Jessica’s Remedies Outline
REMEDIES GENERALLY ___________________________________________________________________________________________6
EXPECTATION DAMAGES_________________________________________________________________________________________6
Canlin Ltd. v. Thiokol Fibres ................................................................................................................................................................................................ 7
Ticketnet Corp. v. Air Canada.............................................................................................................................................................................................. 7
Lost Volume ..................................................................................................................................................................................... 7
Apeco v Windmill Place ......................................................................................................................................................................................................... 7
Damages for Breach of Contract with Alternative Modes of Performance ............................................................... 7
Hamilton v. Open Window Bakery Ltd. .......................................................................................................................................................................... 7
Durham Tees Valley Airport v. bmibaby. ....................................................................................................................................................................... 8
Discretionary Benefits in Employment Contracts ............................................................................................................. 8
Ditmars v. Ross Drug Co. Ltd. .............................................................................................................................................................................................. 8
Lewis v. Lehigh Northwest Cement Limited ................................................................................................................................................................ 8
Cost of Performance or Diminution in Market Value ....................................................................................................... 8
Radford v DeFroberville........................................................................................................................................................................................................ 9
Groves v John Wunder **don’t rely on this case ........................................................................................................................................................ 9
Peevyhouse **don’t rely on this case .............................................................................................................................................................................. 9
Ruxley Electronics v. Forsythe ........................................................................................................................................................................................... 9
Negligent Performance of Contractual Services in Relation to Land Transactions............................................... 9
Toronto Industrial Leaseholds (TILCO) v. Posesorski .......................................................................................................................................... 10
Messineo v. Beale .................................................................................................................................................................................................................. 10
Reliance Damages in Breach of K _____________________________________________________________________________ 10
Bowlay Logging v. Domtar ................................................................................................................................................................................................ 11
Esso Petroleum v. Martin ................................................................................................................................................................................................... 11
Pacific Playground Holdings Ltd. v. Endeavour Dev. Ltd..................................................................................................................................... 11
Sunshine Vacation v. The Bay .......................................................................................................................................................................................... 11
Damages for Negligent Misrepresentation and Negligent Performance of K ........................................................ 11
Beaver Lumber v. McLenaghan ....................................................................................................................................................................................... 12
V.K. Mason v. Bank of Nova Scotia ................................................................................................................................................................................. 12
Rainbow Caterers v. C.N.R. ................................................................................................................................................................................................ 12
RESTITUTIONARY REMEDIES _________________________________________________________________________________ 12
Garland v. Enbridge Gas Distribution Inc. .................................................................................................................................................................. 13
Wilson v. Fotsch ..................................................................................................................................................................................................................... 13
Wrotham Park Estate Co. v. Parkside Homes Ltd. .................................................................................................................................................. 13
Restitution & Breach of Contract ........................................................................................................................................... 14
Attorney General v. Blake .................................................................................................................................................................................................. 14
Bank of America Canada v. Mutual Trust ................................................................................................................................................................... 14
Measuring the Enrichment....................................................................................................................................................... 15
Peter Pan Manufacturing v. Corsets Silhouette Ltd. .............................................................................................................................................. 15
Edwards v. Lee ....................................................................................................................................................................................................................... 16
Lac Minerals............................................................................................................................................................................................................................. 16
Whitwham v. Westminster Brymbo Coal and Coke Company .......................................................................................................................... 16
Townsview Properties v. Sun Construction Co. Ltd............................................................................................................................................... 16
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Strand Electric Co. v. Brisford Entertainments Ltd. ............................................................................................................................................... 16
Seager v. Copydex Ltd. (No. 2) ......................................................................................................................................................................................... 16
ICAM Technologies Corp. v. EBCO Industries Ltd. .................................................................................................................................................. 16
PUNITIVE DAMAGES ____________________________________________________________________________________________ 17
Whiten v. Pilot Insurance Co. ........................................................................................................................................................................................... 18
Performance Industries Ltd. v. Sylvan Lake Golf and Tennis Club .................................................................................................................. 18
CivicLife.com Inc. v. Canada (AG) ................................................................................................................................................................................... 18
Vicarious Liability for Aggravated and Punitive Damages ........................................................................................... 19
Queen in Right of Canada v. Peeters ............................................................................................................................................................................. 19
T.W.N.A. v. Clarke et al. ....................................................................................................................................................................................................... 19
Non-Pecuniary Damages for Breach of K ............................................................................................................................ 19
Fidler v. Sun Life Co. of Canada ....................................................................................................................................................................................... 20
Mustapha v. Culligan of Canada Ltd. ............................................................................................................................................................................. 20
Farley v. Skinner .................................................................................................................................................................................................................... 21
Turczinski v. Dupont Heating and Air Conditioning .............................................................................................................................................. 21
Non-Pecuniary/Aggravated Damages for Wrongful Dismissal .................................................................................. 21
Honda v. Keays ....................................................................................................................................................................................................................... 21
REMOTENESS ____________________________________________________________________________________________________ 22
H. Parsons (Livestock) Ltd. v. Uttley Ingham & Co. Ltd. ....................................................................................................................................... 22
Purolator Courier Ltd. v. Nav Air Charter Inc. .......................................................................................................................................................... 22
Kienzle v. Stringer ................................................................................................................................................................................................................. 23
D.W. Matheson & Sons Contracting Ltd. v. Canada (A. G.) ................................................................................................................................... 23
Impecuniosity (Ps who have special vulnerability) *Applies to Remoteness AND Mitigation* ...................... 23
Liesbach ..................................................................................................................................................................................................................................... 24
PROBABILISTIC CAUSATION/EVIDENCE BEFORE TRIAL__________________________________________________ 24
LIABILITY AND INTERVENING EVENTS ______________________________________________________________________ 24
Naylor Group Inc. v. Ellis-Don Construction Ltd. .................................................................................................................................................... 25
Schrump v. Koot ..................................................................................................................................................................................................................... 25
Sunrise Co. Ltd. v. The “Lake Winnipeg” ..................................................................................................................................................................... 25
MITIGATION______________________________________________________________________________________________________ 26
Reasonable Steps to Mitigate: Personal Injury ................................................................................................................. 26
Janiak v. Ippolito .................................................................................................................................................................................................................... 26
Bourgoin v. Leamington (Municipality) ...................................................................................................................................................................... 27
Cochrane v. O'Brien .............................................................................................................................................................................................................. 27
Avoidable Losses ......................................................................................................................................................................... 27
Erie County Natural Gas and Fuel Company Ltd. v. Carroll ................................................................................................................................ 27
Jamal v. Moolla Dawood Sons & Co. .............................................................................................................................................................................. 28
Time of Assessment .................................................................................................................................................................... 28
Dodd Properties v. Canterbury City Council **Ps should not rely on this case – See Jens ................................................................... 28
Semelhago v. Paramadevan .............................................................................................................................................................................................. 28
Measurement Issues: Damage to Chattels .......................................................................................................................... 29
O’Grady v Westminster Scaffolding .............................................................................................................................................................................. 29
Measurement Issues: Damage to Real Property .............................................................................................................. 29
Nan v. Black Pine Manufacturing Ltd. .......................................................................................................................................................................... 30
C.R. Taylor (Wholesale) Ltd. v. Hepworths Ltd. ....................................................................................................................................................... 30
Jens v. Mannix Co. .................................................................................................................................................................................................................. 30
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Kates v. Hall ............................................................................................................................................................................................................................. 30
BETTERMENT ____________________________________________________________________________________________________ 30
James Street Hardware and Furniture Co. v. Spizziri ............................................................................................................................................ 31
Fontaine v. Roofmart Western Ltd. ............................................................................................................................................................................... 31
PERSONAL INJURY DAMAGES _________________________________________________________________________________ 31
Andrews v. Grand and Toy Alberta Ltd. ...................................................................................................................................................................... 32
Lindal v. Lindal ....................................................................................................................................................................................................................... 32
Lump Sums..................................................................................................................................................................................... 32
Discounting .................................................................................................................................................................................... 32
Structured Settlements ............................................................................................................................................................. 32
Chesher v. Monaghan .......................................................................................................................................................................................................... 32
Management Fees ........................................................................................................................................................................ 33
Kroppmanns v. Townsend ................................................................................................................................................................................................ 33
Cost of Future Care ...................................................................................................................................................................... 33
Personal Injury and Tax ............................................................................................................................................................ 34
Non-Pecuniary Losses for Personal Injury: The Functional Approach .................................................................... 34
Lee v. Dawson ......................................................................................................................................................................................................................... 35
Loss of Earning Capacity ........................................................................................................................................................... 35
Teno v. Arnold ........................................................................................................................................................................................................................ 36
Fobel v. Dean ........................................................................................................................................................................................................................... 36
McIntyre v. Docherty ........................................................................................................................................................................................................... 36
MacCabe v. Westlock Roman Catholic School District No. 110 ......................................................................................................................... 36
Collateral Benefits & Subrogation ......................................................................................................................................... 36
Bystedt (Guardian ad litem of) v. Hay .......................................................................................................................................................................... 37
Ontario Family Law Act ...................................................................................................................................................................................................... 37
Cunningham v. Wheeler ..................................................................................................................................................................................................... 38
M.B. v. British Columbia ..................................................................................................................................................................................................... 38
Krangle (Guardian ad Litem) v. Brisco ........................................................................................................................................................................ 38
Fullerton (Guardian ad Litem of) v. Delair ................................................................................................................................................................. 38
Fatal Accidents – Family Claims ............................................................................................................................................. 38
Keizer v. Hanna ...................................................................................................................................................................................................................... 39
To v. Toronto Board of Education.................................................................................................................................................................................. 40
BC Family Compensation Act ........................................................................................................................................................................................... 40
Lian v. Money Estate ............................................................................................................................................................................................................ 41
Bjornson v. McDonald ......................................................................................................................................................................................................... 41
EQUITABLE REMEDIES: INJUNCTIONS _______________________________________________________________________ 41
Quia Timet Injunctions .............................................................................................................................................................. 41
Fletcher v. Bealey .................................................................................................................................................................................................................. 42
Palmer v. Nova Scotia Forest Industries ..................................................................................................................................................................... 42
Hooper v. Rogers ................................................................................................................................................................................................................... 42
Connaught Laboratories Ltd. v. Smithkline Beecham Pharma Inc. ................................................................................................................. 42
Mandatory Injunctions .............................................................................................................................................................. 43
Redland Bricks v. Morris .................................................................................................................................................................................................... 43
Bellini Custom Cabinetry Ltd. v. Delight Textiles Ltd. .......................................................................................................................................... 43
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Property Interests ....................................................................................................................................................................... 43
Goodson v. Richardson ....................................................................................................................................................................................................... 44
Gross v. Wright ....................................................................................................................................................................................................................... 44
Clark v. McKenzie (BCCA 1930) ...................................................................................................................................................................................... 44
Barons v. Richards ................................................................................................................................................................................................................ 44
Jarnouin v. Parvais ................................................................................................................................................................................................................ 45
Lewvest v. Scotia Towers **Questionable precedent – see Earle, Vaz** ...................................................................................................... 45
Earle v. Martin ........................................................................................................................................................................................................................ 45
Vaz v. Jong (ONSC) ................................................................................................................................................................................................................ 45
Jaggard v. Sawyer (1995 CA)............................................................................................................................................................................................ 45
Property Law Act ................................................................................................................................................................................................................... 46
Municipal Act .......................................................................................................................................................................................................................... 46
Conveyancing and Law of Property Act ...................................................................................................................................................................... 46
Nuisance.......................................................................................................................................................................................... 46
Miller v. Jackson ..................................................................................................................................................................................................................... 47
Boomer v. Atlantic Cement Co. Ltd. ............................................................................................................................................................................... 47
Bottom v. Ontario Tobacco (1935 ONCA) .................................................................................................................................................................. 47
Huron Steel (1992 ONCA) ................................................................................................................................................................................................. 47
Palmer v. Burnaby (BCSC 2006) ..................................................................................................................................................................................... 48
Cattell v. Great Plans (2008 SASK CA) ......................................................................................................................................................................... 48
Spur v. Del Webb (1972 Arizona) .................................................................................................................................................................................. 48
Public Rights.................................................................................................................................................................................. 48
AGAB v. Plantation Indoor Plants .................................................................................................................................................................................. 48
AGBC v Couillard ................................................................................................................................................................................................................... 48
AGNS v Beaver ........................................................................................................................................................................................................................ 49
INTERLOCUTORY INJUNCTIONS ______________________________________________________________________________ 49
American Cyanamid v. Ethicon ....................................................................................................................................................................................... 50
RJR-MacDonald Inc. v. Canada (AG) .............................................................................................................................................................................. 50
Yule Inc. v. Atlantic Pizza Delight Franchise Ltd ..................................................................................................................................................... 50
Jurisdiction Over Interlocutory Orders & Civil Procedure........................................................................................... 50
Special Situations: Medical....................................................................................................................................................... 51
Jin v. Calgary Regional Hospital ...................................................................................................................................................................................... 51
C. (S.) v. Capital Health Authority ................................................................................................................................................................................... 51
Sweiss v. Alberta .................................................................................................................................................................................................................... 51
Special Situations: Restraint of Trades................................................................................................................................ 52
Shafron v. KRG Insurance Brokers (Western) Inc. ................................................................................................................................................. 52
Cantol v. Brodi Chemicals Ltd. ......................................................................................................................................................................................... 52
Towers et al. v. Cantin ......................................................................................................................................................................................................... 52
Cygnal Technologies Corp. v. Taylor ............................................................................................................................................................................. 53
Special Situation: Mandatory Interlocutory Injunctions .............................................................................................. 53
National Commercial Bank Jamaica Ltd. v. Olint Corp. Ltd. (Jamaica) .......................................................................................................... 53
Bark & Fitz Inc. v. 2139138 Ontario Inc. ..................................................................................................................................................................... 53
Special Situation: Free Speech ................................................................................................................................................ 53
Canada Metal Co. v. Canadian Broadcasting Corp. ................................................................................................................................................. 54
Canada Metal Co. Ltd. v. Canadian Broadcasting Corp. (No. 2) ......................................................................................................................... 54
Special Situation: Aboriginal Land Claims.......................................................................................................................... 54
Macmillan Bloedel (BCCA 1985) .................................................................................................................................................................................... 54
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Platinex v. Kitchenuhmaykoosib Inninuwug First Nation .................................................................................................................................. 55
Musqueam v. Canada (FCA 2008) .................................................................................................................................................................................. 55
Undertakings................................................................................................................................................................................. 55
Vieweger Construction v. Rush ....................................................................................................................................................................................... 55
Mareva Injunctions ..................................................................................................................................................................... 55
Mareva Compania v. International Bulkcarriers S.A. ............................................................................................................................................ 56
Aetna Financial Services Ltd. v. Feigelman ................................................................................................................................................................ 57
Anton Piller Orders ..................................................................................................................................................................... 57
Anton Piller K.G. v. Manufacturing Processes Ltd. .................................................................................................................................................. 57
Celanese Canada Inc. v. Murray Demolition Corp. .................................................................................................................................................. 57
Fila Canada Inc. v. Doe ........................................................................................................................................................................................................ 58
PERSONAL SERVICES CONTRACTS ____________________________________________________________________________ 59
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REMEDIES GENERALLY
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Remedies are important because they give meaning and content to legal rights (Ashby). A right without a
remedy is useless. The question guiding remedial selection is how best to vindicate a P’s right, with
reference to balancing competing interests, ensuring fairness between the parties, social and economic
factors, and public policy. The remedy/quantum will also be influenced by the nature of P’s interest, the
nature of D’s conduct, what (if any) alternatives were open to D, the goals of the remedy, and
administrative efficiency and convenience, which recognizes the institutional limitations of the court
system. Key principles include proportionality (the remedy should fit the wrong) and self-help (courts will
not be overly tender to Ps).
At CL the default is monetary damages. Equitable damages are highly discretionary. They are not awarded
as of right, but only where monetary awards are inappropriate, such as when the subject matter is unique.
The restitution interest addresses UE, by restoring the status quo between the parties. It is backwardlooking and premised on corrective/restorative justice, where D obtains a benefit at P’s expense, such as
the opportunity to negotiate (Wrotham). The quantum is based on the value necessary to disgorge gains
from wrongdoing.
The reliance interest is also backward looking*. It seeks to restore the status quo between the parties by
returning expenses wasted in reliance on the D’s promise, due to the breach. It may include both
affirmative losses and lost opportunities (Esso).
Punitive damages are based on retribution and are designed to punish D and deter wrongful conduct. The
focus is entirely on D’s conduct and not on P’s loss. Punitives are rare in Ks, since there is nothing
inherently wrong about breaching a K.
Expectation damages restore P to the same financial position P would have occupied had there been no
breach. It is the primary measure for breach of K and includes wasted expenses, lost profits (subject to
concerns about double recovery) and consequential losses.
EXPECTATION DAMAGES
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Expectation damages are the primary/normal measure of damages for breach of K. They restore the
promisee to the same position as though K were fully performed, including pecuniary and non-pecuniary
losses. Damages are assessed by the difference between the P’s expected financial position absent breach
and the actual position occupied with the breach, including wasted expenses and lost profit.
Value may be assessed in different ways, but the question is always the same: what has P truly lost? For
commercial Ks, market price will provide a default determination or at least a useful starting point. For
consumer Ks, there may be no market. The courts will then consider what is fair and reasonable (Ruxley).
Wasted expenses: P can recover every expense that they have reasonably incurred in their reliance on the
K, either pre or post K (Anglia, Ticketnet), subject to the duty to mitigate. Reasonable mitigation costs will
also be recoverable.
Lost Profits: includes past and future losses directly caused by the breach, plus lost opportunities to earn
profit (Canlin). P is entitled to recover past losses that are established with reasonable certainty on BOP.
Mere difficulties in assessment should not prevent the court from awarding (Canlin). For future losses, it’s
about real possibilities not probability. Losses must be reasonably foreseeable at the time of the Ks. Lost
profit will likely always be foreseeable in commercial transactions, since they are presumptively intended
for profit (Canlin). Contingencies might also affect P’s profits and should be taken into account.
Double recovery: Because expectation damages are not supposed to give P a windfall, double recovery
must be avoided. P cannot claim gross revenue and reliance. Claims for revenue need to be reduced by
expenses – capital and operating - saved due to D’s breach. Net profit can be claimed in addition to reliance,
since wasted expenses have not been included in the net figure. (Ticketnet)
Mitigation: The P has a duty to mitigate and cannot recover losses that could have been avoided by
mitigating. Recovery will depend on the P’s opportunity to mitigate (Canlin). In some cases, it may be too
late, may take time, or may be impossible. Considerations include the nature of the goods and whether they
are easily traded; availability of a substitute; and whether the effects of the breach prevent effective
mitigation, such as through loss of reputation (Canlin). Lost profits are awarded for as long as mitigation is
6
impossible (which protects lost opportunities – Canlin)
Canlin Ltd. v. Thiokol Fibres
 Facts: D was aware that P needed materials to manufacture a specific product (swimming pool covers) and
of the quality of materials needed. The pool covers disintegrated. P was in a competitive industry and the
harm to reputation which followed the breach prevented participation in the market for 4 yrs.
 Held: P entitled to future losses for 4 yrs. given the harm to his reputation.
Ticketnet Corp. v. Air Canada
 Facts: Parties K for development of software that would be used by airlines. AC stops P from proceeding w/
development of software.
 Held: P entitled to lost opp to have profited from the software, based on net profits. P cannot base claim for
lost profit on gross revenues b/c P would have had to incur some expenses which they no longer have to
incur b/c of D’s breach.
Lost Volume

The problem of lost volume arises when considering whether P’s actions after D’s breach and profits
earned from those efforts were actually earned in mitigation or losses consequent upon D’s wrong
(substitute transactions), or whether they were separate transactions entirely (APECO). The test is whether
P would have had the opportunity to earn profit but for D’s breach. The primary assessment question is
whether the second transaction was a true substitute for the first or whether the transaction could have
been completed in any event. It will depend on whether P was operating under or at capacity. If P is
operating at full capacity, then the second transaction will not have been possible but for the breach of the
first, and P will have mitigated. (APECO)
Apeco v Windmill Place
 Facts: D wrongfully cancelled lease of space in P’s warehouse. P was able to rent the space out 6 months
later. D argued damages were limited to 6 months rent since P had successfully mitigated.
 Held: The subsequent transaction had not mitigated P’s loss since portions of the warehouse were still
vacant. The 2nd lease could have been concluded even if first one had not been broken since P could have
leased space in another part of the warehouse to the 2nd customer. Where 2nd transaction is independent of
the 1st, it will not be taken into account (deducted) in assessing the loss.
Damages for Breach of Contract with Alternative Modes of Performance


