I. Damages .......................................................................................................................... 7
Basic Process for Assessing Damages: ..................................................................................... 7
Expectation Damages ................................................................................................................ 7
General Principles & Lost Profits ......................................................................................................... 7
Theory and Background (from Fuller & Perdue) ............................................................................. 7
Claiming Lost Profits ....................................................................................................................... 8
Canlin Ltd v. Thiokol Fibres Canada [1983, ONCA] ............................................................. 8
Problems of Determining the Value of a Bargain: Avoiding Double Recovery .............................. 8
R. G. McLean Ltd. v. Canadian Vickers Ltd. [1971, ONCA] ................................................ 8
M.G. Baer, “The Assessment of Damages for Breach of Contract – Loss and Profit” ............... 9
Doctrine of Election ......................................................................................................................... 9
Profit or Capital ........................................................................................................................... 9
Overlap of Expenditures and Lost Profits ..................................................................................10
Problems of Proof .......................................................................................................................10
Ticketnet Corp v. Air Canada [1998, ONCA] – Laskin JA ...................................................10
Damages for Breach of K w/ Alternative Modes of Performance .......................................................12
Hamilton v. Open Window Bakery [2004, SCC] ..................................................................12
Durham Tees Valley Airport Ltd. v. bmibaby Ltd. [2010, Eng. CA] ....................................13
Ditmars v. Ross Drug Co. [1971, NBQB] .............................................................................13
Lewis v. Lehigh Northwest Cement Ltd. [2009, BCCA] ......................................................14
Cost of Performance or Lost Market Value .........................................................................................14
Posner – Economic Analysis of Law ..............................................................................................14
Efficiency ...................................................................................................................................14
Economic Analysis and Damages ..............................................................................................14
Lost Value vs. Cost of Performance ................................................................................................15
The Old Approach: Wigsell v. School for the Indigent Blind, as cited in Radford v.
DeFroberville, and McGregor on Damages ................................................................................15
Megarry V-C in Tito v. Waddell, Four Propositions on Cost of Performance Awards: .............15
Radford v. DeFroberville [1977] ...........................................................................................16
Cotter .....................................................................................................................................17
Sunshine Exploration Ltd. v. Dolly Varden Mines Ltd. [1970, SCC] ...................................17
Groves v. John Wunder Co. [1939, Minn. SC] ......................................................................17
Peevyhouse v. Garland Coal Mining Co. [1963, Oklahoma SC] ...........................................18
Ruxley Electronics and Construction Ltd. v. Forsyth [1996, HL] .........................................18
Wilson v. Sooter [1988, BCCA] ............................................................................................19
Miles v. Marshall [1975, ON] ................................................................................................19
Summary of Factors re Cost of Performance v. Lost Market Value...........................................20
Starting Points........................................................................................................................20
Factors ...................................................................................................................................20
Non-Pecuniary (Aggravated) Damages for Breach of K .....................................................................20
Basics ..............................................................................................................................................20
Addis v. Gramophone [1909, HL] .........................................................................................20
Vorvis v. ICBC [1989, SCC] .................................................................................................20
Policy Concerns ..............................................................................................................................20
Exceptions to the General Rule: Situations in Which Courts WILL Award Non-Pecuniary
Damages ..........................................................................................................................................21
1. Where Breach of K Causes Significant Physical Inconvenience ............................................21
Hobbs v. Southeastern Railway [1875] .................................................................................21
Warton [BCCA] .....................................................................................................................21
2. Psychological Deliverables ....................................................................................................21
Jarvis v. Swan Tours [1972, Eng. CA] ..................................................................................21
Farley v. Skinner [2002, HL] .................................................................................................21
Fidler v. Sun Life [2006, SCC] ..............................................................................................22
Aggravated Damages .................................................................................................................22
1

Turczinski v. Dupont Heating and Air Conditioning [2004, ONCA] ....................................23
Wallace v. United Grain Growers [1997, SCC] ....................................................................23
Honda v. Keays [2010, SCC] ................................................................................................24
Reliance Damages ................................................................................................................... 24
General .................................................................................................................................................24
Reliance damages ARE available: ..................................................................................................24
Reliance damages ARE NOT available: .........................................................................................24
Where Expected Profits are Not Determinable: ..............................................................................25
Misc Rules on Reliance Damages ...................................................................................................25
Reliance Damages for Negligent Misrepresentation ............................................................................25
Negligent Misrepresentation Damages: Requirements (Hedley Byrne Principle) ..........................26
Application ......................................................................................................................................26
Beaver Lumber v. McLenaghan ............................................................................................26
VK Mason v. Bank of Nova Scotia [SCC] ............................................................................26
Rainbow Caterers v. CNR .....................................................................................................27
Negligence and Reliance in Professional Services ..............................................................................28
Posesorski ..............................................................................................................................28
Messineo v. Beale [1978, ONCA] .........................................................................................28
Kienzle v. Stringer .................................................................................................................29
Restitutionary Remedies ......................................................................................................... 29
Basics ...................................................................................................................................................29
Remedial Advantages: .........................................................................................................................29
Established Categories of Restitution Remedy: ...................................................................................30
Requirements for Restitution to be Granted .........................................................................................32
Restitution in Contract .........................................................................................................................32
Quantum

Various Approaches ........................................................................................................33
Punitive Damages .................................................................................................................... 34
Distinguishing Between Some Common Types of Damages ..............................................................34
When are Punitive Damages Available? ..............................................................................................35
Concerns..........................................................................................................................................35
The UK Position ..............................................................................................................................35
Broome v. Cassell [1972, HL] ...............................................................................................35
Canadian Jurisprudence...................................................................................................................36
US Jurisprudence ............................................................................................................................37
II. Limiting Factors.......................................................................................................... 38
Intro to Limiting Factors: ...................................................................................................... 38
Remoteness .............................................................................................................................. 38
Hadley v. Baxendale ..............................................................................................................38
Parsons (Livestock) Ltd. v. Uttle Ingham [1978, QBCA] .....................................................39
Kienzle v. Stringer [1981, ONCA] ........................................................................................40
Matheson v. Canada [2000, NSCA] ......................................................................................40
Summary of Remoteness .....................................................................................................................41
Mitigation ................................................................................................................................. 41
Basics ...................................................................................................................................................41
Cockburn v. Trusts Guarantee Co. .........................................................................................42
Apeco v. Windmill ................................................................................................................42
Erie County Natural Gas v. Carroll [HL]...............................................................................42
Jamal v. Moola Dawood Sons & Co. [1916, PC (Burma)] ....................................................43
Campbell Mostyn v. Barnett Trading ....................................................................................43
Time of Assessment ................................................................................................................. 44
Asamera Oil Corp. v. Sea Oil and General Corp. [1979, SCC] .............................................44
2

