
the breachee, the compensation will be that of the reasonable price of having been in a situation where no breach
could have occurred. Link with way-leave cases.
F: Restrictive covenant limited # of homes Def could build on the land. In breach of covenant, Def developer built 14 extra
homes.
I: no loss to Pl, but Def gained from breach of K. Crtrefused a mandatory injunction that would have required the house to be
demolished. Value of Wrotham Park Estate was not diminished by the erection of houses (value didn't even change (no harm))
/ Courts held it would be wasteful to destroy them.
H: Def stripped of a portion of the value it reaped from the property. Court said they would measure the wrongfully obtained
benefit by the amount the court thinks reasonable parties would have come up with as a measure of the benefit. Basically,
calculates how much developer would have paid P for the right to build the extra homes.
A just substitute for mandatory injunction would be such a sum of money as might reasonably have been demanded by Pl from
Parkside as a quid pro quo for relaxing the covenant. A landowner faced with a request from a developer which he feels
reluctantly obliged to grant would first ask what profit the developer expected to make. The developer would have said about
50,000, since that is the profit that Parkside concedes it made from the development. The landowner would then reasonably

12

have required a certain percentage of that anticipated profit as a price for the relaxation of the covenant. The appropriate
award is 2,500.
Notes:

Pl wanted the whole profit from the houses (140 000). In what theory could they gain it? Restitution-gain based calculation

Court says gain is actually 50 000 and gives 5% (2500, which needed to be split among Pls, so about 166)

Pls get the reasonable amount that would have made a reasonable Pl to allow the selling of the land, given that the
property value of the Pls did not loose value at all.

Wrotham Park did not involve a breach of contract in the sense that a default by a seller to deliver goods would involve
such a breach. While the plaintiffs rights arose under a restrictive covenant (and in this sense was contractual) the right is
more closely akin to a property right.
Tactically speaking, the plaintiff should have sought an injunction to stop the defendant from building. This would have
allowed him to bargain for an attractive price before releasing the Def from the injunction. Since the Pl did not do that, it
had no loss and had to throw itself on the courts mercy to give it some relief. In such a case, the court can: (1)
compensate the plaintiffs loss; (2) award the defendants gain; or (3) if its a deliberate invasion of property rights, give
punitive damages.
The crucial test for the recovery of the promisees gain would be if that right would prevent efficient breach. Efficient
breach (when it takes the form of efficient trespass or efficient conversion will be prevented in several situations, though
the basis for that result is principally the law of restitution.
Pl asked for the covenant (didn't pay). This made the going price lower (because you can't build as much): the argument
could be made that by agreeing to this covenant, I have effectively given you something, a lower contract price (some
cases accept negative benefits). So you've saved money. No, if you go and break the covenant, it's like broken delivery: I
gave you a savings on condition that you keep the covenant. So you're just trying to get back what you agreed to get from
this covenant, i.e. a reduction of the price.
Attorney General v Blake, [2000] 4 All ER 385 (HL) (p. 76) In some circumstances, where ordinary remedies are
inadequate, restitutionary damages / gain-based damages for breach of K may be awarded.
Facts: As part of his original employment contract with the gov, there was a clause that said that he could never write about
what he did without their permission. Writing the book breached the clause. The problem is that, given that this had all
become public knowledge, the gov didnt suffer damages. How do we go after the 50K? They say, we dont want what we
lost, we want what he gained.
Problem: There are only a few circumstances where we can ask for this:
Fiduciary duty breach: Not the case here.
With respect to certain property rights:
If I take your property without your permission, and use it for a while, you chair and horse will not be damaged but I got
some benefit from breaching your property right, which allows courts to order the payment for the reasonable cost of use.
If you sell land to someone its possible to sell it with limits to its use (restrictive covenants). If you breach the restrictive
covenant, the reasonable cost you would have made should be reimbursed (you reimburse the profit that was forgone by
giving the property).
We have a legal principle that they want to use but its only available in particular cases; can it be expanded beyond
to be appropriate here?

Court uses Wrotham Park. But 1) it doesnt deal with property right, not a contract case 2) Pl recovers only reasonable
license fee, whereas here the Pl gets the whole profit.

This is the 1st case where we say 1) we can get gain-based remedies for breach of contract and 2) gain-based
remedy can be the whole profit. In the dissent, p. 81, does not agree with this: this isnt a property case! So, your
remedy here is wrong all we could do is award a licensing fee, and then again it wouldnt be restitutionnary.
Key thing: If were going to go beyond that, when can we go beyond that? Will only be in exceptional cases but no fixed
rules can be prescribed (= very useless). The subject matter of the contract, the circumstances of the breach, the
consequences, etc. will be taken into account.
TEST
Restitutionary damages are exceptional but available when Ld. Steyns test is met
Test: Disgorgement of profits is available where the term was important to the contract and
1) Breach of a negative stipulation (i.e. BP promised not to do something)
2) BP profited from breaching negative stipulation
3) NBP has special interest over and above the hope of a benefit to be assessed in monetary terms
4) Literal enforcement remedies are ineffective or virtually ineffective
NOT when:
1) cynical and deliberate breach

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2) the fact that the defendant was able to enter into a more profitable contract elsewhere
** makes exceptions for cases of efficient breach
Teacher:
1) Exceptional
2) Justice has to require it
3) Arises when the breaching parties gain is higher than the innocent partys loss

Ratio: Due to the nature of the relationship btw the parties (paramount importance that confidential information be kept thus
so & that members of the service have complete confidence in their dealings with each other), the breach of contract can be
considered akin to a breach of fiduciary duty where the appropriate remedy available is an account of profits (or
restitution remedy).
Where the normal remedies for breach of contract provided inadequate compensation, the court could grant the
discretionary remedy of requiring the defendant to account to the plaintiff for the benefits received from the breach of
contract even where the breach did not interfere with a property interest of the claimant;
Damages are compensatory generally. However, financial loss cannot be the only criteria. Sometimes, the just response to
the breach is that the wrongdoer should not be permitted to retain any profit from the breach;
If confidential information is divulged in breach of contract, an account of profits may be ordered in respect of the equitable
wrong;
The court will regard to subject matter, purpose of the breaching provision, the circumstances and the consequence of the
breach. The general guide is whether Pl had a legitimate interest in preventing Defs profit-making activity and hence, in
depriving him of his profit.

Application of this case / Follow-up:

So far, no Canadian cases have actually followed Blakes. The only case where it was used was WWF wrestling v. WWF
wildlife foundation.
In Canada, theres one case. A woman agreed to give a secured loan to a company. The company paid back the money with
interest but did not give her the mortgage she asked for. This allowed the company to benefit from a lower interest rate. The
court applied Blakes to order that the company give the woman the profit that they made from avoiding the mortgage, which
is equal to what they saved from the lower interest rate.
Comments:

We move from compensatory damages to things like punitive damages that ppl cant decide how to label (some say
restitutionary damages). At CL, you can get the other guys profit and not necessarily what you lost if you ask for it.

The reason why theyre called restitutionary, restitution has the idea of transfer and return of value, which is a
compelling reason to compensate someone for it. The court refers to the laws on restitution (or unjust enrichment).

The legal wrong makes this case differ from the others: it is a breach of contract. Case of trespass to land (intentional
tort). In Strand, the legal wrong is detinue ; in Wrotham Park, breach of covenant. Here, employment contract: it isnt a
property wrong.
H) NON-PECUNIARY LOSS IN CONTRACT
We cant easily value them with money like pain & suffering, loss of enjoyment.
Fidler v Sun Life Assurance Co of Canada, [2006] 2 SCR 3 (p. 82)
Facts: P suffered mental distress. For more then 5 yrs D denied P long-term disabilities.
Ratio: Is the damage foreseeable? If yes you can recover damages for mental distress.
Rejects idea of showing an independently actionable wrong (independent cause of action needed only to prove
damages resulting fr aggravating circumstances tht parties didnt expect while K formation)
YOU JUST MUST SHOW THE HADLEY V. BAXENDALE TEST.
You can recover damages for mental distress if the object of the contract was to secure psychological benefit (promise in
relation to state of mind), it brought you mental distress, and it was in the contemplation of the parties (based on wht was in
the reasonable contemplation of parties at the time of K formation), and then only if the degree of suffering is sufficient to
warrant damages.
Holding: P got damages for mental distress (which are compensatory 20k) but there was no bad faith so no punitive
damages.
Notes:
The mental distress part of the claim is what matters to us.
In order to get damages for a non-pecuniary loss, do you have to have a diagnosis? Or is it enough to just have symptoms?
She does recover, so having the symptoms is enough / not necessary at all times that a diagnosed psychiatric disease is
found.
Historically, could we get non-pecuniary damages fr a breach of K? One reason why courts were hostile to this its because of
the stiff upper lip expectation (be tough) (par. 36). Also, is it foreseeable? A contract-breaker is not generally liable for

14

distress (par. 34).

There is a general rule that we cant get this, we can get it as exception in specific cases. As long as the promise in relation
to state of mind is a part of the bargain in the reasonable contemplation of the contracting parties, mental distress
damages arising fr breach are recoverable. (par. 48)
Court clarifies aggravated damages in the context of damage for mental distress arising fr breach of K (par. 51). aims
compensation, but takes full account of intangible injuries like distress & humiliation tht may have been caused by Defs
insulting behaviour. Aggravating damages= given for aggravating circumstances; (pg 52,53) The damages she gets are
not aggravated damages.
K does not have to be a K where mental element is the main aspect for mental distress to be foreseeable when there is a
breach.
o Subtext/secondary purpose of insurance Ks is peace of mind.

Not just to protect against the financial risk, but so you dont have to worry about that risk in the meantime.

Psychological benefit of having peace of mind while the K is in place.

Basically adopts Hadley v. Baxendale (principle of reasonable expectation) foreseeability requirements for determining
whether psychological harm is compensable.

But, to apply the foreseeability rule, you look at the object of the K/what was promised. so, its not really
a huge step forward.
Analysis:
Award still relatively modest ; seems that giving such small amount is a deterrence to suing for these causes of mental
distress ; if law evolves but if the damages are low, not much evolution in the law.
Was supported by medical evidence in this case.
Might be worth to add these damages to another cause of action, but if the only thing we're suing for is mental distress, it
might not be worth it.
Its not just about missing the psychological security of having an insurance K, but getting + sick by having to live without
disability benefits.
Honda Canada Inc v Keays, [2008] 2 SCR 362 (p. 93)
A) Trial Judge Decision: DefS termination of Plss employment was a disproportionate response to his alleged insubordination so he was
wrongfully dismissed. Pl got 15 months notice as well as a 9-month extension of the notice period (i.e. a Wallace bump-up) as a result of
Pls bad faith actions in the manner of dismissal. Trial judge also awarded 500k in punitive damages as a result of Defs discriminatory and
harassing treatment of Pl in the course of his employment.
B) CA Decision: upheld the 15-month notice period Pl was wrongfully dismissed and that his termination for insubordination was a
disproportionate response. Also upheld the 9-month extension of the notice period on account of Defs bad faith dealings with Pl + Pls
added vulnerability as a result of his disability. Finally, while they upheld the principle of a punitive damages award, they reduced the
award itself from 500 to 100k on the basis that some of the trial judges findings of fact were not supported by the evidence and that the
award violated the fundamental principle of proportionality.