In some Ks, the D may have discretion in the mode of performance, and not all options will be favourable to
P. The damages are based on minimum level of performance enforceable under the K (Hamilton). This is
based on the principle of freedom of K and K allocation of risk. (Hamilton) We are not concerned with what
the P actually expected, but only with what P is legally entitled to. This is a D-favorable assumption (don’t
want to penalize D by assuming that they would have done more than required by the K) and is about
administrative convenience (easier than constructing a hypothetical)
But, where the parties do not specify the minimum, the rule will not apply and the court will assume
that the parties meant that they would act in good faith with a view to maximizing their own
interests and will stipulate a reasonable level of performance. (Abrahams – book publishing, Durham
Airport – number of flights not specified) This is because the min in the K typically shows what is
commercially reasonable. Where the hypothetical is constructed, the level of performance chosen must
be commercially reasonable and consistent with the D’s interests (Durham)
Hamilton v. Open Window Bakery Ltd.
 Facts: K for 36 months, D breaches w/o notice. Term in K that D was entitled to terminate if P did
something that was detrimental to D’s reputation. Also, could terminate after K had been in effect for 18
months upon giving 3 months notice. D terminated after 16 mos.
 Held: Damages should be limited to min level of performance. Should only be entitled to 5 months damages
(what P would have been entitled to under the K). (18 – 16 + 3) Justification: Freedom of K. Ks are
7
voluntary arrangements – parties are entitled to put terms in K as they see fit. Allocation of contractual
risk: P accepted the terms of the K. In free market economy must ensure certainty and predictability.
Durham Tees Valley Airport v. bmibaby.
 No minimum level of performance specified. The number of flights was never specified – only the fact that
two planes would be operated out of this airport. Thus the court attempts to construct a hypothetical
whereby a commercially reasonable result is reached. Court emphasizes that it will pay particular attention
to the commercial interests of a D acting in good faith and acting in its own best interests.
Discretionary Benefits in Employment Contracts
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A wrongfully dismissed employee is entitled to damages for discretionary benefits they would have
received during the period of reasonable notice if they had legal entitlement to receive benefits. Legal
entitlement may be in the form of an express term, revealing the parties’ intentions at the time of K, or
implied (Ditmars). Where the benefit is clearly gratuitous/not mentioned in the K, the court will
typically adopt the standard minimum rule and assume that D would not have paid the benefit. (Laverack,
Lewis) But, where a K is silent on discretionary benefits, a pattern of awarding bonuses as a mechanism to
make salaries competitive may amount to entitlement (Ditmars). The rationale is that it would be unfair to
disregard the actual relationship between the parties (Ditmars).
The court will award a reasonable amount where the K says “a bonus will be paid” but the amounts are not
specified (Cantor Fitzgerald) because this is no longer discretionary. (lost chance of a bonus)
Where employees are wrongfully dismissed during or after temporary absence from work, discretionary
benefits are not awarded. The rationale is that discretionary salary increases are often dependent on a
company’s financial status and the employee’s job performance. If an employee has not contributed to the
company’s financial performance, there is no basis to assess entitlement to share in profits (Lewis).
Ditmars v. Ross Drug Co. Ltd.
 Original K states that the bonus is purely discretionary, but the wages were substandard and the bonus was
basically used to up the employee’s salaries to the market wage for several years. The court is essentially
implying a term into the K such that the bonus is NOT purely discretionary.
 Also,the company had just changed the wage system to recognize that the bonuses were part of wages by
eliminating the bonuses and increasing wages correspondingly, which is further evidence for P that
bonuses were really part of the wages.
 Remember: parties can change the K at any time by mutual agreement. So perhaps there shouldn’t be too
much emphasis on the original K.
Lewis v. Lehigh Northwest Cement Limited
 Employee wrongfully dismissed after 28 monthss medical leave. P had received annual increases for a 5 yr
period prior to his leave. Nothing in K that stated that a wage increase would be given. His co-workers
continued to receive increases after his termination. P argued he should be entitled to salary increases
during notice period.
 Held: Claim dismissed. Discretionary increases in salary often dependent on company’s financial status and
employee’s job performance. Since P was on medical leave, he had not contributed to the company’s
financial performance nor was there a basis for assessing his job performance.
Cost of Performance or Diminution in Market Value
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The guiding principle is that the court will provide an amount of money designed to put P in the position
they would be in had the K been performed. The question is: what has P truly lost? There is no hard and
fast rule about how this will be measured. It could be the diminished market value. (Wigsel) It could be the
full cost of performance (Radford). Or it could be somewhere in between, using the loss of amenities
approach. (Ruxley) The loss of amenities approach involves asking “what amount of money will make P
indifferent between what they contracted for and what they received?” This recognizes that there are
subjective values to a consumer above and beyond the purchase price. (Ruxley)
Consider: P’s true interest in the K, nature of the K (commercial or consumer), P’s true intent (does the
8
court think that P will actually spend the damages award on the cost of performance? Is P reasonable in
wanting to do that? Wigsel – no longer needed fence, property actually worth more without it, compare to
Radford where the court found that P had a legit interest in building the fence), size of the disparity
between the figures, economic waste (Ruxley, Young v. Kent - pipe), unjust enrichment (unjust to let D
snap up the gain by not performing the K - John Wunder)
Radford v DeFroberville
 Full cost of performance to build the fence awarded to P; court says that there is a genuine interest in
having the fence built and P is reasonable to build the fence.
Groves v John Wunder **don’t rely on this case
 Reclamation work on gravel pit. Total value of the land is $12,000 and doing the reclamation work would
have cost $60,000. Court says they are following the Radford case and awards the $60,000 cost of
performance.
 P is unlikely to use the money to fix the land. P leases the land out, and flat or unflat doesn’t affect the price
they can lease the land for. Thus it appears to be a windfall for P because P’s real interest is not in having
flat land. So, this is NOT an application of Radford, it’s really the opposite! This case shows another set of
judicial motivations at work. This was more about punishment - it seemed that D had acted poorly. D had
taken a benefit based on negotiations that included the reclamation without “paying the price” for that
benefit. This is really an application of a restitutionary principle, where the court will depart from the
expectation rule and apply a restitutionary rule in a breach of K case.
Peevyhouse **don’t rely on this case
 Basically identical to Groves. Strip-mining in Oklahoma, D doesn’t do the reclamation work. Cost of leveling
- $10,000, diminished value was only $300. Here, court doesn’t award cost of performance, only the
diminution in value. Court followed the Wigsell approach, said that $300 was enough to measure P’s total
loss.
 Cassels: This case should have been decided like Groves, because here P was a farmer and he had a legit
interest in having flat land. Thus there is a stronger argument for cost of performance.
 These cases are considered to be somewhat anomalous. Groves can be defended from a restitutionary
point of view but not so much from an expectation point of view.
Ruxley Electronics v. Forsythe
 Swimming pool is a few inches too shallow. It doesn’t affect the functionality of the pool or the value of the
property, but P argues that he still didn’t get what he wants and wants damages measure by the cost of
building a new pool. Dilemma – P paid for a pool and didn’t get what he wanted, shouldn’t he get
something? But on the other hand, building a whole new pool seems ridiculous.
 P is entitled to be put in the position that P would have been in had the K been performed. This is
not necessarily cost of performance OR diminution of value. Here, what has been lost is some
psychological satisfaction, so the court uses the “loss of amenities” approach.
 The question is what amount of money will make P indifferent between what he wanted and what he got.
Negligent Performance of Contractual Services in Relation to Land Transactions
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P may suffer a loss due to detrimental reliance on negligent professional advice, generally with respect to
land transactions, causing the P’s expectation interest to be less than anticipated, in that the value of the
property is below the K price. The loss may be an overpayment, the loss of an anticipated benefit (such as
profit on resale), or a breach of service K. Where D’s negligence causes the defect, meaning that the P would
have received the interest but for the D’s negligence, the measure of damages is the value P would have
received - expectation (Kienzle). Where D’s negligence is a failure to notice a defect or offering poor advice,
P loses opportunity to avoid a loss/negotiate, etc. The measure of damages is K price – true market value +
consequential losses = reliance (TILCO; Messineo).
Time of Assessment: The general rule is that damages are assessed according to the market value at the
time of K. The exception is when there is a subsequent decline in property value that is directly caused by
9
D’s negligence (TILCO).
Toronto Industrial Leaseholds (TILCO) v. Posesorski
 Solicitor failed to identify a defect in the title of the property. Ps overpaid by $100,000. Also, between
purchase of property and finding out about the defect, property value had decreased by $10,000. The cost
of remedying the defect was $260,000. Ps want the $260,000.
 Majority: P didn’t hire S to remove the option. Had D done his job properly, he would have told P about the
option and then the price would have been re-negotiated downwards. This is about causation. The primary
loss caused by the breach is overpaying by $100,000 plus the subsequent loss in market value - the court
assumes that P would not have entered into the K and would have avoided that loss. Ps also get interest on
the loss and their legal costs for getting another solicitor to try to help P get out of the dilemma, and the
cost of maintaining the vacant property.
 Dissent: Proper remedy is $260 because the only way to put P in position it should have been in is to
reimburse P for the cost of eliminating the option. The problem with this argument is that P would never
have gotten the land in the first place without paying something to have the option removed.
Messineo v. Beale
 P buys property for $10,000 which he believes includes Murch’s Point. Solicitor failed to notice that it did
not. The total value of the property even without Murch’s Point is $11,000. Cost of acquiring Murch’s Point $5000.
 Damages are $0 because if the lawyer had done what he was supposed to do, P would have gone ahead with
the purchase anyway at $10,000, because it was a good deal, or would have tried to buy Murch’s Point as
well but would have had to pay more. The lawyer’s negligence did not cause the loss of Murch’s Point.
 It would be different if the lawyer had guaranteed title of the property of Murch’s Point. But he didn’t do
that, and can’t do that, because he didn’t own Murch’s Point.
Reliance Damages in Breach of K
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Expectation damages are forward-looking; reliance damages are generally backwards-looking (*) and
designed to restore the position the parties would have been in had they never entered into the contract. In
tort law, reliance damages are the standard remedy. In K law, reliance damages are a secondary remedy,
available:
o Where you can’t prove expectation damages or they are really difficult to establish
 Anglia TV v. Reed: In the field of entertainment where each product is unique, it would be
hard to prove what a particular show could earn.
 The court will make a P-favorable presumption that P would have broken even (Sunshine
Vacations) This is fair because P has lost the opportunity to see how the business would
have turned out as a result of D’s actions. D can rebut this presumption by proving that P
would have made a loss. (on a BoP?)
o Where for some reason of public policy/justice/fairness, the court feels that an award of
expectation damages would be “too much” (Royalty Rocker analogy, Esso)
P can recover expenses incurred in reasonable reliance on performance of K, and wasted due to breach.
May be pre- or post-breach expenses (Anglia; Ticketnet), and can include opportunity cost (Esso). P can
claim reliance as a complement to expectation damages where the claim is for net profit (Ticketnet).
Reliance may include expenses taken in fulfilling the P’s duty to mitigate.
Reliance damages protect P if P is in a bad bargain and D cannot rebut the presumption that P would have
broken even (Sunshine), but expectation may also act as a ceiling where D can show that P would have
incurred net losses (Bowlay). This means that a P cannot hide behind reliance to be put in a better position
than he would have been in had the K been fully performed. P is limited to expectation (net loss) upon
proof that P would have suffered net loss absent D’s breach (Bowlay). This is based on fairness, causation,
and risk allocation. Thus, P cannot claim reliance damages where they are greater than expectation
damages (Bowlay) However, increased losses due to the breach are recoverable (Pacific Playground),
whereas normal expenditures in the performance of K are not (Bowlay).
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Bowlay Logging v. Domtar
 P is lucky in fact that D breached because they would have lost even more in completing the contract. They
don’t sue for expectation damages because they would have actually been negative.
 Here, reliance damages are inappropriate because of causation, risk allocation, and justice. Causation: is the
loss caused by breach of contract? No! It’s caused by the super inefficient performance of the contract. Risk
allocation: awarding reliance damages here would totally reverse the principle behind a fixed-price cutting
contract – which assumes that the wood cutter is in the best position to bear the risk of price fluctuations in
the cost of cutting wood. Justice: Unfair that D should have to bear $170,000 worth of business losses that
really weren’t caused by anything that D had done.
 “The law of contract compensates a plaintiff for damages resulting from the defendant's breach; it does not
compensate a plaintiff for damages resulting from his making a bad bargain. Where it can be seen that the
plaintiff would have incurred a loss on the contract as a whole, the expenses he has incurred are losses
flowing from entering into the contract, not losses flowing from the defendant's breach. In these
circumstances, the true consequence of the defendant's breach is that the plaintiff is released from his
obligation to complete the contract -- or in other words, he is saved from incurring further losses.” (trial)
 Capital asset issue: P said that the TJ exaggerated the extent to which this was a losing contract. That the
$223,000 included capital investment – which should not be attributable to this particular contract because
such investments are supposed to be paid off over time. The problem with P’s argument is that first they
are saying that they lost $223,000 – but then they say that they didn’t REALLY lose $223,000 because a lot
of it was a capital investment. Can’t have it both ways.
Esso Petroleum v. Martin
 Court didn’t think it would be fair to Esso to hold them accountable for the lost profits since there was no
guarantee of a certain level of profit. However, had there been no breach, Martin wouldn’t have entered
into the K. So the court awards him his expenses PLUS an estimate for the amount of income he would have
earned via another job. So while reliance damages are backwards looking, they also look forward in
this respect – where they consider opportunity cost! Court is adamant that they are awarding reliance
damages, and using the profits that would have been earned as a proxy for opportunity cost.
Pacific Playground Holdings Ltd. v. Endeavour Dev. Ltd.
 P is a developer, D enters into K to bring water to the development. D breaches; unable to bring water to
the land. Everyone goes bankrupt. P makes 3 claims:
o 1) $120,000 in expenses after D breached trying to get water to the land (recoverable)
o 2) the full cost of performance (not recovered)
o 3) lost profits (not recovered)
 #2 and #3 are alternate ways of measuring expectation damages. The court orders neither because of
Bowlay. This project was doomed to failure anyways. The business loss was not suffered as a result of not
getting the water to the land; it was a loss that was inevitable in the circumstances.
 However, the gloss on Bowlay is that the money that was spent on trying to get water after contract
breached is recovered. The difference here is that the breach specifically caused this loss.
Sunshine Vacation v. The Bay
 Facts: P had an idea about marketing package vacations through department store outlets. D breaches.
 Held: Damages for wasted expenses but not lost profit.
 Reasons: Following Anglia, P was permitted to claim as reliance damages its entire lost investment, though
there was uncertainty about whether it would have earned any profits. D did not discharge onus of proof
that P would not have broken even.
 Even where P is unable to prove that it would have made a profit, the court will assume that it
would have broken even, unless D is able to show that it would have incurred a loss
Damages for Negligent Misrepresentation and Negligent Performance of K
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Damages for NM are limited to reliance damages (amount paid – value received) + consequential losses
(Beaver Lumber). Would not include lost profits/lost bargain.
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Reliance damages might approximate expectation where P is awarded damages for opportunity costs (V.K.
Mason). Potential profit can be used as a proxy for P’s opportunity costs. D can rebut this presumption by
bringing evidence to show that the expected profit on the first K was unusually large, or that P’s
opportunities elsewhere were much less valuable. (V.K. Mason)
Once satisfied that NM induced entry to K, the court will assume that P would have avoided all losses.
(Rainbow Caterers). If D proves P would have gone ahead anyway even absent D’s wrong (albeit for a
different price) and still would have incurred losses, P can only claim the amount of loss associated with
the NM and not the amount associated with P’s own business efficiencies. (Rainbow Caterers)
Beaver Lumber v. McLenaghan
 P relied on misrep by one of D’s employees. The value of the house built for P turned out to be way less
than what P expected it to be. P claimed diff b/w value received and what value would have been if things
had gone right.
 Issue: What is the proper measure of damages for a negligent misrepresentation which induces the
plaintiff to enter into a contract with D or a third party – reliance or expectancy?
 Held: Reliance. The tortious measure aims at restoring the status quo ante. Where a NM induces P to enter
into a K, the tortious measure would be the difference b/w the value of the property/services received
under the K and the amount paid for that property/services, plus consequential losses, but not loss
of bargain or prospective loss of profits.
 Consequential losses include liabilities to 3Ps incurred as a result of the NM and additional funds wasted
trying to run the business, salvage the transaction, or mitigate the damages
 In cases of NM, the usual rules of remoteness apply – the losses must meet the test of foreseeability
 Fairness: Here, P did not pay D for the recommendation for a house builder, D is not in the business of
giving advice, don’t want to make D an insurer. Court is trying to balance the competing interests at stake
V.K. Mason v. Bank of Nova Scotia
 Reliance measure of damages may include opportunity cost
 D bank carelessly misrepresented to P contractor that a developer would have sufficient financing for a
construction project. P entered into K w/ developer to do the work but was not fully paid
 “There is a conceptual diff b/w damages in tort and contract but in many instances the same
quantum will be arrived at, albeit different routes”
 SCC reasoned that had the misrep not been made, P would not have entered into the K, clearly P
wouldn’t have earned profits on the work but it would have entered into other profitable Ks.
 The profit lost on the first K was used as a proxy to estimate what P might have earned elsewhere. D can
rebut this presumption by bringing evidence to show that the expected profit on the first K was unusually
large, or that because of the state of the industry, P’s opportunities elsewhere were much less valuable.
Rainbow Caterers v. C.N.R.
 P tendered a bid to supply meals to railway crews. Bid was based on a negligent forecast by D as to the
volume of meals that would be required and P lost money on the K before terminating it.
 Usually, where P enters into a transaction on the faith of a careless statement by D, P is entitled to
all the losses suffered on that transaction, on the assumption that “but for” the negligent advice, P
would have avoided the transaction altogether.
 Where D can prove that P would still have entered into the transaction (though perhaps on different terms)
and would have suffered a loss, damages will be reduced. In these situations, it cannot be said that all the
losses suffered on the investment were caused by D’s wrong because even in the absence of the wrong, P
might still have made the investment and might still have suffered a loss (though likely a smaller one)
 In this case, court found that P would not have entered K but for D’s NM. P was entitled to recover all its
losses from the K, including those which may have not actually been caused by the NM.
RESTITUTIONARY REMEDIES
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Restitutionary remedies prevent UE to D and the quantum is determined according to D’s benefit. D’s gains
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may be positive or negative in the form of saved expenses. The rationale is that where a person commits a
form of wrongdoing in order to obtain a benefit, we want to strip the wrongdoer of their gains. Restitution
is a form of corrective justice, where the focus is on the gain to the wrongdoer and not the loss to the
victim. The focus is not compensation.
Advantages: a) overcomes problems of proof (simpler to look at the profit that D made from the
wrongdoing), b) can provide higher levels of compensation (basement inventor scenario), c) in rem
relief is available (proprietary right, tracing is available), d) may be available when there is no other
basis of legal liability
P would prefer a proprietary remedy where there has been an increase in the value of the asset, D’s
ability to pay cash is impaired, or there are other creditors
Restitutionary damages are available:
o When money or services have been provided to someone by mistake
o Waiver of tort (Whitwham, Strand)
o Gains from crime (Garland, Blake)
o IP cases
o Breach of confidence (Peter Pan - bras, Seager – carpet grip, ICAM)
o Necessitous intervention (good Samaritan cases)
o Services per quantum meruit
o Total failure of consideration
o Contracts that are void (frustration) or voidable by reason of fraud, misrepresentation,
unconscionability or mistake. Court will try to restore the parties to their original positions.
o Advance payments under Ks that fail to materialize (Estok v. Haguy)
o Domestic property cases that fall outside of the legislative framework (Wilson)
o Other? General emerging body of restitution (Blake)
Requirements: D obtained a benefit (Garland): positive or negative (don’t consider set-off at this point –
Wilson), D’s conduct deprives P of legal right or property (includes right to negotiate), there is no juristic
reason for D to retain benefit: prima facie UE where P shows benefit cannot be retained under established
legal categories (K agreement, required payment under law, gift). The presumption of UE is rebuttable
(reasonable expectations, public policy).
Defences: Delay, acquiescence, change of position where D has substantially altered her/his position due
to receipt of benefit (Garland)
Garland v. Enbridge Gas Distribution Inc.
 Facts: D is collecting late fees from customers with permission from the Utilities Commission to charge the
fees in question. Fees later determined to be in violation of the CC.
 Held: D had to pay their customers back. There was a benefit to D, detriment to the customers, and no
juristic reason because the penalties were illegal. But for a period of time (until the action was launched) D
had a reasonable expectation that the fees were legal, so until that point they can keep the amount.
Wilson v. Fotsch
 Unpaid or under-compensated services counts as a corresponding deprivation
 For the change of position defence, D must have made a special expense/commitment because these
particular benefits were in their hands – something you normally would have done anyway doesn’t count
(Garland, Wilson)
 Don’t consider set-off until you’ve completed the UE analysis
Wrotham Park Estate Co. v. Parkside Homes Ltd.
 D breaches an RC and builds more houses than permitted. Neighbor P sues for a mandatory injunction to
have the fourteen offending houses torn down.
 Traditional damages would be nominal or nothing, but the mandatory injunction is unreasonable.
 D earned a profit from breaching the covenant. Court calculated that profit by looking at the difference
between the value of the property with the covenant and value without the covenant. P should get a
portion of that profit, i.e. what might have been “bargained for” had the parties bargained for the relaxation
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of the covenant. This is a restitutionary award based on the portion of the value that D received by not
adhering to the covenant.
P only got a portion of the profit. This is a time of a housing crisis and building more houses was
reasonable. The court is suspicious of P’s own behavior in waiting until the building was complete.
Extreme view #1: this case is revolutionary and permits a restitutionary remedy for breach of K
Extreme view #2: There’s no restitution in here at all. This is a standard contract damages case about
compensation. Had the covenant been kept, D and P may have negotiated a new contract to relax the
covenant and share the profits from that. So what P lost was the opportunity to bargain for a share of the
profit and that’s what the court provided in this case.
Restitution & Breach of Contract
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Restitutionary damages are generally not available for breach of K, since we presume that there is nothing
inherently immoral about breaching K. Rather, breaches are often calculated in the interest of economic
efficiency. We don’t want to overcompensate P or discourage efficient breach.
There may have always been an implicit restitutionary remedy available in contract law that the courts
used when they were really ticked off. (Groves - court may have been stripping D of its ill-gotten gains – the
savings from not leveling the land) Now courts are being more open about awarding restitution in breach
of K situations (Wrotham Park, Blake)
Restitution in K will only be available when there is “something more” – some type of public policy reason
(Bank of America Canada, Blake – national security)
A simple breach is not enough for restitution: It’s not enough that the breach was cynical and
deliberate; that the breach enabled D to enter into a more profitable contract elsewhere; and the fact that
by entering into a new and more profitable K D put it out of his power to perform his contract with P.
(Blake)
Consider whether P has a legitimate interest in preventing the particular type of profit-making venture
(Blake, Bank of America Canada)
Attorney General v. Blake
 Facts: Former British spy writes a book, in breach of confidentiality agreement.
 Held: Crown entitled all royalties to date and in future.
 Reasons: This is an exceptional case. The context is employment as a member of the secret service. D was
employed on the basis that he would not disclose official information – and it was on the basis of that
employment that he acquired the sensitive information. The Crown has a legitimate interest in
preventing these types of profit-making ventures – need to create disincentive for people to do this
Bank of America Canada v. Mutual Trust
 P entered into loan agreement w/D. D refused to advance funds. D’s failure wasn’t because D was going to
loan the money to other customers – just failed to make good on the loan and in the process ended up
making more money. Not so much an efficient breach (I can make more money doing something else) but
rather (If I don’t do this at all I will be better off). Resulted in P having to liquidate and sell development for
less than they had invested.
 Held: Award restitutionary damages of compound interest – not only the interest that the bank made by
not lending the money to P – but also the interest earned on the interest earned in that time
 Courts don’t want to discourage efficient breach – so usually will just award expectation damages
 But where by not paying the money, D gets a bunch of interest on the money (way more than loss to P of
not having the money during that time), D’s gain is P’s loss – the value of which, but for D’s breach, would
have belonged to P (D trying to pull a fast one). To prevent Ds from exploiting the time-value of money
to their advantage, by delaying payment of damages so as to capitalize on the time-value of money
in the interim, courts must award damages which include an interest component that returns the
value acquired by a defendant between breach and payment to the plaintiff
 SCC explicitly says that the theory of efficient breach is a part of the law of K and that restitution shouldn’t
be available where there is solely an efficient breach. There has to be “something more” than a simple
efficient breach.
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Measuring the Enrichment
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The amount awarded via a remedy is based on the benefit wrongfully obtained by D. But there are many
ways to approach this. Only one approach may be used, but P may choose the method most favourable to P
(ICAM). D bears the burden of establishing that another method is more appropriate.
o Reasonable wayleave or rent (Whitwam - trespass, Strand Electric – wrongful detention of goods)
o Opportunity cost/hypothetical bargain (Wrotham Park, ICAM)
 If you take the concept of opportunity cost seriously for the calculation of expectation
damages, then you can say that Wrotham Park and ICAM are really about expectation
damages and not restitution.
o Full revenue (Blake)
 True restitutionary remedy not a compensatory remedy! (Compare to the above methods
that can be considered compensatory remedies if you’re considering opportunity cost)
 This quantum is very rare and typically will not be awarded except where the court has
some further punitive goals in mind. Reason: it overstates the benefit to the wrongdoer
because it doesn’t take into account their expenses.
o Full net profit (Peter Pan)
 The reason why full revenue overstates D’s benefit is because D has also invested in order
to profit, i.e. has incurred expenses. Typically net profits will be the measure that courts use.
 In IP, this can be an extreme remedy, but based on notion that D’s profits flow from the
wrong committed, so every profit should rightly be attributed to P’s information. Where the
D’s conduct is inadvertent, likely too harsh (Seager).
o Apportionment (argued in Peter Pan, Edwards v. Lee)
 Will be appropriate where D misappropriates P’s property and combines it with his own
property to produce something. Since D benefits from the use of P’s property, P is entitled to
increased profit that it attributable to the use of P’s property. To get apportionment as
opposed to net profits, D must prove (1) the right to apportionment, meaning that they
could have done something, even without P’s interest (2) extent of D’s property used and
the profit from it, (3) an absence of a causal link between those profits and infringement of
P’s right. (Peter Pan) The P’s recovery is limited to the profit that is attributable to
infringement (Edwards).
o Comparative profit/savings (Townsview)
 There is a negative benefit to D where D obtains a financial advantage from wrongdoing.
Savings comparison will thus be the remedy of choice for breach of RCs and trespass
(Wrotham, Townsview). The focus is on savings and not on profit from wrongdoing,
making it an attractive remedy where D made no profits.
o Royalty (capitalized) (Seager v. Copydex)
 More appropriate in an inventor-manufacturer relationship (Seager) but not appropriate in
a manufacturer-manufacturer dispute (Peter Pan) because it essentially amounts to a
judicially enforced sale. For inventors, that is generally not a problem.
o Quantum meruit on basis of market value
 Appropriate where the benefit is services provided
 Value received approach: i.e. childcare services are given a market price
 Value survived approach: i.e. joint enterprise between the spouses with the understanding
was that the property would be shared
o Issue of reciprocal benefits and set-off (Wilson)
 Court will deduct or take into account, in measuring the benefit to D, benefits received by P.
Peter Pan Manufacturing v. Corsets Silhouette Ltd.
 D stole P’s technique for making bras.
 Held: P entitled to damages in form of net profit. The manufacture of bras couldn’t have been done
legitimately – needed the confidential information. D’s apportionment argument because the SCC wanted to
provide a larger disincentive for stealing confidential info.
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Edwards v. Lee
 D gives tours of the cave which is partially below P’s property. P claimed entire net profit of the enterprise.
Court said no, they were going to apportion the benefits based on the land ownership. Thus, restitution
here is not acting as a significant disincentive here because this is probably the bargain that the parties
would have struck. The implication is that the court was not particularly disturbed by D’s conduct.
Lac Minerals
 P awarded 100% of the mine’s net profits, even though 50% was intended under the JV, on the basis that
awarding just 50% would not be a sufficient incentive to act in good faith – the worst outcome for D for
stealing the info is getting what they would have gotten in the first place through the JV.
Whitwham v. Westminster Brymbo Coal and Coke Company
 D trespassed on P’s land – polluting on it. The value of the trespass to D was 900 pounds but diminution in
value of property to P was only 200 pounds.
 Held: award of 900 (based on reasonable wayleave)
 Reasons: Damages are to be measured not merely by diminution in value to P’s land, but by value derived
by the wrongdoer from the tort. If one person has w/out leave of another been using that other’s land for
his own purposes, he ought to pay for such use.
Townsview Properties v. Sun Construction Co. Ltd.
 D used P’s property (vacant lot) and by doing that saved a great deal of money/time on their construction
project. This was a calculated act on the part of D to save money – not really any tangible loss on P’s side.
 Held: Punitive damages based on amount D saved. Savings measure is appropriate where D deliberately
engages in tortious conduct w/a view to profit.
Strand Electric Co. v. Brisford Entertainments Ltd.
 Facts: D came into possession of portable switchboards and used them for its own profit for 43 weeks
 P entitled to recover as damages the full market rate of hire for the whole period of detention
 Even if owner of goods could not have used/hired out the goods in question, he is nonetheless
entitled to a reasonable hire from D who was wrongfully retained them
 D cannot be better off b/c he did not ask permission.
 When you pay the reasonable rental fee – it includes an element of reasonable wear and tear. But if items
are in worse condition than normal wear and tear – then D could be made to pay for the additional damage
done to the profit. If you fail to return it or item is completely destroyed – you will pay the rental fee PLUS
the cost of the item based on the value of the item at the time of damage.
 P could have brought a traditional action for damages and the question would have been whether P could
have sold or rented the switchboards during that time. P would have had to bring evidence. Restitution is
simpler.
Seager v. Copydex Ltd. (No. 2)
 D inadvertently used P’s carpet grip technology.
 Held: Awarded a lump sum based on a license for royalties received over time. Assumed that P would be
willing to sell the info (not an issue here, they were already in talks) P is an inventor who probably
wouldn’t have started a company to make the product, but probably would have licensed his invention for a
royalty. Courts can’t order a royalty directly because it puts parties into a relationship, so they capitalize
the royalty and figure out the present value (PV) of it.
 The value of the confidential information depends on the nature of it. Here, it is clearly unique information,
shown by the fact that P had applied for a patent. In addition to R&D costs, there should also be an element
paying P for P’s inventive idea. Should also think about the way that the sale of this info to D will affect P.
ICAM Technologies Corp. v. EBCO Industries Ltd.
 P is allowed to have damages assessed on the basis most favourable to P. In this case, the market value of
the info, as between a willing buyer and a willing seller, would produce the most favourable result for P
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In assessing what a willing seller would have accepted here – both the time and energy expended in
creating the concept of the project and an additional sum for the value of the unique factor are
appropriate factors to be weighed.
PUNITIVE DAMAGES
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Punitive damages are non-compensatory and exemplary in nature, with the goals of punishment,
deterrence and denunciation. The focus is completely on D’s conduct, and the availability and quantum are
determined by a rationality test for what is necessary to sufficiently punish D for reprehensible conduct
(Whiten). Punitives are only available where all damages, considered together, are insufficient to punish D.
(Vorvis)
o Aggravated damages are part of compensatory damages and compensate P for intangible injuries
for the manner in which the wrong was committed. (Vorvis).
The policy framework for punitive damages, as set out in Whiten, is exceptionality (the primary vehicle of
punishment is the criminal law/regulatory law and punitive damages should be resorted to only in
exceptional cases and with restraint), rationality (tied to punishment, denunciation, or deterrence), and
proportionality (with respect to D’s blameworthiness, P’s vulnerability, harm, and the general need for
deterrence). Consider what is the smallest amount that will achieve these objectives (Whiten).
The notion of a punitive purpose can be troublesome in civil matters and damages are generally only
awarded in cases of intentional torts (Whiten). Punitives are rarely awarded in negligence cases, except
where D’s conduct shows malicious and outrageous disregard for P’s well-being (Robitaille). They are also
available for breach of fiduciary duty and to strip D of UE or wrongful gains (Townsview - trespass).
Until very recently, you couldn’t get punitive damages in K. This was based on the rationale of K law – that
it’s about self-interested pursuit of profit, bargaining, and risk allocation, with no room for moral notions.
Thus, the starting presumption is that punitive are not awarded for breach of K (Addis) Because of our
starting point that breach is not immoral, we will require an independent actionable wrong, although this
does not necessarily mean a tort (Whiten). If the breach of the implied duty of good faith in performance of
the K is the basis for the compensatory damages award, that cannot form the basis of the punitive damages
award. (Civic Life) In Whiten, there were two wrongs – the breach of the duty of good faith, and the breach
of the insurer’s obligation to compensate when the subject matter of the K is destroyed.
Rationality Test Factors:
o Nature of D’s conduct: requires a marked departure from ordinary standards of decency, with a
degree of moral turpitude that deserves condemnation and punishment. This will be considered
with respect to whether there was specific P targeting, the relative vulnerability of the parties, and
whether D was the source of P’s vulnerability (compare Whiten to CivicLife)
o Sufficiency of compensatory damages and the need for punishment and deterrence: Rational
to use punitive damages where compensatory damages would amount to nothing more than a
license fee to earn greater profits through outrageous disregard of the legal rights of others
o Advantages/Benefit/Savings from wrongdoing: may serve as a basis for quantum of a punitive
award (Townsview). However, the punitive quantum is not limited to D’ gain. (Whiten – company
profited by not paying out, but certainly didn’t make $1 million in doing so)
o D’s financial means: A lesser amount may not achieve desired deterrence if the D has significant
means (Hill)
o Expressions of Remorse and Apology: may be relevant with respect to degree of culpability and
need for punishment. In Muir, the Crown apologized and no punitives were awarded. By contrast,
in Hill, the failure to apologize helped justify punitives.
o Prior Penalties: The general rule is that there is no double jeopardy. However, the penalties must
be for the same conduct as the civil suit. Civil courts may still consider the sufficiency of prior
penalty to see if it achieves the purpose of punishment you are attempting to achieve in the civil
context. Prior sanctions are an important consideration, but not a bar to punitive damages.
(Whiten) Punishment will be liberally interpreted (Performance Industries – harm to reputation)
Appellate courts be more interventionist with respect to punitives vs. compensatory damages (Whiten)
17
Whiten v. Pilot Insurance Co.
 D used high-handed tactics in refusing to pay P’s claim under a fire insurance policy. The denial of the claim
was designed to force her to settle for less than she was entitled to. Conduct was planned and deliberate
and continued for over two years.
 SCC reinstated award $1 million punitive damages award. Punishment is a legitimate object not only of
criminal law but of civil law as well. It is the nature of the remedy that punitive damages will largely be
restricted to intentional torts, or breach of fiduciary duty, but Vorvis itself affirmed the availability of
punitive damages in the exceptional case in K.
 A breach of an insurer’s duty to act in good faith is an independently actionable wrong. There are two
conditions in every insurance K 1) obligation to pay compensation when the subject matter of K is damaged
or destroyed (this is the primary cause of action), and 2) implied obligation to act in good faith (this part
constitutes independent cause of action)
 It’s hard conceptually to understand why Ps should receive punitive damages, especially because P has
received full compensation for what they suffered. Essentially, it’s a windfall to award the punitive
damages to them. The SCC in Whiten responded to this saying that it’s a form of compensation or bounty for
private law enforcement. How else to create an incentive for Ps to really pursue wrongdoing?
 Words like "high-handed", "oppressive", "vindictive" provide insufficient guidance to the judge or jury
setting the amount. A more principled and less exhortatory approach is desirable. The court should relate
the facts of the particular case to the underlying purposes of punitive damages and ask itself how, in
particular, an award would further one or other of the objectives of the law, and what is the lowest award
that would serve the purpose, i.e., because any higher award would be irrational.
 Factors in Whiten that made the insurance company’s actions cross the line: never any factual basis for the
arson; utterly unsupported, insurance company was trying to capitalize on the plaintiff’s vulnerability
 Comparing Fiddler: Insurer refused to pay disability benefits in quite an aggressive fashion – it didn’t take
the evidence of the insured’s physician seriously, hired private investigators. Did not cross the line into bad
faith.
Performance Industries Ltd. v. Sylvan Lake Golf and Tennis Club
 D deliberately changed feet to yards in the written version of an oral K.
 Held: Expectation damages are sufficient. An award of punitive damages does not serve a rational
purpose. In this case, neither the making of a punitive damages award nor the $200,000 assessment meets
the test of rationality. This was a commercial relationship between two businessmen. One tried to pull a
fast one on the other but there was no abuse of a dominant position. D’s misconduct was planned and
deliberate but in the end, the courts did their work and P obtained full compensation plus costs. In addition,
D is stigmatized with a judicial finding that he acted in a way that was "fraudulent, dishonest and deceitful.”
 Only in exceptional cases does tort attract punitive damages. Torts such as deceit or fraud already
incorporate a type of misconduct that to some extent represents a marked departure from ordinary
standards of decent behaviour, yet not all fraud cases lead to an award of punitive damages. The fraud
is one of the reasons why P is receiving a huge compensatory damages award.
CivicLife.com Inc. v. Canada (AG)
 Gov employee engaged in deceitful behaviour – encouraged P to go ahead w/ project, incur expenses. At the
same time, employee tells other company to develop program and portal. P never got what it was hoping
for (the gov K) which led to financial difficulties for P.
 Held: There was a breach of K but no punitive damages award as they would not serve a rational purpose.
The law is clear that in commercial K cases, punitive damages should only be awarded in the most
exceptional circumstances and only for very harsh and outrageous conduct. Nothing about the culture of
the gov had to be deterred.
 For punitives, there must be an IAW – the breach of a different obligation under the K or other duty, such as
a fiduciary obligation. P relied on Whiten to argue that breach of the contractual duty of good faith can
justify an award of punitive damages. The problem is that in this case, unlike in Whiten, the breach of
the duty of good faith is the basis for the trial judge's award of compensatory damages.
 Also, P’s vulnerability was largely self-imposed (put all their eggs in one basket) There was no indication
18
that D profited from the misconduct as in Whiten.
Vicarious Liability for Aggravated and Punitive Damages