Dodd Properties v. Canterbury City Council [Eng. CA] .......................................................45
Perry v. Sidney Philips [1982, Eng. CA] ...............................................................................45
Damages in Lieu of Specific Performance ............................................................................ 46
Wroth v. Tyler [1974, Eng.] ..................................................................................................46
Semelhago v. Paramadevan [1996, SCC] ..............................................................................46
Specific Performance in Real Estate Ks ................................................................................ 47
Background ..........................................................................................................................................47
Domowicz v. Orsa Investments Ltd. [1993, ON Gen. Div.] ..................................................47
McNabb v. Smith [1982, BCCA] ..........................................................................................48
Semelhago v. Paramadevan [1996, SCC] (continued) ...........................................................48
John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. [2001, ONSC] ...................................48
Earthworks 2000 Design Group Inc. v. Spectacular Investments (Canada) [2005, BCSC] ..49
Raymond v. Raymond Estate [2011, SKCA] ........................................................................49
Measurement Issues: Reinstatement or Diminution ............................................................ 49
Damage to Chattels ..............................................................................................................................49
Dewees v. Morrow [1932, BCCA] ........................................................................................49
Darbishire v. Warran [1963, Eng. CA] ..................................................................................49
O’Grady v. Westminster Scaffolding Ltd. [1962, QB] ..........................................................50
Factors to Consider Re Reinstatement for Damage to Chattels: .....................................................50
Damage to Real Property .....................................................................................................................50
Taylor v. Hepworths Ltd. .......................................................................................................50
Jens v. Mannix & Co. [1978, BCSC] ....................................................................................51
Kates v. Hall [1991, BCCA] ..................................................................................................51
Betterment ............................................................................................................................................52
James St. Hardware v. Spizziri [1987, ONCA] .....................................................................52
Safe Steps ..............................................................................................................................52
Fontaine v. Roofmart Western Ltd. [2005, MBQB] ..............................................................52
III. Remedies for Personal Injury ................................................................................... 53
Context: The Role of Tort in Dealing with Disability .......................................................... 53
Andrews (The “Trilogy”): Overview of Methodology ......................................................... 53
Lump Sums: Finality vs. Accuracy........................................................................................ 54
Advantages and Disadvantages ............................................................................................................54
Discounting ..........................................................................................................................................54
Theoretical basis: ............................................................................................................................54
The Trilogy Mistake: .......................................................................................................................54
Law and Equity Act ........................................................................................................................55
Non-Pecuniary Losses ............................................................................................................. 55
The “Insurance Crisis”: ........................................................................................................................55
New Theoretical Basis – The Functional Approach ............................................................................56
As Opposed To:...............................................................................................................................56
Basics of the Functional Approach .................................................................................................56
The Cap ......................................................................................................................................56
Logical Conclusions of the Functional Approach ...........................................................................57
Problems with the Canadian Approach ...........................................................................................57
Alternatives .....................................................................................................................................57
Pecuniary Losses: Lost Future Earnings .............................................................................. 58
Step 1: Estimate the level of earnings .............................................................................................58
Step 2: Consider length of working life ..........................................................................................58
Lost Years ..................................................................................................................................59
Step 3: Factor in Contingencies: .....................................................................................................59
3

Step 4; Account for Residual Earnings ...........................................................................................59
Step 5: Deduct for Any Overlap with Cost of Care .........................................................................59
Step 6: Factor in Collateral Benefits ...............................................................................................59
Step 7: Discount to Present Value ...................................................................................................59
Note: Issue of Taxation ........................................................................................................................60
Theoretical Justification ..................................................................................................................60
Practical Justification ......................................................................................................................60
Past Loss .........................................................................................................................................60
Compensating Future Losses of Children & πs who did Unpaid Work ...............................................60
Issues of Fairness ............................................................................................................................61
Addressing these Issues:..................................................................................................................61
Compensating Household Services: ................................................................................................62
Compensating Unwaged Work (or Underemployment) ..................................................................62
Charitable and Religious Organizations .....................................................................................63
Turenne ..................................................................................................................................63
Cost of Care ............................................................................................................................. 63
Step 1: Assessment of Need .................................................................................................................63
Step 2: Determination of Standard by Which Needs should be Met ....................................................63
Mitigation ........................................................................................................................................63
Test of Reasonable Expenditure ......................................................................................................63
General Notes on Determination of Standard .................................................................................64
Step 3: Project Need and Standard into Future ....................................................................................64
Contingencies re Needs and Levels .................................................................................................64
Step 4: Deductions and Adjustments ...................................................................................................65
Mitigation ................................................................................................................................. 65
Objective Test: Assessing What a Reasonable Person Would Do .......................................................65
Thin Skull Situations ............................................................................................................................66
Collateral Benefits ................................................................................................................... 66
Categories of Collateral Benefits: ........................................................................................................67
1. Voluntary Family Care ................................................................................................................67
2. Charity .........................................................................................................................................67
3. Private Insurance .........................................................................................................................67
4. Employment-Based Benefits .......................................................................................................67
5. Public Benefits ............................................................................................................................68
(a) Social Welfare .......................................................................................................................68
MB v. BC [SCC] ...................................................................................................................68
(b) Publicly Funded Care Programs ...........................................................................................68
(c) Health Care Costs .................................................................................................................68
(d) Employment Insurance – Repayment ..................................................................................69
Subrogation ..........................................................................................................................................69
How Does it Work? .........................................................................................................................69
Structured Settlements as an Alternative to the Lump Sum .................................................................72
Fatal Accidents ........................................................................................................................ 73
Basics ...................................................................................................................................................73
Theory of Compensation ......................................................................................................................74
Who Can Recover? ..............................................................................................................................74
Valuing the Dependency ......................................................................................................................75
Non-Pecuniary Losses .........................................................................................................................75
IV. Injunctions ................................................................................................................. 76
Introduction ............................................................................................................................. 76
Framework: Categories of the Law of Remedies .................................................................................76
Liability Rules .................................................................................................................................76
4