C) SCCs Dec:
Wallace v United Grain Growers: In the context of employment contracts, the SCC had previously held that aggravated
damages were not available in wrongful dismissal cases unless there was an additional and independently actionable
wrong. However, the Court at the same time held that it was appropriate to lengthen the required notice period if the
employers conduct in the context of the termination was particularly harsh or malicious this was coined as Wallace
Damages.
Wrongful Dismissal? Upheld the finding that Pls employment was terminated without just cause / wrongfully dismissed.
Reasonable Notice Period? Reasonableness of the notice period must be decided with reference to each particular
case, having regard to the character of the lost employment, the employees length of service, the age of the employee,
and the availability of similar employment having regard to the experience, training and qualifications of the employee.
These factors can only be applied on a case-by-case basis and no one factor should be given disproportionate weight.
Despite some errors, found lower courts determination was not unreasonable in light of the entirety of the circumstances
of this case. As a result, upheld the 15 months notice period.
Extension of the Reasonable Notice Period for Bad Faith (i.e. Wallace bump-up)? Hondas behaviour did not
warrant an extension of the notice period because the evidence did not support a finding that manner of dismissing Pl
was an egregious (outstandingly bad) display of bad faith.

Also effectively eliminated the concept of the "Wallace bump-up" and held that in cases where damages are
attributable to an employer's conduct in the manner of dismissal, there will no longer be an extension of the notice
period. Rather, the amount to be fixed should accord with all other cases dealing with moral damages. In other words,
if an employee can prove that the manner of dismissal caused mental distress and that the distress was in the
contemplation of the parties, "those damages will be awarded not through an arbitrary extension of the notice period,
but through an award that reflects the actual damages."
Punitive Damages? (PD) No basis for awarding any against Def. Courts should only resort to punitive damages in
exceptional cases and Hondas conduct was not sufficiently egregious or outrageous to warrant such damages.
Furthermore, expressed concern that damages for conduct in dismissal and PD often result in unnecessary overlap in
damage awards. As a result, now asking adjudicators to question whether PD are necessary in addition to damages for
conduct in dismissal.

15

Find that both the trial judge and CA erred in concluding that Hondas "discriminatory conduct" amounted to an
independent actionable wrong for the purposes of allocating punitive damages. Breach of the Code cannot
constitute an actionable wrong; therefore the legal requirement for the common law remedy of punitive damages was
not met.
How does Fidler v Sun Life Assurance Co of Canada affect Wallace damages? The court chooses to change the
approach to the mental distress damages for breach of employment contract. Did the court need to do that in this case?
SCC could have simply said that this is not a case of Wallace damages, but they decide to change the law. We had
Wallace, but now we have Fidler, so we are going to apply Fidler here. The big change that goes on is that we can now fit
the employment cases under the Hadley v. Baxendale principle (bad firing no more compensated by Wallace and extra
months of notice, but normal principles of Hadley v. Baxendale).

Court says that in principle an employment contract is not a "peace of mind" contract. "The k of employment is, by its
very terms, subject to cancellation on notice or subject to payment of damages in lieu of notice without regard to the
ordinary psychological impact of that decision." So, not reasonable foreseeable that by termination of the k, employee
will suffer mental distress at all.

So then, when are the damages foreseeable as per Hadley v. Baxendale? The firing itself cannot lead to suffering
of mental distress. However, if the employer fires someone really badly, it is reasonably foreseeable that firing in this
way will lead to suffering of mental distress and so the employer would have to pay damages for mental distress.
o Bad firing no more compensated by Wallace and extra months of notice, but normal principles of
Hadley v. Baxendale.
Dissent / Judge Lebel: Thinks Wallace is right. "The contract of employment is a good faith contractoften reflects
substantial power imbalances. As a result it must be performed and terminated in good faith and fairly."
I)

PUNITIVE AWARDS
Hill v Church of Scientology, [1995] 2 SCR 1130 (p. 98) PUNITIVE DAMAGES IN TORT. To get punitive dam, conduct
must depart markedly fr ordinary standards of decency i.e. exceptional case tht is malicious, oppressive or highhanded and that offends courts sense of decency. A cap should not be imposed in defamation cases. confirmed
by Whiten v Pilot
Facts: Punitive damages often awarded in actions for defamation. Pl sued for defamation; Def systematic attempts to
discredit through prolonged and intentional campaign to defame.
Held: $300k general compensatory damages, $500k additional compensatory damages b/c of aggravated nature of the
defamation (long time, extreme) (= non-pecuniary damages for being defamed), $800k in punitive damages above the
compensatory damages.

On punitive damages:

Non-compensatory. Aim not to compensate Pl, but rather to punish Def.

Are in the nature of a fine which is meant to act as a deterrent to the Def and to others from acting in this manner.

Court may take account of ability to pay, asking: what is rationally required to be a real deterrent?

Where there are joint and several tortfeasors, they are not all responsible for the punitive award, because actual malice is
required. Only the one(s) found to have acted maliciously will pay.

Possible for a subsequent judge in appeal to change punitive damages, but with compensatory, including aggravated
damages, it is more difficult to modify.

Some academics say that their use might be a way to compensate moreif compensation award was on the low side
(compensatory awards barely give full compensation so the punitive make the compensation a bit better).

If no amount of money will stop Church from saying these things (they repeated it the day after), why award these
damages?

General social deterrence

There is still punishment for their lack of deterrence

Should only be awarded in those circumstances where the combined award of general and aggravated damages would
be insufficient to achieve the goal of punishment and deterrence; rational purpose.
Note: this is an intentional tort. Principles are less easily applied in negligence cases. Cassels text indicates that only cases
of gross negligence will likely draw punitive damages. Also, this case is an exception to the functional approach normally
taken with non-pecuniary damages.
On aggravated damages:

Compensatory, related to intangibles such as mental suffering, humiliation, distress.

Comments:

See Andrews, where we imposed a cap of $100k for non-pecuniary damages for personal injuries.

Jury got any little, if any guidance, in respect of the three numbers they gave. Raises the question as to why we are using
jury for certain tasks: jury does not have to give reasons as to what number they decide on for damages.

16

Hill did not end up suffering (he became a judge) BUT court says this is not important.

Whiten v Pilot Insurance Co, [2002] 1 SCR 595 (p. 105) In breach of K, conduct must constitute marked departure fr
ordinary standards of decency + must be independently actionable (here CLARIFIES Vorvis: does not need to be a
separate tort, so long as the plaintiff can establish an actionable wrong) + confirms Hill
Facts: Insurance refuses to pay insurance on Pl home. Def breached K by failing to pay, & also breached a contractual duty
of good faith. Def wrongly accusing Pl of arson.

Trial JURY awards 1M (higher than the amount the Pl claimed);

CA: 100k because amount of punitive damages is too high (3 times more than compensatory loss);

SCC restores the 1M : SCC would not have awarded 1M but considers the award is within the rational limits within a jury
must be allowed to operate. Dissident Lebel agrees with the view of the CofA
On punitive damages:
1. Not limited by categories Vorvis. So, in negligence cases, we can still have damages no limitation. There are some
carelessness cases where we can award punitive damages.
2. General objective = punishment (so 3 in general: punish, deterrence & denounciation)
3. Since punishment is in criminal law, PD exceptional
4. Insufficient guidance offered by terms high-handed, oppressive
5. Promote rationality
6. Rational to use PD to relieve wrongdoer of its profit where comp dam would only = license fee to earn greater profit
7. No formulaic approach
8. Governing rule for quantum: proportionality
9. Juries should receive more guidance (par. 93)
10. PD not at large; moderate awards are generally sufficient ; assess the lowest award that would serve the purpose. (Hill)
11. Standard of review: could a properly instructed jury find that this amount, and no less, was required?
12. In principle, PM not available if Def has been punished by the criminal justice system for the same conduct / criminal
punishment must be considered.
Rationale:
o
Cant get punitive damages just for failing to perform the K must have an independent wrong.
In this case, the breach of implied duty of good faith and fair dealing.
o Breach of duty of good faith can give rise to an award of punitive damages. Whiten clarifies Vorvis: independently
Actionable Wrong doesnt have to be a tort can be a breach of something else in the K. So long as it goes beyond
the primary deliverable, and also is a breach of another element of the K which is independently actionable.

So, two obligations in insurance Ks:

(1) pay $ on occurrence of a specified risk, and
(2) treat customers in good faith.
o Breach of duty of good faith can give rise to an award of punitive damages. Whiten clarifies Vorvis: independently
Actionable Wrong doesnt have to be a tort can be a breach of something else in the K. So long as it goes beyond
the primary deliverable, and also is a breach of another element of the K which is independently actionable.

Purposive approach to punitive damages: they must be rational (lowest amount that would serve the purpose) and
proportional to misconduct. Hill v. Church of Sc
(1) Rationality: not many explanations on this point and given that two judges thought $1M was irrational, while 1
agreed with CA, seems that reasonable people can hold vastly different opinions on this subject. Rationality is an
entirely discretionary concept of little assistance in determining an appropriate award. However, it will now be
difficult to attribute irrationality to punitive damages of less than $1M.
(2) Proportionate to the blameworthiness of Defs conduct (par. 112) May be influenced by many factors such as:

Was misconduct planned & deliberate;

Intent and motive of Def;

Persistence of outrageous conduct over time;

Cover-up;

Awareness of wrongdoing;

Degree of profit;

Knowledge of deeply personal nature of the damage;

Level of vulnerability of Pl when one party is particularly vulnerable to the greater

power of the other, this vulnerability ought not to be exploited Such exploitation is reprehensible, and
deserving of punishment;

Degree of intended harm;

(3) Consider financial means of Def IF:

Def argues financial hardship,

Financial means directly related to the misconduct;

It is rational to assume that a lesser award would fail to achieve deterrence. (But, the court discouraged
reference to the net worth of the Def, and offered little guidance about how to apply this 3rd factor. Non-financial
effects such as humiliation and bad publicity are not acknowledged as factors which in many cases will serve to

17

add to the punishment of Def.) We are left to speculate achieves deterrence for a moneyed Def.
J) PERSONAL INJURY
One lump sum instead of periodic payments: One issue with lump sums is that the Pl might be undercompensated; at
other times Pl dies before and the lump goes on to the beneficiaries. Assessing one lump sum is also quite complicated. We
need to take into account inflation, taxation, deductions based on circumstances.
Then why don't we have periodic payments? Too difficult on the administration + finality. There would have to be
reassessments every now and then (evidence and argumentation back and forth for years). Majority of Defs are
insurance companies. They like the lump sum because, in addition to paying less, they do not want more risk or
uncertainty. They set premiums based on what they think they will have to pay out less some profit. They could not
set their premiums if there were variable periodic premiums.
Contingency fee arrangements = most cases where an insurance company is not involved have these arrangements; the
lawyer gets a cut of the recovery ; no win, no fee. So, lawyers want the lump sum of money.
Pl might benefit from a set of periodic payments that could vary over time, but no other party has interest in it (like lawyer).
Watkins v Olafson (p. 136): when there is no legislation telling judges that periodic payments must be awarded, judges must
make lump sum awards, but there clearly is a debate as to which of these approaches is the best.
Other factor to take into account: interest obtained by Pl. Pl gets sum; what the reasonable Pl does = puts money in the
bank and get interest. What is the role of interest in the calculation then? The more interest we think Pl will make, the less that
will be paid. In Andrews court assumes that the amount that will be earned in interest was 7% (real rate of return about
inflation of 7% per year after investment) this was truly high taking into account that it is usually 2%. More recent cases have
assessed better.
Andrews v Grand & Toy Alberta Ltd, [1978] 2 S CR 229 (p. 118) Functional approach adopted, cap imposed on nonpecuniary damages for personal injuries: $100,000. Damages assessed as cost of procuring services which will
make the situation better for Pl.
Facts: Andrews is part of the 1978 SCC trilogy (along with Thornton and Teno) that set out the law regarding the assessment
of damages in case of personal injury.
Andrews, 21 yo man, rendered quadriplegic in a car accident for which respondent Anderson and his employer, Grand, have
been found partially liable. Accident resulted in damage to the spinal cord and left A with severe and permanent injuries,
including paralysed legs, arms and trunk.
Issues:
Does Andrews require home-care or could he settle for (cheaper) hospital care? Home care.
Does the court have to take into account what the injured party might do with the awarded money? No. What he
chooses to do with his $$ should not be taken into consideration when assessing damages; courts have no
control over the Pls expenditure of the award (nor would Andrews have been limited in expenditure of his
earnings had he been able to work).
Can there be a limit on non-pecuniary damages? Yes, $100k.
Held: Appeal was allowed in part. The award changed to 75% of $817,344 ($613,008).
Analysis:

Pecuniary vs Non-Pecuniary Loss : Court set out principles of law with respect to pecuniary and non-pecuniary loss.
o

Made a clear distinction between these two categories.