For aggravated damages, vicariously liability is available. This is based on policy - the goal of getting full
compensation to P is the most important thing. Vicarious liability for aggravated damages is justifiable
under the notion that the employer introduced risk into community and should thus be responsible for
materialization (TWNA – residential schools) Harm to P is essentially considered a cost of doing business,
and thus the employer, even if not morally blameworthy, should be held liable. This rationale doesn’t apply
to punitive damages because P has already been fully compensated.
The question of whether it is fair to hold an employer liable for punitives in case of torts committed by the
employee arises since VL is premised on the relationship rather than the conduct in question, and is based
on strict liability. This may seem unfair when the EEr has acted innocently. Thus, punitive damages, in
contrast to aggravated damages, are not available against vicariously liable Ds, absent personal
wrongdoing deserving condemnation and punishment. Liability is thus considered to be direct, and not
vicarious. The conduct must be referable to employer. This may be made out where the wrong is by a
managerial level employee ‘who has assumed the corporate identity’ (TWNA) or where the employer is at
fault or complicit (Peeters – failure to properly train). Such an award may be justified on the basis that it
provides an incentive for employers to control the behaviour of their EEs. If punitive damages must
ultimately be justified on the basis of deterrence, there can be no possibility of a deterrent effect if there is
no complicity by employers against whom punitive awards are sought. (Peeters)
Queen in Right of Canada v. Peeters
 Convict savagely beaten by guards while being taken to hospital by ambulance while naked, strapped to
stretcher
 The Crown, just as with other employers, can be liable for punitives. However, to hold an employer
vicariously liable for punitives, there must have been at least some form or degree of complicity or
blameworthiness on the part of that employer.
 This complicity may be direct – as where the doing and the manner of the employee’s act was authorized or
subsequently ratified or indirect – where the employee’s training is inadequate for the task assigned and
this lack of training is found to be relevant to the tort committed
 In this case, the inadequacy of training of the guards was sufficient to establish complicity
T.W.N.A. v. Clarke et al.
 Two Ds, one was principal of school, other was a dormitory supervisor – both committed sexual abuse.
Principal knew about other’s abuse and purposefully covered it up.
 The award of punitive damages against Canada can be supported on the basis that the principal was top
management such that his deplorable conduct was the conduct of Canada itself
 Applies in situations where D was in executive/managerial position, or was a directing mind of
organization, not just carrying out orders, but making decisions for organization
Non-Pecuniary Damages for Breach of K


Non-pecuniary damages are losses that cannot be quantified in money, and are available in tort and K for
intangible losses such as pain and suffering, mental distress and emotional shock. They include aggravated
damages, and are part of compensatory damages, since they are not awarded to punish, but rather to
compensate the P.
The starting general rule is that K damages are limited to financial losses: there is no compensation in K
law for intangible injuries such as emotional distress or hurt feelings (Addis). The rationale is that Ks are
about self-interested, impersonal pursuit of profit. However, the courts have increasingly recognized that
people have enjoyment concerns that arise from the performance of Ks. Fidler sets out the current
Canadian position, which restates the view that in ordinary commercial Ks, there is generally no MD
damages, but that non-pecuniary damages are available if they fall within the parties’ reasonable
expectations (Hadley). There is thus no distinction between pecuniary and non-pecuniary losses – in all
cases we should look to the K and what it promised. If it is properly interpreted to promise intangible
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benefits, losses naturally flowing from the breach may include loss of intangible benefit the P expected to
receive from the K.
Applying Hadley:
o A) What are the usual foreseeable damages for a breach of this type of K?
 Mental distress is reasonably foreseeable where the type of K was to secure a psych benefit.
(Fidler; Farley) Thus the previously established case law examples (Sutter Studios –
wedding photos, Heywood – restraining order) remain important even though there is no
longer a categorical approach. It is not necessary that the sole purpose of the K be for peace
of mind, as long as peace of mind is an object of the K.
 In most commercial Ks, mental distress will not be foreseeable (Fidler)
o B) Are there any special circumstances (i.e. notice) regarding this particular K such that
mental distress damages are reasonably foreseeable? (Farley - surveyor was on special notice
about potential psychological losses) (It will be rare that mental distress damages will be found
under this branch – Turczinski)
 Reasons: It is very difficult for a lay person to assess the mental state of a stranger,
particularly to the extent of predicting with any degree of certainty how a breach of K might
affect the person. An extension of the circumstances when such damages are awarded could
cause businesspeople to be wary of dealing with persons with mental disabilities for
fear of exposure to such claims. It should take clear evidence that the contracting parties
were specifically aware of the potential for significant mental distress, before such damages
are awarded. The point of the special notice principle in Hadley is so that D can draft an
exclusion clause (i.e. if decides that they don’t want to accept that risk) or can charge a
higher price for taking on that risk. This doesn’t really apply to small business owners; who
may in fact face human rights claims for doing so. (Turczinski)
The degree of MD caused by the breach was of a degree sufficient to warrant compensation (more than
mere disappointment) (Fidler).
With mental distress, remoteness in tort and reasonable foreseeability in K lead to the same result
(Mustapha)
In tort, you take your victim as you find them, and once you are liable, you are liable for all the losses. In K,
both liability and extent of liability are determined by the Hadley test of what was reasonably foreseeable.
(Turczinski)
Fidler v. Sun Life Co. of Canada
 P was covered by group insurance policy that included long-term disability benefits. Insurer pays out policy
for a while, then cuts her off – says video surveillance detailed activities inconsistent with P’s claim that she
was unable to work. P sues for mental distress damages.
 Held: P entitled to aggravated damages of $20,000. To award damages for mental distress for breach of a
contract is not incompatible with Hadley – rather it is part of the application of the Hadley principle.
 Aggravated damages are foreseeable when parties enter into a contract, an object of which is to secure a
particular psychological benefit. Includes Ks entered into with a view to pleasure, relaxation or peace of
mind (includes disability insurance contracts because peace of mind is essence of K)
 The court must be satisfied: 1) That an object of the contract was to secure a psychological benefit, 2) That
mental distress upon breach is within the reasonably foreseeable contemplation of the parties; and 3) That
the degree of mental suffering caused by the breach was of a degree sufficient to warrant compensation
(mere disappointment with breach is not sufficient)
 We no longer need an IAW as a prerequisite for mental distress damages flowing from breach of K
Mustapha v. Culligan of Canada Ltd.
 With psychiatric injury, remoteness in tort and reasonable foreseeability in K lead to the same result
 Aggravated damages sustained by P were not reasonably foreseeable by the defendant water company at
the time of the alleged tort. Mr. Mustapha's damage could not be reasonably supposed to have been within
the contemplation of the parties when they entered into their agreement.
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Farley v. Skinner
 P engaged D as a surveyor to survey property – told him to investigate the likelihood of aircraft noise – if
there would be noise said he wasn’t interested. Surveyor doesn’t even really investigate – says noise won’t
be an issue. P buys property – spends money renovating – moves in, and there is constant noise –
impossible for P to enjoy anything in outdoors. P sued D.
 So long as psychological benefit was an important aspect of the K – that is sufficient to bring it w/in
reasonable contemplation of parties. P need not have suffered any physical inconvenience
Turczinski v. Dupont Heating and Air Conditioning
 Heating contractor provides services to mentally ill woman who then claims mental distress damages.
 K for home improvements is not a peace of mind K. In fact, one expects some disruptions during
renovations, not a stress-free time.
 Here, there is no basis to award damages for mental distress when D did not have reason to know that a
breach of the K would cause such suffering.
 Look at proportionality: the installer charged $11,000 – the trial award was $75,000 total. Is there really
proportionality in holding a small contractor on a small job responsible for $75,000 for a botched job?
 Mitigation issue: P argued she couldn’t mitigate by hiring another contractor because of her mental
condition. In tort cases D takes P as found (thin skull rule), but in K, both the type and extent of the
damages for breach of K are based on what was within the reasonable contemplation of the parties
 In this case, no reason for P to believe that if K was breached, D would not be able to mitigate the work by
hiring another heating contractor. CA allows damages for rental loss until time that it would have been
reasonable for P to have K completed and rent out rooms
Non-Pecuniary/Aggravated Damages for Wrongful Dismissal
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
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Originally, Addis held that mental distress damages were not available for wrongful dismissal. This was
confirmed in Canada in Vorvis. Then, in Wallace, the court held that where the manner of dismissal was
bad, but fell short of IAW for MD, P was entitled to an extended notice period, or pay in lieu, with the length
of notice turning on the employer’s conduct (Wallace). Honda modified the law on wrongful dismissal,
noting that damages are normally limited to pecuniary losses for failure to give notice, but that there is a
duty of good faith and fair dealing in the manner of dismissal and that a breach of this duty may give rise to
foreseeable compensable losses under Hadley. The quantum is assessed independently based on P’s
damage from MD, which provides an advantage over the Wallace scheme that necessarily linked
compensation to income. (Honda) The implied term of good faith and fair dealing is implied to all
employment Ks wrt manner of dismissal. But it will be harder/easier to prove a breach of this term
depending on the circumstances (length of employment, nature of employment, etc)
Courts are reluctant to award damages for mental distress for termination because of the causation issue
(distress will generally be caused by the dismissal, even absent any wrongful dismissal) and because of the
tension between employer’s interests in managing their workforce and employee’s interests in their jobs.
Punitive Damages: Punitive damages in employment Ks require an IAW, such that the employer engages
in deliberate wrongful acts that are so malicious and outrageous that they are deserving of punishment on
their own.
Honda v. Keays
 Confirms that Fidler changed the law; the quest for an IAW is not necessary. The rule is Hadley.
 To put it in Hadley terms, “where the parties are aware that wrongful dismissal (inadequate notice)
coupled with abusive treatment in course of dismissal, could lead to mental distress, then those damages
are foreseeable.” The breach of K must be what causes distress.
 Mental distress damages will no longer be awarded via the extension of the notice period. Inadequate
notice will be compensated via the wage loss claim, and mental distress will be compensated separately.
o Problems with the old Wallace approach: If the employee gets a job right away, then they can’t
argue for a notice period even if there was a wrongful dismissal. How should MD damages be
addressed in that scenario? Also, if employer provides adequate notice, but is abusive in the matter
21
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of termination, then how do you compensate the employee? There would be no “notice period”
damages in that case.
There has to be bad faith in manner of termination in order to lead to mental distress damages. The
majority found there was no bad faith here.
REMOTENESS
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Remoteness operates as a limiting principle on damages such that unknown or unforeseeable losses will
not be compensable (Turczinski). Remoteness is a policy choice that attempts to protect legitimate
expectations and prevent unfair surprise. The general rule for breach of K is articulated in Hadley. Losses
must be in parties’ reasonable expectations to be recoverable. It is an objective test, based on the
reasonable person (Parsons). However, the wording in Hadley doesn’t determine specific outcomes;
remoteness is a policy result based on what is fair. It’s an error to think that what is foreseeable is an
empirical question, when it is actually a normative question.
Losses classified as normal/ordinary losses flowing from the breach can be recovered. In order for unusual
losses to be recoverable, special circumstances must be communicated. (Hadley) Factors include notice of
the K purpose (Purolator), D’s expertise and knowledge of P’s business, liability insurance, custom of
trade, K price (Kienzle).
Only the type of loss needs to be foreseen, but not the precise manner of loss (Parsons). However,
recovery is not unlimited - the P is still subject to a duty to mitigate. Losses that could have been reasonably
avoided through mitigation not recoverable (Parsons; Turczinski).
Rationale: It’s not fair to hold parties liable for something they didn’t think about. If they knew of special
circumstances, then the parties had the opportunity to discuss risk allocation.
Remoteness issues in K: Is the supplier really the insurer of P’s business? If D’s contribution is just a small
part of P’s business, should D be responsible if P’s whole business crumbles?
Impecuniosity: D is not liable for all of the risks of P’s financial vulnerability, where D has not caused that
vulnerability. It’s unfair to D to be the insurer of P’s financial health. (Matheson)
H. Parsons (Livestock) Ltd. v. Uttley Ingham & Co. Ltd.
 D sold a hopper for storing pig food to P for P’s pigs. While installing the hopper, D failed to open a
ventilator. Pig nuts became mouldy, pigs got e-coli and died. The evidence was that the chances of
contracting ecoli from lack of ventilation were pretty rare.
 Held: all that parties have to reasonably contemplate is that some damage generally could result from D’s
breach of K. What needs to be foreseen is some damage – not particular type/kind of damage that results or
the manner in which it results. Here, it’s clear that something could go wrong w/ pigs if they eat
contaminated food.
 Demonstrates how wording doesn’t determine specific outcomes; remoteness is a policy decision!
 Note this case says there is a distinction between tort and contract: but there is no difference between
“reasonably foreseeable in tort” and “reasonably contemplated in contract.” However, Denning is
right when he says that cases of physical injury are generally more compelling and courts will be much
more generous about how they apply foreseeability than in a pure economic loss case (indeterminate
liability).
Purolator Courier Ltd. v. Nav Air Charter Inc.
 Remoteness is an objective test – not about subjective knowledge
 P was in original K w/ a number of banks to transport their documents. P subcontracted w/ D to actually
carry out the transportation of documents. One of D’s planes crashed – had some cheques of P – D found to
be negligent. D argued that the losses in question were remote and shouldn’t be responsible – outside
reasonable contemplation of parties at time of K that the shipment would be that valuable to the bank
 Court accepts that D subjectively believed that bank documents had no value. However, the question of
whether a certain loss is too remote to be recovered by P is not subjective. It’s about whether the
reasonable person in D’s position would have realized that such loss was likely to result from the
breach of K.
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Any reasonable person in Ds situation, given all the circumstances, should have known that the shipment
was valuable to P. Banks had gone to great length to ensure safety of the documents – hired a private plane
rather than put it on a commercial plane – didn’t just give it to Canada Post. Also P required D to have
insurance for carrying these documents – indication that it was important to P. D also aware that timely
delivery and security was important
From these factors, the reasonable person would infer that documents were valuable to P
Kienzle v. Stringer
 D solicitor had been negligent in conveying title to P and P ended up w/ no title
 ONCA emphasized the issue of fairness in remoteness analysis.
 “In the ordinary course, a client relies on his solicitor to guarantee the title that he certifies. The fee charged
is calculated upon the sale price of the title certified and arguably the size of the risk assumed. It is not
unreasonable to add to that risk consequential damages immediately concerned with the failure of
marketability. This reliance, however, does not or should not extend to the loss of profits from secondary
transactions which may be fuelled by funds expected from the marketing of the subject real property. This
range of secondary transactions is unpredictable and limitless and so are the losses that may flow
therefrom. If the ambit of reasonable foreseeability takes us into this area of secondary transactions it is
difficult, if not impossible, to know where a boundary may be found.”
 Idea of proportionality – price and service offered is commensurate with the value of the transaction.
Solicitors would charge way more if they were taking on the risk of all subsequent failed transactions.
Holding lawyers liable for subsidiary transactions would make insurance rates go up and transaction costs
would go up as well. Must draw the line at the losses associated with the first failed transaction.
 Words alone don’t get you to the result!! Loss of Farm 2 could be said to be reasonably foreseeable if you
didn’t own farm 1? Yeah, probably. So it’s less about what’s foreseeable and more about what’s fair.
D.W. Matheson & Sons Contracting Ltd. v. Canada (A. G.)
 P held to have been wrongfully removed from project and awarded damages for breach of K. However, P’s
claim for loss of profits on future Ks was rejected as too remote
 Such losses are recoverable but only when financial vulnerability of plaintiff and likely impact of breach
could have been within parties' reasonable contemplation at time of contracting. P’s inability to bid on
jobs could not be said to have been in reasonable contemplation of parties since one party to
commercial K does not become insurer of other party's financial health.
 Here, there was no suggestion that P was extraordinarily vulnerable, let alone that any special
circumstances were known to the government at the time of the K
 It is not fair to require D to pay damages he or she could not reasonably foresee at the time of contracting
because, if made aware of them, D could have decided not to accept that risk of breach and contracted
with someone else
Impecuniosity (Ps who have special vulnerability) *Applies to Remoteness AND Mitigation*
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
P’s poor financial position may lead to losses that are considered too remote. P’s poor financial position can
also result in an inability to mitigate, which increases P’s losses. The Liesbosch position was that P’s
financial circumstances are not relevant in assessing damages – the costs of P’s inability to mitigate should
not be borne by D. This would likely be followed in BC where there is the view that individuals should
purchase insurance on their valuable assets. The insurance would allow P to mitigate their damages.
However, there is more flexibility for consumer Ks to compensate for additional losses that arise because of
P’s financial inability to mitigate. Furthermore, in the UK, certain cases have essentially allowed a thin skull
rule with respect to impecunious plaintiffs (Dodd Properties, Lagden)
Reasons why there should be no financial equivalent to the thin skull rule: It would create an incentive for
people to NOT deal with newcomers to the industry who may be unstable, people wouldn’t be able to enter
the markets, things in the marketplace would be more expensive, don’t want to penalize people for doing
business with companies that are only borderline stable
D should not bear the risk that someone has chosen not to buy insurance on their most important
business asset (i.e. a ship). The function of insurance is to enable P to continue their business by buying a
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new ship, and then the insurance companies sue each other.
However, in some cases, P has been entitled to additional costs that were related to P’s inability to
mitigate.
o Dodd Properties** – D damages P’s car park, P didn’t repair the car park, and lost some profits. The
cost of repairs really escalated from the time of the damage to the time of trial. D argued that P
should have mitigated by doing the repairs right away, but the court said that here it wouldn’t be
fair to make P mitigate in that way, and that it was fair to allow P to wait and claim the higher cost.
o Lagden v. O’Connor** - P’s car damaged. P could have rented a car while his own car was being
repaired, but P couldn’t afford to hire a car on usual terms and had to enter into a super expensive
arrangement. HL didn’t overrule Liesbach, but said that Liesbach doesn’t stand for any rule of law
and that the result will vary with the circumstances. Thus, the court will simply consider what the
proper allocation of risk is in the circumstances.
**It’s unlikely that these cases would be decided the same in BC, where the idea is that people should buy
insurance to protect themselves from this risk. D would have a strong argument that they shouldn’t bear
the risk of whether or not P purchased insurance.
Liesbach
 P could not afford to purchase a new ship to replace the damaged one and had to charter a ship instead
(which was more expensive). P claimed the additional cost. This was rejected on the basis that the loss
suffered by P was caused by the fact that they didn’t buy a new ship/mitigate their damages. Basically, P’s
inability to mitigate is not a risk that should be borne by D.
PROBABILISTIC CAUSATION/EVIDENCE BEFORE TRIAL
1) Past losses: Regular standard of proof: BoP “is it more likely than not”
2) Future Predictions: Probabilistic causation applies
a. If there is a reasonable chance that something will happen, the amount of damages should take into
account that chance. The distinction is not between what is probable and not probable but rather
between what’s possible and what’s purely speculative. (Shrump v. Koot)
b. In K, future losses may be recoverable when proved with a reasonable degree of certainty – where
there is a loss, the fact that the quantum is speculative is not a bar to recovery (Canlin). It requires a
real and substantial chance, vs. mere speculation. Lost profits may be estimated based on available
evidence (Ticketnet). However, the amount will be subject to contingencies (Magnussen; Naylor)
and the duty to mitigate (Canlin).
c. In tort, where the P can show that there is a real and substantial chance of a loss (Schrump –
likely >10%), compensation will be provided, even when the chance is small, subject to
remoteness and mitigation.
i. Cochrane: auto accident resulting in injury; no obvious incapacity to work. Small chance
that, in P’s entire life prospects, there will be opportunities that P can no longer pursue.
3) Courts will consider evidence that arises post-accident, pre-trial
a. Naylor: Contractor1 sues D for lost profits. Before trial, Contractor2 finished the work and virtually
earned nothing because the job turned out to be way more complicated and challenging than it
should have been. Thus, at time of trial, there is new evidence about what the first contractor’s
profits actually would have been. The court uses this evidence and substantially reduces P’s award.
b. However, this isn’t always the case (management fees – Kroppman, where P bears risk of not
mitigating at the time of breach and thus assumes subsequent increases/decreases in price - Jamal)
LIABILITY AND INTERVENING EVENTS