Property Rules .................................................................................................................................77
Inalienability Rules .........................................................................................................................77
Timing of Injunctions – Three Options: ...............................................................................................77
Scope of Injunctions: Three Options....................................................................................................77
Quia Timet ............................................................................................................................... 78
Mandatory Injunctions ........................................................................................................... 79
Permanent Injunctions

Injunctions to Protect Property Interests ................................ 79
Possible Alternatives to Permanent Injunctions in Real Estate Cases: ................................................80
1. Live and Let Live ........................................................................................................................81
2. Modify the Property Rights .........................................................................................................81
3. Remedial Alteration ....................................................................................................................81
4. Statutory Intervention

BC Property Law Act .........................................................................82
Injunctions to Address Nuisance ........................................................................................... 82
Injunctions to Address Public Rights .................................................................................... 84
1. Who Can Seek an Injunction to Enforce Public Rights? ..................................................................84
2. How Will Courts Exercise Their Discretion re Whether to Grant Injunctions in This Context? .....85
Concerns..........................................................................................................................................85
When Can a Public Rights Injunction be Obtained? .......................................................................85
AGAB v. Plantation Indoor Plants ........................................................................................85
Robinson v. Adams [1924, ON] ............................................................................................85
AGBC v. Couillard ................................................................................................................85
AGNS v. Beaver ....................................................................................................................86
Reconciling Couillard and Beaver ? ................................................................................................86
Interlocutory Injunctions ....................................................................................................... 86
General .................................................................................................................................................86
Introduction & Context ...................................................................................................................87
Jurisdiction & Procedures ...............................................................................................................87
Law and Equity Act s. 39 ...........................................................................................................87
BC Supreme Court Civil Rules: .................................................................................................87
New Approach: Balancing the Risks ...............................................................................................88
American Cyanamid ..............................................................................................................88
Test for Interlocutory Injunction per American Cyanamid : ............................................................89
Nuanced Analysis of the Situation – Other things to Consider .......................................................89
Final Determination ....................................................................................................................89
Pure Question of Law .................................................................................................................90
Mandatory Injunctions [see below] ............................................................................................90
Restrictive Covenants [see below] .............................................................................................90
Free Speech ................................................................................................................................90
No Undertaking ..........................................................................................................................90
Assessing “Irreparable Harm” .........................................................................................................90
Yule Inc v. Atlantic Pizza Delight Franchise .........................................................................91
David Hunt Farms Ltd. v. Canada (Minister of Agriculture) [1994, FCA] ...........................91
Mandatory Interlocutory Injunctions ...............................................................................................92
Undertakings ...................................................................................................................................92
Injunctions in Relation to Contract Law ..............................................................................................93
Contract Injunctions Generally .......................................................................................................93
Yule v. Atlantic Pizza ............................................................................................................93
What about at Trial? ...................................................................................................................94
Questions about Fothergill Set the Stage for More Assertive Injunctions: .................................94
Vancouver Island Milk Producers v. Alexander [1922 BCCA] ............................................94
Metropolitan Electric Supply v. Ginder .................................................................................95
Thomas Borthwick ................................................................................................................95
5

How does this Mesh With the Concept of Efficient Breach? ................................................96
Assessing whether to grant a K Injunction: ................................................................................96
Using Injunctions to Enforce Restrictive Covenants .......................................................................96
Restrictive Covenants in Sale-of-Business Contracts .................................................................96
Cantol v. Brodi Chemicals Ltd. .............................................................................................97
Towers v. Cantin ....................................................................................................................97
Other reasons why injunctions are more readily given in this context: ......................................97
Restrictive Covenants in Employment Contracts .......................................................................97
Lumley v. Wagner [1852, Eng.] ............................................................................................98
Warner Brothers v. Nelson [1937, Eng.] ...............................................................................98
Detroit Football Club v. Dublinski [1955, ONHC] ...............................................................99
Page One Records v. Britain ..................................................................................................99
Legal Architecture ......................................................................................................................99
Special Situations – Some Discrete Issues in Interlocutory Injunctions ..............................................99
Speech .............................................................................................................................................99
Canada Metal Co. v. CBC [1974, ON HC]............................................................................99
Canadian Tire v. Desmond ..................................................................................................101
Procedural notes about CBC: ...................................................................................................101
Medical Treatment ........................................................................................................................101
Key Differences that Help Courts Make these Decisions:........................................................102
Rasouli .................................................................................................................................103
Environmental Disputes and Aboriginal Interests .........................................................................103
MacMillan Bloedel v. Simpson [1996, SCC] ......................................................................103
Platinex v. Kitchenuhmaykoosib Inninuwug First Nation ...................................................104
Constitutional Cases ......................................................................................................................105
AG MB v. Metropolitan Stores: ..........................................................................................105
RJR MacDonald v. Canada ..................................................................................................105
Mareva Injunctions ............................................................................................................................106
The Established Rule .....................................................................................................................106
Lord Denning to the Rescue – Mareva ..........................................................................................106
The Reception in Canada: Aetna ...................................................................................................107
Jurisdiction ....................................................................................................................................108
Extraterritorial effect: ...............................................................................................................108
Protections for ∆ ............................................................................................................................108
Third parties ..................................................................................................................................108
Anton Piller Orders ............................................................................................................................109
Red Hot Video .....................................................................................................................110
6

1.
Select

interest that deserves vindication a.
Restitution i.
Idea that people should live up to bargains. A victim of a breached bargain should at least get their money back. ii.
Restitution is measured by benefit to ∆ 
designed to deprive wrongdoer of ill-gotten gains b.
Reliance i.
Compensates

for expenditures made in reliance on promise by ∆ ii.
Restores status quo prior to promise being made c.
Expectation i.
Puts

in position they would have been in had the bargain been fulfilled ii.
∆ must either keep promise (specific performance) or provide monetary equivalent of keeping promise (damages)
2.
How do you apply the measure of damages?
3.
Are there any relevant principles that moderate/limit the damages award, to balance out ∆ legitimate interests? a.
Mitigation b.
Remoteness
Theory and Background (from Fuller & Perdue)

In some ways, restitution and reliance damages are easy to accept as appropriate remedies in contract law

they are about redressing the balance between

and ∆, and are easy to line up with shared moral values. o The idea is that people shouldn’t make promises then break them, especially when you know someone will waste time and effort as a result.