Pecuniary loss deals with the costs of future care and future loss of earnings (or loss of prospective earnings), while
non-pecuniary loss deals with loss of amenities or enjoyment in life.

Actuarial Evidence
o

The reliability of actuarial science is illusionary since it deals with probabilities rather than actualities.

But as long as long as the lump sum system exists, actuarial calculations are the best available means of determining
the amount of damages.
Until a system of reviewable periodic payments is adopted by the Parliament, the Courts have to establish principles
to award damages to compensate accident victims.

Home-care or Hospital Care?

Court came to the conclusion that, if possible, home care should be provided, on the basis of full compensation
principle.
The victim is entitled to past and future costs as long as they are reasonable.

The ability of the tortfeasor to pay is not a relevant consideration in the assessment of damages.

Just because the government treats veterans and injured workers differently is no reason to impose that standard of
care onto victims of torts.
When victim still mobile & still full control of mental faculties, hospitalization NOT the right way to compensate for loss;

18

justice requires something better.

If objective = restore Pl in the position he was before, why would he end up in an institution if he wasn't there before?
Contrary to the view expressed in the Appellate Division of Ab, there is no duty to mitigate , in the sense of being forced to accept
less than real loss. There is a duty to be reasonable. There cannot be "complete" or "perfect" compensation. An award must be
moderate and fair to both parties. Clearly, compensation must not be determined on the basis of sympathy, or compassion for the
plight of the injured person. What is being sought is compensation, not retribution. But, in a case like the present, where both Courts
have favoured a home environment, "reasonable" means reasonableness in what is to be provided in that home environment. It
does not mean that A must languish in an institution which on all evidence is inappropriate for him.

The use of the awarded funds

o
o

Cap imposed on non-pecuniary damages for personal injury: $100k. Supported by Lindal v Lindal. Modification to
Cap possible to take into account inflation.
o The court went on to consider the various approaches (the "conceptual" approach, the personal approach and the
functional approach) and approved the functional approach which sets $100k (around $325k today) as the upper
limit for non-pecuniary loss in cases such as this, stating that a cap needs to be implemented as they were
constantly rising, specifically commenting on the situation in the US.
o Why did Hill (in Scientology case) get 500k in 1995 for defamation? We capped non-pecuniary losses because they
are the secondary component of the award; usually attached to physical damages. In a defamation case, money
given for the defamation = whole award (isnt second amount). Also, a lot more physical injury cases than defamation.
Unlike the non-pecuniary losses attached to the physical, no evidence of the need for a cap in defamation awards is
needed (we do not have many cases). There is then a policy issue with non-pecuniary losses so the need to put a
cap. Otherwise, drivers would have to pay great amounts to insurance cies so they can afford these claims.
Lost earning capacity:
o
o

Save for infants and the mentally incompetent, it is not to the court to control the injured partys expenditure with
respect to the amount awarded to him.
Victim is free to plan his life and to plan for contingencies, possibly by seeking the help of financial advisors.

It is not loss of earnings but, rather, loss of earning capacity for which compensation must be made.... A capital asset
has been lost: what was its value?
Loss of earning capacity was assessed with reference to the maximum salary for the type of work engaged in by the
plaintiff.

Calculations: contingency/svariables of life: We work out the care cost and deduce the contingency (bc things can
change, are not certain). We calculate the care costs, and further considerations make us reduce what we think you
need.
o For the deductions for future earnings, same thing (20% reduction).
o

Now, the contingency deductions arent calculated the same way.

Watkins v Olafson, [1989] 2 SCR 750 (p. 136) Courts should prefer lump sum payments of damages over periodic
payments, unless there is a structured settlement between the parties.
Facts: W was in an accident on a hwy that was under construction with a van driven by O and owned by Aitkenhead.
Subsequently brought action against the 2 & the provincial government. Trial judge awarded a lump sum payment which
included damages for loss of earning capacity both to the date of trial and for the future, damages for future care as initial
outlay and for ongoing care, & an amount for a financial management fee. The CA reduced the damages for pre-trial and for
post-trial loss of earning capacity and set aside the lump sum award for future care & ordered instead that the provincial govt
pay W a monthly payment adjusted annually for inflation, subject to deductions for on-going care which W might receive from
the provincial govt.
Issues:

Did CA err in substituting periodic payments for a lump sum judgment?

Should an allowance be made for the effect of taxation in calculating the cost of future care?

Did CA err in reducing the amount allowed by the trial judge for cost of future care?

Did CA err in reducing the award for lost earning capacity, past and future?
Decision: Unanimous court held that court should not order periodic payments for several reasons:

Make a clean break btw the Pl and the Def, and not to force them to have an ongoing relationship;

Def might not have the funds in the future to continue to make the payments what would happen then; and

There would be undue burden on both parties and the court system because they would have to keep revisiting the issue
and recalculate the costs.

An allowance for taxation was reasonably calculated and warranted taking it into account.

CA also erred in reducing the amount of award as it was not open to them to change it without demonstrable error on the
part of the trial judge.

Fee for management award of the fund may be awarded where appropriate. It was appropriate in this case.

19

Lindal v Lindal, [1981] 2 SCR 629 (p. 141) Cap imposed on non-pecuniary damages for personal injuries is set in
stone. However, modified in one way: to adapt to inflation. Expect the number to be today around $400k (= to 100 000 in
1978; buys you what you could have bought in 1978 with $100k).
Facts: Only question is whether CA erred in reducing award for pain/suffering from 135K$ to 100K$.
Issue: Under what circumstances should a trial judge exceed the rough upper limit of $100K$ for non-pecuniary loss
established by the SCC?
Holding: 100K$ limit is upheld.
Reasoning:

Appellant suffered loss of brain function, speech impairment, paralysis, muscle spasms, etc. (basically ending possibility of
functioning with help in society). Trial judge took this as compelling reasons for bigger amount of dmgs, an exceptional
case.

SCC, in establishing $100k limit recognized that money cannot repair losses contemplated in cases such as these:
o Pain/suffering are intangibles
o Money is awarded not because lost faculties have a dollar value, but because money can be used to substitute other
enjoyments and pleasures for those that have been lost

Therefore, award of non-pecuniary dam doesnt depend alone on seriousness of injury, but ability to ameliorate condition of
victim considering particular situation
o Ex. permanently comatose person will not get non-pecuniary dam award because it couldnt possibly help them at all

Reasoning for having the 100K$ limit:

1. Difficulty in calculating dmgs of this sort; claim for these types of injuries is virtually limitless
2. Victim is already fully compensated for lost earnings
3. Dmgs for non-pecuniary loss arent really compensatory
4. Social burden of exorbitant non-pecuniary dmgs is huge; reference to its effects in US
Argument made that inflation affects this 100K$ amount: court can take account of inflation, but it has no effect on the
award here.
Townsend v Kroppmanns, [2004] 1 SCR 315 (p. 146) Legislated discount fees, tax gross-up, management fees.
Facts: After assessing damages against Kroppmanns and Currie in an action arising out of a motor vehicle accident, trial judge issued
supplementary reasons to deal with the tax gross-up and management fees. T had already received partial payment and spent part of it
purchasing a house and paying legal fees. Trial judge deducted the capital expenditure and the legal fees in calculating management fees and
the tax gross-up. Also reduced the fee award by 50% to account for a predicted increased return, assumed to result fr the investment
counselling for which the management fee award was granted. In BC, discount rates are fixed by Law and Equity Regulation & a four-level
classification for calculating management fees is regularly applied by courts. CA unanimously held that the evidence did not support the
reduction of the award for management fees and that management fees and the tax gross-up were to be calculated in relation to the full
amount of damages awarded, without deducting Ts legal fees and the capital investment.
Issue: Does a Pls decisions regarding how to use their damages affect the award of items such as management fees?
Decision: Appeal dismissed.
Reasons: Rejected appellant's argument; will not increase the discount based on the fact that management fees were awarded. Holds that
the whole point of the legislature setting discount rates was to take considerations like this out of the court's hands. Also finds that to reduce
the damages because Pl had spent money on a house would defeat the very purpose of ensuring full compensation. Principle of finality
(Andrews) demands a clean break between the parties; allowing repeated revisiting of the evidence every time money is spent would be
inconsistent with this principle.
Ratio: Legislated discount fees must be strictly followed, including in the calculation of tax gross-ups and management fees.
Notes: A tax gross-up is awarded as the Pl is going to have to pay tax on the capital gains earned by the award, thus the amount received in
damages might be much less than how much is "awarded". Therefore, court must award them more than the basic calculation of the award so
that it will equal the awarded amount after tax.

Teno v Arnold, [1978] 2 SCR 287 (p. 149) Projected income of child.
Facts: Diane T, 4yo girl, crossed street with 6yo brother (having first obtained permission and money fr her mother, Y) to make a purchase
from an ice cream truck owned by J.B. Jackson Ltd & operated by Stuart Galloway. Children were served at a service window of the truck on
the curbside. D was served first and while her brother was being served she left to return to the opposite side of the street. After passing
around the front of the truck, was struck by a car owned by W Arnold & driven by B Arnold. As a result of injuries sustained by Diane, her
mobility was seriously lessened, although technically she was not paralysed, and she suffered a considerable degree of mental impairment.
The trial judge gave judgment against the four defendants apportioning the negligence between them: 1/3 against the Arnolds; 1/3 against
Jackson and Galloway, and 1/3 against Jackson alone. CA varied the apportionment of negligence to 1/4 for the Arnolds, 1/4 for Jackson, 1/4
for Galloway, and 1/4 for Y Teno, the mother. Trial judge assessed the total damages of Diane at $950k divided into two parts: $200k for nonpecuniary damages and $750k for pecuniary damages. CA reduced the award for pecuniary general damages by $75k but otherwise did not
interfere with the assessment of damages at trial.
Issue: What is the appropriate method for determining the prospective loss of future earnings of a child?
Decision: Appeal allowed; damages fixed at $540,000.
Reasons: Lower court had decided to use the yearly salary of the little girl's mother ($10k/yr) in the absence of any other guide. Court held
that this cannot be used because cannot rely merely upon speculation. Award of $5k/yr would be too low as it would place her below the
poverty line. So they split the difference and award lost earnings of $7k/year; 20% contingency deduction brings it to $6k and use a discount
rate of 7% in assessing the total.