Personal Injury Cases
o Tortious causes: D2 is liable for only the increase in loss due to the second incident.
 Baker v Willoughby (1970 HL): D1 causes foot injury, D2 causes amputation. D1 liable for
full loss of income associated with foot injury. D2 is liable only for any increase in loss due
to amputation (D2 injured someone who already had reduced earning capacity)
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Non-tortious causes: D is liable only for the period up to the non-tortious intervening act
 Jobling v Associated Dairies (1982 HL) P injured in accident, after the accident it was
discovered that he had a pre-existing illness. D liable only for the period until the disability
would have taken hold.
 Smith v Shade (1996 BCCA): D causes ankle injury to P but then a subsequent non-tortious
knee injury happens that is even more disabling. D liable only for lost income until knee
injury because the subsequent event obliterates its effect.
 Penner v. Mitchell (1978 ABCA) P injured by D’s negligence; P missed work for 13 months;
P suffered heart condition unrelated to injury from accident that would have required P
missing work for 3 months. P awarded lost income for 10 months.
Property Cases:
o Tortious events: D2 liable only for the increase in loss due to the second incident.
 Performance Cars (1962 CA): P’s car damaged by D1 and requires repainting. Before
repairs done, car damaged by D2 and would also require repainting – D2 not liable for
painting since he damaged a car that already needed a paint job.
o Non tortious events: Unclear
 Carslogie (1952 HL): D damages P’s ship, which is subsequently and independently
damaged more seriously in a storm. P sues D for lost profits. Court denies this since the ship
damage would have happened in any event. Unfair to hold D responsible for the lost profits
of a ship that was never going to earn any more profit. D is lucky because he damaged a ship
that had a very short working life.
 Sunrise v Lake Winnipeg (1991 SCC): Ship goes aground as a result of D’s negligence and
requires 27 days repair. Prior to repairs and unrelated to the first damage, the ship went
aground again and requires 13 days repairs – D argues that it should be liable only for 14
days lost profit. SCC holds D liable for 27 days.
 The 13 is subsumed in the 27 days. The total work can still be done in 27 days. This
is why this case probably wouldn’t work for other cases.
 If you took the personal injury approach, D would be off the hook because they only
caused 14 days of lost profits. They hit a ship that only had 14 days of profit-making
left in it before it would have to go in for repairs.
 On the other hand, if you look at it through the lens of the second injury being a
smaller thing such that there are no incremental damages, this could actually be the
same as personal injury.
o

Naylor Group Inc. v. Ellis-Don Construction Ltd.
o Contractor2 brought in to complete project after D breached and removed P. Evidence that the job turned
out to be less profitable than P and D thought it would be, so P’s damages were reduced accordingly.
o Lost profits recoverable should reflect contingencies that might have affected P’s profits such as
unanticipated job site conditions and delays.
Schrump v. Koot
 P suffered injuries in a car accident that might require future back surgery. Expert evidence conflicted,
though the P’s doctor assessed possibility of back surgery at between 25-50%.
 It is appropriate to take into account “chances” so long as they are real and substantial possibilities
and not purely speculative. Court rejected an all-or-nothing approach under which P would receive 100%
compensation if it can be shown that loss is “likely” to occur and nothing if it is “unlikely” to occur.
Sunrise Co. Ltd. v. The “Lake Winnipeg”
 P’s ship was forced aground by D’s ship as a result of D’s negligence. Damage would take 27 days to repair –
P claimed lost profits for that period. Shortly after first incident, P’s ship went aground again, resulting in
damage that would also require ship to be taken out of service but could be done in the original 27 days.
 Court held D liable for entire loss. Thus, for property cases, it makes no difference whether second
incident is tortious or non-tortious.
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
Court clear that it is not intending ruling to affect personal injury cases where there is a distinction.
MITIGATION






The duty to mitigate is fundamentally about fairness. The law seeks to balance P’s full and proper
compensation while not placing an undue burden on D. The duty to mitigate requires that P must take
reasonable steps to minimize or eliminate losses following D’s wrong and that avoided or avoidable losses
are not recoverable. The onus is on D to prove that losses are avoidable. The reasonable cost of mitigation
is also recoverable, notwithstanding the fact that mitigation may be ineffective (Ticketnet). The
reasonableness of P’s decision not to mitigate is a question of fact.
Mitigation in K: In breach of K, P is expected to act reasonably. P does not need to take extraordinary
measures to mitigate. The cost of reasonable mitigation will be subject to recovery. P’s inability to mitigate
may relieve P from the duty to mitigate where the inability was reasonably foreseeable or caused by the
breach (Turczinski; Kienzle). With avoided losses, the test is whether P would have had the opportunity to
earn profit but for D’s breach (Erie County).
Mitigation in sale of goods cases: Two types of losses in these cases: 1) lost use of the goods (can’t claim
these if you could have gone out and purchased a replacement) 2) changes in the price of the goods (usually
you can’t claim this either – you should mitigate as soon as possible)
Mitigation in property damage cases: obligation to repair expeditiously.
Mitigation in wrongful dismissal cases: seek alternative employment.
Mitigation in personal injury cases: seek out employment of the type you are able; obligation to seek
reasonable modes of treatment and rehabilitation
Reasonable Steps to Mitigate: Personal Injury


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Mitigation is problematic in personal injury cases, because the court is attempting a person’s right to make
choices about their own bodies and courses of treatment with fairness to D.
In personal injury claims, a P must submit to reasonable medical treatment, diagnostic testing,
rehabilitation, or retraining. An unreasonable refusal, ascertained by a risk-benefit analysis and
considering the concensus (or lack thereof) in medical opinion, to undergo treatment may amount to a
failure to mitigate and a corresponding damage reduction. D bears the burden of establishing that P’s
refusal of treatment was unreasonable (Janiak) P can still be compensated for the chance that the
treatment would not have been successful in avoiding P’s loss (Janiak). The recommended course of action
need not be a cure for P’s condition, provided it would have given P the opportunity to improve his
condition (Cochrane). Where there are conflicting medical opinions, following one is considered
reasonable, even if it ends up aggravating P’s condition (Bourgoin, Janiak). P does not need to take heroic
efforts (Bourgoin). Only pathological (pre-existing) psychological conditions will excuse P from mitigating
(Janiak)
Where the result of treatment is uncertain, damages will be reduced in proportion to the likelihood of
success (Cochrane).
The psychological thin skull rule can apply. P has to show that: a) it was a pre-existing phobia (prior to
the accident) If it’s not pre-existing, then the damages will be analyzed as a matter of remoteness. b) the
phobia results in an incapacity to make the choice facing them (Janiak)
Janiak v. Ippolito
 Surgery in question entailed a 70 percent chance of success, and if successful would have provided almost
complete recovery for P’s back injury. Given high likelihood of success and potential upside, it was
unreasonable that P didn’t undergo the surgery.
 Look at chances of success – when it seems to be perfectly balanced, expectation would be to give it a shot
 Potential benefits: If successful, how completely will the procedure restores P’s health
 How serious are the consequences of refusal to undergo treatment: In this case Janiak would be
incapable of working and would have to be compensated for rest of his working life – court said that
consequences of refusal were too great
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Bourgoin v. Leamington (Municipality)
o Conflicting medical advice, issue was whether or not it was reasonable for P to refuse to have leg
amputated. Success was uncertain.
o Where there are alternative/conflicting treatments for P’s condition, following one of the courses of
treatment that commands reasonable support among health care professionals is considered reasonable
even if it ends up aggravating P’s condition
o As long as P follows any one of several courses of treatment recommended by the medical advisers he
consults, he should not be said to have acted unreasonably
o In doing what is reasonable to mitigate, P is not expected to take heroic efforts
o Does not mean that a failure to amputate would be unreasonable in all cases
Cochrane v. O'Brien
o P had some persistent problems which doctors said could be relieved by following an exercise regimen.
Given P’s condition, she was in too much pain to undertake the exercise regimen. P told to take painkillers –
not to cure P’s condition but to enable her to undertake exercise
o The fact that this was not going to be a cure was not sufficient for her to have not taken the injection –
still seen to be unreasonable. Recommended course of action need not be a cure for P’s condition provided
it would have given P the opportunity to improve her/his condition.
o So the court applies Janiak and makes a small deduction on the basis that it was low-risk procedure with a
pretty high potential benefit. No experts were of the view that the physio would have been useless.
Avoidable Losses

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
When mitigation is successful, its effect in reducing loss cannot be ignored. The question is whether, but
for the breach, P could have earned the second set of profits? Sometimes, P may enter into a distinct kind
of K only due to the breach (Erie County). Profits from such a venture would be calculated into the
damages award. P bears the risk of post-breach speculation. Where P chooses not to mitigate immediately,
the market may rise or fall, resulting in potential profits or losses. P takes both the risk and the reward
(Jamal).
The same principles apply to a buyer of goods. Where the cost of obtaining substitute goods at time of
breach is greater than K price, buyer is generally entitled to difference. Where the buyer delays in obtaining
substitute and price falls below original K price, this may seem to cancel the loss. However, based on Jamal,
buyer in such circumstances is still entitled to damages based on price of obtaining substitute at time of
breach.
See also Lost Volume
Erie County Natural Gas and Fuel Company Ltd. v. Carroll
 D breached a K to supply gas to P for a seven-year period. P was able to purchase gas leases, meet its
requirements, and sell the leases at the end of seven years for substantial profit, thus apparently suffering
no loss. P sought damages on the theory that, had D not breached its K, P would have had its gas needs
provided and would have been able to sell rather than consume gas from its own leases for a further profit
 Held: Actions taken after D’s breach were taken as a substitute transaction. Thus P mitigated. P
would not, but for the breach, have entered into the second transaction – P would never have even
considered / had opportunity to go into market and obtain subsequent gas leases that they were then able
to sell at a profit. P wasn’t in the business of gas leases. Shows how important framing the facts are – is P
a quicklime manufacturer or a gas manufacturer?
 I don’t like this result because:
o P could have sold all of that gas to a 3P and profited, i.e. P had this opportunity irrespective of the
breach and the opportunity wasn’t caused by the breach.
o Unjust enrichment: D got the property on the basis that D would supply P with as much gas as
needed. D had paid some money for the land but part of the consideration was that P would get as
much gas as they need. So D has clearly made a profit off of that gas.
o Also, P has incurred the opportunity cost of investing the $60,000 in the gasworks – money that
could have been invested elsewhere had D not breached.
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o
If P had just bought gas in the marketplace, they would have gotten the value of the gas purchased.
And they’d still have their gas to exploit later.
Jamal v. Moolla Dawood Sons & Co.
 D refused to go through w/ a purchase of shares from P. At time of breach market price of shares was lower
than K price and damages would have been substantial. P, however, delayed in selling shares until market
price recovered (and actually resold at a higher price). D claimed subsequent transaction avoided the loss
caused by the breach. P still awarded damages based on diff b/w K price and market price at time of breach
– result is fair in that P takes both risk and reward of post-breach fluctuations in the value of the shares
Time of Assessment

The general rule for measuring damages in tort and in K is at the time of the wrong. (Jamal) This
principle is linked to mitigation, since at the time of the breach, the P is expected to go into the market and
acquire a substitute. The burden of failing to do so falls on P. Similarly, P is entitled to benefits from not
mitigating right away, on the basis that during that time it is P that bears the risks. However, in some cases,
the time of wrong assessment may be seen to be unjust and the courts will respond flexibly. Exceptions
include when P is unable to mitigate soon after, the court will use the earliest time that it was feasible for P
to mitigate (Dodd Properties – although it is unlikely this conclusion would be reached in Canada); where
subject matter of K is truly unique, such that P is entitled to specific performance (Semelhago). The
automatic rule about SP in real estate cases in Canada is softening (in part to avoid results like Semelhago)
SP should not be granted as a matter of course absent from evidence that property is unique to the extent
that its substitute would not be readily available. (Semelhago) Where damages are assessed at the time of
wrong, courts will award pre-judgment interest to compensate for this loss.
Dodd Properties v. Canterbury City Council **Ps should not rely on this case – See Jens
 P’s garage damaged by D’s workers. P did not rebuild and prices of materials increased substantially. P
awarded higher cost of building materials 10 years after incident.
 Held: Not reasonable to use time of breach. Damages can be assessed at any time the court thinks just.
Usually that means the time of the accident, but in unusual circumstances the court can push the date
forward.
 Unusual circumstances here (which likely wouldn’t be adopted in Canada): P didn’t have much money
(court says this isn’t impecuniosity case, it’s just a “financial stringency” case, and thus P’s financial means
can be considered), and it was not commercially reasonable for Ps to spend their money on fixing the
garage because there was no harm being done to the building in the meantime, and Ds were firmly denying
liability so P didn’t want to use its own money to repair the building if he wasn’t sure that D was going to
pay.
 Note: These arguments don’t really make sense. Ds always deny liability, that can’t be used to justify not
mitigating because it would pretty much get rid of the duty to mitigate. If it’s not reasonable to repair it
using your own funds then can it be said that you truly have a legitimate interest in repairing the building
at all? Cassels: D should have used this evidence and the fact that P also said that even if there had been no
money problem, P still wouldn’t have used its money to repair the building, because it just wasn’t
financially worth it, to argue diminution in value as the appropriate measure of assessing the damages.
 This case is questionable as a precedent for Canadian law. Where is P’s insurance? P owns a commercial
building, hasn’t repaired building because of its financial stringency. Why should D bear the risk that P
hasn’t bought insurance? The insurance proceeds could have been used to fix the building at the time of
breach, and that would have avoided the whole increase in the price of repairs.
Semelhago v. Paramadevan
 While at one time, the common law regarded every piece of real estate to be unique, with the progress of
modern real estate development this is no longer the case. Residential, business and industrial properties
are all mass produced much in the same way as other consumer products. If a deal falls through for one
property, generally another is readily available. It cannot be assumed that damages will be an inadequate
remedy in all of these cases.
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


In this case – value of P’s new house (where K was breached) increased a lot – but b/c P had to keep old
house – this house had also increased in value a lot – so P has benefited and could be said to get a windfall if
this is not accounted for. SCC ignores this and awards P the increased value of the property at the time of
trial, w/out any deduction being made for the costs that P might have incurred in order to “carry” the
property during that time (e.g. interest charges on the planned mortgage)
SCC in this case declined to deduct the collateral profit earned by P from retaining his original home. A
deduction would be inappropriate since the purpose of the award is to be a substitute for SP – this claim
was for damages in lieu of SP. If P had received SP, he would have had the property contracted for and
retained the amount of the rise in value of his own property.
It remains to be seen whether you can deduct the costs that would have been incurred to make the profit
on the second house even if you don’t deduct the increase in value from the first home. SCC did it here
because there was no cross-appeal on the issue, but was “uncomfortable” with it – probably you wouldn’t
deduct the financing costs if you’re granting the increase in value in both homes…
Measurement Issues: Damage to Chattels

The starting point for damage to chattels is that you get repair cost that reflects the chattel’s reduced value
(Darbishire). It is measured by the difference between the value pre-wrong and post-wrong (O’Grady). If P
chooses, can accept cash instead of actually effecting the reasonable repairs. Where reasonable repairs do
not restore chattel to pre-wrong value, P will get additional damages for extra loss in value (O’Grady).
Where repair cost exceeds replacement costs, P is generally limited to the cheaper alternative, plus the
consequential losses. P can recover higher repair costs where the item is unique and it is reasonable to
repair (O’Grady; Darbishire). This is because the focus is always on what is P’s true loss. Uniqueness refers
to the non-availability of a reasonable substitute and P’s subjective interest in the chattel. P is to prove
uniqueness; D is to prove that market exists (O’Grady). An exact replacement is not required – rather, one
that reasonably meets the P’s needs is sufficient. In making the determination, the following indicators of
reasonableness are to be considered: amount of economic waste (the difference between repair and
replacement costs); intention to repair/restore; benefits of reinstatement to P vs. burden on D.
O’Grady v Westminster Scaffolding
 General principle of compensation for damage to chattels: Where a chattel is negligently damaged, the
normal measure of compensation is the diff b/w the value of the chattel before the damage and its value as
damaged. In this case of a partial loss, this will usually be a) the cost of repairing; b) the diff (if any) b/w
value of chattel before the accident and after it was repaired; and c) such consequential loss as the
reasonable cost of hiring another chattel while repairs are being effected
 What is reasonable turns on how great the disparity b/w the figures is, and whether owner has a “real
interest” in having the repairs done
 Value of car before the accident was between 185-200 pounds and cost of repairs was 253 pounds. Court
granted full amount and held that P had acted reasonably in repairing the vehicle. Of particular
importance in this case was the fact that the car was highly cared for by P and in unique condition for a
vehicle of its age. P had demonstrated that the car did have special value to him – he had even named
it. P’s subjective interest in chattel made chattel unique
Measurement Issues: Damage to Real Property
o
The general rule is that where cost of repairs or reinstatement is equal to or less than diminution in value, P
is entitled to the cost of reinstatement. Where reinstatement cost exceeds reduction in value, P will
generally be able to recover the higher reinstatement cost if reasonable to repair, determined in reference
to the owner’s true interest in the property and the genuineness of the claim to full reinstatement. In real
estate, as opposed to chattels, the starting presumption is that real estate is not a purely fungible item but
is unique. If P’s interest is commercial, P will generally be confined to diminution in value (C.R. Taylor).
Reinstatement cost is likely where property is P’s residence and intends to continue using it as such (Jens,
Blackpine). The court may recognize that the subjective value of the property to P lies somewhere between
the cost of repair and the diminution in value (Kates). The court will consider what is “reasonable,
practical, and fair in all of the circumstances” (Kates). In terms of the quality of repair/reinstatement, the P
29
is entitled to the cost of work necessary to bring property to an acceptable standard that meets P’s needs
(Dodd; Kates).
Nan v. Black Pine Manufacturing Ltd.
o Fireplace negligently installed in home, home burns down. The value of the home and land before the fire is
$47,000. The cost of replacing the home is $70,000 and P is awarded the $70,000. The key principle is that
Ps are entitled to be compensated for their true loss, and what P’s have lost here is their home on this piece
of land, and it will cost $70,000 to replace that.
C.R. Taylor (Wholesale) Ltd. v. Hepworths Ltd.
o Old billiard hall on a piece of investment real estate that hasn’t been used as a pool hall in 40 years is
destroyed. For the last 10 years it was just used to store Christmas decorations for one week per year. Cost
would be $29,000 to construct a new billiard hall. Court rejects this amount. It’s not even the starting point
– P hasn’t lost a billiard hall - P lost a derelict structure. Sidenote: D actually got a cost reduction because
the land is actually more valuable without the pool hall on it. The principle is always the same: what has P
lost? P must be given a sum of money that will make them whole.
Jens v. Mannix Co.
 P’s house and property were damaged by an oil spill from a broken pipeline. D disputed cost of rebuilding
P’s house – land was zoned for commercial use and could be sold for that purpose for more than its value
w/ a house on it. D argued that market value of land had not been diminished by fact that house is
uninhabitable. P wanted his house repaired – has a special practical and sentimental value to them as a
palace to live. They had built the house and it allowed them to keep a close eye on car collection housed in
vicinity.
 Court is hesitant to award damages for replacement as Ps had not built a new house by now. However,
despite the uneconomic nature of P’s request – court accepted that the property had special practical and
sentimental value to P – reasonable to award sufficient damages to rebuild the house. Replacement cost is
more likely to be awarded where damaged property is P’s residence and P intends to continue using
it as such
 Note: TJ awarded $50,000 – cost of building the home at the time of the trial. CA reduced the award to
$30,000 because the cost of building at the time of breach was only $30,000 (note the stark contrast to
Dodd Properties. Here, court is saying that P should have mitigated. D was denying liability up to trial and
yet here this wasn’t enough to relieve P’s obligation to mitigate)
Kates v. Hall
 D cut down 13 of P’s trees. P spent little time on the property – just used it for vacations. No apparent
diminution in value of property- and would cost $200,000 to replant mature trees. P sought cost of
replanting trees.
 In principle, no reason for a court to confine itself to the two alternatives of cost of repair or
diminution in value. In some cases, neither of these figures will be an accurate measure of P’s loss
 Instead, court awarded a substantial amount for alternate remedial work, damages for “lost amenities”
(privacy and aesthetics) that would not be regained, and punitive damages
 This award recognizes that the subjective value of the property may lie somewhere b/w the cost of
repair and diminution in value. The court considers not only the financial benefit but any non-financial
interest that P might have
 Important to look at true interest of P in restoration – here, P spent little time in the home – and lots of
other trees on the property – court felt that P didn’t actually intend to replant but perhaps simply wanted
to punish D. Different than Jens – where property was P’s principal residence.
BETTERMENT

In some cases of property destruction/damage, replacement will secure for P a better or more valuable
asset that what he lost. (i.e. in both Jens and Blackpine, Ps lost an old house, yet the award gives them a
new house) This poses the problem of betterment, and the question of whether this gain should be taken
30
into account in assessing damages. The problem is that if no deduction is made, P will be overcompensated.
But, if a deduction is made, P will have been forced to spend his own money on repairing or replacing
property and this would not have been required but for D’s wrong. A middle ground can be reached where
the amount of the betterment is deducted, but the opportunity cost to P of having to spend P’s own money
earlier than P would have otherwise had to is added in to the damages award (James Street Hardware,
Fontaine). There is no assumption of betterment: onus on D to prove betterment; and if met then the
onus is on P to prove he will suffer a loss by being required to an make unexpected expenditure. (James
Street Hardware) For wasting assets, life span for purposes of betterment is limited to the expected useful
life (Fontaine). The court can decide to ignore the betterment issue (Jens).
James Street Hardware and Furniture Co. v. Spizziri
 D’s negligence caused damage to P’s building. P rebuilt the damaged part of the building in a superior form
– because had to live up to a new building code (to have restored exactly was prohibited by building code)
 A deduction should be made for betterment but P should be compensated for the loss of use of his own
money. This loss would be the cost (if he has to borrow) or value (if he already has the money) of the
money equivalent of the betterment over a particular period of time
o Difficult to decide on how long period of time should run
 There will be no automatic deduction for betterment (no assumption of enhanced value)
 Onus on D to demonstrate that repairs do in fact result in betterment
 Onus on P to prove that P will suffer a loss from being required to make an unexpected expenditure
 If it was a loan, then you give P the amount of the interest for the additional years. If you’re using your own
money, then there is more room for creativity about what the client has really lost in opportunity cost (i.e.
if client was an entrepreneur).
 In this case, there wasn’t enough evidence to actually do this, yet this case is an invitation for lawyers. Ds
should argue the betterment issue.
Fontaine v. Roofmart Western Ltd.
 P bought roof shingles from D – 15 year warranty. Shingles defective after 10 years. P sought damages.
 P is entitled to the cost of new shingles. The problem is that P is getting new shingles, when really what P
lost was 5 years worth of having shingles on his roof. Thus, while P is only entitled to 1/3 of the cost of the
shingles (to get rid of the “betterment”) the court recognizes is that P had to reshingle roof 5 years earlier
than he would have, and awards an additional $700 for the cost of financing the roof for five years.
PERSONAL INJURY DAMAGES