Expectation damages are different: not restoring the harm, but giving

the value of the promise. This is a moral concept, but perhaps one not so commonly shared.
 Expectation damages didn’t originally exist in K law o They become important in the planning done by individuals through private interactions.
 To achieve stability in a complex capitalist economy, we need certainty, future planning, credit.
 It’s about giving planners in the marketplace the security to trade. o Reliance and restitution don’t sufficiently facilitate these interests.
 Restitution doesn’t give you anything extra

Reliance would require

to prove all the minute ways in which

had relied on ∆ promise, which are just generally included in expectation
7

damages.

Note: if you include opportunity costs in reliance damages, and went through the whole minute assessment, people could essentially get expectation damages through reliance damages anyway.

Economic and Juristic Rationales o Administrative: facilitating reliance o Economic: allows trading on present value of the K.
Claiming Lost Profits
Canlin Ltd v. Thiokol Fibres Canada [1983, ONCA]

An example of a court protecting the expectation interest, despite arguments of remoteness and perhaps certainty of damage

Default: you get the difference b/w goods paid for and goods received; but this is predicated on a duty/ability to mitigate. Where that can’t be done, the presumption is rebutted.

Facts:

bought product from ∆ to manufacture swimming pool covers. Material defective, shreds into customers’ pools.

Issue/Arguments: o ∆ argues, per presumption stated in s. 56(3) of the Sale of Goods Act, that the proper measure of damages should be limited to the difference between actual value and value goods would have had if ≠ defective. o 
claims for lost profits in addition, because their business suffered as a result of the damage to their reputation.

Held: for

. Entitled to lost profits as well as difference in value.
 Reasons: s. 56(3) of SoG Act doesn’t apply here.

An assumption behind the provision: if defect is discovered early enough and buyer acts quickly enough (as obligated to mitigate), then the buyer can find new materials, replace the defective product and move on with their business.
 Under this assumption, ∆s are normally only liable for the notional cost that would have been incurred to buy new materials. However, in this case the defect wasn’t discovered soon enough and  s were shut out of the market for a few years as a result of the fiasco.
 This is sufficient “evidence to the contrary” as required to avoid the application of s. 56(3)

that provision wouldn’t give them what they lost.
Problems of Determining the Value of a Bargain: Avoiding Double Recovery
R. G. McLean Ltd. v. Canadian Vickers Ltd. [1971, ONCA]

Avoiding double recovery

Facts:

printing co bought new printing press from ∆, didn’t work properly. TJ awarded damages for lost profits and the cost of the press.

Issues/Arguments: o (1) ∆ argued that TJ award was double compensation. o (2) What happens when

doesn’t have sufficient funds to mitigate?
8


Held: TJ overruled; sent back for new trial o Re

inability to mitigate:
 ∆ shouldn’t be saddled with burden; the level of risk of a vendor of machinery should not vary depending on who they sell to.
 It’s different from the thin skull rule in tort, likely because of the commercial context. o The true measure of expectation damages is putting

in position they would have been in had the K been performed.
 
would have earned profit, but would have had to incur an expenditure to acquire the press.

CA refers back to new trial to determine the amount of profit after expenditure
 BUT: this isn’t enough 
would have spent $ on the press, but then also would have had a working press.

So, consider the depreciation value of the press in the two year delay, then calculate profit by deducting that depreciation.
Alternately, consider the cost of buying a new press.

Note: realistically,

had paid $15,000 already, which is likely roughly equivalent to the depreciated cost, so really the TJ did award net profits in the end.

The CA was right about the rule generally, but you shouldn’t deduct 100% of the value of equipment from a claim of lost profits over only two years. o Mitigation: ∆ offered to take back press and refund, but

declined. Obligation to mitigate.
M.G. Baer, “The Assessment of Damages for Breach of Contract – Loss and Profit”

Gross profits include your expenses
Doctrine of Election
Profit or Capital

THE ISSUE: Double Counting o In McLean , the press didn’t work so they claimed lost profits. But hadn’t paid for the press, and TJ didn’t deduct cost of press from lost profits. o Doctrine of Election means you can’t get both. That would be double-counting, because if

had actually earned the profits, they would also have paid for the press. It’s about putting 
in the position as if K had actually been performed.

Note: CA applied the doctrine too broadly in McLean . o Yes,

would have to pay for press to earn the profit, but had K been performed they would also have had a valuable press. o So, can’t deduct the whole cost of the press 
just deduct the depreciated value.

Assess the proportion of the working life of the press that is attributable to the time period for which profits are being claimed, and
9

deduct that proportion of the press’ value from the profits.
Overlap of Expenditures and Lost Profits

In McLean , the CA also overturned the TJ’s method of calculating lost profits in relation to expenditures.

General principle : you can either claim the money wasted or sue for the profit you should have had. Can’t have both – that would be overlap.
 Also, you can’t claim wasted expenditures in excess of the amount you would have had to spend to make the profit.

In McLean , the TJ awarded net profit, not gross profit. So, really, even though he included profit and expenditures, his calculation was actually in keeping with the doctrine of election. So, they SHOULD have been allowed to claim lost profit and expenditures.

Waddams: profit must be net profits, not gross potential income
Problems of Proof

CA in McLean found that the lost profits claimed were exaggerated.
 Don’t calculate profit solely on the theoretical productive capacity of the machine  must also consider the actual likely work that was available and/or would have been done. o This puts a significant burden of proof on the
 , but courts won’t hold ∆s to the assumption that every party they deal with is running the best possible business
(most competitive, most profitable) in that industry.

Rather, a court will consider industry averages and projections, and compare with
 ’s actual track record to try to establish some kind of ratio.
Ticketnet Corp v. Air Canada [1998, ONCA] – Laskin JA
 Doctrine of Election: gets the whole “net vs. gross profits” thing right.