MacCabe v Westlock Roman Catholic School District (2001), 96 Alta LR (3d) 217 (CA) (p. 152) Damages for future
earning capacity male vs female data (female = negative contingencies).

20

Held that it was an error in principle for the trial judge not to have taken into account negative contingencies
associated with childbirth and child-rearing in assessing future income loss for a female plaintiff who had indicated,
before she suffered her injury, that she wished to have several children and would consider staying home with them.
Facts: Pl, teenager who wanted to be a physiotherapist later on, was injured in gym class while she was doing gymnastics.
Attempted a move but landed on her neck, became quadriplegic. Sued the teacher and the Westlock School Board as a result
of her injuries.

Trial: found that teacher & school board were both negligent, & substantial general damages were awarded to Pl. To
examine claim for loss of future income, judge refused to assess this aspect of the Pls damages using female-specific
actuarial tables for physiotherapists about earning, years of employment, etc., claiming they reflected historic wage
inequities / judge used male actuarial tables.

CA: noted that physiotherapists working in a hospital setting in Alberta are paid the same, regardless of gender but
studies show that females tend to take more time out of their careers, work part time, or leave work for family reasons.
CA finally used the female table to calculate the loss.
"In general, tort law, and in particular, the quantification of damages necessitates an individual approach. This is where I
find the learned trial judge erred. In attempting to rectify potential inequities in the methods for quantifying damages, the
learned trial judge neglected to focus on the evidence and the individual actually before her ...
While I do not forecast that MacCabe would have had four children and stayed at home until all of them were in school,
the fact that she expressed this preference cannot be ignored and supports the appropriateness of applying female
contingencies since they reflect the likelihood that women will take time out of the paid workforce, and in particular, more
accurately reflect that this individual female would have taken time out of the paid workforce."

Doesnt answer the hard questions, doesn't look into the law and policy, but simply bases answers on pl's testimony.

K) COLLATERAL BENEFITS
Some other money Pl gets that has something to do with the loss. Question becomes if Pl could get at the same time
damages fr the wrongdoer in respect to the loss, but could also get money fr other sources in respect to the loss. Issue of
double compensation.

General rule: no entitlement to double compensation, except with regard to statutory benefits.

Defs arguments: if there were no other benefits, Def would pay full compensation but Def argue that they wish to
deduct from what they have to pay any collateral benefits received by the Pl in respect of the loss, which could go all the
way to full compensation. Should this be so? The answer to whether I get to deduct the collateral benefit will depend on
the KIND of collateral benefit.
There are exceptions to the amounts that can be deducted even if there is double compensation/recovery.
o Private donations/charitable gifts: do not deduct. Cunningham par. 9, MB par. 30.
o Private insurance: can argue that it is not an exception bc ino double recovery given than Pl paid premium & benefit out of
it is the result of his paying. Def should not benefit from it by deducting the amount (par. 10 Cunningham, 164 Bradburn v.
Great Western Railway).
o Benefits fr employer? Ratych v Bloomer : money fr emp was deductible, BUT the majority of court changes opinion in
Cunningham. In Cunningham: benefit is sort of like insurance = there is no such thing as free lunch; if emp is providing for
a benefit is because this was negotiated and the employee paid for it somehow. Normally to get benefits, employee
foregoes pay. Corey gets around by saying that in Ratych there was no evidence that the employees had paid
something/had bargained for benefits, but here Cunningham paid and negotiated; it was like private insurance and so IT
WAS NOT DEDUCTIBLE.
o Benefits not bargained for = deductible;
o Benefits bargained for = not deductible because they are like private insurance.
Social services? Considered wage replacement. In MB: not charity, not private insurance (not necessarily an exception). If
it does not fit under the exceptions, then it is deductible to oppose double compensation.
Discussion: State takes money from taxes to provide social assistance; if it didn't, we would be paying taxes and then go buy private
insurance, which would be some kind of bargaining. Court doesn't buy this and doesn't take seriously the argument that this could be like
in Cunningham.
Relationship between collateral benefits and subrogation:
o
Insurance cie can go after the wrongdoer. If it doesn't, & Pl recovers from Def, Pl will have to give it to the insurance

o
o

given the insurance K. The K will say: Pl subrogates his rights, but if the insurance doesn't exercise the right and the Pl
sues on his behalf and recovers, will have to give the recovery to the insurance (unless authorized otherwise by the
insurance cie.
In health care benefits, Pl usually gets covered. However, most provincial legislation will include clauses stating that if
the Pl recovers from Def, Pl will have pay for his healthcare coverage: to prevent double compensation.
Best to state in Ks clearly the right for subrogation, but right of subrogation can be implied given the circumstances.

Cunningham v Wheeler, [1994] 1 SCR 359 (p. 162) Wage benefits fr employer insurance plan will not result in a
reduction in damages, where the benefit resulted from collective bargaining or paid in some manner by injured party
(either directly or in some manner of reduced wages, etc.).
Facts: Struck by car and injured. At the time, he had been an employee of BC Rail & as he was off work for 20 weeks he had
collected disability benefits pursuant to a collective agreement. No deductions were made fr his pay for those benefits, but the

21

hourly wage package was made up of an hourly rate of pay together with collateral benefits. Disability benefits recovered did
not have to be paid either to the employer or to the insurance company managing the plan.
Trial: held that the payments should not be deducted in calculating the amount payable by Def for the wages lost by Pl as a
result of his injuries, as he had established that indemnity benefits were paid for by him as part of his wage package.
CA: reversed the judgment, determining that since there was no subrogation right in the employer, and the direct funding for
the disability benefits came from the employer, the plan was not in the nature of a private insurance policy and the funds
received should be deducted from the damage award.
Issue: Should disability benefits provided by a collective agreement be exemption fr deduction from an amount recovered in
damages for loss of wages?
Held: While Pl in a tort action not generally entitled to a double recovery for any loss arising from the injury, the disability
benefits obtained as a result of his collective bargaining agreement were in the nature of a private policy of insurance and
should not be deducted from the claim for lost wages. To show that the benefits were in the nature of insurance, there must be
evidence adduced of some type of consideration given up by the employee in return for the benefit. Since benefits at issue
here were bargained for and obtained as a result of a reduction in the hourly rate of pay, they were obtained & paid for by Pl
just as much as if he had bought and privately paid for a disability insurance policy.

Application of the insurance exception to benefits received under a contract of employment should not be limited to cases
where Pl was a member of a union and bargained collectively. Benefits received under the employment contracts of nonunionized employees would also be non-deductible if proof was provided of payment in some manner by the employee for
the benefits.

Evidence that the employer took the cost of benefits into account in determining wages would adequately establish that the
employee contributed by way of a trade-off against higher wages.

Ratych rule narrowed to situations where the Pl cannot prove he gave up income to receive insurance as a benefit.
MB v British Columbia, [2003] 2 SCR 477 (p. 174) Welfare benefits are deductible from an award of damages.
Social assistance benefits / state benefits. Is it deductible? Yes! Designed as wage/income replacement so it is deductible
(different fr insurance benefits & charitable benefits exception par. 31).

Rationale of the exception for charitable benefits does not concern the purpose of charitable donations (irrelevant that
social assistance shares purpose of helping such as private charities). It lies in the effect that a rule of deductibility
might have on individuals who wish to help those who are in need.

There should not be a policy-based exception to the rule of deductibility for social assistance. "Seems unfair to
taxpayers to allow some Pls to recover fr these funds & then receive a duplicative payment from a tort award."
IBM Canada Limited v Waterman, [2013] 3 SCR 985 (p. 178) Employment law Unjust dismissal Damages Pensions /
Pension benefits should not be deducted from the damages award.
Q: Whether pension benefits received by the respondent during his wrongful dismissal notice period should be deducted from his wrongful
dismissal damages award.
The respondent employed by IBM & then IBM Canada Limited for over 40 years before being terminated without cause with 2 months notice.
When his employment terminated, he was 65 yo & eligible to receive benefits under IBMs employer funded pension plan. He had no intention
of retiring and sued for wrongful dismissal. After termination, he received a pension benefit of $2,124.25 per month.
Trial: the appropriate notice period was 20 months. Awarded damages based on lack of notice for 18 months. Respondent was paid pension
benefits after termination based on a fully vested pension. No deduction of amount of pension benefits paid during the notice period from the
damages award.
IBM Canada Limited appealed, arguing that an amount equal to the pension benefits should have been deducted from damages.
The Court of Appeal dismissed the appeal.

PART II: SPECIFIC REMEDIES

Called "specific" because we are not using money to compensate. In most cases money damages substitute for a loss, but
if we get the thing we want, that is the very exact thing (chattel). In the case of an injunction, Def will have to act in a
particular way and respect Pls right as opposed to just getting money for the violation of the right.
Equitable remedies.

Discretionary remedies, while damages are not (Pl has right to recover if he proves the loss). So, when it comes to SP and
injunctions, Pl no automatic right. Court can exercise discretion but cannot do so arbitrarily and without valid reasons but
has power to decide which cases are good cases for injunctions and which cases are not.

If one has a right to damages and no right to specific remedies, suggests that the CL supports more the use of substitutive
damages. Why? Bc administering SP can be a bigger burden. In the case of damages where Def doesn't pay, provinces
have all kinds of procedures to get the money without requiring the parties to come back to court (ceasing, garnishment of
wages). If Def does not follow a court order of SP, what happens? Pl has to prove the violation and go back to court so they
court rules on whether or not Def is in contempt of court. The reason why in CL specific remedies are less considered is
that they require more of an administrate burden; require monitoring of the court, at times for a very long period of time. At
times specific remedies will require cooperation from the parties.

22

Before addressing injunctions, we must consider the following categories:

A. Time is it preventative (quia timet) or responsive to a wrong?
B. Action is it a negative (to restrain) or a mandatory (to compel) injunction?
C. Interest does the injunction address trespass, nuisance, personal injury, property injury, breach of contract, etc.?
These categories overlap, because all three of these issues always arise when we consider injunctions that deal with land. We want to work
out which factors are more important for which categories
Court must consider three points when issuing specific relief:
1. Firstly, when asking for a remedy, Pl must establish a cause of action, and therefore cause for a specific remedy. This depends on the
rights that we already have. However, courts may work backwards by considering the remedies to unpack the rights.
2. Secondly, courts will consider whether damages are the appropriate remedy. Courts will generally not grant specific relief if it can
remedy with damages.

What do we mean by inadequacy of damages? Money may not be able to fix the problem, the defendant cannot pay, Pl does not
suffer harm, etc.

How important is this consideration?

Why do we consider damages as the primary remedy? Specific relief is not a remedy as of right, but we can attribute this to the
history of the CL.
3. Thirdly, the court will consider whether equitable rules bar an award. For example, the order causes undue hardship to the Def. It is at
this stage where hard discretion operates.
Some remedies are only available if the plaintiff has/will suffer irreparable harm. This concept has a large number of meanings. The court will
also consider the balance of convenience/cost. The court considers both the interests of the plaintiff and defendant.