Damages for personal injury attempt to restore P, as far as money can, to the same position as P would be
absent D’s wrong. Damages are awarded for both past and future losses – pecuniary and non-pecuniary.
Pecuniary damages compensate P’s financial losses, including past lost income, diminished future earning
capacity, cost of care, and expenses incurred as a result of the injury. Non-pecuniary damages provide a
measure of consolation for intangible losses, including pain and suffering, loss of amenities, loss of
enjoyment of life, and loss of expectation of life. Damages may be special or general: special damages are
pre-trial out of pocket losses (income loss, medical treatment). General damages are losses that will likely
arise in the future (speculative). The P must act reasonably and must not be extravagant (Andrews).
Courts use an itemization approach for awarding damages (Andrews). Special damages include pre-trial
pecuniary losses. These consist of pre-trial loss of opportunity to engage in productive work, both paid and
unpaid, subject to contingencies, such as illness, layoffs, etc. Pre-trial cost of care, such as medical expenses
and cost of caregivers, regardless of whether P actually paid for services or not, is included. These awards
can be problematic, as they might create a windfall (Teno; Thornton). To avoid this, the courts will create
an in-trust award for a party who provided service that is extraordinary and necessary to P’s care
(Bystead). The in-trust award is valued according to reasonable replacement cost. Where this is more than
actual cost, you will get actual cost. Any consequential losses due to P’s injury are also recoverable. General
damages include non-pecuniary losses, loss of working capacity and future care costs.
Prior to 1978, Canadian law on personal injury damages was relatively unstructured. The trilogy (Andrews,
Thornton, Teno) provided a highly structured framework for personal injury damages. The trilogy
31
established that damages must be itemized (special damages, general damages, cost of care, lost future
earning capacity) to ensure fairness and predictability.
Andrews v. Grand and Toy Alberta Ltd.
 Negligence action for personal injury – young man rendered quadriplegic in traffic accident. P will never
improve functionally – will for the rest of his life be dependent on others for survival. But also not a
vegetable – can see, hear speak. P receives the cost of home care.
Lindal v. Lindal
 Example of the uncomfortable implications and inconsistent application of the personal approach. The TJ
said that P’s injuries were much worse than Andrews, and the CA said the opposite. People who have no
understanding of the realities of injuries (judges) are trying to compare injuries.
Lump Sums

The default award will be lump sum unless the parties agree otherwise (Watkins). Advantages include
finality, no concern about future D insolvency, and preservation of judicial economy. Disadvantages include
difficulties of speculation, changing future need (inaccuracy), potential windfall in the event of premature
death, risk of dissipation of awards, and risk of over/under compensation. Alternatives to lump sum
awards include periodic payments (with possibility of future reviews) and structured settlements (initial
lump sum + annuity with period payments). A structured settlement must be in the P’s best interests
(Chesher), considered in reference to D’s solvency, practicality for P’s needs, full compensation, risk of
dissipation, personal characteristics. May be legislatively mandated in some cases.
Discounting
o
Discounting the award to present value is an attempt to balance the interest from future investment against
the future inflation. The real rate of return for the P is the difference between the long-term interest and
inflation rates. If the discount rate is wrong, the implications for the award are hugely problematic.
Standard practice is 2-3%. In BC, discount rates are set by legislation – s. 56 BC Law and Equity Act, with
lost earnings discounted 2.5% (reflects the fact that productivity increases at a higher rate than inflation)
The general discount rate is 3.5%. Courts have discretion to vary the rate where accurate predictions are
possible but this is rare.
Structured Settlements




Watkins v. Olafson (SCC 1989) D wants a structured settlement, which is less expensive for D. SCC rejects
the idea that structured settlements should be the norm, saying that this was too radical a departure from
the way that damages are done at CL, and that such a change would require legislation.
BC legislation provides that the court can use structure settlements where a) the parties agree or b) where
it is clearly in P’s best interests. Additionally, courts must impose a structured settlement where P is
requesting a management fee and a tax gross up unless there is a strong argument against the structured
settlement. (s.99 of the Insurance Act)
Advantages of structured settlements: guaranteed income, avoids dissipation, no need for tax gross-up
on care costs (structured settlements are tax free), no need for a management fee – the insurance company
is acting as the money manager because they are promising you a guaranteed payout. Management fees can
be 3-5% of the lump sum.
Disadvantages: still based on prediction, inflexibility (Chesher) and lack of control
Chesher v. Monaghan
 P did not want a structured settlement. The structured settlement was only going to last as long as P lived,
so if P died early, then his family wouldn’t get the money. P asked for tax gross-up. Under the Ontario
legislation (which is similar to BC’s), if P does this in context of a personal injuries case, D can ask court to
order a structured settlement. The court is required to do so unless the court is of the opinion that such an
order would not be in the best interests of the plaintiff having regard to all the circumstances of the case
 P objected to arrangements for a whole number of reasons. P wanted to be able to pay for medical devices
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


when technologies become available. Also wanted to pay debts. A structured settlement would leave
nothing for his estate (stops on death). Both of the latter are problematic arguments because this is an
award for future cost of care.
Held: Court awarded the lump sum because it was in P’s best interests. The lump sum allows P to spend the
money on a new prosthetic down the road if he wants to. Also, a big factor was that P was capable of
managing the money (he was financially literate).
Note: structured settlements do not always terminate upon P’s death. The settlement offer in Cheschire
could have been made more attractive to P.
For catastrophic injuries, structured settlements are the way to go for Ds because the amounts are huge
(and the savings on the tax gross up and management fees are huge)
Management Fees
o
Awards are expected to be invested to give P a stream of income over his life, but this may require
professional help. An award for counselling or management fees are not automatic; P must bring evidence
of need. Relevant factors determining P’s need include the nature/severity of P’s injuries, damage quantum,
duration, P’s ability to fend for himself. An award of management fees will not impact discount rate –
entitled to full amount (Kroppmans)
Kroppmanns v. Townsend
 Unusual case – P only got half of their award at time of judgment because of unresolved issues. Came back
to resolve these issues 5 years later. At this time, it was known what P had done w/ the first half of the
money - P had paid off her house/legal bills, and would invest only the next part of the award. P asked for
management fees. D argued that management fees should only be for amount of award left to spend
 Held: The basis for the award of management fees should be the initial amount – what P does w/ money
subsequently is irrelevant.
 D also argued that if P is getting management fees – the investment will have higher returns, so the court
should use a higher discount rate (better interest) Rejected.
Cost of Future Care
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Ps will often have future care costs that will not be covered by a provincial health insurance program, such
as home modification, etc. P is entitled to compensation for all costs so long as they are reasonable. There is
no duty to mitigate in the sense of accepting less than full compensation. The test is reasonableness, and
not medical necessity (Andrews). The claim must not be extravagant: care is to be appropriate to the P’s
needs, based on what a person with ample means would reasonably spend to meet those needs (Bystedt).
The award is limited to additional care required – will deduct cost of care that P would have received even
absent injury, such as care ordinarily provided by family members (Bystedt). Costs will be assessed for as
long as P requires (post-accident life expectancy).
Start with an assessment of need. Consider the need for medical treatment, rehab, physio, pain
management, ongoing daily care, transportation/drug costs, special equipment and physical arrangements,
general living support (accommodation and living costs)
Determine the standard of care that would meet those needs (Andrews)
o No duty to mitigate (i.e. find cheapest care), only to be reasonable (Andrews). You must
mitigate by finding ways to reduce the injury itself, such as having surgery (Janiak), but no duty to
mitigate by finding ways to deal cheaply with care of the injury. The duty to mitigate per Janiak
applies to need but not standard. Test for reasonable expenditure: would a person of ample
means make this expenditure on themselves? Social cost is relevant only in choosing between
acceptable alternatives. Home care is fully funded where preferred and appropriate (Andrews,
Bystedt) Sometimes institutional care will be preferable – will depend upon level and duration of
family support, need for multidisciplinary care, benefits of socialization, etc. (Krangle)
Calculate life expectancy post-accident – use actuarial evidence specific to people with this type of injury
Factor in contingencies but avoid double deduction where the actuarial tables already take into
account the various contingencies
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20% is the conventional deduction for contingencies (Andrews)
Andrews - lower courts used actuarial tables for people with quadriplegia, then applied a further
deduction for the chance he might die earlier. Those risks are already in the actuarial tables.
o The problem of double deduction is also acute re: wage loss. Courts use lifetime wage earning
tables, and then apply contingencies (i.e. chance of a period of unemployment), whereas the tables
themselves likely take these considerations into account.
o Ps should argue against this deduction where the actuarial evidence that has been used
would already include both good luck and bad luck.
Living expenses (Andrews): If the cost of care award includes basic living expenses, then in the lost
earnings part, you deduct the amount of the basic living expenses. For lost years, you award the lost
earnings with the 50% deduction for personal expenses.
o
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Personal Injury and Tax
o
o
Claim for wage loss has to be divided into two components – special damages and general damages. For
the special damages (up to time of trial) you must award the after-tax amount. For general
damages/future loss of earnings, you award the gross wage. This results in overcompensation but it’s
still done, and it’s offset somewhat by the fact that the interest earned on the award will be subject to tax.
This is because it’s the loss of capacity to earn income (i.e. treating it as a capital asset). I don’t agree with
this! The value of the capital asset in a high-tax jurisdiction would be lower.
For cost of future care, to give full compensation you should gross-up the award to take account of the fact
that the return on the investment will be taxed. (Watkins v. Olafson, Fobel)
Non-Pecuniary Losses for Personal Injury: The Functional Approach
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Non-pecuniary losses compensate the P for intangible losses, with loss of amenities, pain and suffering, and
loss of expectation of life assessed globally, based on post-accident life expectancy. The assessment is based
on a functional approach, with the purpose to provide reasonable solace for the P in his injured state. This
means using money to make P’s life easier and more tolerable. It is not equated with sympathy and is not
based on the severity of injuries, but only on what concrete difference money can make to the P’s life
(Andrews).
The limit on non-pecuniary damages is $100,000 (1978 value, adjusted for inflation ~ $340,000) (Lindal).
Theoretically, it may be exceeded in extraordinary cases, however the case law shows that it is never
exceeded in negligent personal injury claims. The cap and the functional approach are justified by the
paramountcy of care, the avoidance of excessive social costs, uniformity, and the avoidance of a windfall for
P’s estate. The cap is not applicable outside personal injury cases where there is an element of
intentionality. (Hill)
The quantum is a case-by-case determination, that turns on the extent to which P can appreciate the
expenditure of money and whether money can make a difference in P’s life as reflected in the level of
P’s cognitive impairment (Bystedt). This means that, at least in theory, unconscious Ps should get less
non-pecuniary damages. The courts will seize on the slightest possibility of future consciousness.
For determining the amount, consider (Bystedt): “the ability to appreciate what has been lost; awareness
of, or interest in, what was happening around the plaintiff; response to human interaction; displays of
pleasure, enjoyment, pain and sadness; attempts to communicate or initiate interaction with others;
attentional abilities; memory ability; and life expectancy.”
The functional theory (Andrews, Lindal): The question is not “how much pain and suffering is associated
with this particular injury” but rather “what good can money do in this case to improve the pain and
suffering that has been caused by the injury?” Because social cost is relevant, the idea is that there
shouldn’t be an award if there is no indication that it will do any good. The goal is to provide consistency
and to avoid difficult comparisons. However, the comparison of injuries does still happen. Courts use the
language of the functional approach, but then use the Goldstein book where injuries are listed out with the
amounts next to them…which is the embodiment of the conceptual approach. In sum, courts always quote
from Andrews but we notice that the functional approach hasn’t really gone anywhere.
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Lee v. Dawson
 P is Korean; evidence presented that injuries are worse b/c of stigma. Awarded 2M by jury for nonpecuniary but court limited the award. P challenged.
 Arguments in favor of exceeding the cap: P and intervenor (BC Coalition of People with Disabilities)
o Cap discriminates against Ps w/ severe or catastrophic injuries, contrary to Charter values.
o Alleged conceptual underpinnings of cap no longer valid after 25 yrs. Concerns about extravagant
awards have not panned out. No evidence of high social cost of large awards.
o Cap discriminates against Ps not entitled to large pecuniary awards; eg: Ps w/ pre-existing
disabilities
o Cap undermines principle of full compensation
o Conflicting policy justification in support of cap – SCC has not been consistent re cap – eg not
applying it to defamation
o Cap is arbitrary and not grounded in logic
 Held: The cap is not inconsistent w/ Charter values and although it may be time to reconsider it, the court
indicated that they were bound by the case law.
Loss of Earning Capacity
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Impaired working capacity requires a real and substantial chance that the injury will affect future earning
ability. Lost earnings are based on the capital asset formula multiplied by pre-accident life span years.
No deductions are to be made for the lost years, despite the fact that this may yield a windfall for P
(Toneguzzo). Post-Andrews, compensation is based on a prediction about actual earnings for type of work,
calculated with reference to P’s salary level and earning history, and according to P’s pre-accident life
expectancy and likely retirement age. Calculating future earnings is particularly problematic where the
plaintiff is a child. (M.B.) Where there is no earnings record, courts may use statistics. For children, courts
generally make predictions about career paths, based on family background and parents’ socio-economic
status (Teno). This may replicate and perpetuate historical inequalities, particularly for girls, as award will
generally be based on what mother, vs. father, does. Though gendered/racialized statistics may project
systemic inequality into the future, it is argued that tort law is not the appropriate forum for addressing
these issues, as tort law is focused on compensation for harm caused by D, and indeed D’s actions are not
what caused the systemic inequality. (McCabe).
For impaired homemaking ability, Ps will be compensated for paid and unpaid work that can be assigned
an economic value, and that is actually impaired by the injury (compensation can relate to direct labour
and/or management functions) (Fobel). This is not limited to full-time homemakers or women and is for
P’s benefit, rather than family or dependent benefit. Compensation is based on replacement cost in the
market (Fobel). Where P does not purchase replacement services, however, the law is inconsistent. One
view compensates for pecuniary loss, whether replaced or not. Another view considers the loss part of nonpecuniary losses, but the cap would apply and this may not be satisfactory in serious cases where the cap
has already been reached. These approaches raise some concerns with respect to equity (McIntyre). The
amount for impaired homemaking ability is based on entire pre-accident life span, subject to a contingency
of reduced ability with advanced age.
The court will factor in contingencies that might impact earnings. These tend to be gendered, with
deductions for assumptions of lower work force participation for women due to marriage and childbearing
contingencies (MacCabe). Today, these should not be assumed, but rather evidence-based. The courts have
used three approaches to dealing with young females. First, using female-specific statistics and topping up
for the possibility of future gender wage parity (Toneguzzo). Second, using average earnings for men and
women in segment of economy that P would likely have been a part, subject to a contingency deduction
that P might not have pursued that career path. There is also the possibility of using male income tables for
a female P, but this is rare. (Tucker - but note the TJ then made a 60% contingency deduction without any
evidence, bringing the wage loss claim very close to the female statistical wage)
Lost years vs. windfall to estate: If P has a post-accident life span of 3 years, but is awarded lost earnings
for 30 years, this could be viewed as a windfall to P’s estate. The rationale is that had P worked, that money
would have been used to provide for the dependants. Thus, the award can serve as a proxy for
compensation for the dependants. If P has no dependants, the outcome is basically to confer a large
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inheritance on relatives.
A deduction of 40-50% is typically made for personal consumption during the lost years
(Tonneguzzo) subject to evidence. The richer you are, the smaller the % deducted.
Teno v. Arnold
 P was 4 ½ yrs old at time of injury. Mother’s income was used as a proxy for P’s probably earnings (mother
earned $10,000 as primary school teacher) reduced on appeal to $7500 w/ another $1500 deduction so
that the final award was just above the poverty line.
Fobel v. Dean
 Homemaking capacity should be divided into a) direct labour and b) management functions. Only the
aspect of P’s homemaking capacity that is impaired due to injury should be compensated for.
 Use cost of replacement approach
McIntyre v. Docherty
 Pre-trial work left undone: Case law is inconsistent. Non-pecuniary damages can be awarded for loss of
fulfillment from work, and losses associated with living in a disorderly home.
 Pre-trial work done by P with difficulty: If a plaintiff works "inefficiently", her or his non-pecuniary
award would be increased to reflect any increased pain and suffering. To the extent the plaintiff's
inefficiency also results in a less clean and organized household, this is the loss of an amenity that the
award for non-pecuniary damages would also take into account.
 Pre-trial work done by 3Ps: P may claim the reasonable replacement cost of that homemaker as special
damages. Similarly, if there is evidence that P agreed or was otherwise obliged to compensate a 3P for
services rendered pre-trial, P may claim that amount as special damages
MacCabe v. Westlock Roman Catholic School District No. 110
 P was 16 – accident rendered her a quadriplegic
 Issue: appropriateness of using male earning tables and contingency deductions in quantifying
compensation for loss of working capacity
 Trial judge refused to adopt female specific statistics
 Held: Determination of negative contingencies based upon a classification according to sex is not
unreasonable in these circumstances. The situation is analogous to the use of actuarial tables based on sex,
age or marital status to determine insurance premium rates for drivers of motor vehicles.
 Three negative contingencies that are applicable to both men and women: non-participation in labour
force, unemployment, part-time work. P told court that she wanted to have as many as 4 kids and might
stay home w/ them until they were in school. Applying male contingencies ignores fact that P said she
wanted children. Ignoring this evidence potentially inflates her damage award – puts her in a better
position than if she had sustained the wrong. It would be different if she said she didn’t want kids or
wouldn’t take time off
 The fact that women will likely move closer to wage parity w/ men in the future can be used as a positive
contingency. The younger P is, the greater the amount.
Collateral Benefits & Subrogation
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P will frequently receive some replacement for lost earnings or will receive some form of service that
reduces P’s costs from sources that appear to offset part/all of P’s losses from the injury. The tension is that
non-deduction gives P a windfall, whereas deduction subsidizes the tortfeasor. For family services, this can
be resolved by in-trust awards, and for employment or insurance benefits, it can be addressed through
subrogation. The general rule is that a deduction should be made for collateral benefits (Cunningham).
However, there are so many exceptions and this rule is essentially honored in the breach.
Exceptions
o Gifts and private charity: Rationales outlined in M.B.
o Private Insurance Benefits (Cunningham): Are not deductible if there is evidence that P paid for
the benefits in some way, as D is not to benefit from P’s foresight and self-denial. Includes
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mandatory insurance schemes. The right of subrogation avoids the problem of P windfall.
 Cunningham: “the private policy of insurance should be maintained...it is based on fairness.
All who insure themselves for disability benefits are displaying wisdom and forethought... The
acquisition of the policy has social benefits for those insured, their dependents and indeed their
community. It represents forbearance and self-denial on the part of the purchaser of the policy
to provide for contingencies.”
o Employment Benefits: Are deductible unless P paid for the benefits in question, is obligated to
reimburse the collateral source, or 3P has right of subrogation (Cunningham). The court will
basically assume that the P paid for the benefit somehow. Anything that shows you gave up or
sacrificed something will be viewed as payment, meaning that employment benefits will almost
never be deductible. (i.e. sick benefits that are “used up”)
State Benefits: Health Care and benefits and employment insurance are not deductible, but must be repaid
(Health Care Recovery Act; EI Act, s. 45). Social assistance and welfare benefits are deductible. They are an
income replacement scheme and not part of the charitable gifts exception (M.B.) If it is a nondiscretionary scheme, the benefits are deducted (Krangle) For a discretionary scheme based on means,
the court will not deduct. (Fullerton) To do so would essentially be requiring the government to provide
for P, which the court does not want to do.
Family care: Voluntary family care, over and above normal, will not be deducted from the damage award.
(Bystedt) The amount may be “in trust.” (Bystedt)
Bystedt (Guardian ad litem of) v. Hay
 P sought compensation for the past care provided to her by her family
 Held: An in-trust award may be ordered in favour of any person who offered services. However, family has
no independent right of action for in-trust awards – has to be part of P’s claim
o Note: In Ontario, eligible family members entitled to sue in their own right - Ontario Family Law Act,
s.61
 The services provided must replace services necessary for the care of P as a result of P’s injuries. If the
services are rendered by a family member, they must be over and above what would be expected from
the family relationship. In this case the award was discounted by 30% because P was an infant.
 Where the actual cost to the care-giving family member is lower than the cost of obtaining the
services independently, the court will award the lower amount.
 The family members providing the services need not forego other income and there need not be
payment for the services rendered
 Nature of services should be such that P would have likely paid somebody for those services had
they not had the benefit of the person
o Note that these limitations are not found in the Family Law Act
Ontario Family Law Act
Right of dependants to sue in tort
61. (1) If a person is injured or killed by the fault or neglect of another under circumstances where the
person is entitled to recover damages, or would have been entitled if not killed, the spouse, children,
grandchildren, parents, grandparents, brothers and sisters of the person are entitled to recover their
pecuniary loss resulting from the injury or death from the person from whom the person injured or killed
is entitled to recover or would have been entitled if not killed, and to maintain an action for the purpose
in a court of competent jurisdiction.
Damages in case of injury
(2) The damages recoverable in a claim under subsection (1) may include, (a) actual expenses
reasonably incurred for the benefit of the person injured or killed; (b) actual funeral expenses reasonably
incurred; (c) a reasonable allowance for travel expenses actually incurred in visiting the person during
his or her treatment or recovery; (d) where, as a result of the injury, the claimant provides nursing,
housekeeping or other services for the person, a reasonable allowance for loss of income or the value of
the services; and (e) an amount to compensate for the loss of guidance, care and companionship that the
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claimant might reasonably have expected to receive from the person if the injury or death had not
occurred.
Cunningham v. Wheeler
 Where it can be demonstrated that P has paid for the disability insurance, it will be treated like private
insurance and won’t be deducted from the lost wages award.
 There was a direct deduction from P’s wages for the insurance (although it was a small portion of the cost
of the plan) Court was able to “follow” Ratych by saying that in Ratych there was no evidence that P had
paid for the disability benefits at all. Thus, Ratych not overruled – but rare that P wouldn’t be able to argue
that they “paid” for the benefit in some way.
 Employment benefits are deductible unless 1) P paid for the benefits in question or P is obligated to
reimburse the collateral source.
 P could have paid for benefits directly or indirectly. Anything that shows you sacrificed something will be
enough to show that person paid for the benefits.
 Court may take judicial notice of a payment w/out direct evidence of payments.
 McL policy dissent: There is social waste involved in transferring amounts between insurance companies,
and it isn’t going to matter in the long run who pays. The real effect of the non-deductibility rule is to
increase insurance premiums and provide windfalls to Ps.
M.B. v. British Columbia
 Rationale for non-deductibility of gifts (M.B.)
 D shouldn’t benefit from benevolence of third parties
 Would discourage acts of kindness toward injured persons
 Practical difficulties – value of such benefits not easily ascertainable
 Windfall re: past gratuitous care/services avoided through in-trust awards
 Future care cost: no deduction for possibility of gratuitous care (Andrews – possibility of mother
helping not relevant consideration)
Krangle (Guardian ad Litem) v. Brisco
 P was to move into a publicly funded group home at age 19. This arrangement was in P’s best interest. P’s
care was unlikely to fall on his parents, but his parents claimed that the public funding was not guaranteed
so they wanted an additional sum for cost of future care in case P did not go into a group home.
 Held: P’s parents awarded $80,000 for a 5% contingency that they might be responsible for P’s care at a
certain point in the future. The Court was sufficiently certain this was unlikely to happen given social policy
of the government looking after disabled adults, at least in BC.
Fullerton (Guardian ad Litem of) v. Delair
 If the public benefit is discretionary and based on need, than the outcome of P’s damages award will affect
P’s eligibility for the social program. If the court makes the full award, P won’t be entitled to the benefits. If
the court doesn’t make the award, then the court is dictating that the public benefit must provide for P,
which they don’t want to do. Thus, there is no reduction in the damages award where the benefit in
question is discretionary, has limited funding and is intended to be a last resort
 Unlike Krangle, you cannot count on this program in the same way
Fatal Accidents – Family Claims