The burden of proof is on

to prove damages, but where ∆ wrong has prevented precise proof,

can rely on projections (discounted to reflect certain contingencies)

Facts o 
created an online ticket-booking software, made a deal w/ ∆ to jointly develop it and share revenues for a set period. o ∆ repudiated and at first 
expected to get the software back but ultimately ∆ never returned it. o 
entered into new K with American Airlines. Different terms, but involved payment to

of 750k for the software. When it became clear they weren’t getting the software back,

had to renegotiate their K with American Airlines, and lost out on the 750k.

Issue/Arguments:

sued ∆ for lost profits and lost business opportunity. o (1)

claimed $12 million in lost profits. ∆ accepted breach but argued damages should be limited to 750k, the difference between the first and second AA agreements.
10

o (2)

also sought additional expenses not allowed at trial

Held: Damages NOT limited to 750K; TJ ruling on additional expenses upheld.

Reasons o Issue (1) – Damages limited to 750k?

Arguments:
 ∆ argued the only value lost was the value of the asset. Had managed to parlay the repudiated agreement into a new agreement with AA, but then the lost software meant they lost
$750k.

Argued that lost capital is better representative of the lost profit

∆ said that since AA was willing to buy and

was willing to sell for $750k, that is an accurate measure of the damages suffered.

The concern is against double-recovery: lost profits are logically contained in the value of the assets. The value of a business asset is the discounted stream of revenue that will be earned by that asset.
 In principle, this argument is sound. If there is a radical difference between the value an asset is sold for and the damages claimed for it, something is amiss.

But in this case, there is a difference: the price of a share sale conducted by shareholders under financial pressure (due to ∆ actions) and eager to mitigate is NOT a proper measure of the value of the company.
 ∆ shouldn’t profit from the poor bargaining position it left 
in.

Plus,

wasn’t seeking damages for the past/present value of the software, only for the lost business opportunity due to ∆ breach of agreement and subsequent injunction. o Issue (2) – calculation of lost profits: inclusion of expenses in damages

Arguments
 
argued they should be awarded damages for expenses incurred before the repudiation, and for all (not just some) expenses incurred after the repudiation. Not to do so,

argued, would double count the expenses in favour of ∆, and would fail to put

back in original position.

Numbers:

Expected Revenue: 15 million

Actual expenditures: $2 million
 Additional anticipated expenditures (if there hadn’t been a breach): $3 million

So, expectation damages should be $12 million

would have had
$10m had everything worked out, but lost $2 million was wasted expenditure.
 TJ interpreted the report as calculating

lost profits separately from expenses, by deducting projected expenses and taxes from projected
11

revenues (not including the out-of-pocket expenses), then added the actual expenses (pre- and post-repudiation) to the lost profit projections.

argued that the actual expenditures were wasted expenditures, because they didn’t generate offsetting revenue and b/c software had no residual value.

argued these expenses must be added to damage award to avoid double counting against them.

TJ declined to add the claimed amount back in, because it was included in the projected revenues per his interpretation of the report. CA said ≠ included in projected revenues, because close reading of the expert report shows they deducted it then added it back in afterward.

Generally, a party seeking damages for breach of K must elect between claiming lost profits or wasted expenditures – cannot claim both, as this would be overlap [ Anglia v. Reed (1971, Eng.
CA)]. However, in this case the actual expenses are not included in the projected profits, and thus are two separate forms of damage, not overlapping.

Have to add back in the amount that was actually spent, since it had no corresponding revenue as was expected.

TJ basically just phrased things differently

he interpreted the report such that the projected expenses referred to the remaining expenses projected (i.e. those that hadn’t been spent yet), when in reality it left those out of the initial calculation then added them back in. But he still came to the conclusion that $12 million was the right number.

So, TJ should have considered the actual and projected expenses separately. But his award was ok anyway, so nothing was changed.

Expectation damages are not necessarily the
 ’s actual expectation, but what 
has a right to expect.

What if a party could have performed K duties in more than one way, but failed to perform at all? o It has been argued that we should measure the damages based on how ∆ would most likely have performed the K. o However, in 2004 the SCC unanimously rejected that argument:
Hamilton v. Open Window Bakery [2004, SCC]

Stands for: minimum performance principle

Facts: o K for 3 years, but termination provision to allow either party to terminate with
3 months notice o ∆ terminated with no notice due to a misunderstanding (so, wrongful repudiation). o TJ awarded damages for full 36 months of K, less 25% to reflect the possibility that ∆ might have validly exercised the termination right at some point.
12


Reasons – Arbour J. o General principle is that you adopt the mode of performance that is least profitable to

and least burdensome to ∆, and calculate damages on that basis. o SCC upheld CA: Early termination clause with three months’ notice constituted the minimum guaranteed benefits under the K. As such, this was considered to be the maximum liability to which ∆ could be exposed, and the appropriate measure of damages. o Note: much of the litigation in this area is trying to confine the rule and find exceptions to it. o Policy

Can allocate risk in K

if they have set up their reasonable expectations in the K, it’s fair to enforce that.
Durham Tees Valley Airport Ltd. v. bmibaby Ltd. [2010, Eng. CA]
 Facts: ∆ agreed to fly two airplanes out of the airport for a 10-year term, but then stopped.
 Issue: ∆ wants to take advantage of minimum performance rule – say they agreed to fly two airplanes but never specified how many times/day they would fly. Thus, argues damages are zero under the minimum performance rule

you assume the minimum possible. o TJ said this wasn’t even a K and declined to enforce it.

Held: CA did enforce the K, but rejected zero minimum. o Where parties have not specified, court says the K must still have meaning. o Since parties have not specified a range of possible performance, no room for operation of the minimum performance rule

it would be absurd to assume the

understood zero flights to be an option, because that is commercially ridiculous. o So, back to the old rule: what would the parties have actually done?

Reasonable amount of damages.
Ditmars v. Ross Drug Co. [1971, NBQB]

Facts: Wrongful dismissal action
 
won, received severance and also sought a bonus that he would have earned had he not been fired.

Issues/Arguments: Employer argued that K said maybe bonus, but did not obligate them to pay a bonus. o K specifies that it is discretionary, which implicitly assumes zero as a possibility.