Money is a substitution. They substitute for wht the Pl had before the loss. All of the specific remedies are equitable. The heart
of a discretionary remedy is that you have no right to it. So even if we meet the test in law, court can exercice its discretion and
not give it to you. So, in our legal system, dominant remedy = damages.

Categories of Injunctions:

Prohibitive injunction: orders a person to refrain from specified conduct;

Mandatory injunction: orders a person to take positive action to right a wrong or repair damage done.

Interim injunction: pre-trial injunction valid for a specific period. CL recognizes that sometimes there is a delay even in
getting an interlocutory injunction, which can take a few weeks. Interim inj can be obtained pretty much right away after
going to court. Will only be in place until the time when judge will decide if an interlocutory inj will be granted or not.

Interim orders for anticipating wrongs i.e. court may order an interim inj against someone not to trespass. Order arises
from a primary right (such as a proprietary right) since the wrong has not occurred yet and it may never occur.

Interlocutory injunction: pre-trial injunction valid until trial or time of judgment. If successful at trial, Pl would get a
permanent injunction for the future. Pl undertakes to pay damages to Def if it turns out the inj shouldnt have been
granted (if Def suffers losses). Many Pls wont take this risk bc it is often unquantifiable.

Quia timet injunction (one who fears): order rendered before the wrong has occurred or before any damage is
suffered / one wishes to stop an anticipated harm. Preventive injunction / preventing the harm before it happens.
Issue: how do judges decide whether or not to award an inj where the harm complained of may not yet have
happened? Starting principle: courts will sometimes grant injunctions where the damage has not yet occurred, but
the damage has to be imminent. If the damage comes, it must be a very substantial harm (Fletcher v. Bealey).

Sometimes, one will have all three injunctions taking into account the urgency of the matter (interim, interlocutory,
permanent).
One can have different types of injunctions (ex: Mareva (freeze funds), Anton Pilar (seize)).
ARE NOT SELF-ENFORCING: Pl needs to go back to court to enforce it, so a Def can buy his way out of an
injunction. So damages v. injunctions: just another way of buying a right of doing something. Pl might want to pay
damages instead bc price is set by court, not the Pl (probably higher). Set by court = market price, objective price. But
if it is an injunction, Pl sets the price in a subjective way.

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QUIA TIMET INJUNCTIONS

Fletcher v Bealey (1885), 28 Ch D 688 (p. 181)

In absence of actual damages, a quia timet injunction (PERMANENT HERE) will only be granted if Pl establishes:
1) Legal cause of action
2) Threat if imminent / immediate harm (bal of convenience)
3) Apprehended damage will be substantial
4) Harm will be irreparable
Otherwise, come back when there's an actual damage. Shows that courts are concerned with liberty: to pre-order
something, you need a really good reason i.e. you need a wrong to get a remedy.
Facts: Pl is a paper manufacturer drawing water fr river. Def is up river, downstream user of river water, could potentially ooze
out & into the river, which would cause probs to quality of Pls paper. Hasnt been affected yet, but worried that it will be a
problem as waste leaches in. Pl wants a permanent injunction.
Held: no injunction.
There are at least 2 necessary ingredients for a quia timet action:
1. There must, if not actual damage is proved, be proof of imminent (about to happen) danger AND
2. There must be proof that the apprehended damage will, if it comes, be very substantial/ almost irreparable.
Danger has to be imminent, which it wasnt in this case (would take years to see Pls business affected). Policy in favour of
allowing Def to use their own property. Judge had positive expectation for future technological developments, such that before
this became a problem there would be a way to prevent it. Not worth the burden on Def to prevent them from disposing their
waste when the risk is not high & the harm wouldnt be all that severe. Low probability was the point that killed it here: it was
not at all certain that the harm would happen.
IRREPARABLE HARM

The requirement for irreparable harm is reflective to the requirement to show that CL remedies are inadequate;
Irreparable Harm = harm that is incapable of being remedied by any other means at the time of trial.

Classic formulation of the notion of irreparable is from RJR-MacDonald:

Irreparable refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be
quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the
other

Magnitude of harm will however become a relevant consideration in the examination of the balance of convenience.

Examples of accepted irreparable harms:

Harm to reputation and/or career;

Harm to viability of a business includes goodwill, market share;

Claims in support of a restraint of trade clause;

Intellectual property infringement;

Where damages can be quantified but are unlikely to be recovered;

Infringement with natural resources or with quiet enjoyment of land;

Infringement of the public interest;

Not allowed to vote about your shares;

If an 11yo prohibited to play at a tournament (a case). There is a huge fight in sports to move levels, there might be
a scout... even a delay of one year.

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Jagtoo v 407 ETR Concession Co, [1999] OJ no 4944 (QL) (SCJ) (p. 184) INTERLOCUTORY INJUNCTION.
Facts: Pl. bring motion for an interlocutory quia timet injunction to prevent the defendants from building a hwy. Pl claim that
the extension of the it will constitute a nuisance because will increase level of noise & alter the rural setting in which they
currently reside.
Appropriate test for an interlocutory injunction was established by the SCC in RJR. MacDonald Inc v. Canada (par. 14):
1. Theres a serious question to be tried. The threshold when determining if there is a serious question to be tried is low.
The expectation must be reasonable.
2. In the absence of an injunction, the moving party will suffer irreparable harm.
3. Balance of convenience favors granting the injunction.
Application to the facts:

No nuisance: "Hwys are necessary; they cause disruption. In the bal of prob inherent in the law of nuisance, the utility of a
hwy for the public good far outweighs the disruption & injury which is visited upon some adjoining lands." Judge was
unable to find anything unreasonable about the Govs designation of the land to build a hwy. Instead, Pls expectation of
residing in a rural area is somewhat unreasonable given that they ought to have known that the land was reserved for the
extension of hwy. This is not a case of nuisance. There is binding jurisprudence which establishes that changing Pls
homes from a rural setting to an urban setting does not in and on itself constitute nuisance.

There is irreparable harm; however, court did not find that this harm is imminent.
o Imminence of the harm is an important consideration: court determined that Pls may not feel the effects of the
construction of the highway for a long time (if ever). Can provinces have environmental legislation that allows the
state or private persons to review/contest public projects and environmental assessments.

No serious issue to be tried and no irreparable harm will result without an interlocutory injunction, it is almost inevitable
that the balance of convenience favors the defendants (when balancing the convenience, the court must weight the
interest of the plaintiff against the interest of the public).
Comments:

RJR test in Jagtoo v. to Fletcher? In Fletcher, Pl look for a permanent injunction. In Jagtoo they seek an interlocutory
injunction, which means that they will also go in trial to ask for perm injunction. Claim the building of the hwy will
constitute nuisance. Because Pls look for an interlocutory injunction, court cites the 3 part test.

The issue here is that the 3 part test and Fletcher have nothing in common:
o Maybe due to the different kinds of injunctions?
o Court doesnt seem to use notions of Fletcher.
o Par. 16: "the low threshold of nuisance"; the court seems to be asking if there is a nuisance here; but the Quia timet
ink is preventive. Court doesnt seem to appreciate the Quia timet aspect.
o Par. 36: Quia timet injunction explained.

Pl doesn't the injunction because to begin there is no actionable nuisance and if there is no nuisance, Pl doesn't even
pass part I of the test (not a serious question to be discussed).
o Once the road build, will there be a nuisance

Par. 17 & 23: even if the road was built, there would not nuisance. Court is satisfied that this will never be a
nuisance.

Par. 44: "I agree with Defs counsel that in this case the nuisance is inevitable." However, court admits there is a
3 part test. Whether there is a nuisance or not is the 1 st part, how bad it is = part 2, and balance of conve = part
3.

Main reason why the balance of convenience does not favor Pl is bc the interest of the public has more weight in
this case. We are talking about a hwy, which is necessary.

In which part of the test we talk about quia timet character? 2nd part: par. 36/37.

Pl loses at 1st stage; seems to support Pl in 2nd stage (par. 37). But court recognizes the irreparable harm is
imminent and cites Fletcher (par. 38); Pl looses 3rd stage.
Palmer v Nova Scotia Forest Industries (1984), 60 NSR (2d) 271 (TD) (p. 189)

Court will consider scientific evidence and govt regulations to consider the standard by which the risk of
irreparable harm is set. Pl must establish irreparable harm given the above considerations.

Also, quia timet injunction ought not to be used to stifle innovation and/or development
Facts: Pls filed for a quia timet injunction asking the court to restrain Defs from spraying dioxin near their homes (it was a
small amount, well below the maximum regulated level). Pl alleges if the water is contaminated then there is a health risk to
the community.
Issues: Are the Pls entitled to the quia timet negative injunction?
Holding: No.
Reasoning: The risk to health, if proven, would have constituted irreparable harm in this case, and an injunction would have
been an appropriate remedy to subdue that risk. However, court did not find that Pls established an imminent danger to their
health / Def did not prove nuisance.

Court found no risk that the dioxin will travel down the river or through ground water to contaminate the Pls homes.

25

Court doesnt want to shut down an important part of the economy (forest spraying) unless the risk is proven to be higher.
Concern that granting quia timet injunction may curb innovation & development the injunction should not have this
effect.
Comments:

This case v. Jagtoo: where does the court say the test to be met for the Quia Timet injunction? In this case the court
doesn't mention the three part test as in Jagtoo. Why not? What's difference about this case that Jagtoo? The Pl wants a
permanent injunction (par. 3-5) after the interim injunction was granted. Therefore, this is why the 3 part RJR test for
interlocutory injunction is not used here. This case is more like Fletcher.
Test used: "essential elements of a regular injunction, namely irreparable harm and that damages are not an adequate
remedy"

injunction is a discretionary remedy

The pls do not get the injunction because there is no nuisance real or probable

This court concludes that there is no legal wrong to the Pl

In permanent injunction what we have to do is first look at the whether or not there is a wrong and the move on to show
there is imminence, irreparable harm, damages would not be appropriate; in the interlocutory context, there has to be a
possibility of a serious wrong
Hooper v Rogers, [1975] Ch 43 (CA) (p. 192)
Court will use soft discretion to determine whether the damage is imminent that is, whether the claim for relief is
not premature / here, damages given in lieu of an injunction because it would have been inadequate.

Imminent harm relates to both a quantification of time + the probability tht a particular event might occur

The event referred to must be such that neither party can do anything to prevent it
Facts: There was a fear that Def, who altered grade of their land, exposed Pls building to erosion exposure & potential
collapse. Pl knows that if he had sued for damages in CL, he wouldnt have gotten them because no harm had happened, so
Pl sues for an order.

Pl was awarded damages in lieu of a mandatory inj

Def appealed arguing that damages could not be awarded until actual damage was sustained & damage to building was
not imminent.
Issues: Is Pl entitled to the quia timet mandatory injunction which would require Def to reinstate the slope of the land by the
house?
& can damages be granted without actual loss?
Held: court grants damages, which presupposes approval of the injunction (permanent) (absent a discretionary reason, Pl
would have met the test for the inj and this is why the damages in lieu are given). Too late for a quia timet injunction parties
already have a toxic relationship so, it would be very unwise to put an order that will make worse the issue when the
relationship btw parties would lead to more administrative costs if the inj is given, court can make the decision not to give it,
but simply give damages.
Reasoning:

The damage is imminent. The word imminent is used to describe circumstances when the remedy sought is not
premature. There has to be a high probability of the coming about ab irreparable harm Pl showed high prob that damage
to the property is an inevitable result of Pls actions. Court characterized imminence as a question of inevitability,
rather than immediacy. More flexible approach on what imminent means. Imminence is a function of probability, severity
and burden on Def.