Historically, no action was available at CL to survivors for their losses due to a family member’s wrongful
death, producing the anomaly that tortfeasors were better off killing, rather than injuring their victims.
Legislation now provides compensation for family members or dependants through the BC Family
Compensation Act, which gives a right of action to particular family members of deceased – spouse, parent,
child, grandparent. The basis of the award is to compensate the survivors for their pecuniary losses from
the death of a family member (Keizer). Claimants do not need to show a legal right to financial support. A
reasonable expectation of pecuniary benefits from the deceased is sufficient, to be measured by the value of
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the dependency, including the value of non-monetary benefits.
Pecuniary Damages: Relates to loss of labour market earnings and the actual financial benefit P likely
would have received from the deceased. Start with the probable gross income (other benefits from
employment such as dental, medical plans are only factored in if they would have benefited the claimant),
deduct income tax, deduct personal expenditures that would not go to family (40-50%) (Keizer), add the
deceased’s other monetizable contributions (e.g. housekeeping, care, cooking, gardening, support,
guidance), account for contingencies affecting the deceased’s own earnings and the period of dependency
(length of time that the survivors would have enjoyed the deceased’s income - consider prospects of family
breakdown, possibility of remarriage, possibility of the deceased dying under different circumstances,
retiring before the expected dependency period, evidence about the period of time a child should be
dependent, etc), discount the amount and calculate a tax gross up.
Problem of double counting/acceleration of inheritance: The court award is what the child would have
received over the rest of the parent’s lifetime, and if that money would likely have come out of the parent’s
savings (which the child will inherit) the child is doubly compensated. The court award can also increase
the value of the inheritance because the children get it early. Thus there will typically be a deduction.
Non-Pecuniary Damages: loss of care, guidance, companionship, or affection (Lian, To). The rationale is
that although these are difficult to measure, you can use money to get children who’ve lost parents into
situations that will help to ensure their success. Usually claimed by spouses and children for death of
parents, but also possible for other family members when supported by evidence (To). In some provinces,
there is a conventional award for grief. In BC, grief itself is not compensable. Instead, recovery is limited to
pecuniary losses, liberally interpreted to include loss of care, guidance, and companionship. May be claimed
by family members other than partners and children (Lian).
Contingencies: Awards may be affected by two types of contingencies (Keizer). First, things affecting
deceased’s earnings (same as under personal injury); and second, dependency relationship (forming
another dependency, relationship breakdown). The possibility of forming another interdependent
relationship is relevant because it may reduce or eliminate the loss, raising concerns about double
recovery. This is highly speculative and so will not be subject to automatic deductions. A relationship at the
time of trial is relevant (viewed as mitigation), but financial benefits from the relationship must be real and
permanent, with the onus of proof on D. Where claimants do not have partners at the time of trial, this is
more difficult, but the possibility of a future interdependency relationship must not be ignored, despite the
massive speculation and distaste involved (Keizer).
Relevant factors for recovery of pecuniary losses include cultural traditions (i.e. evidence of a tradition of
filial obligation - To), family circumstances, the age of the deceased and of other children, age and health of
parents or other survivors, claimants’ financial means if that relates to how much the deceased would have
supported them (Lian), deceased’s education, training, and vocational prospects, demonstrated desire or
actual financial assistance.
With respect to the death of a child, the predominant view is that the actual loss to a parent from the death
of a child is mostly non-pecuniary, unless there is evidence of financial dependence, with the rationale that
parents may actually be better off financially.
For surviving adult children, non-pecuniary losses are generally limited to modest sums upon evidence of
strong interdependency. There is generally no award for financial losses, unless there is exceptional case
and evidence of financial dependence on the deceased parent (Bjornson).
You take your victim as you find him (Lian, To) This does create something of a thin skull rule
Conventional awards: may be advantageous since they provide uniformity, efficiency (no need for
individualized assessment), sparing family members recounting effect of death, etc. Conventional awards
may, however be disadvantageous, since they assume all claimants experience the same loss, don’t allow
for revision and inflation, and fail to recognize special relationships and bonds (ie: To).
In terms of collateral benefits, private insurance benefits are not deductible, for the same reasons as
personal injury (BC Family Compensation Act).
Keizer v. Hanna
o Where family members are claiming damages, consider contingencies affecting deceased’s earning
profile (same as those considered under personal injury); and contingencies affecting the dependency
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o
o
relationship (early death of P or divorce, remarriage)
Should factor in spousal support that would occur if broke up
Possibility of forming another inter-dependency relationship: No automatic deductions. Evidence of
relationship at time of trial relevant. But mere fact of living with someone at time of trial should not be
conclusive b/c might not be getting financial benefits – onus on D to show that P is getting financial benefit.
To v. Toronto Board of Education
 Deceased was 14 years old, family of Chinese origin from Vietnam. There was evidence that this child was
living up to the cultural expectations of a first-born son. Each parent got $100,000 for loss of support. Note:
parents wouldn’t expect to start receiving financial support until many years later. So the amount would
have to be discounted appropriately.
BC Family Compensation Act
S. 1 In this Act: "child" includes (a) a person to whom the deceased stood in the role of a parent, and (b) a person
whose stepparent was the deceased; "parent" includes a grandparent and a stepparent; "person" means a natural
person; "spouse" means a person who (a) was married to the deceased at the time of death, or (b) lived and
cohabited with the deceased in a marriage-like relationship, including a marriage-like relationship between
persons of the same gender, for a period of at least 2 years ending no earlier than one year before the death;
"stepparent" includes a person who lives with the parent of a child as the spouse of the parent for a period of not
less than 2 years and who contributes to the support of the child for not less than one year.
Action for death by wrongful act, neglect or default
2 If the death of a person is caused by wrongful act, neglect or default, and the act, neglect or default is such as
would, if death had not resulted, have entitled the party injured to maintain an action and recover damages for it,
any person, partnership or corporation which would have been liable if death had not resulted is liable in an action
for damages, despite the death of the person injured, and although the death has been caused under circumstances
that amount in law to an indictable offence.
Procedures for bringing action
3 (1) The action must be for the benefit of the spouse, parent or child of the person whose death has been caused,
and must be brought by and in the name of the personal representative of the deceased.
(2) The court or jury may give damages proportioned to the injury resulting from the death to the parties
respectively for whose benefit the action has been brought.
(3) The amount recovered, after deducting any costs not recovered from the defendant, must be divided among the
parties in shares as the court or jury by their judgment or verdict directs.
(4) If there is no personal representative of the deceased, or, there is a personal representative but no action has
been brought within 6 months after the death of the deceased person by the personal representative, the action
may be brought by and in the name or names of all or any of the persons for whose benefit the action would have
been if it had been brought by the personal representative.
(5) Every action brought must be for the benefit of the same person or persons as if it were brought in the name of
the personal representative.
(6) If a defendant in any action desires to pay money into court in satisfaction, the defendant may pay the money
into court in one sum as compensation to all persons entitled to recover damages in the action, without specifying
the shares into which, or the parties among whom, it is to be divided under this Act.
(7) If the money is not accepted and an issue is taken by the plaintiff as to its sufficiency, and the court or jury finds
it sufficient, the defendant is entitled to a verdict on that issue.
(8) In assessing damages any money paid or payable on the death of the deceased under any contract of
assurance or insurance must not be taken into account.
(9) In an action brought under this Act, damages may also be awarded for any of the following expenses if the
expenses have been incurred by any of the parties for whom and for whose benefit the action is brought: (a) any
medical or hospital expenses which would have been recoverable as damages by the person injured if death had
not ensued; (b) reasonable expenses of the funeral and the disposal of the remains of the deceased person.
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Lian v. Money Estate
 20 year old daughter dies, Ps bring evidence regarding filial piety because of their Chinese culture. The
parents were approaching their retirement.
 Court awarded $175,000 for support that the parents might have expected from the daughter during the
rest of their lives. This award was sent back by the BCCA as being too much, and then it settled.
 Ratio: cultural factors will be taken into account in assessing these damages.
Bjornson v. McDonald
 Adult child financially and emotionally dependent on her parents; 38 year old single mother of three
children; evidence of a close relationship and that parents helped her out (bought food, clothing, helping
her w/ her loans)
 Court recognized that she had suffered a financial loss from the passing of her parents. The court divided
the damages into a) loss of household services/childcare - $50,000, b) loss of financial support – lump sum
of $60,000, c) loss of guidance, love, and affection - $15,000)
 The typical rationale for such losses – that money can be used to put the children in scenarios that will
compensate for the loss of the parent is more difficult to justify here. Here, one possibility is that the level
of dependency between the daughter and the parents and the loss of the “management” type of support
that the parents provided could result in a financial loss. This case is an application of the thin skull
principle in fatal accident cases.
 Compare McDonnel Estate (BC 1997) Three sisters in their 30s were claiming for loss of guidance of their
75 year old mother, court awarded $0.
EQUITABLE REMEDIES: INJUNCTIONS
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Equitable remedies such as injunctions and specific performance provide specific relief and fill in the gap
where monetary remedies are found to be inadequate. Equitable remedies are discretionary, they are not
awarded as of right. They may be granted where P has established a substantive cause of action; there is
irreparable harm, such that damages would be inadequate, and there are no discretionary reasons for
denial of equitable relief (Wrotham). The advantages of equitable remedies include avoiding guesswork in
damage assessment and effective protection of P’s interests. They are not generally available, because they
tend to be harder on D and more intrusive than monetary damages, and carry a risk of contempt for D if
unable to perform. In some cases, might also require continued work in a strained relationship.
Injunctions operate to remedy either past or prospective wrongs. Injunctions can be prohibitive or
mandatory, quia timet (anticipatory), permanent (final orders that prevent all further interference with P’s
property interest) or interim (for a specified period of time), final (issued after trial) or interlocutory
(granted before trial). Pre-trial injunctions protect P pending the final determination of the parties’ rights.
They may merely operate until trial (interlocutory) or for a specific period designed to get the parties to
court. Injunctions may be mandatory (Rodgers), imposing a positive obligation on the D to do something, or
they may be prohibitive (Fletcher), restraining D from doing something, often where the relevant interest
is land. Mandatory injunctions are more difficult to obtain than are prohibitive injunctions (Redland).
Injunctions can always be bargained away.
Injunctions must have a clear, explicit order, with clear instructions about what is required for
compliance. (Redland). Courts prefer to avoid injunctions that require significant supervision. Injunctions
may also be denied where compliance detrimentally affects third party interests (Kerlenmar).
Quia Timet Injunctions
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Quia timet injunctions are forward looking. They address conduct that threatens to infringe P’s rights
before the harm occurs. They may be mandatory or prohibitive. The injunction can be sought before the
harm and the activity have started (Palmer), where the activity is underway, but harm has not yet occurred
(Fletcher), or where the conduct is complete, but the threatened harm has yet to occur. (Hooper) The court
will balance the risk of oppression to D against P’s rights, and will consider the court’s own institutional
limitations, mindful of the fact that if the bar for getting an injunction is set too low, the court will receive
more applications in a forum that doesn’t really have the capacity to answer many of the scientific
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questions that quia timet injunctions raise (Palmer). The problem with QT injunctions is pre-maturity,
since the harm has not yet happened. In general, courts will be hesitant to grant quia timet injunctions
where regulatory approvals have already been granted and where the evidence is not conclusive (Palmer).
The requirements are as follows (Fletcher):
o A potential future cause of action
o Damages must be inadequate
o The harm must be imminent, in the sense that it is inevitable. This is an extremely high threshold,
requiring a high probability of the threatened harm occurring (Palmer). The magnitude of the harm
must be balanced against the likelihood of its occurrence – severity and probability to be
considered as a whole (Hooper). Thus particularly severe consequences may demand a lesser
probability of occurrence.
o There must be a strong probability that P will suffer irreparable harm if the injunction is denied.
For IP cases, see the requirements in Connaught
If a QT injunction is denied, there is no prejudice to P’s rights; i.e. the issue is not res judicata (Fletcher). In
theory, at least, P can return to court at a later time and apply for the injunction again.
Fletcher v. Bealey
 P is worried that the sludge from an upstream alkali business will seep into the river water and harm his
business. P applies for a quia timet injunction.
 Held: Injunction denied on the basis that it’s too soon to put an end to D’s activities given that it’s not
inevitable that the vat waste will end up in the river.
 The harm has to be imminent. What is imminent? Consider:
o The likelihood that something will happen
o The severity of harm
o The chances that it can be prevented from happening before then
 The worse the consequences, the lower the probability the court may demand.
Palmer v. Nova Scotia Forest Industries
 D is about to start a spraying program in the forests with a toxic substance.
 No injunction granted because the judge did not think that enough of it would be sprayed to cause harm there was no proof that such a low dosage would have the same harmful effects of higher doses. Here the
severity is high but the probability is low.
 Also, the court would kind of be usurping the legislative branch if they were to grant the injunction,
because the sprayers already had a spraying permit. The court doesn’t want to be “overruling” the
decisions of the regulatory authority unless it’s really obvious.
 Note: P didn’t want an injunction (he wanted damages) but had to claim an injunction. P was not entitled to
CL damages because the harm hasn’t happened yet. You can’t sue in tort (CL) until damage has
occurred. But through equity you can get a remedy for future anticipated harm (an injunction) and
you can get damages in lieu of the injunction.
Hooper v. Rogers
 Downhill neighbor bulldozed his own property creating a loss of support for uphill neighbor’s land. Uphill
neighbor wants an injunction for D to stop bulldozing, and to fix the support. Court grants it.
 Key difference between this case and Fletcher: here, the evidence was that if no repairs are done/if the
bulldozing continues, the damage is inevitable. Basically, imminent = inevitable.
Connaught Laboratories Ltd. v. Smithkline Beecham Pharma Inc.
 Intellectual property dispute over vaccines
 Quia timet proceedings alleging patent infringement require:
o The statement of claim must allege a deliberate expressed intention to engage in activity the result
of which would raise a strong possibility of infringement;
o The activity to be engaged in must be alleged to be imminent and the resulting damage to the
plaintiff must be alleged to be very substantial if not irreparable;
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The facts pleaded must be cogent, precise and material. It is not sufficient that they be indefinite or
speak only of intention or amount to mere speculation.
No facts pleaded that speak to a deliberate intention or that go to imminent damage.
o
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Mandatory Injunctions
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Mandatory injunctions require D to take some positive steps to remedy a wrong. These injunctions engage
concerns about judicial interference, economic waste, and balancing benefits and burdens. The courts take
a cautionary approach (Redland).
The requirements are as follows (Redland):
o Imminence/Inevitability of Harm: high threshold.
o Inadequacy of Damages: inadequate to protect P’s interests.
 The presumption is that damages are inadequate for interference with property.
 Damages may be seen to be inadequate where difficult to measure or where P would have
to trespass on D’s land to fix the problem (Redland)
o Cost-Benefit: hardship to D v. benefit to P
 Consider the conduct of the parties. Where D has been innocent (as in Redland) then the
court will look at oppression/cost to D of complying with the injunction compared to the
benefit of the injunction. Where it’s hugely expensive for D to comply compared to the
benefit, then the court might deny the injunction. (Redland) P’s conduct will be relevant
with respect to the failure or delay to complain (Wrotham).
o Definition: if the order is granted, can it be appropriately defined so that D knows exactly what
they are supposed to do. It must not be impossible for D to restore status quo.
Redland Bricks v. Morris
 Downhill neighbor is a brick maker. Uphill neighbor is a strawberry farmer. The strawberry farm starts to
slide downhill due to the brick maker’s extraction of clay from his land. Strawberry farm owner gets the
injunction from the TJ who says “D must take all steps to restore the support within 6 months.”
 Applying the test: damages are inadequate: Here, damages are hard to measure, and fairly speculative
because we don’t know how bad the damage to the farm will get. Oppression/burden to D vs. Benefit:
Cost was $30,000, the value of the farm was $12,000. In sum, the cost of the injunction is too great vis-à-vis
the benefit to be achieved and the order is too vague. Also, problem is on D’s property, so giving P the
money won’t really help because they’d have to trespass on D’s property to fix it.
 Defining the mandatory injunction is key. Orders must be properly defined so that D knows exactly what
they are supposed to do (relates to fairness and increased litigation concerns).
Bellini Custom Cabinetry Ltd. v. Delight Textiles Ltd.
 Applies Redland Bricks. Shoddy wall beginning to tilt over onto P’s property. P requests mandatory
injunction (on grounds of trespass) to have the wall removed, and the cost of that is $220,000.
 Court orders that the wall be removed. No evidence that the removal would be oppressive to D, the harm to
P is not trivial as P can’t access own property, D behaved inappropriately (hiding surveys, etc). It’s hard for
D to make a case of oppression when they don’t have clean hands.
Property Interests
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Goodson and Gross v. Wright affirm that an injunction as a remedy for trespass to land does not require
any material damage, since the action itself rests entirely on the right to exclude. This is a very strong
affirmation of property rights. Although injunctive relief is primary for property interests, the need to
balance the benefit and burdens of injunctions means that there is discretion to award appropriate
remedies including damages (Shelfer) or to tailor the injunctive relief based on the circumstances.
Damages in lieu of injunction awarded only if (1) minimal injury to P’s legal right; (2) monetary estimation
for P’s injury is possible; (3) a small payment of monetary damages would be adequate; (4) injunction
would be oppressive to D (Shelfer).
Permanent trespass is distinguished from transient interference without damage to P’s property, such
as accessing adjoining land for repairs, or overhanging cranes. Injunctions are arguably better limited to
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continuing trespass (Goodson). Where the court grants damages for a permanent trespass, the damages
essentially result in a judicially-enforced sale (Clark) and hence this will be extremely rare. The law is
unclear regarding the appropriate remedy for temporary interference. An injunction may be ordered but
suspended, particularly in cases where D’s activity carries social utility and P’s conduct is unreasonable
(Woolerton). Where D takes a calculated risk to trespass for cost avoidance, an injunction may be granted.
There is a tension in the case law between absolute rights to property interests (Lewvest) and cost/benefit
analysis (Vaz). In rare cases, the injunction may be denied entirely on the grounds that P is being
unreasonable. (Barons v. Richards, Jarnouin) Temporary interference could be re-characterized as
nuisance, which allows the court to consider reasonable limits of land use. (Denning in Miller v. Jackson)
There is a danger of a chilling effect on D’s activities if injunctions are awarded for transient interferences.
Awarding an injunction may open D up to the possibility of extortion, since D will have no option but to
bargain for use, and P will be placed in a stronger bargaining position. Where there is no functioning
market, the court may deny the injunction on the grounds that it would leave D at the mercy of P.
An injunction is more likely where D’s conduct is flagrant and willful (Gross v. Wright), the encroachment
is significant and interferes with P’s rights (Bellini), and the injunction is not oppressive to D (Bellini). An
injunction is less likely where the trespass is inadvertent or necessary (Jarnouin), the interference is
trivial, damages are adequate, or where an injunction would be oppressive (Wrotham). An injunction is not
automatic – particularly where it would leave D at the mercy of P (Vaz). However, using a property rule (an
injunction) encourages private ordering, rather than simply trespassing and then having to pay damages
(results in the court granting after-the-fact licenses) Thus it is a social decision to have private ordering
with the owner setting the price, not the court setting the price via damages.
Summary of the court’s options for dealing with trespass:
o Grant the injunction BUT suspend it for long enough such that the parties strike a bargain (Earle v.
Martin) or long enough for D to finish what they need to do (Woolerton)
o Deny the injunction and allow the trespass to continue (very rare) (Barons v. Richards)
o Deny the injunction by stating that it’s not a trespass or a nuisance (Denning in Miller v. Jackson)
o Award damages in lieu of the injunction (Shelfer, Clark v. McKenzie, Jaggard)
Goodson v. Richardson
 D buries pipes under a public roadway where the subsurface rights are owned by P. P is not suffering as a
result (P however owns his own water company and doesn’t like the fact that D is setting one up).
 Trespass is considered an inherent harm. Court grants the injunction on the basis that the irreparable harm
is the fact that it is a deliberate/intentional trespass. P’s legal right to control what happens on his land
could have a monetary value (“veto value”) because that right could be bargained for.
 Adopted in Canada in Gross v. Right
Gross v. Wright
 Shared wall case. P wants a mandatory injunction to have the wall torn down (which basically means
tearing down D’s house). The SCC grants the injunction. Here the departure from the K was intentional and
deliberate (D got slightly bigger rooms and saved some $) Of course, the house won’t be torn down (the
injunction will be bargained away) But now, the bargaining dynamics have changed. P could technically ask
for the cost of rebuilding the house less a dollar.
Clark v. McKenzie (BCCA 1930)
 Two neighboring properties, D’s house is three inches over the property line. Total value of the land is
$1500, P asks for $1000 to sell 3 inches of land. D refuses, says he will give $50. Surveyor says $15. Can’t
strike a deal, P asks for a mandatory injunction to have D tear down his house. Court awards $50. Under the
principles in Shelfer, this is a trivial interference that can be compensated in money. Note: here the court
has forced a sale (which makes this a pretty radical case)
 Cassels: this is the only case he’s found that has been like this…probably because the trespass was so trivial.
Barons v. Richards
 For generations locals had been using paths on D’s property to get to their boats. Owner finally sued for an
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injunction to prevent the trespasses. Court denied the injunction. Didn’t say that there was an easement or
a prescriptive right, simply didn’t grant it because court didn’t think it was reasonable.
Jarnouin v. Parvais
 Two neighbors feuding because D’s livestock are walking on P’s land. P sues for damages and an injunction,
court awards damages but refuses the injunction on the same basis as Barons. This is a farming community
and cattle stray. Most farmers able to resolve case with a simple phone call. Court is not without sympathy
to P, and awards $1500 for the trespass, which had happened 15 times. So, $100 per cow for P’s
inconvenience, which provides P with an incentive to fix his fence.
Lewvest v. Scotia Towers **Questionable precedent – see Earle, Vaz**
 D is building using a crane, and the crane swings over P’s vacant lot. No apparent harm to P, no safety issue,
no diminution of value or physical interference with the land, however the court still grants the injunction
even though it will increase costs by about a half million dollars. Ratio: Courts will protect the sancrosanct
nature of property rights.
 If the court had found otherwise, Ds would have less incentive to negotiate with Ps, and wouldn’t pay
anything above what D thought the court would order if D went ahead with the trespass anyway. Better to
have a clear black-letter rule because it’s easier for the courts. On the other hand, in crowded urban
environments, is a little give-and-take perhaps more reasonable and better? If you can’t interfere with your
neighbor’s property in ANY way…that might be unduly burdensome. Most provinces have passed
legislation that states that if private parties can’t reach a deal they can apply to a court for assistance.
 Woolerton: most dramatic case of suspended injunction. English case, identical to Lewvest, overswinging
crane. CA adopts the traditional approach, grants injunction, and then suspends the injunction for 1 year to
give parties time to strike bargain. BUT only 1 year until project finished. Great way to not “change” the
law, while still changing its effect completely.
Earle v. Martin
 Overhanging eave. Overhanging eave considered a fairly substantial breach and here it isn’t
innocent/accidental. This is an intentional violation of P’s property rights that diminishes P’s ability to use
and dispose of their property. The court thus grants the mandatory injunction. Also, here the injunction is
not oppressive to D – it’s only $1000 to remove the eave. However, the court suspends the injunction
for 8 months. Reason: court hopes that the parties will come to their senses and will strike a bargain.
Vaz v. Jong (ONSC)
 There is an overhanging porch which is trespassing on P’s airspace by about a foot. Court considers
Lewvest, says that it wouldn’t follow Lewvest because there is no normal market operating here.
 These are circumstances where granting an injunction “would leave one party at the mercy of another.”
 Normally in a market both a buyer and a seller have less pressure because they have other options, but in
these construction cases, markets don’t work because land is land and there are no other alternatives. If D
didn’t know about the trespass and made a significant investment, then the P will extort every penny they
can get from D. In those situations, court says they will not take the Lewvest absolutist approach – i.e.
courts do have power/discretion to refuse an injunction where the issue is trespass. But although in
principle the court has the authority to do something different, they do grant the injunction here because
it’s not oppressive to D to fix the overhang.
Jaggard v. Sawyer (1995 CA)
 Access lane built through the garden in breach of RC. P (neighbor) sues for an injunction for trespass.
 Court doesn’t grant the injunction, states that Shelfer is the appropriate solution and damages are
appropriate in lieu of the injunction. Ps argued that damages weren’t adequate because not capable of
being measure in money, there has been no financial loss. Like Wrotham Park, the damages are the lost
opportunity to have sat down and negotiated for the relaxation of the restriction on the use of the garden.
Court said this would have been about $1000 per neighbor. If the injunction would have been granted, P
could have demanded the value of two houses less $1 from D.
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Property Law Act
Right to enter and repair
34 (1) The owner of a dwelling house on one parcel of land may apply to the Supreme Court for an order
permitting the owner to enter adjoining land to carry out repair or work if (a) the dwelling house is so close to the
boundary of the other parcel that the owner of the dwelling house cannot repair or work on the part of the
dwelling house that adjoins the boundary without entering the adjoining land, and (b) the consent of the owner of
the adjoining land to the entry is refused or cannot reasonably be obtained.
(2) An order under subsection (1) must state the following: (a) the period of time and purpose for the permission;
(b) that the owner of the dwelling house must compensate the adjoining owner for damage caused by the owner of
the dwelling house or the owner's servants, agents and contractors, in an amount to be determined by the court if
the owners cannot agree; (c) other terms the court considers reasonable.
Encroachment on adjoining land
36 (1) For the purposes of this section, "owner" includes a person with an interest in, or right to possession of
land. (2) If, on the survey of land, it is found that a building on it encroaches on adjoining land, or a fence has been
improperly located so as to enclose adjoining land, the Supreme Court may on application (a) declare that the
owner of the land has for the period the court determines and on making the compensation to the owner of the
adjoining land that the court determines, an easement on the land encroached on or enclosed, (b) vest title to the
land encroached on or enclosed in the owner of the land encroaching or enclosing, on making the compensation
that the court determines, or (c) order the owner to remove the encroachment or the fence so that it no longer
encroaches on or encloses any part of the adjoining land.
Municipal Act
Repairs or alterations
132. (1) A local municipality may authorize the owner or occupant of land to enter adjoining land, at any
reasonable time, for the purpose of making repairs or alterations to any building, fence or other structures on the
land of the owner or occupant but only to the extent necessary to carry out the repairs or alterations.
(2) The following apply to a power of entry under a by-law under this section: 1. The power of entry may be
exercised by an employee or agent of the owner or occupant of land. 2. A person exercising the power of entry
must display or, on request, produce proper identification. 3. Nothing in a by-law under this section authorizes
entry into a building. 4. The owner or occupant shall provide reasonable notice of the proposed entry to the
occupier of the adjoining land. 5. The owner or occupant of land shall, in so far as is practicable, restore the
adjoining land to its original condition and shall provide compensation for any damages caused by the entry or by
anything done on the adjoining land.
Conveyancing and Law of Property Act
Lien on lands for improvements under mistake of title
37. (1) Where a person makes lasting improvements on land under the belief that it is the person’s own, the
person or the person’s assigns are entitled to a lien upon it to the extent of the amount by which its value is
enhanced by the improvements, or are entitled or may be required to retain the land if the Superior Court of Justice
is of opinion or requires that this should be done, according as may under all circumstances of the case be most
just, making compensation for the land, if retained, as the court directs.
Nuisance
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Nuisance actions protect P’s right to use and enjoy P’s land subject to reasonable limits. Balancing occurs at
two stages: at the liability stage, the actionable nuisance depends on the degree of interference (Miller).
The court will consider the duration, frequency, and degree of impact. (Palmer) At the remedy selection
stage, there is no automatic right to injunction (Shelfer). Damages may be awarded in lieu where injury is
minimal, damage can be assessed in monetary terms, and damages will be an adequate compensation and
injunction is oppressive to D (Miller). In contrast to trespass cases, in nuisance cases the presumption in
favour of an injunction is not as great.
The predominant Canadian view for choosing a remedy in nuisance actions involves a cost-benefit analysis.
This approach acknowledges the legitimacy of balancing competing interests, and holds that an injunction
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should be denied when it will detrimentally affect 3Ps (Boomer, Bottom). Relevant interests for the
purpose of balancing and consideration of 3Ps include preserving employment (Bottom, Boomer) and the
public or community interest (Palmer, Miller). Whether or not the D or P is first in time is not relevant in
terms of legal liability. This recognizes that neighbourhoods change and we don’t want to freeze land use.
An injunction may be suspended to give the D an opportunity to abate (Miller, Sammut). It may be
inappropriate where D cannot, or will not, abate during specified time (Boomer). An injunction can also be
partial/qualified: the Court can specify tolerable levels of permissible activities and timing (Cattell).
The court may leave the parties with uncertainty as to whether or not an injunction will be granted,
directing parties to figure out their own terms (Huron Steel).
Damages in Lieu of Injunction: this equitable remedy will be appropriate when the injunction is
oppressive to D and others and damages can be appropriately awarded for past and future nuisance
(Miller, Boomer)
Compensated Injunction: very rare remedy where granting of injunction is conditional on P bearing D’s
cost of compliance (Spur). This can be appropriate where it is necessary to prevent unjust enrichment.
Difference between trespass and nuisance is that trespass is the intentional physical interference with P’s
property that challenges P’s ownership of that property whereas nuisance is typically an indirect and
unintentional interference with P’s property that is not a challenge to P’s possession of their property but
rather of their enjoyment of that property. In Canada, if something is found to be a nuisance, there is a
prima facie right to an injunction, but it’s easier for a D to resist this in a nuisance case as opposed to a
trespass case. This is because the court doesn’t feel like they are expropriating property the way they are
when they refuse an injunction in trespass cases. In nuisance cases, the problem is bilateral - someone is
going to be told that their property is worth less than they had hoped.
Miller v. Jackson
 Cricket balls falling into P’s backyard.
 Denning: This is an interference with enjoyment of property but not the kind of interference that is serious
enough to amount to a nuisance. Denning also tries to overrule the longstanding proposition that the “we
were here first” idea means nothing.
 Lane: This is a nuisance, it’s a fairly serious interference with the use of the property, serious risk of
serious injury, first in time rule doesn’t protect the cricket field, and this isn’t trivial. Grants injunction.
 Bruce: Goes down the middle. It is a nuisance (it’s serious, risk of injury) but denies the injunction.
Damages should be sufficient – character of the neighborhood is such that cricket has always been played,
green space is important for the public interest, courts will not interfere by granting an injunction
where the injunction will seriously affect the rights of 3Ps not before the court.
Boomer v. Atlantic Cement Co. Ltd.
 Residential landowners seek injunction to shut down a cement plant that employs 400 locals. Court stated
that it was a nuisance, but denied the injunction and awarded permanent damages instead. There would
be a significant impact on third parties.
Bottom v. Ontario Tobacco (1935 ONCA)
 P sued to shut down a tobacco curing operation. Their affidavit alleged fairly significant forms of harm. This
was the largest industry in town providing a lot of employment income and tax revenue for the area.
 CA looked at Shelfer – whether damages should be substituted for an injunction. Here there is a huge
disparity between the benefit to P and the harm to D by way of injunction. Would cause unemployment for
200 people and disaster to the community. There would be a significant impact on the local
community. Injunction denied.
Huron Steel (1992 ONCA)
 P built and leased residential apartment buildings near a steel factory. P wants an injunction because the
noise makes living in the building much less enjoyable – causing loss in terms of higher vacancy rate and
lower rent. Steel Co. had done a lot to try and minimize the noise.
 Court refused the general injunction (would shut the factory down) but they did say that it was a nuisance
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and that the damages were not trivial, and that neighborhoods change. Awarded a significant damages
award for lost rental income, creating an incentive for D to reduce noise, and also signaled that it might
grant an injunction and sent the parties away to negotiate. The parties came back with a negotiated
agreement that would diminish the noise but wouldn’t shut the factory down.
The court had left the parties with uncertainty so that both parties would be at risk – incentive for
them to behave like reasonable people. Interesting approach to achieve a balance between a significant
economic player and private enjoyment of land.
Palmer v. Burnaby (BCSC 2006)
 City hosts concerts in public park near P’s home. Court takes an approach similar to Denning in Miller v.
Jackson: use of a public park for concerts is not a nuisance. It’s annoying and interferes with enjoyment but
doesn’t surpass the threshold in the modern world. Looks to frequency, duration, and degree of impact.
Doesn’t surpass degree of seriousness that results in a nuisance.
Cattell v. Great Plans (2008 SASK CA)
 A lot of golf balls coming into P’s backyard. CA grants the injunction on the terms that the owner of the golf
course cannot let people hit more balls onto P’s land than the surrounding neighbors would experience. (?)
Awards damages for the balls so far, at $2000/year, and this creates an incentive for the golf course to fix
the problem.
Spur v. Del Webb (1972 Arizona)
 D runs a massive feed lot out in the desert. P buys some property and creates retirement properties and
sues D for nuisance. Court granted P the injunction but ordered P to pay D’s relocation costs. “Compensated
injunction.” P would get a windfall otherwise – bought the land for cheap, and if he shuts down D, then the
value of the land goes way up.
 This will only work very rarely – where all of the beneficiaries are in court at the same time.
Public Rights