Held: Court awarded

a bonus o Adds requirement of a bonus as a term of the K (says “virtual” but that word isn’t really necessary 
it’s a straight up term of the K now) o Through practice and continual renewals, it’s not unrealistic to say that the K has been changed by the parties over time. o All other pharmacists in industry had been getting salary increases, but in this case they were just getting bonuses instead, to keep them up to industry practice.

So : courts can avoid the minimum performance principle, and then a judge can put in
13

whatever figure he thinks is reasonable.
Lewis v. Lehigh Northwest Cement Ltd. [2009, BCCA]

Facts: wrongful dismissal.

claiming for anticipated annual increase in salary (had received ~3%/year for the previous five years). Argues implied term in K.
 Held: Increased salary ≠ awarded.

Reasons: o Judge ≠ bound to find that 
would have received a discretionary salary increase during the notice period. o 
had been on extended medical leave during which he had no job performance to assess and had made no contribution to ∆ financial performance.
Posner – Economic Analysis of Law
Efficiency

Sometimes it makes more sense to breach a K than to perform it. o Holmes’ view: the law simply requires a party to choose between performing the K and compensating the other party for any injury resulting from failure to perform. o A remedy that induces the wronged party to complete the K after the breach may be wasteful

Hence the doctrine of mitigation, and the preference for damages as a remedy over specific performance.

What if the cost to ∆ of making good the wrong exceeds the value to

of doing so?

Sometimes there is an incentive to breach  where the profit expected from breaching is greater than the profit expected from performance, even considering the losses of the other party that will be taken out in damages. o So, the law, and remedies, are structured to facilitate the efficient allocation of resources.

Efficiency is defined as arrangements of resources to their most highly valued use. o “Value”: measured by parties’ willingness to pay o “Trade”: maximizes welfare and efficiency  moves items to more highly valued uses as measured by a party’s willingness to pay. o “Contract”: allows for complex trades
Economic Analysis and Damages

Expectation damages encourage the performance of Ks when they are efficient and discourage their performance when they are inefficient.

When is performance of a K inefficient? o (a) When cost to ∆ of performance exceeds the losses from non-performance o (b) When alternate opportunities to ∆ are more valuable than 
loss

Efficiency explains the requirement of mitigation: reduction of joint costs of breach
14


Efficiency explains why courts should not award less than expectation damages. o E.g. reliance damages won’t give an incentive to carry our K even if it is efficient.

Efficiency explains why courts should not award more than expectation damages, and should generally avoid specific performance: o We don’t want to encourage the performance of inefficient Ks

BUT, efficiency also shows why specific performance is sometimes available: because it is the only way to measure the value of the K. o Where goods are fungible, SP won’t be available. o SP may be available if there is no functioning market in the goods, or if for some reason the market isn’t the right indicator of value
 E.g. consumer surplus, sale of unique property o Note: even if the law gets it wrong on this, a post-judgment bargain may bring things back into balance.
Lost Value vs. Cost of Performance
 Posner: Efficiency generally points toward “ lost value
” rather than “ cost of performance
” o Don’t encourage performance of Ks where cost exceeds benefit, and don’t penalize K-breaker for avoiding waste.
The Old Approach: Wigsell v. School for the Indigent Blind , as cited in Radford v.
DeFroberville , and McGregor on Damages

Facts:

partitioned property and sold half to build a school; part of the deal was that buyer would build a fence between the partitions. School never built, no more need for fence, and it never got built. No evidence that ∆ land was worth any more with or without the fence, but the cost of building was several thousand pounds.

Held: court awarded lost value.

Note: Posner would say that building the fence was an inefficient use of the resources.
Megarry V-C in Tito v. Waddell, Four Propositions on Cost of Performance Awards:

[Cited in Radford v. DeFroberville ]

1. The principle is to compensate

by putting him as much as possible in same pos’n as had he not suffered the wrong. It’s not about making the ∆ pay what he has saved, but about compensating the

.

2. If

has suffered monetary loss, then that is obviously recoverable. If ∆ has saved $ by not doing what he K’d to do, that is irrelevant to the calculation of damages, as it was not a loss by the

.

3. If

can establish that his loss includes the cost of doing work ∆ failed to do (in breach of K), then that sum is recoverable. Onus is on

to establish what his loss was.

4.

has a number of ways to establish that loss includes cost of work: o Work was done before action brought. o OR, work will/must be done. This Can be indicated through:

An action for specific performance,

Or by the fact that

is obligated to a 3 rd
party to complete the
15

work,

Or perhaps by the existence of a statutory obligation;

Could also be indicated simply by

proving he wants/intends to complete the work.
Radford v. DeFroberville [1977]

Facts o 
sued for breach of K to erect a wall on ∆ property. o 
sold adjoining property to ∆ in consideration for an agreement to build a wall between them. But, ∆ never completed the wall. o Absence of physical barrier didn’t devalue the land; in fact, ∆ argued higher value than if wall were completed.

Held:

gets cost of performance.

Reasons: o The principle is to put

(as far as money can) in the same pos’n he would have been in had the K been fulfilled.

Note: this is not necessarily the same as putting

in as good a financial position. o Distinguishes Wigsell : in this case, there was convincing evidence that

did have a real interest in having a fence. o To assess whether a

wants to complete the work:

1. Does

have genuine/serious intention of doing the work?

2. Is carrying out the work reasonable for the

to do? o In this case:
 1. Court found the requisite ‘fixity of intention’. Plus 
gave undertaking anyway. Court accepted that

wanted to do work and found that the appropriate measure of damages was the cost of completion.

2. Reasonable to carry out work?

This is really a question of mitigation. ∆ argued prefab fence would be just as effective and less expensive.

But, court did not accept this argument: o Prefab fence ≠ permanent and 
would have to maintain it o Prefab fence ≠ what the 
asked for. o Although ∆ argued future owner might not want a fence there, so they could build another house in a corner of the lot, court said there was no indication of that, and in fact thought it might not be possible to get planning permission anyway.
 “A plaintiff may be willing to accept a less expensive method of performance, but I see nothing unreasonable in his wishing to adhere to the contract specification.”

Note: Court asked a third question: Does it matter that

is not personally living on the land but wants to do the work for benefit of
16

his tenants?