Test for injunction in Fletcher. Court interprets Fletcher differently: "it seems to me that imminent is used in the sense
that circumstances must be such that the remedy sought is not premature". This is a more flexible approach as to
what Fletcher means.

Court is allowed to substitute damages for specific relief because of Lord Cairns Act.
It appears that it is easier to give Pl money, than to compel Def to act (perhaps because the parties did not get along it
will be hard to prove if the following repairs are done properly, the court cannot effectively supervise the respect of an
injunction in such case where there is no cooperation).
*** See Semelhago: damages in lieu of an injunction.
L)

INJUNCTIONS VERSUS DAMAGES

Nuisance = unreasonable interference with ones property. Standard rule is still that an injunction is the remedy.
Miller v Jackson, [1977] 3 QB 966 (CA) (p. 194) In cases where an injunction would affect the public interest the
court may award damages for present and future injury instead. So, in cases of nuisance, public interest should be
considered in and weighed in an equitable manner. Awarded damages in this case.

26

Facts: Pl buys a house next to a cricket ground and sues the club for balls hit onto their property; alleges that activities of club
causing a nuisance interference. Club claimed that it took all reasonable measures to avoid hitting balls onto the property.
Balls rarely left the pitch. Pl is seeking an injunction and damages. Pl were successful at obtaining an injunction at the lower
court which the club appealed.
Issues
a. Is playing cricket a nuisance?
b. Is it relevant that the houses were recently built and the field has been there for 70 years?
c. Is this an unreasonable use of the land?
Held: Def is liable; however, Pl is entitled only for present and some future damages.
Reasoning:
A) Lord Denning, dissent: rejected Sturges v. Bridgman to state the proposition tht a balance has to be maintained btw
the right of the occupier to do what he likes with his own [land], and the right of his neighbour not to be interfered with.
This is no nuisance, bc it is not an unreasonable use of the land & community interest in cricket far outweighs possibility of
Pl being hit. He would have dismissed a claim for damages, but the club agreed to pay for damages. Says theres no
wrong, but if Def wants to pay then he can pay. Least helpful decision fr LD. Only one that thinks there isnt nuisance.
B) Lord Geoffrey Lane cited Sturges v. Bridgman to state that the law on the matter is decided: coming into the nuisance is
no defence. Grants the injunction, but suspends its operation for 12 months to allow Defs to seek an alternative pitch.
Thinks damages are inadequate bc it will keep happening. So, we could award a sum of money for damages that have
already happened but this will keep happening!
C) Lord Cumming Bruce sought to strike a fair balance between the right of Pl to have quiet enjoyment of their house and
the opportunity of the inhabitants of the village to enjoy the manly sport. He recognizes that the rules of equity allow
for flexibility in his remedial assessment and therefore believes there is a nuisance but no injunction based on the
principles of equity. Discussion about Shelfer City case: you should only get damages instead of inj if injury to rights is
small, easy to estimate in money and compensated by a small payment, and it would be oppressive to Def if inj was
granted. Anything can affect remedy bc it is discretionary.
Kennaway v Thompson, [1981] QB 88 (CA) (p. 202)

Court expressly disagrees with LDs ruling in Miller v Jackson and refuses to allow the public interest to prevail
(agrees with Justice Lane).

Court can tailor an injunction: here, recognized the interference with the Pls property, but itemized the events that the
Def boating club could hold each year, and limited the club from exceeding a noise limit during non-event periods.
Facts: Pl built her house on land near a lake on which there was a water-skiing and motorboat-racing club; knew ahead of
time of the activities but did not think that they would disturb her. However, over the years the activity increased and she
brought action for an injunction. Lower court found that there was a nuisance but refused to grant injunction, rather awarding
her 1k for damages to that date and 15k for damages likely to be incurred in the future (equitable damages in lieu of specific
relief). Pl appealed seeking an injunction, which was allowed.
Issue: Does Pl have an action for an injunction in nuisance?
Decision: Appeal allowed, injunction granted detailing allowed operation.
Once Pl had proved that the club had caused a nuisance that interfered in a substantial and intolerable way with the
enjoyment of her house, she was entitled to be granted an injunction. So, if there is a nuisance do we automatically get
injunction? Looks at the Shelfer principles, but says that it doesnt apply: not small problem, not easily calculated in terms of
money. Gets inj bc court believes the general remedy in case of nuisance is inj.

However, clarified by stating the injunction must protect her from excessive noise, but not prevent the club from
organizing events about which a reasonable person could complain. As a result the injunction laid out detailed
provisions about how and when the club could operate.
M) INTERLOCUTORY INJUNCTIONS
Interlocutory = any part of the period prior to judgment.
Injunction = an order granted by a court of competent jurisdiction that instructs a person to do, or refrain from doing, a
particular thing.
Interlocutory Injunctions are a powerful tool:
o

Can be sought literally any time, even before the institution of proceedings;

Can be sought ex parte;

Immediately binding on the party to whom it is addressed;

Disregarding an injunction is sanctioned by contempt proceedings;

Powerful tool to force settlements and avoid trials on the merits.

Interim v. Interlocutory

Interim injunction = a form of interlocutory injunction, but usually granted for a specific period; Pl must return at the
expiry of the term to seek a continuance, or to seek the transformation of the interim injunction into an interlocutory
injunction;
Interlocutory injunction = usually granted until the final judgment;

27

 Accessibility Thresholds
The classic test is that the plaintiff must demonstrate:

a prima facie (around 40%, higher than serious question to be tried) existence of right and infringement of that right,
i.e. that the plaintiff has provided sufficient affidavit evidence couple with a valid substantive claim to prove his case
such that he would win at trial;
Higher standard used if:
a)

Decisive. If the decision on the injunction was final, the standard would be higher. So if the outcome on inj
itself will be dispositive on itself, we will use a higher merits standard. Ex. abortion case.
b) Just about the law.
c) Interlocutory injunctions that are particularly intrusive. Ex. asset freeze, Anton Pillar.
Irreparable damage that could not be compensated if successful at trial harm you cannot compensate for with
damages;
That the balance of convenience favours the grant of the injunction (determinative in borderline cases).

Classic test altered in the U.K. by the House of Lords in American Cyanamid Co. v Ethicon Ltd.

American Cyanamid v Ethicon Limited, [1975] AC 396 (HL) (p. 204)

Facts: American C, pharmaceutical company, introduced new patent in 1970. Ethicon, another American pharmaceutical
company, was the dominant supplier of catgut sutures. They decided to introduce their own artificial suture. AC started an
action in 1973 to obtain an injunction to restrain E from selling their XLG to surgeons bc of the potential infringement to their
patent. On same day, presented a motion for an interim interlocutory injunction.

Motion judge granted an interlocutory injunction after the hearing of the motion.

Ethicon appealed to the CA.

CA allowed the appeal and quashed the judges order.

Leave to appeal was granted by the House of Lords.

Issue: Was the CA right in discharging the order of Graham J. granting the interlocutory injunction?
Reasoning:

House of Lords rejected the old test for granting an interlocutory injunction.

Considering if a prima facie case of infringement of patent had been made out is not the test anymore.

The prima facie case test is replaced with:

o

Court must be satisfied that:

(Show that claim is not frivolous or vexatious)
1. There is a substantial issue to be tried: prima facie case, in the sense that applicant has legal right which is
attempting to protect pending trial
2. Irreparable harm, goes along with damages being inadequate: failure to grant relief will result in a threatened
harm to the applicant which may not be adequately compensable by way of damages
3. Balance of convenience, effect of injunction on both parties: it must be in favour of the applicant

Satisfying the low American Cyanamid threshold does not entail the granting of the injunction it simply opens the door for
the discretionary stage of the analysis. no absolute right to an injunction
Application to the facts:

Affidavit evidence shows that there are serious questions to be tried

If Ethicon were entitled also to establish themselves in the market until the action is tried and possibly thereafter until
the case is finally disposed of on appeal, Cyanamid, even though ultimately successful in proving infringement, would
have lost its chance of continuing to increase its share in the total market
The irreparable harm would have been the market share. We could say harm you cannot compensate for with damages.
Lost opportunity to develop market share.

Accessibility Thresholds: In Canada, the American Cyanamid test has not been universally adopted, and three
different test can be applied:
o The classic prima facie case test (also called the multi-requisite test);
o

The American Cyanamid serious issue to be tried test; or,

A multi-factor test, comprised of six factors to consider (not cumulative/no need to have them all

Very context specific. i.e. if proceeding in an ex parte basis, you can use prima facie case. In other instances, courts

28

could follow American Cyanamid test.

Fundamental difference between the classical prima facie case test and the multi-factor test is that the question of
whether there is a prima facie case is a threshold question in the former, while it is only one of the factors to be
considered in the latter.

The decision of the SCC in RJR-MacDonald Inc. v Canada suggests a growing acceptance of the American Cyanamid
test over the other two tests still applied in Canada.

Yule Inc v Atlantic Pizza Delight Franchise (1977), 17 OR (2d) 505 (Div Ct) (p. 204) American Cyanamid v Ethicon
Limited is good law in Canada.
Facts: Pl given sole and exclusive rights to sell franchises in Ontario for 5 yrs. 2 yrs into the K Def canceled the agreement.
Def also sent a message to various franchise holders in Ontario advising them that the Pl was no longer involved. Def claims
this affected his reputation in the franchise field and in the food servicing industry and will suffer severe financial losses since it
now holds or is in the process of purchasing real estate and equipment bought specifically for the purpose of carrying out the
business generated through his contractual relationship with the Defs.
Issues: Can P request an interim injunction against the alleged breach until date of trial?
Ratio:
A) What three tests does the court identify?
1. Classical model (Multi requisite test): requires a strong prima facie threshold
2. Multi factor test: this is a set of non cumulative conditions that can be met in order to be granted an injunction, the
failing of one would not necessarily mean the failing of the possibility of being granted the injunction

Has the plaintiffs demonstrated a prima facie case?

If the plaintiffs action doesnt succeed at trial, can the plaintiff pay damages?

Is the order necessary to maintain the status quo?

Will the plaintiff suffer irreparable harm without the injunction?

The balance of convenience; and,

Does the defendants interest merit equal consideration to that of the plaintiff?

3. American Cyanamid test

B) What test do they adopt?
Judge selects the test from American Cyanamid Co v. Ethicon, because in this case there were conflicting affidavits and
transcripts of cross-examinations.
if the court only has one side of the story or one side of affidavits, this is a factor that demands a higher scrutiny
C) Test for Injunction
(Show that claim is not frivolous)
1) There is a substantial issue to be tried: prima facie case, in the sense that applicant has legal right which is
attempting to protect pending trial
2) Irreparable harm, goes along with damages being inadequate: failure to grant relief will result in a threatened
harm to the applicant which may not be adequately compensable by way of damages If injunctive relief is not
granted, the plaintiff will be put out of business
3) Balance of convenience, effect of injunction on both parties: it must be in favour of the applicant
Note: An injunction is a discretionary remedy and economic factors represent a necessary element for consideration
Decision:

There was no error made by Evans CJHC in enunciating and applying the American Cyanamid test in determining
whether to grant the interim injunction

The appeal is therefore dismissed.