There is a huge reluctance on the part of courts to use injunctions to enforce public rights. This has
amounted almost to a prohibition against using injunctions to enforce criminal statutes. This is because of
the difference in standard. To get an injunction, it’s BoP, to enforce criminal law, it’s BRD. Also, you’re
doubling up the penalty – an act can be penalized in both criminal sphere and civil sphere. Essentially it’s
using civil procedure to get around criminal statutes. Over time, there has been a development of a
hesitating willingness to use the injunction to “supplement” criminal law. Where there is serious flouting of
the law by a repeat offender (AG Alberta v. Plantation Indoor Plants) and there is a public interest in
trying to prevent the activity, the court will grant the injunction. It is still problematic because a) it changes
the penalty for the offense b) the injunctions can issue before the activity happens. The court must consider
whether the court has jurisdiction and whether P has standing. Now, courts will probably grant the
injunctions when public health and safety is at issue (prostitution cases are on the border…)
AGAB v. Plantation Indoor Plants
 Corp flouting Sunday closing laws, happily paying the fine. AG successfully got the injunction.
 Corp appealed one of its criminal charges to SCC, which tore down the Sunday closing law on grounds that
it was unconstitutional.
 Thus the original injunction was granted for flouting an unconstitutional law. If the corp had flouted the law
after getting the injunction, that would have been a separate offense (contempt of court)
AGBC v Couillard
 Hysteria in Vancouver’s west end because of prostitution.
 Background: SCC had made it very difficult to get a criminal conviction for soliciting prostitution – soliciting
only illegal if it exceeds a certain level of annoyance (Hutt) It was virtually impossible to get a criminal
conviction for this.
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Ps brought a civil action to stop the solicitation. BCSC granted the injunction and BCCA affirmed.
AGNS v Beaver
 Same issue in Halifax, AG brought the same action there. Court showed a more traditional/cautious
approach to these matters. Said that the criminal law already provides list of offenses/penalties, not just
wrt prostitution, but also wrt 10 other CC offenses that can be used to control the level of noise/annoyance
in urban areas.
 We shouldn’t be granting the injunction if what we’re really doing is banning prostitution/amending the
CC. Injunction denied on the basis that the court “must consider whether it is really necessary in light of
other procedures available to achieve the same end”
INTERLOCUTORY INJUNCTIONS
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Interlocutory injunctions are particularly risky for D because D must stop doing something or do something
before a civil wrong has been established. They are designed to protect P from risks associated with delay.
The traditional approach was that courts did not grant interlocutory orders – they are draconian, interfere
with people’s rights before rights even established, violate basic concepts of due process. The view was that
there should be a trial before granting a remedy, particularly one which has contempt of court as a
potential consequence. This caused the courts to put in very strict requirements for getting one. An
interlocutory injunction was only granted where a) there would be a significant delay before the trial and P
would suffer irreparable harm in the meantime and b) P had a very strong prima facie case. This all began
to change in late 60s/early 70s as a result of legal change (delay and complexity) and technological change
(computers, internationalization of business and banking).
Interlocutory injunctions are awarded pre-trial and direct D to behave in ways that are consistent with P’s
interests. The purpose is usually prohibitive (preserve status quo) but can be mandatory (restore status
quo). They ensure that the subject matter of the dispute still exists at the time of trial.
Threshold: American Cyanamid - lowered from the prima facie case standard – focus on balance of risks
o 1) Serious Issue for Trial: low threshold - action must not be frivolous, vexatious, or impossible
o 2) Irreparable Harm: risk of irreparable to P or D if denied
o 3) Balance of Convenience: who risks the most harm
Irreparable Harm: Irreparable harm may be established when the harm feared cannot be quantified in
monetary terms. We are concerned with the nature and not the magnitude of the harm. We will first
consider irreparable harm to P and then to D (American Cyanamid; Yule). Irreparable harms include
damage to business reputation (Yule), lost chance to secure market position (American Cyanamide), a
permanent loss to natural resources (RJR), D wouldn’t be able to satisfy judgment. For D, consider whether
D will be adequately compensated by P’s undertaking in the event that D succeeds at trial.
Balance of Convenience: Assessing the balance of convenience requires balancing risks as between the
parties. Where both P&D risk irreparable harm, whoever risks the most hardship will succeed, with
reference to a desire to preserve the status quo (American Cyanamid; Yule) and interests of 3Ps. The court
will try to avoid compelling an ongoing relationship between the parties that requires co-operation, trust
and confidence.
The American Cyanamide test applies to general litigation and for Charter litigation (RJR) However, there
is a strong presumption that the gov represents the public interest in the balance of convenience
component (RJR) and that getting an interlocutory injunction wrt legislation would harm the public
interest. This does make it more difficult to get an interlocutory injunction in Charter cases.
Two exceptions to the American Cyanamide test (where prima facie case still required and the situation
is looked at on the merits):
o Where the injunction will in fact be the final determination of the matter (i.e. picketing)
o Pure questions of law (court can look at the merits b/c no contested facts)
Impecuniosity: D’s inability to satisfy a judgment may justify an injunction. Conversely, an injunction
might be denied if a P has insufficient assets to satisfy a damages undertaking. This raises concerns
impecunious individuals may not be able to have their rights adequately protected due to their lack of
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means. The court nevertheless has discretion to relieve applicants of undertaking, under the Supreme Court
Rules. They may do so in cases where the injunction is to protect public interests or where the applicant’s
case is very strong (Platinex).
American Cyanamid v. Ethicon
 IP dispute. D has not yet started marketing the sutures whereas P has.
 Application of the test: D had no business that would be brought to a stop as a result of the II, the II
wouldn’t involve layoffs or loss of factories. On the other hand, P has employees, is marketing the product,
and would be severely damaged if D were wrongfully allowed to enter the market. Also, if D is allowed to
enter the market, even if P is successful at trial, P would have lost the chance to increase market share up
until the time of trial (loss of market share is very hard to calculate) Much of the benefit of patents is that
they give you time to get established in the market and this benefit goes on long after the patent expires.
Also, if P doesn’t get the injunction now, it probably can’t get one later, even if P wins at trial, because
doctors will get used to the product (?) The II is granted in favor of P.
 Adopted in Canada in Atlantic Pizza and confirmed by SCC in RJR and Metropolitan Stores.
RJR-MacDonald Inc. v. Canada (AG)
 Applies American Cyanamide to Charter litigation
 Tobacco companies are challenging the constitutional validity of tobacco packaging legislation.
 Crown makes the argument that there is no irreparable harm to the tobacco corps b/c they will only lose
profits (easily quantified in damages). Corps respond that in Charter litigation, even if the corps win at trial
and law is struck down, that doesn’t mean that the gov will pay for the lost profits. Thus, in Charter cases,
Ps will have a stronger case for irreparable harm against the gov because it’s unlikely that Ps will be
able to collect any damages.
 However, the public interest is also an important factor. Ps here have no claim to be representing the public
interest. Gov is representing the public interest, which trumps the irreparable economic harm suffered by
the tobacco corps.
 Distinction b/w exemption vs. suspension: In Charter cases, P could be asking that only P be exempted
from the application of the legislation, or P might be asking that the legislation be completely suspended for
all purposes before trial. Where it’s just a single P getting an exemption, there is not as much harm to the
public interest. Where P is asking for the legislation to be suspended, the harm to the public interest is
greater because the law is put on hold for all purposes. Here, 2 of 3 tobacco corps are part of the litigation,
and 3rd will certainly join if the II is granted, so for all practical purposes this is a suspension case, not an
exemption case. For that reason, the public interest outweighs the private interest of the Ps.
 Note: Court accepts that gov is not the exclusive representative of the public interest. So, can’t say that gov
always represents public interest and opposing party always represents only their private interest. But, the
court creates a presumption that the gov represents the public interest. A private party can claim they
represent the public interest but they have to prove it.
Yule Inc. v. Atlantic Pizza Delight Franchise Ltd
 Adopts American Cyanamide in Canada.
 D seeking to sever relationship so that it no longer has to sell P’s pizza. II awarded to P to prevent D from
terminating the K. P has 26 employees who are involved in administering this portion of the K and would
have to be fired if II not granted. D in terminating P’s right would be damaging P’s reputation and the
goodwill of P’s company (both difficult to calculate).
 “To determine, on the basis of the material usually appearing before the court on an interim injunction
application whether a strong prima facie case has been demonstrated is an exceedingly difficult, if not
impossible task…In reality it is impossible for a judge as much as a jury to make a factual assessment without
hearing and seeing the witnesses.”
Jurisdiction Over Interlocutory Orders & Civil Procedure
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Jurisdiction
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o S.2 of the Law and Equity Act grants the court jurisdiction over CL and equity.
o S.4 states that CL courts have the right to grant equitable remedies
o S.39 specifically grants the right to grant injunctions wherever it is just and convenient to do so
o S.39(3) courts can grant injunctions both at the end of trial and in an interlocutory way
Civil procedure: Getting a Pre-Trial Injunction:
o BCSC Rule 8: Applications. Draft the order that you want, include all the relevant affidavits. Mini
trial solely on basis of affidavit evidence.
o BCSC Rule 8 – 5(6): An order can be without notice
o BCSC Rule 10-4(2): you can apply for an injunction even before the action has been started. Must
demonstrate significant urgency, or that for a strategic reason you don’t want D to know that you
are about to sue them because of the risk of evidence tampering. You would want an ex parte (no
notice) application if you’re motivated by a strategic reason. You may not want an ex parte
application if your motivation is significant urgency.
Professional responsibility obligations on lawyers in ex parte applications are VERY high. When
drafting the affidavits, if the lawyer is aware that any of the evidence is untrue or inaccurate, they must
indicate so. Otherwise they could be subject to contempt of court or professional discipline. The rationale
for the increased obligations is that the adversarial system is not working when the application is sought,
because D is not there. Thus the lawyer must be both an advocate for their client and an officer of the court
by making sure the court has all the relevant info.
Special Situations: Medical
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Can compel health care providers to provide, extend, or withhold medical treatment (Jin). The American
Cyanamide/RJR test can be used (but for a different approach, see Sweiss) Factors supporting an
injunction are: (1) serious question to be tried, (2) irreparable harm, (3) balance of convenience (C.S. –
deemed hopeless; Jin – some hope). Rasouli is currently before the SCC and will hopefully provide some
much-needed guidance in this area.
Jin v. Calgary Regional Hospital
 66 year old healthy man falls and suffers a catastrophic brain injury, docs believe there is no chance of
recovery. Docs feel that they are prolonging death, and that heroic measures are not medically necessary or
appropriate, so they want to place a Do Not Resuscitate order on the chart. Family doesn’t want this order.
 Court uses American Cyanamide/RJR test: There is clearly a serious issue to be tried, damages are
inadequate obviously, b/c life and death at issue. Balance of convenience: an injunction for a short period
will likely not cause as much harm to the system (or to the doctors…) than the failure to grant the II would
do to the family. On the other hand, the II will force the doctors to do something that they do not believe is
in the patient’s interests. The court concludes that since it’s just a short injunction they are comfortable
granting it to P.
C. (S.) v. Capital Health Authority
 Mother in very late stage cancer; family wants extraordinary measures to continue to prolong her life;
doctors view this as cruel in the circumstances. II not granted (thus the DNR order can be put on her chart),
but the court does order the doctors to maintain the ventilator. Judge distinguishes Gin on the basis that in
Gin, care was still in its early stage, the health care authority that wanted to discontinue treatment had just
recently started giving the treatment.
Sweiss v. Alberta (2010 ABQB)
 Serious brain injury; 0% chance of recovery; doctors thought that keeping the patient on the ventilator
would cause further unnecessary suffering. Court says that the American Cyanamide/RJR test is not
appropriate because it is a commercial test developed in commercial circumstances. Court creates a new
test for IIs involving medical treatment which it calls the “best interests of the patient” test.
 The danger with this test is that it sets the courts up as the arbitrator in these decisions – i.e. the courts will
decide what is in the best interests of the patient. Institutional competence?
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Special Situations: Restraint of Trades
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The granting of an interlocutory injunction to enforce an RC depends on reasonableness (geographic
coverage, length of time, and the scope of the restriction)
Employment: restrictive covenant depends on whether there is a specific term or employment status
(fiduciary duty/high level employees with access to confidential information). A higher threshold of strong
prima facie case is test where injunction has serious implications for D, in that impacts ability to engage in
chosen vocation and earn livelihood. A covenant must be reasonable and consistent with public policy.
Reasonableness will be assessed with reference to the nature and duration (Cantol; Towers). For fiduciary
employees, an injunction may be granted even w/o direct evidence of competition (Taylor). The test is
trust, and vulnerability resulting from that trust. (Taylor) The clause must be unambiguous and the court
will not re-draft the K for the parties to get rid of the ambiguity (Shafron) The court is generally more
willing to enforce covenants in business than in employment Ks, since employees are considered more
vulnerable (Shafron). Furthermore, in sale of business Ks, not only is there is lower chance of
unconscionability but D is actually being paid for the fact that he will not compete. A significant portion of
the sale price is goodwill (brand value, reputation, and relationships). (Shafron)
The tension is between freedom of K and the public policy in favor of competition (Shafron)
To get an II in a case of RC typically requires a strong prima facie case. (Cantol) Courts are not unanimous,
but it is thought to be an exemption to the American Cyanamide/RJR test.
Shafron v. KRG Insurance Brokers (Western) Inc.
 D was subject to a restrictive covenant that prevented him from competing within the "Metropolitan City of
Vancouver" for a period of three years following the termination of his employment. P sued to enforce.
 Restrictive covenants are a restraint of trade that courts have always been very cautious to apply. In order
for an employer to be permitted to hold a former employee to a restrictive covenant, the clause must be
reasonable and unambiguous. In particular, the clause must be reasonable in respect to three primary
factors: The clause must have a reasonable geographical scope. The clause must have a reasonable time
limit. The clause must be reasonable in the activities it seeks to restrict.
 The primary issue in the KRG case was the ambiguity attached to the term the "Metropolitan City of
Vancouver." An ambiguous clause cannot be a reasonable clause, and will not be enforceable. The BCCA
applied a legal doctrine known as "notional severance" in order to give meaning to an ambiguous phrase.
The Supreme Court of Canada recognized that the Court of Appeal was following a practice of "fixing" an
otherwise defective contractual provision to make it legal and enforceable, and determined that this
practice was not appropriate in the employment context.
Cantol v. Brodi Chemicals Ltd.
 For employment Ks, courts are employing a higher threshold before granting the II largely because of
unconscionability, the fact that the restraint of trade runs counter to the public policy of competition, the
strong impact on the former employee, the fact that the II often involves a pure question of law (contract
interpretation, all facts admitted) If pure question of law, court can decide the issue right there, the fact that
the II will be often be determinative of the matter because RCs usually only last for a short period of time
(i.e. under 2 years). Thus, the II decision will likely be the end.
 Application: Although D was probably violating the RC, the balance of convenience favors nonenforcement because the K is oppressive and unfair to D, there is no irreparable harm to P (the amount of
reduction of sales are not so great that D couldn’t satisfy an award of damages, and capable of reasonably
precise computation) On the other hand, it would put P out of a job.
Towers et al. v. Cantin
 D works for one company for many years, rises to a senior level, has direct relationships with clients, and
has knowledge of the business processes of the company. Lured away by a competitor in the same region
who is basically trying to buy D’s business relationships and knowledge.
 Court grants the II. There is a very strong prima facie case, there is serious irreparable harm to P (loss of
market share and loss of business reputation) The harm to D is not very serious because the RC is narrowly
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drawn and the new employer will still keep her on even if she can’t solicit former clients.
Thus, no danger here of D being unable to work by virtue of enforcement of the RC as it was in Cantol.
Cygnal Technologies Corp. v. Taylor
 In some circumstances, a court will imply a restriction on the activities of a former employee, where the
court sees a fiduciary relationship. Thus, the court will require one of the parties to behave with utmost
good faith. This is where the employee is a senior employee, and in order for the company to function
properly, it needs to trust the employee with confidential information.
 P couldn’t rely on the employment K because the K had not been renewed. Court said it didn’t matter
because there was a fiduciary relationship here. D had sold P the company for $17 million, and was
employed in the new business and was on the Board of Directors. Then D started a competing company,
having taken the confidential info home with him. Court granted the injunction, saying that D could not
compete with that information
 TEST: Trust, and vulnerability resulting from that trust
 This a fair result - the covenant is part of the reason why the business had the sale price that it did.
Special Situation: Mandatory Interlocutory Injunctions
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Mandatory injunctions likely more drastic than a prohibitory injunction. Timing matters. If P waits until D
has already completed, the court will be more reluctant to order the mandatory injunction where it would
involve hardship and economic waste. If P should have applied earlier for a prohibitive injunction, that will
be a factor in D’s favor.
It can be difficult to distinguish between a mandatory or a prohibitive injunction. Often the injunction can
be framed either way. Thus, it is appropriate to take a nuanced approach. Consider the burden that will be
placed on D if the injunction is granted. If it will put D in a situation where D will have to continue taking
positive actions and continuing a relationship that D does not want to maintain, the threshold will be
higher, recognizing that the continuance of the hostile relationships is more burdensome to D. A further
reason for the higher threshold to obtain the injunction is that these situations will likely put the court into
a position where they will have to intervene over and over again to supervise the relationship. Thus, the
court recognizes their institutional limitations.
National Commercial Bank Jamaica Ltd. v. Olint Corp. Ltd. (Jamaica)
 Bank wants to terminate its relationship with P because P appears to be running a Ponzi scheme. P applies
for an injunction to prevent the bank from ceasing to provide services. This injunction can be viewed as
prohibitive (prohibit the Bank from taking steps to close the accounts) or mandatory (ordering the bank
into a continued relationship with a client and to provide services to that client)
 Held: Injunction denied. The level of hardship on the bank (must continue against its will to provide
confidential services, putting its reputation at risk, not clear that P would be able to meet the banks losses
via an undertaking, and Ps case was very weak) is not outweighed by the needs of P for the injunction.
Bark & Fitz Inc. v. 2139138 Ontario Inc.
 P is a franchisor of pet food stores and store owners want to go independent. P wants an injunction to
prevent them from breaching the K. Can be viewed as prohibitive (don’t breach the K) or mandatory
(requires Ds to perform the K)
 P has a very strong prima facie case that D’s refusal to take the product is a breach of K.
 Held: Court grants the injunction, but the terms try to minimize the level of supervision required and the
oppression to Ds. Ds ordered to keep paying the money owed under the K (advertising and royalty fees)
and P ordered to stop engaging in unfair mark-ups.
 The court is not confident in P’s ability to post and undertaking, so 20% of what Ds owe P under the K will
be paid directly into court to be part of the undertaking
Special Situation: Free Speech
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Where free speech is at issue and threatened by a requested injunction (usually to prevent defamation), the
courts favours the right to freedom of expression, and use a higher threshold test.
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An injunction will only be granted in the CLEAREST of cases. Court must be satisfied that the words are
beyond doubt defamatory, clearly untrue, and are not fair comment on true or admitted facts. If not,
P is limited to a remedy of damages at trial. (Canada Metal) There is an obligation to comply with the spirit
of the order (Canada Metal #2)
Canada Metal Co. v. Canadian Broadcasting Corp.
 CM is a lead refining company allegedly contaminating the local neighborhood with lead. CBC made a
documentary about it, CM sought an injunction to prevent the show from airing. Allegation that CM bought
misleading expertise. CM gets an injunction at 6pm, gives it to CBC 45 min before show is about to air. CBC
went ahead with the documentary but did a series of last-minute edits.
 Both appeal courts stated that the injunction should not have been granted – can’t apply the AC approach
where someone is seeking a prior restraint on freedom of expression. An injunction in defamation
cases will only be granted in the CLEAREST of cases. Court must be satisfied that the words are beyond
doubt defamatory, clearly untrue, and are not fair comment on true or admitted facts. Otherwise P
must be left to a remedy in damages because not appropriate to restrain the speech.
Canada Metal Co. Ltd. v. Canadian Broadcasting Corp. (No. 2)
 The injunction didn’t say ‘don’t broadcast the documentary’, it said not to broadcast anything that would
suggest that CM bought experts. CBC took a highly suggestive approach in the documentary that would lead
to the conclusion that CM had bought experts. ONCA found that CBC showed contempt of court. It’s
irrelevant that the injunction should not have been granted, which might only serve to mitigate the
sentence.
 There is an obligation to comply with the spirit of the court order. CBC officials fined $500 each.
Special Situation: Aboriginal Land Claims
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American Cyanamide applies.
Aboriginal groups may get injunctions to prevent access to land subject to Aboriginal rights and title claim,
or treaty negotiation. This may be justified as fulfilling the Crown’s duty to consult and accommodate.
Conversely, other groups may get injunctions to restrain Aboriginal people and others from interfering
with land. The operative concerns for Aboriginal people here are protection for the land, resources, culture
and tradition, which are not easily quantifiable or adequately remedied by monetary damages. Concerns
for commercial license holders include constraints on legitimate commercial activities, and the associated
economic and social consequences (MacMillan Bloedel). For the Crown, the concerns are de facto
recognition of Aboriginal title or the claim, creating a precedent for other Aboriginal groups, or potential
consequences for the economy or public interests in polycentric disputes. The concerns about floodgates
have been addressed by the assertion of a case-by-case, merit-based approach in order to balance interests.
Irreparable harm is established where the court recognizes that the possibility of monetary compensation
does not negate damage to the interest at stake (Musqueam).
With respect to balance of convenience, the public interest may tip the balance and determine the outcome
of the injunction, generally in favour of allowing the activity to proceed. However, the duty to consult and
accommodate can also be framed as serving the public interest (Platinex).
Aboriginal groups may also lack the necessary resources for a damages undertaking, which could be fatal to
the claim. The court has discretion to dispense with the undertaking requirement in consideration of
fairness (Platinex).
Treaty lands cases are straightforward: you cannot proceed (with some exceptions) with an industrial use
without the consent of the FN. Where the land is subject to a bona fide claim, there is a duty to consult and
accommodate the FN. It doesn’t mean that the FN has a veto. The company must make good faith efforts to
consult and build the concerns into the plan. If the FN refuses to talk to you, you can go ahead.
Macmillan Bloedel (BCCA 1985)
 Logging company wanted to clear-cut an island that was subject to an Aboriginal land claim.
 American Cyanamide test: definitely a serious issue to be tried, irreparable harm to both parties (harm to
company = financial, due to delay, no immediate damage to 3Ps, harm to FN = not purely economic,
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cultural, “culturally modified trees” in the forest were going to be very important in the FN land claim as