Apparently not.
Cotter
 Facts: mining companies, ∆ breached K to drill well, 
seeks cost of drilling well

Held: In cases like this,

can only get proven economic loss suffered, not cost of performance. o The only loss proven was $1000 for not having well.

claimed $25k for cost to drill the well, but court said this would be oppressive.
Sunshine Exploration Ltd. v. Dolly Varden Mines Ltd. [1970, SCC]

Stands for: Cotter isn’t a hard rule; depends on the circumstances

Facts o Similar to Cotter. JV;

(DV) holds lease to mining territory in northern ON. ∆ takes half interest and commits to doing a bunch of work, but then only does part and abandons the project. o 
claims the cost of completing the work. o ∆ argues
Cotter , you only get proven economic losses.

Held:

gets cost of completion. Cotter ≠ hard rule – it depends.

Reasons o The rule is expectation damages. What those amount to varies depending on the circumstances. o In this case, ∆ had done almost nothing under the K, and full consideration had passed from

.
 ∆ now owned half the property – took all the benefit from 
, and then didn’t do what they promised. Sense of unjust enrichment. o The decision looks to the true expectation: the loss was actually the information on whether or not to mine, and

didn’t get that, so they didn’t get the value sought from the K.
Groves v. John Wunder Co. [1939, Minn. SC]
 Facts: ∆ K with 
to remove fill; ∆ only took the good fill to its own advantage, leaving the land unusable and in worse condition than when it began. Cost of performance =
$60k, max overall value of land = $12k.

Damages were awarded for cost of performance, even though that was grossly disproportionate to the value of the land.

Posner critiques Groves : o Real preference was to maintain land value, not have flat land. Thus, Posner says the decision is wrong. o Majority said if

wants a certain situation, court shouldn’t enforce the price of the land as a cap on that preference. BUT, these were commercial operators;
 owned land for an investment, and it’s highly unlikely that the 
would actually spend $60k to level the land if he knew it would only sell for $12k. o If

pockets the $60k then turns around and sells the property, the court hasn’t protected expectation

just conferred a massive windfall. But if

lives on the
17

land and has personal/family connection etc., then maybe it can be argued that
$12k isn’t the appropriate valuation. o SO...
we examine the nature of

interest in the K: is it economic or personal?

In Groves, there was basically a windfall built into the K for one side or the other: o Even if the outcome was inefficient, ∆ shouldn’t be unjustly enriched by failing to perform, and should be punished for their egregious behaviour. o So, where a windfall must be given to one party, for moral reasons the judge decided it should be the

who benefited in this case.
Peevyhouse v. Garland Coal Mining Co. [1963, Oklahoma SC]

Facts o Farmers, lived on farm for generations. Leased land to coal mining company to strip-mine their land, with promise to restore farm. o But they didn’t restore. o Cost of restoration: $25k. Diminished value: $300.

Held: Court awarded diminished value. o Cost of performance uneconomic, would be windfall to

.

Comments: o But in this case, the
 s were family people and probably had legitimate reasons for wanting the land restored. Plus, they built that requirement into the
K. o So...maybe both Groves and Peevyhouse are wrong. o Probably the court and jury in Peevyhouse were bothered by the serious disparity between cost of performance and the value of the property

you could buy several farms for that price.
Ruxley Electronics and Construction Ltd. v. Forsyth [1996, HL]

Stands for: consumer surplus

court can consider the personal/subjective value over a straight market-value assessment

Facts o ∆ built pool for 
, but 6 inches shallower than K called for. o ≠ effect on value of pool, or utility (can still dive into it) 
no functional difference. o Zero lost value in commercial terms. Fixing the problem means rebuilding the whole pool, at a cost of ~£30k.
 Held: Award of £2000 for loss of amenity

higher than nothing, but less than full cost of performance

Reasons o Court believes

wanted a deeper pool, but won’t award the full cost of performance.

Doubtful that the award would actually be used to build a deeper pool, and thinks it’s unreasonable. o Policy concern: protect

interest w/o imposing undue liability on ∆ (who was pretty much innocent in this case.) o Court acknowledges loss of amenity

the personal satisfaction

would have
18

had if pool were made to spec. o In most cases of this sort, neither alternative is really satisfactory

there’s always going to be a significant windfall or punishment if you choose absolutely between cost of performance and lost market value. SO...we don’t stop with market value. Can consider an individual’s personal valuation.
 Consumer surplus  the amount by which a party values a transaction over and above the market price.
 It’s usually hidden or irrelevant because a consumer can mitigate, thus making the loss measurable by market price (difference in what’s paid)

But, sometimes, the market won’t work.

E.g. no replacement available.

In these cases, court awards the value of lost amenity as an estimate of what the true loss to

is.
Wilson v. Sooter [1988, BCCA]

Facts: o K for wedding photos. o K price = $399, but we can assume wedding pictures have a much higher consumer surplus value. o Photographer showed up drunk, took terrible pictures, and
 s didn’t find out until the pictures were developed. o ∆ argued measure of damages should be the market value, $399 
give them their money back. o  s wanted the cost of redoing the whole wedding – $7000.

Held:
 s awarded ~$2000

Reasons o Court knew there was subjective value, but the cost of redoing the entire wedding and flying people back from Brazil etc. was just too high. o The goal: find an amount that compensates

without unduly penalizing ∆. o Courts want to enforce performance of Ks, when they are efficient, but not to penalize people for breaching a K when performance doesn’t make sense
 idea of waste.
Miles v. Marshall [1975, ON]
 Facts: damages for tenant failure to give land back in good repair. Some repairs ≠ necessary for enjoyment of property.

Held: Awarded diminution in market value

Reasons o Cited Joyner v. Weeks [1891]: two ways to measure cost of damages for repair

(1) cost of doing repair

(2) cost of diminution in market value o Court says that generally, the rule is #2: we look at diminution of market value. o Basically, the rule in Radford exists, but we’re going back to Wigsell . o Comment: this was decided after Sunshine , but that was an SCC case so maybe we should trust that.
19

Summary of Factors re Cost of Performance v. Lost Market Value
Starting Points

Expectation principle

Balance of interests

Enforcement of Ks

Avoidance of waste and inefficiency ( Jacobs )
Factors

Assessment of
 ’s true interest

Nature of K

commercial or consumer [ Ruxley ]

Centrality of the obligation (e.g. building K or incidental provision)
 Problem of “waste” [
Jacobs ; Ruxley ]

Problem of unjust enrichment of ∆ vs. windfall to

[ Groves , Peevyhouse ]

Claim to specific performance?
 Owner’s intent to do work

Reasonableness of work

size disparity b/w cost of performance and benefit achieved
Basics

A common claim in tort law/personal injury cases

it’s often reasonably foreseeable that if you injure someone they will suffer non-pecuniary harm.