Note that the Court does not exclude the other tests outright, it just says that the prima facie case requirement is too
onerous when faced with conflicting evidence an ex parte application could still in principle be held to the prima
facie case burden.

Mott-Trille v Steed (1996), 27 OR (3d) 486 (Gen Div) (p. 216) Disability to defend oneself before the LSUC is irrep harm
Facts: Applicant facing discipline proceedings before LSUC, he is also a Jehovahs Witness facing proceedings in church
Wants to appeal before the LSUC, which will require him to have witnesses there. The church has its own process that can
lead to dispelling (other members of church are not to have contact).

Applicant seeks interlocutory injunction to stop the JW disciplinary proceeding.

Issues:

Is there irreparable harm if the court interferes with the rules of a religious organization? (What is the irreparable harm? =
Disability to dfend oneself before the LSUC is irrep harm)

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How does the court handle the challenge that Pl has a right to a fair hearing before a professional review board on one
hand, and the Defs right to religious freedom on the other hand?
Held:

Grants interim injunction, refraining Defs fr proceeding with new Judicial Committee hearing until LSUC hearings have
concluded.

David Hunt Farms Ltd v Canada (Min of Agriculture), [1994] 2 FC 625 (CA) (p. 220) Courts will take into consideration
an admission against interest by one of the parties.
Facts: Farmer in Alberta had cows imported fr UK. Ministry decided to have UK imported cattle destroyed (risk of Mad Cow
disease). Applicant asks for interlocutory interim injunction against gov, to stop cattle fr being destroyed. First dismissed by the
trial judge. Farm appealing to the CA to have the decision overturned and the injunction granted.
Decision: Appeal was allowed. Injunction was granted.
Reasoning: The three-part test in Turbo Resources Ltd. v. Petro Canada Inc. was applied.
1) Is there a serious issue to be tried? Minister's undertaking in a similar case in Nova Scotia not to destroy the cattle
until disposition of the application for judicial review, was persuasive evidence that there was a serious issue to be tried.
2) Irreparable harm Easily measured in damages ($4-5k) ; but b/c of legal impediment, Pl probably wouldnt be able to
get the full amount of damages.
a) Appellant's irreparable harm

The appellant will suffer irreparable harm if the injunction is refused.

Under the Maximum Amounts for Destroyed Animals Regulations the Minister is required to pay a maximum of
$2,000 per destroyed animal.

However, each of the animals in question is worth substantially more than this amount.

Bc the amount of the recoverable loss is restricted by statute, and that amount is significantly less than the actual
loss to be incurred if the injunction does not issue, irreparable harm was established.

There was the possibility that the Canadian Beef Breeders Council would supplement the compensation to
"approach the fair market value" of the cattle, but this was not certain, as the Council does not owe any legal
obligation to the appellant by which the appellant could enforce payment of full compensation.

The appellant was entitled to more than a mere possibility of recovering over and above the prescribed minimum
compensation.

Section 50 of the Act prima facie limited the Minister's liability. The appellant did not have a practical and viable tort
remedy in the event that the animals were wrongfully slaughtered.
Respondent's irreparable harm

b)

3)

It was assumed for the purposes of this appeal that the public interest would be harmed if the interlocutory
injunction issued.

When determining irreparable harm in the context of a public authority, the issue is not to be decided on the basis of
pecuniary considerations alone.

The inability of a public authority to carry out its legislated mandate in protecting the public interest is sufficient.

The balance of convenience test

Here the Court clearly mentions that the balance of convenience test is very important.

It enables a court to consider diverse factors which cannot be quantified in monetary terms and which ensures
flexibility in the application of equitable principles in diverse factual situations.

The respondent had a duty to protect the public interest of all Canadians, not just those directly affected by notices
issued under the Act.

The substantial financial repercussions which could follow a second reported case could not be ignored.

But the Minister's willingness to let another case, predicated on the same reasoning, be decided on the merits, after
a short delay, before slaughtering the animals, tipped the balance of convenience in the appellant's favor.

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Moreover the evidence did not support the assertion that cattle from one part of the U.K. were more at risk than
those from another.

Prairie Hospitality Consultants Ltd v Renard International Hospitality Consultants Ltd (1980), 118 DLR (3d) 121 (BCSC)
(p. 226) Balance of convenience between the parties.
F: Franchise agreement which granted Pl with the exclusive use of the Defs personnel system in BC, for a franchise fee of
10k. The Pl received a letter of termination of the agreement for various breaches and defaults by the Def. Seeking an
injunction restraining the Def from terminating the franchise agreement, AND a mandatory injunction to force Def to carry out
the agreement for a certain period of time.
Pls position: They would lose clients, goodwill and cease to function if they were forced to terminate the agreement.
Defendant's position: No irreparable damages, mandatory injunction should only be granted in exceptional circumstances
The Court:

Refers to Evans Marshall & Co Ltd v Bertola SA (1973) Case in which Justice Sachs observed that: " the fact that some
degree of mutual co-operation or confidence is needed does not preclude the Court from granting negative injunctions
designed to encourage the party in breach to perform his part of the agreement".

Are the circumstances in the case sufficiently exceptional to grant a mandatory injunction?

The duties imposed upon the Def if the mandatory injunction was granted would be very light.

Injunction granted.
N) SPECIFIC PERFORMANCE
Direct Enforcement of a Right: Proprietary Claims: Direct enforcement of a proprietary right is rare in CL. The rule is that
you get it for your land, but not your goods unless it is unique.

The general idea is that if the good is unique (Falcke), money won't buy you a replacement for what you were promised
(substitute damages are thus inadequate).

Since to get SP, you must show that damages would be inadequate, why are damages inadequate in cases of unique
goods? Because (1) money cannot by what you want; (2) money cannot compensate you for your loss.
Pg. 231: Harnett v. Yelding "the original foundation of these decrees was simply this, that damages at law would not
give the party the compensation to which he was entitled; that is, would not put him in a situation as beneficial to him as
if the agreement were specifically performed."

Falcke is a bad example because there could have been SP had there not been an equitable bar (akin to unreasonable
behaviour).

When are damages inadequate?

Case of a unique property

The leading example is LAND, but we no longer assume automatically that bc it's land it is unique: Southcott
Estates Inc v Toronto some pieces of land are unique, but not all. Holding property for investment implies one can
use other lands for that purpose and so no uniqueness. Also see Semelhago v Paramadevan.
Ordinary chattels can be unique: Falcke.
Elks are rare but not unique: Taylor.

Third parties.
In Taylor, hardship to 3rd parties is a very strong reason for not granting specific performance.
o Why didn't the pl get the elk herd? Because the Def sold to someone else. What type of 3rd party are we
talking about here? 3rd parties are bona fide purchasers for value without notice (Equity's darling). They
didn't know anything about the prior problem with regards to the asset in question.
o (had they not bought for value, it would be possible to ask them to give it back)
o The law massively favors Equity's darling

In Falcke, court doesn't decide how it views Mr. Watson because it doesn't need to. 3rd party or not, the court would
have said this is an unfair bargain so the specific performance would not have been given.
o If the court had to decide, how would have decided in respect to Watson? As per principle in Tyler, the more
innocent the 3rd party is, the less likely we are going to award the specific performance

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In Canadian Long Island v. Irvin Industries, Pl and someone else engage in a property. Pl has a
first refusal right. The Def doesn't give the Pl the FRR and sells it to Canadian Long Island. Now the Pl and CLI have
joint property and the PL sues. He wants specific performance. Here we need to look at the role of CLI
o CLI knew that S was under legal obligation to exercise FRR to the Pl and didn't do it. It knew it was acquiring
land in violation of a legal k.
o What does this do to the court? The court is more inclined to award it is not a hardship to the 3rd party.
There is no innocent 3rd party here because it knew that it was buying subject to FRR

Specific performance and the duty to mitigate

When one mitigates, one is trying to get something else for the specific thing. If I can mitigate, then I don't really need
the thing.
Southcott Estates Inc v Toronto: Pag. 252, par 93: Dissent of Justice Mc. "The act of filling a claim for specific
performance is inconsistent with the act of acquiring a substitute property. A Pl, acting reasonably, cannot pursue
specific performance and mitigate its loss at the same time." Majority says the Pl should have gotten other land and
mitigated make a strategic choice as to how to behave based on the circumstances.
Asamera: Strategic choice made was to do nothing and then sue in specific performance. The court says the SP is
no good because the actions are not unique. Therefore, the Pl should have mitigated. They went with SP and not
mitigation, court says it was a bad choice and they should have mitigated.
Semelhago v Paramadevan.: Pl claims SP (ends up getting damages in lieu at time of trial); Pl didn't do anything
to mitigate the loss and the court says the property is unique enough so there is no obligation to mitigate.

Falcke v Gray (1859), 62 ER 250 (Ch) (p. 230) Sale of an ordinary chattel/personal property. General rule is no SP
unless chattel is unique and damages are not an adequate remedy (extends SP to chattels). Third party issue: third
parties with notice must pay up (here, W didnt know so not responsible). SP is a discretionary remedy, illustrated here:
seems like a hard bargain would be a defence for SP.
Facts: G sold F, an antique dealer, a pair of vases for 20 pounds each. Before delivery, she began to have her doubts about
the real value of the vases so she asked Mr. Watson, another dealer, for a valuation. W so amazed by the beauty of the vases
that offered 200 pounds for them. Mrs. G accepted the offer and Mr. W bought them.
Issues:
1. Can Falcke get the vases (SP)? No. SP should only be granted for unique goods the vases were unique but Falcke
tried to trick Grey into thinking they were worth less (dirty hands equitable bar / unfair deal). Inadequacy of price is a
sufficient ground for denying SP (equitable court).
2. Can Pl get damages? In this case, no. He is in a court of equity and therefore, he can't get damages because
damages were given by the CL courts (Lord Cairns Act not adopted yet and it seems that even then the damages in
lieu would not have been awarded because one must demonstrate entitlement to the property).
3. Can Watson be liable? No. Would only be liable if he knew or had notice of the other K, which was not demonstrated.
SP if:
1)
2)

damages inadequate
Def able to comply

Ratio. Only if the vase is unique can you get SP (like for land).
Comments. Where is the unfairness exactly? In the objectively wrong price or in the subjective knowledge in Pl of unfair
price. Usually, knowledge is required to invoke an equitable bar but here, court suggested it didnt matter, which intuitively
makes sense (if someone does wrong without thinking what they do is wrong, the should be liable).
Canadian Long Island Petroleums Ltd v Irving Industries Ltd, [1975] 2 SCR 715 (p. 234) Where a third party breaches a
negative covenant and is aware (or ought to be) of the breach, the court may order the enforcement of the covenant
and the return of property to the plaintiff.
A third party purchaser for value without notice can trump (rank above others) even an equitable claim; however, CLI
had notice of Irvings interest.
This case v Falcke: Watson didnt know about earlier deal. Here, CLI KNEW that the other party could exercice refusal ;
bought property that seller selling property in violation of legal contract.
Facts: Irving contracted with Sadim for joint ownership and development of an oil lease. The contract included a ROFR.
Sadim sold its interest to CLIP without informing Irving and was in breach of the joint ownership contract. A copy of the
agreement between Irving and Sadim was enclosed with the offer.
Issue: Can Irving get specific performance? // Is it a hardship if we order SP and Can Long has to give up interest in this
property and have it sold to Pl or do they get to keep it?
Held: Yes. A 3rd party purchaser for value without notice can trump even an equitable claim; however, CLI had notice of
Irvings interest.