evidence) On the balance of convenience, the potential harm to the FN was greater. Injunction granted
Platinex v. Kitchenuhmaykoosib Inninuwug First Nation
 No efforts by the corp to engage in consultation with the FN.
 There is a serious issue to be tried.
 Corp will suffer irreparable harm if injunction granted and will probably go bankrupt. In some cases, that
might weigh heavily, but here, court states that corp brought it on itself.
 The injunction is not intended to be a veto the way it is with trespass. Don’t want to turn a right to be
consulted into a right to enter into a bargain.
 Injunction requires that the FN shall immediately set up a consultation committee to meet with the corp
with the objective to reaching an agreement. Thus the injunction is tailored to fit the right that is being
protected.
Musqueam v. Canada (FCA 2008)
 Sale of fed buildings in downtown Van on Musqueam traditional territory. FN seeks injunction to prevent
the sale of the buildings, stating that they had not been consulted or accommodated and thus the sale
should not go through.
 Injunction denied. The objective of the FN is not actually to make a land claim over downtown Van. The
concern of the FN is about their own land base, but that’s not in downtown Van, and thus a land swap could
be good. Thus the harm is not irreparable to the FN, but it is irreparable to the Feds because they can’t deal
with their property. The FN wouldn’t be able to provide undertaking to cover the loss of the transaction to
the Feds. The FN can go to trial, and if the sale of the property turns out to have been wrong, they can be
adequately compensated either through a land swap or through damages.
Undertakings
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Damages Undertaking: A damages undertaking is when a P undertakes – or makes a commitment to the
court - to compensate D for losses (either in the execution of the injunction or if it is established at trial that
the injunction was not justified). Interlocutory injunctions typically involve an undertaking as to damages.
The amount should be proportionate to damages D risks should the injunction be wrongly granted. The
court has discretion to waive the undertaking. (Vieweger)
Vieweger Construction v. Rush
 P’s obligation to pay the undertaking to D if P loses at trial doesn’t turn on D having a cause of action, or on
P having done anything wrong. Here P tried to argue that it wasn’t P’s fault that they wrongfully got the II –
it was the court’s fault in granting it. SCC says no, the court is not saying that you are likely going to win at
trial by granting you the II. You have to pay the undertaking regardless of anything else.
Mareva Injunctions
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Mareva injunctions are pre-trial injunctions that restrain D and 3Ps from removing or dissipating D’s
assets, pending trial or judgment. They address a risk faced by P caused by delay in receiving the final
determination of the dispute. Their basic rationale is to protect the integrity of the civil justice system by
preventing empty judgments, that were a risk under the prior Lister rule that P could not restrain D’s
assets prior to trial subject to very limited exceptions (Mareva). The requirements for a Mareva injunction
were set out by the SCC in Aetna:
o Strong prima facie case. However, BC courts have been somewhat liberal, granting Mareva
injunctions based on a good arguable case (NuCare)
o Real and substantial risk of asset dissipation to frustrate execution of judgment
Balance of convenience: Even if the above are satisfied, the court can deny the injunction on the grounds
that it would be too oppressive to D or would have too great an impact on 3Ps. This often occurs where D
has continuing business obligations, or where you’re seeking the injunction to freeze the sale of a chattel
o Rasu: Ship owner wanted a Mariva injunction over certain equipment. The value of the equipment
is relatively small from a resale perspective but is great to D who wouldn’t be able to run his
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business without it. Thus the injunction was denied.
This is a nuclear warhead of civil procedure – the potential oppression to D is great. The courts must be
cautious in granting Mareva injunctions so that “litigious blackmail” is avoided (Mareva). The harshness of
the Mareva injunction, issued usually ex parte, is relieved against or justified in part by the Rules of Practice
which allow D an opportunity to move against the injunction immediately (Aetna)
With respect to the real and substantial risk, the mere transfer of assets between provinces in the normal
course of business is insufficient. P has to show something more – that D is moving their assets for an
improper purpose (Aetna) P must provide evidence about a “smell” about the transaction, using affidavits.
And the affidavit has to state the grounds for the belief – i.e. certain behaviors, past practices, etc. **BC
courts may take a more relaxed approach here!** (Gateway Village)
In the Canadian federal system, where a judgment in one province can be enforced in the others through
inter-provincial agreement, a Mareva injunction would generally be considered inappropriate (Aetna) But
note the different approach of the BC courts, recognizing that it is not realistic for P to chase D to another
province unless it is for a great deal of money, because of the costs involved. (Gateway Village)
The purpose of the asset transfer must be to avoid judgment, meaning there must generally be some
fraudulent intent, though in BC this is not necessarily so when other pragmatic factors, such as the amount
of money involved and the likelihood of interprovincial enforcement, weigh in favour of granting the order.
(Gateway Village) The BC courts have taken a liberal approach, awarding Mareva where there is no
deliberate attempt to frustrate execution of judgment, noting concern that the emphasis on the purpose of
the transfer could be detrimental to P. (Silver Standard and Mooney, discussed in Nucare)
P’s obligations are to make (1) full and frank disclosure of facts actually known to P, and those that could
have reasonably known, including weaknesses in his case, (2) give particulars and grounds for application;
an undertaking in damages, (4) P may only very rarely be relieved of damages undertaking.
A MI is an order in personam. D is restrained from disposing of his assets in the sense that if he does
dispose of his assets, he is in contempt of court. The court cannot freeze all of D’s assets: only available to
the extent necessary to protect P’s interests. D’s interests will be protected by ensuring that allowance is
made for reasonable living expenses, including business expenses. Further, joint accounts are normally, but
not always, protected. A MI may have negative repercussions for 3Ps, such as financial institutions, holding
D’s assets. As a result, there are safeguards in place. The P must indemnify 3Ps for the cost of compliance,
give precise notice of the assets covered by MI, pay for 3Ps to conduct searches for D’s assets, provide
names of 3Ps to be served, give damages undertaking to D and 3Ps. The asset to be held will not exceed the
value of P’s claim and a return date will be specified when the parties return to court. D will also be
provided the opportunity to show that he has sufficient assets to satisfy the judgment.
Traditionally, a court could not grant a Mareva injunction to restrain the disposition of assets in a foreign
jurisdiction (another province or country). However, the court in Mooney noted that the Mareva injunction
is an in personam injunction. Thus, the court is not asserting jurisdiction over the property, but rather the
behavior of D who is within the court’s jurisdiction. If the order says that D cannot dispose of D’s property
anywhere in the world, D can still dispose of his property, but he risks being found in contempt of court.
However, this order will only be made in the clearest of circumstances and where the assets within the
jurisdiction are insufficient to meet the judgment. Again, this is an example of the flexible BC approach.
The MI order does not give P any priority over other creditors. It only allows him to join the line (Aetna).
There were still exceptions to Lister, which are now more or less subsumed into Mareva: if the property
that you want an order over is the subject matter of the dispute and D is about to dispose of the property,
you could get an injunction for that. This is confirmed in the BCSC Rules 10-1. There was also an exception
for fraudulent conveyances
Mareva Compania v. International Bulkcarriers S.A.
 Dispute between ship owners and charter company. Charter company has money sitting in a London bank,
and owes money to the ship owners. Ship owners want to prevent the charterers from transferring the
money out of the country. Denning develops a specific type of interlocutory injunction to protect against
the risk of asset flight, which freezes D’s assets within the jurisdiction.
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Aetna Financial Services Ltd. v. Feigelman
 Interprovincial transfer of assets between Manitoba and Quebec
 While the superior provincial courts undoubtedly have the statutory power to issue a Mareva injunction,
the rules as developed in England do not properly reflect the federal concern in these circumstances.
Considerations of jurisdiction are more complex in the federal context than in a unitary state. In the
Canadian federal system, A was not a foreigner or even a non-resident in that it was capable of residing
throughout Canada and did so in Manitoba. A did not intend to default on its obligations. It did not seek to
defraud its Manitoba creditors or the legal processes of the Manitoba courts through a clandestine transfer
of its assets and it did not remove those assets from the national jurisdiction in which it maintained its
corporate existence. Finally, there are the procedures of pursuit open to the respondents in tracing these
assets through to their destination in Quebec or in recovering from the assets of the appellant in Ontario.
Anton Piller Orders
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AP injunctions are ex parte interlocutory injunctions that permit entry to inspect and or remove property
or evidence that is vital to P’s case, in some ways similar to a civil search warrant. It operates to prevent
irreparable harm to P either where P claims ownership of the material and wants to stop infringement or
remove items from the market (must clearly ID property in questions and substantiate the proprietary
claim) (Fila), or where P has an evidential interest and there is a real risk of destruction or concealment
of evidence such that the ordinary civil process is insufficient. The AP preserves the integrity of the civil
justice system, but threatens D’s rights and should thus only be used as a last resort. AP may compel
disclosure of sources of information, the location of materials, or the identity of accomplices.
Requirements (Celanese)
o 1. Strong prima facie case
o 2. Risk of irreparable harm
o 3. D is in possession of incriminating materials
o 4. Real risk or possibility of destruction
Obligations: P must make full and frank disclosure, including weaknesses in P’s case (Fila). The usual
damages undertaking applies (Celanese).
Charter not applicable, but even if it was and violated Charter, justified under s.1 due to purposes and the
significant safeguards that apply (Celanese). These include the form of the order, the execution of the
order, the post search procedure, and sanctions for improper execution, or removal of counsel if
presumption that solicitor-client privilege has been violated is not rebutted (Celanese).
AP orders may be rolling, sought against “fly by night operators”, and operating as a sort of injunction in
your pocket for use as of need (Fila). They present a high likelihood of abuse and will usually not exceed a
year. The court is reluctant to award them and very high safeguards are in place.
Safeguards: AP will be granted only in the clearest of cases; executed in presence of P’s lawyer, acting as an
officer of the court; D will have an opportunity to challenge P’s claim in court (Fila), P must file an
execution report, and must justify continuance of the order. See requirements in Celanese.
Anton Piller K.G. v. Manufacturing Processes Ltd.
 Developed what is essentially a private search warrant that allows P to go onto D’s premises, search for
evidence, and take the evidence away. The difference between an Anton Pillar order and an actual search
warrant is that a search warrant authorizes a PO to break down your door. With an AP order, P cannot use
any force. D can refuse entry to P, but then they are subject to contempt of court. P’s solicitor often has to
be there – as an officer of the court to make sure that P doesn’t go beyond the order, and the solicitor can
also be subject to contempt or professional sanctions.
Celanese Canada Inc. v. Murray Demolition Corp.
 Docs seized via an AP order are typically held in custody by P’s lawyer or by an independent lawyer. Here,
P’s lawyer got into the docs and violated S-C privilege. Remedy: remove P’s lawyers from the case.
 Basic Protection for the Rights of the Parties
o The order should appoint a supervising solicitor who is independent of the plaintiff or its solicitors
and is to be present at the search to ensure its integrity. The key role of the independent
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supervising solicitor was noted by the motions judge in this case "to ensure that the execution of
the Anton Piller order and everything that flowed from it, was undertaken as carefully as possible
and with due consideration for the rights and interests of all involved". He or she is "an officer of
the court charged with a very important responsibility regarding this extraordinary remedy".
o Absent unusual circumstances the plaintiff should be required to provide an undertaking
o The scope of the order should be no wider than necessary and no material shall be removed from
the site unless clearly covered by the terms of the order.
o A term setting out the procedure for dealing with solicitor-client privilege or other confidential
material should be included with a view to enabling defendants to advance claims of confidentiality
over documents before they come into the possession of the plaintiff or its counsel, or to deal with
disputes that arise…
o The order should contain a limited use clause (i.e., items seized may only be used for the purposes
of the pending litigation).
o The order should state explicitly that the defendant is entitled to return to court on short notice to
(a) discharge the order; or (b) vary the amount of security.
o The order should provide that the materials seized be returned to the defendants or their counsel
as soon as practicable.
The Conduct of the Search
o In general the order should provide that the search should be commenced during normal business
hours when counsel for the party about to be searched is more likely to be available for
consultation.
o The premises should not be searched or items removed except in the presence of the defendant or a
person who appears to be a responsible employee of the defendant.
o The persons who may conduct the search and seize evidence should be specified in the order or
should specifically be limited in number.
o On attending at the site of the authorised search, plaintiff's counsel (or the supervising solicitor),
acting as officers of the court should serve a copy of the statement of claim and the order and
supporting affidavits and explain to the defendant or responsible corporate officer or employee in
plain language the nature and effect of the order.
o The defendant or its representatives should be given a reasonable time to consult with counsel
prior to permitting entry to the premises.
o A detailed list of all evidence seized should be made and the supervising solicitor should provide
this list to the defendant for inspection and verification at the end of the search and before
materials are removed from the site.
o Where this is not practicable, documents seized should be placed in the custody of the independent
supervising solicitor, and defendant's counsel should be given a reasonable opportunity to review
them to advance solicitor-client privilege claims prior to release of the documents to the plaintiff.
o Where ownership of material is disputed, it should be provided for safekeeping to the supervising
solicitor or to the defendant's solicitors.
Procedure Following the Search
o The order should make it clear that the responsibilities of the supervising solicitor continue beyond
the search itself to deal with matters arising out of the search, subject of course to any party
wishing to take a matter back to the court for resolution.
o The supervising solicitor should be required to file a report with the court within a set time limit
describing the execution, who was present and what was seized.
o The court may wish to require the plaintiff to file and serve a motion for review of the execution of
the search returnable within a set time limit such as 14 days to ensure that the court automatically
reviews the supervising solicitor's report and the implementation of its order even if the defendant
does not request such a review.
Fila Canada Inc. v. Doe
 Order which is sought is what is known as a "rolling" Anton Piller order.
 When these orders are obtained from the Court neither the identity nor the address of the persons against
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whom they will be executed are known. On some occasions one or two persons may be identified as named
defendants but they will have no necessary connection to the Jane and John Does against whom the order
will also be executed. The unknown defendants are allegedly infringing intellectual property rights
belonging to the plaintiff but in different places, at different times and in different circumstances. These
"rolling" orders are to be distinguished from defendant-specific Anton Piller orders. While defendantspecific Anton Piller orders may also include Jane Doe and John Doe defendants, in general, the latter will
be connected to the named defendants, for example, by being an employee of the defendant or a supplier of
the alleged counterfeit goods to the defendant.
As with other motions, the material should be filed at least two clear days before the motion is to be heard,
to allow the judge who will hear the application time to review the material before the hearing. The
applicant shouldn’t pretend that it is suddenly urgent when it’s been happening for 6 months.
Secondly, there is no need, in many of these cases, for the proceedings to be held in camera.
Court must be convinced that the applicant has a very strong prima facie case. This means, for example,
that the copyright or trade mark rights which are asserted must be clearly identified (e.g., by production of
the relevant registration documents, by photocopies of the relevant designs).
Argued that the requirement for having a solicitor present would be too expensive for P. Court said – yeah,
that’s the whole point. “If the Court is going to assist a plaintiff in the assertion of its rights by giving orders
as invasive as Anton Pillers, then, I do not think the cost to the plaintiff should weigh too heavily in the
balance when protection for the defendants is the competing consideration.” A solicitor attends on the
execution of these orders in two capacities: as counsel for the plaintiff and as an officer of the Court.
The granting of these orders is a recent evolution of AP orders. Many questions remain unanswered,
including some that are of a very fundamental nature. It would be useful to have some Court of Appeal
jurisprudence with respect to these types of orders. By their very nature, however, the circumstances
under which they are obtained and executed are not conducive to appeals.
PERSONAL SERVICES CONTRACTS
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Older cases such as Lumley and Warner Bros held that the restrictive covenant could be enforced as long
as it did not amount to forcing the defendant to work for the plaintiff. The idea was that if any other means
of making a livelihood were available to the defendant (such as Bette Davis, who would be able to work as a
receptionist) the injunction could be granted. Over time, there has been a shift, as a result of changing
attitudes, a more realistic (or sympathetic) assessment of the work possibilities available to defendants,
and concerns about mutuality. The shift can also be attributed to the development of the legal concept of
unconscionability and concerns about inequality in bargaining power - Lumley was decided at the height of
laissez faire. The court will consider whether the applicant has an independent and separate interest in
receiving the injunction (Page One)
Courts do not grant equitable remedies (SP) to enforce employment Ks. Parties are limited to suing at CL
for damages. Too close of an analogy to slavery or indentured servitude (Ks that bind people to a particular
employer) Also, for practical reasons you can’t force people to work together effectively. Raises problem of
definition and supervision – courts don’t want to be involved in the relationship between hostile parties.
However, many personal service contracts contain an RC – promises by EE to work, and not to work for
anyone else during that same period. Usually, these types of Ks arise in situations where the talents or
abilities of the EE are somehow unique or there is a competitive issue.
Issue: when will the court enforce a negative covenant in an EE case that may have the tendency to
encourage the EE to work?
Lumley: D is an opera star, agrees to performs at P’s theatre and during that time not to perform anywhere
else. D is lured away to sing for X and P sues for an injunction. Injunction granted, court states that they
would never order SP – she doesn’t HAVE to perform for P, but she can’t perform for X. Court states that
even though the injunction may encourage D to perform her original K for P, the court is not forcing her to.
o Ratio: So long as the injunction won’t NECESSARILY amount to SP, then the court can grant it. i.e.
Opera singer can get some other type of job, i.e. acting.
o But there’s another line of cases where the courts say that if she can’t sing, she can’t earn a
livelihood. It depends on how well you can argue the case.
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Warner Bros v. Nelson: You can’t grant SP of a personal service K but you can grant the injunction so long
as the effect is not to eliminate all of D’s employment options. Injunction granted against Bette Davis – she
can get a clerical job or she could earn a fortune performing for Warner Bros. Again the court said that they
weren’t ordering SP. So, where the effect of the injunction will not force D to work for P, the court will grant
it.
o The terms of the RC were quite draconian – she will render her exclusive services as an actress to
WB, and will not render any services or engage in ANY other occupation without WB’s permission.
The last part would be clearly unenforceable. Thus, the court can grant the injunction more
narrowly than the RC is drawn.
o Contrast with Shafron where the court said that they can’t read down RCs because that would
allow people to draw really broad RCs in the hopes that the court will just re-draft it for them if it
turns out to be too broad, which takes away any incentive to the parties to draft the RC in a
reasonable manner in the first place. Shafron doesn’t overrule Warner Bros regarding the policy of
the courts towards editing RCs. Most important reason: distinguish b/w two types of severance.
 Notional severance – what the CA did in Shafron by re-defining an ambiguous term. Can’t
do this.
 Blue pencil severance – can be done. Not re-writing an ambiguous term, just striking out
some words in the K. If you can just strike out words, and otherwise leave the K making
sense, that can be done. This is what the court did in Warner Bros in striking out the
offending portion. Shafron has led to Russian doll contracts. You offer a whole list of everdiminishing territories, hoping that the court will use the blue pencil approach and cross
out to the appropriate level. Not the spirit of Shafron, for sure.
Two types of RCs: “while you are working for me, you can’t work for anyone else” or “after you finish
working for me, you can’t work for anyone else.” In Warner Bros, the court notes that they are not as
concerned with the first type (probably because they seem more reasonable). Courts are more worried
about the latter kind.
Period of the injunction: the court must make the period such as to give reasonable protection to P. D
might appear in other films, depreciating the value of WB’s own films…So WB has a genuine competitive
reason for not wanting Bette Davis to work for anyone else for a certain period of time.
Courts can be more sympathetic to D:
o Page One Records: The Troggs entered into K with the record label. Very restrictive K – record
label basically owns the group; Troggs couldn’t hire any other agent, and couldn’t be their own
agent. The band signs another K with another agent. Court refuses the injunction. In this case, the
court says the injunction would violate the Warner Bros rule – i.e. it would compel them to keep
Page One as their manager. However, Cassels says it’s not really that different because they could
become secretaries.
o The court states that they don’t want to prevent the group from pursuing their chosen vocation.
Secondly (new part) there is a problem of mutuality. In granting equitable orders, the courts
always ask whether there is mutual protection for the parties. In this case, Page One can get an
injunction that would prevent the Troggs from playing music. But there is NO protection for the
Troggs- i.e. Page One can drop the Troggs, and the Troggs can’t sue Page One for SP because that
would violate the rule about performing personal services.
o Often this is not a problem in employment cases where the only obligation of the employer is to pay
money. But where the obligation goes beyond simply paychecks, mutuality is a problem.
o Furthermore, Page One doesn’t have an independent interest in the injunction. In Lumley and
Warner Bros, Ps have two reasons – they want D to work for them, but even if they can’t get their
star back, they have an interest in preventing the star from undermining their other products.
Doesn’t apply here b/c Page One has no competitive interest in preventing the Troggs from
working. That makes it a much weaker case. Cases are way stronger when P has a separate
interest in getting the injunction.
o In summary, the result of this case is a combination of a) changing attitudes, b) a more
realistic/sympathetic assessment of the possibilities available to D, c) concerns about mutuality,
and d) P’s lack of an independent interest in getting the injunction
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o
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Dublinski: Another team hires a football player in violation of his K with the first team. First team,
P, says they’ve invested a lot in him, which is a strong argument that in this industry RCs are
necessary. Injunction application denied b/c:
 D swears that his livelihood is solely dependent on playing football. Court says this is
enough to distinguish from Warner or Lumley. However, logically, this is not necessarily
true because he can get another job.
 D’s services are not considered unique (different from Bette Davis) In Warner Bros, Bette
Davis admitted that her services were unique. Here the court basically states that football
players are replaceable and the loss can be calculated in damages.
 Could now argue that there is a uniqueness because of the star system in
professional sports, fan loyalty, branding, etc.
Dublinski Part 2: P ends up suing Dublinski for damages. Team had to buy a new player which cost
$10,000 in release fees, and paid $11,000 salary to the new player. What they saved was Dublinski’s
salary - $7500 and salary of two other players, so the total damages were $6000.
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