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Reasoning: Justice Maitland cites Lumley v. Wagner to explain that the court will not have as much difficulty enforcing
negative covenants. In this case, Sadim conveyed the property to CLIP giving full knowledge of the joint ownership contract.
Maitland quotes Fry on Specific Performance to support his holding that third parties may be held liable to an action for
specific performance upon the equitable ground of conscience.
Notes: This issue of knowledge is a problem in insurance or travel agency cases involving banks. An agent works for an insurance cie or a
carrier, is authorized to receive premiums or payments from the public. Under the agreement, the money is to be held on trust for the
insurance cie or carrier. Hypothetically, the agent may put the money into a bank to which the agent owes money. Bank may take the money
to offset the agents debt. The insurance cie or carrier becomes really upset because the bank has taken its money. This is assuming that the
agent never told the bank that it was trust money. The Bank Act has provisions exculpating the bank from having constructive knowledge;
however, the bank knows damn well that the money was held on trust. Therefore, the bank holds the money on constructive trust for the
insurer or carrier.

Taylor v Eisner (1993), 105 Sask R 283 (CA) (p. 236)

Taylor the owner of a limited number of elk, entered into an agreement to purchase a basic herd from Eisner, a well known
breeder of elk.

Notwithstanding the agreement, Eisner sold the elk to 3rd p.

The trial judge found a valid and enforceable contract, but declined to order specific performance. Taylor was awarded
damages and from this judgment Eisner appealed.

Appeal allowed. New trial ordered regarding both liability and damages due to perception of unfairness of the part of the
judge (unequal application of the hard evidence rule) and to consider appropriate principles of quantification and mitigation
of damages.
Held: Appeal allowed.

SP not appropriate remedy bc elk rare but not unique and SP would work hardship on 3rd p. who were bona fide
purchasers without notice.

If Pls claim SP, do they still have duty to mitigate? Answer: Asamera Oil. Yes, still a duty to mitigate. So, ordered
back to trial judge to determine if failure to mitigate and if so, appropriate damages.
New trial ordered regarding both liability and damages due to perception of unfairness of the part of the judge (unequal
application of the hard evidence rule) and to consider appropriate principles of quantification and mitigation of damages.
Southcott Estates Inc v Toronto Catholic District School Board, [2012] 2 SCR 675 (p. 238)
Facts: S sued T for SP of a K to sell it 4.78 acres of land. S was a subsidiary of Ballantry Homes Inc, a developer, and special
purpose entity created just for purchasing and developing the land. The deal was conditional upon S paying a 10% deposit,
and the T getting severance permission from Toronto's Committee of Adjustment before a certain date. However, the
Committee refused without reviewing a development plan for the land, which meant severance was not granted in time. S
sued for SP or damages.
At trial, S stated it never had any intention to mitigate its loss and had not tried, that it had no assets other than the deposit
from Ballantry Inc for the deposit, and it was never going to purchase any other land.
Trial:

had the Board used its best efforts, the severance would likely have been granted, and the transaction would have been
completed by the closing date; therefore, the Boards breach caused Southcotts loss;

specific performance was not an appropriate remedy as the land did not have the quality of uniqueness; but

Southcott was entitled to damages, which were assessed at $1,935,500.

The Board appealed, CA decided:

the trial judge did not err in finding that the Board's breach was the cause of the failure to obtain a severance by the
closing date, but

he did err in law in finding that the Board had not shown that Southcott could have mitigated its losses,

however, S failed to make out a case for either specific performance or damages.

As a result, nominal damages were awarded in the amount of $1.

SCC:

Southcott, while not appealing the trial judges refusal to award specific performance, maintained its losses were not
avoidable.

On cross-appeal, the Board questioned whether the Court of Appeal was correct in law in dismissing its argument relating
to causation.

Appeal dismissed.

Principles for mitigation previously adopted by the Court in Asamera Oil Corporation: fundamental basis is
compensation for pecuniary loss naturally flowing from the breach; but this 1 st principle is qualified by a 2nd, which
imposes on a Pl the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him
from claiming any part of the damage which is due to his neglect to take such steps.

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As a separate legal entity, Southcott was required to mitigate by making diligent efforts to find a substitute property,
because those who choose the benefits of incorporation must bear the corresponding burdens, including the duty to
mitigate its losses.
Asamera, when read together with Semelhago v. Paramadevan, holds that it "cannot be assumed that damages for
breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases," and specific
performance will be available only where money cannot compensate fully for the loss, because of some peculiar and
special value of the land to the plaintiff.

Dissent: believed S had a fair, real, and substantial justification for claiming specific performance of the contract.
Note: Southcott is significant because it confirms that a claim for specific performance will not insulate a plaintiff from
the duty to mitigate. It is also noteworthy because the majority as well as the dissent seem to accept by implication that
impecuniosity (no money available) is a defence to a failure to mitigate.
Specific Performance of Personal Service Contracts

Services contracts are ongoing.

One is being forced against one's will to perform services for someone else.

Anytime there is an ongoing relationship, the judge will have to be sitting again having to babysit parties that cannot
get along.

Courts were very reluctant to giving specific performance in services cases even a general principle.

Positive covenant vs. negative covenant in an area of services

Lumley v. Wagner, 42 Eng.Rep. 687 (1852) (p. 254 in Page one Rec) Express negative covenant enforced
Facts: Lumley (P) contracted with Wagner (D) for her to sing at Ls theater for 3 months. Under the K, W promised not
to perform at other theaters while under the K without written consent. Def subsequently arranged to sing at Gyes
theater for more money. L sued and sought an injunction preventing W from performing at other theaters. The trial court
granted injunctive relief for the Pl and W appealed.
ssue: Can injunctive relief be used to enforce a promise not to render personal services?
Held: Yes. Injunctive relief can be used to enforce a promise not to render personal services.
The court cannot compel specific performance to render personal services, but it can grant the remedy of injunctive
relief to prevent a party from performing personal services. The court can compel the Def to abstain from those acts
she promised not to commit under the L.
Notes: This case is an example of the use of injunctive relief to enforce a negative covenant in a contract.
Warner Bros. Pictures Inv. v. Nelson (p. 254 in Page one Rec) Intuiti personae K ; Spec perf will not be
ordered when it infringes on personal liberty. Also, underlying principle of SP is uniqueness.
Facts: N entered a K with WB for 52 weeks, renewable at WBs option, whereby she would render exclusive services
as a film artist to WB. A negative stipulation in the K provided that during the period of the K, she would not engage in
"any other occupation" to anyone else. BD went to England and started working as a film artist for someone else =
breach of K with WB; admits to breach. WB wants an injunction against her working for the 3rd person.
Issue: Can the court, through an injunction, enforce the negative stipulation in which N promised not to work as a film
artist for a 3rd p while under K with WB? YES!
Reasoning (Barnson J): It is not true that this contract is unlawful as being in restraint of trade. N tried to say that it is
so because the K compelled N to serve WB exclusively and could possibly last for the rest of her life.

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The Courts will not enforce a positive covenant of personal service (i.e. a covenant compelling a positive duty of
personal service). That is not what is being asked here (its not the positive covenants but the negative stipulation
that WB wants to enforce).
The Court will not grant specific performance of a contract when it is for personal service, nor will it grant an
injunction when it is the basis of someones livelihood. Neg covenant only enforced in situations where its
imposition will not be equivalent, in effect, to enforcing a positive covenant.
When someone is asking for SP, is there a personal freedom/liberty involved here?
Page One Records Ltd v Britton (trading as The Troggs), [1967] 3 All ER 822 (Ch) (p. 253) If the parties are in a
relationship of trust/confidence, the court likely will not order a negative injunction to enforce a restraint of trade
clause.
Facts: D was pop group and P was their manager. P is the employee of D. D wanted to sign with someone else. D says
manager breached the contract. P sought injunction to restrain D from signing with anyone else until trial after.
Ratio:

An injunction will not be granted when it would force someone to continue to employ someone who they have lost
confidence in.

You can only get specific performance if it is available to both sides (It would amount to enforcing the performance of a
contract for personal services against the Pl when the Pl could not have compelled the manager to work for them (i.e.
lack of mutuality))

Can only enforce negative covenant if it wont stop person from livelihood.
Analysis: Defendant cant get specific performance to compel the manager to work for them Therefore specific performance
has to be available to both sides. Granting the injunction would be same as specific performance

Though The Troggs had not established a prima facie case that Pl had committed a breach which would justified the
repudiation of the agreement, the goal in this case was not to recover damages, but to be granted an injunction.

The fact the Pl had a prima facie entitlement to damages does not mean that there is a prima facie case, or any case,
for an interlocutory or any injunction.

The negative covenants on which the Pl relies are designed to tie the parties together in a relationship of mutual
confidence, mutual endeavor and reciprocal obligations.

Granting the injunction would, in effect, compel The Troggs to continue to employ the Pl.

An injunction will not be granted to enforce the specific performance of the positive covenants of the contract or to
remain idle if it means taking away the means of livelihood of the defendant.
Holding: Injunction not granted.

REVIEW QUESTIONS
Review Question 1 (about 60 minutes):
Ann and Bob were recently married. They had a perfect wedding. Many family and friends came to the wedding from out of
town, including Bobs parents, Bill (the best man) and Anns grandparents. Pierre, a professional photographer employed by
Perfect Photo, took the wedding photos. Ann and Bob were happy with all arrangements until they learned that Pierre, the
photographer, was in a motor vehicle accident on his way home from their wedding. Pierre was seriously injured. Also, his
digital camera and his disc containing all of Ann and Bobs wedding photos were completely destroyed in the accident.
Two weeks before the wedding, Ann and Bob had signed a contract with Perfect Photo and paid $700 in advance for their
wedding photos. After the motor vehicle accident, Perfect Photo returned this payment to them and apologized for not being
able to deliver the wedding photos as promised. Ann and Bob are extremely disappointed and upset and feel their wedding
day was ruined. Their lawyer has commenced legal action against Perfect Photo claiming on their behalf:
(a)
specific performance of the contract. Ann and Bob want Perfect Photo to reassemble the wedding party
including Bill, Bobs parents and Anns grandparents and to provide a photographer to re-shoot the wedding photos.
They estimate the costs will be approximately $8,000, which includes airfare and accommodations for out-of-town
guests;
(b)

damages for mental distress; and talk about remoteness here

(c)

punitive damages.

Explain what Ann and Bob should be awarded for their loss and why.
They cannot be awarded something for their loss that they didnt claim.
No claim for CL damages in a general compensatory way. (b) is a specific aspect of the breach, not general damages. Other
parts could give rise to general compensatory damages but the lawyer did not talk about that it would be a waste of time to
discuss this!

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Review Question 2 (about 20 minutes): Explain why the Supreme Court of Canada in Asamera Oil Corp Ltd v Sea Oil &
General Corp did not follow the general rule for the date on which damages are ordinarily assessed. Do you agree with the
courts reasoning?

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