In K law, the starting point is the exclusionary rule: non-pecuniary losses are presumptively not recoverable in breach of K
(unless it’s also a tort/causes physical injury).
Addis v. Gramophone [1909, HL]

Facts:

was fired in a mean way

Held: damages for breach of K are limited to financial losses, absent ability to prove an independent actionable wrong

This set the general rule.
Vorvis v. ICBC [1989, SCC]

Facts:

fired summarily in breach of K, suffered mental distress

Held: SCC reaffirmed the rule: absent an independent tort or other cause of action, the mere breach of K does not attract non-pecuniary damages.
Policy Concerns

K law is generally assumed to be about trade/exchange

economic values. o Non-economic values and risks are not normally part of the trade.

There is an administrative/evidentiary concern as we move away from pecuniary losses, dealing w/ subjective harms that are difficult to prove and likely prone to overstatement/exaggeration.

Issue of causation:
20

o Particularly in employment cases o Primary distress suffered by an employee is caused by an employer exercising their contractual rights. The breach of K, if any, arises solely from the way the employer exercises those rights. Usually it’s because the employer fails to properly calculate the notice period. o The loss of notice is generally not the reason for the mental distress.  Have to establish a causal connection between a breach and the distress suffered.
Exceptions to the General Rule: Situations in Which Courts WILL Award Non-
Pecuniary Damages
1. Where Breach of K Causes Significant Physical Inconvenience

To some extent, this is an expansion on the usual tort idea. If you’re physically injured, you can have damages.

For a long time, courts have allowed a slightly wider scope of stress and physical inconvenience.
Hobbs v. Southeastern Railway [1875]

Facts: Train stopped early,

had to get off and walk 10 miles in the rain. Significant physical discomfort as a result of the breach of K.

Held: court awarded monetary damages for the physical inconvenience.
Warton [BCCA]

Follows Hobbes

Facts:

bought a Cadillac, but it made a buzzing noise. Kept trying and failing to fix it.

Held: Compensated for the breach and the distressing buzzing, as well as for inconvenience of repeatedly taking the car in to the dealer to have it fixed.

Comments: probably the fancy nature of the car enhanced the foreseeability of the buzzing being a problem for

.
2. Psychological Deliverables

Where the purpose of the K is to deliver a non-economic benefit, which is not delivered.

Brings the question back to a consumer surplus analysis. o Recall Wilson v. Sooter : central to the K for wedding photos was a promise to deliver an intangible benefit (wedding memories etc.)
Jarvis v. Swan Tours [1972, Eng. CA]

Lord Denning

Facts: disappointed vacationer sues for loss of enjoyment of vacation. ∆ offers to reimburse payment, but

claims above that.

Held: the compensation/expectation principle requires more than just reimbursement, because he expected the psychological benefit of a vacation.
Farley v. Skinner [2002, HL]
21


Facts:

argues house is worth less than it should be, due to airplane noise. Sues ∆ surveyor for damages.

Held: no compensation for economic difference in value, but psychological deliverable is compensable - $10k.

Reasons: o Airplane noise was there when he bought the house.

Note: in the market, even if

can prove he would have bargained for a lower price, the owner would have sold it to someone else at the market price.
 No economic loss in this case. So, the only loss he can get would be disappointment/mental distress. o Psychological deliverable: specifically negotiated w/ surveyor for the information on airplane noise, which made it specifically deliverable as part of the K. o Goes beyond previous cases: object of K no longer has to be primarily a psychological deliverable

it can be a secondary aspect of the K. o Court gives $10k, and says that’s the top end of an award of this type.
Fidler v. Sun Life [2006, SCC]

Facts: Disability payments should have been made,

had to go to court to get them.
Claimed damages for mental distress.

Held: $20k awarded.

Reasons: o Subtext/secondary purpose of insurance Ks is peace of mind.
 Not just to protect against the financial risk, but so you don’t have to worry about that risk in the meantime.
 Psychological benefit of having peace of mind while the K is in place. o Basically adopts Hadley v. Baxendale foreseeability requirements for determining whether psychological harm is compensable.
 But, to apply the foreseeability rule, you look at the object of the
K/what was promised.

so, it’s not really a huge step forward.

Comments: note that the award is roughly equivalent to that in Farley

still relatively modest. o And it was supported by medical evidence in this case. o It’s not just about missing the psychological security of having an insurance K, but getting more sick by having to live without disability benefits.
Aggravated Damages

Can mean ambiguously one of two things: o 1. Damages over and above your pecuniary damages

aggravated in the sense that they are more than pecuniary. o 2. Damages where the loss is greater than it otherwise would have been because of aggravating behaviour by the ∆

Most common in wrongful dismissal cases, where damages are caused by aggravating behaviour. E.g. not only did employer fail to give notice, but abused employee on the way out.
22

Turczinski v. Dupont Heating and Air Conditioning [2004, ONCA]

Facts o Heating contractor didn’t do the job right. o All parties agreed that it cost $10k to fix the problem/clean up the mess. o But

also claimed loss of rent for three years, and mental distress. Argues special negotiations. o Had previously undiagnosed depression, bi-polar disorder, OCD

the experience w/ the heating contractor triggered an episode that lasted for three years.

Held: no mental distress award. Lost rent for 1 year awarded as reasonable mitigation period.

Reasons o Mental distress claim rejected:
 ∆ didn’t have special knowledge to the threshold necessary to put them on notice.

may not have fully known, as it was undiagnosed at the time.

Policy: fairness. Unfair to hold a heating contractor to that level of risk in entering into Ks with customers.

Policy: economic efficiency

people should be able to conduct business on the basis of some settled expectations of what their risk will be.
 Policy: don’t want contractors to avoid dealing with people who have disabilities due to added risk o Lost rent:

Normally, would expect a person in this situation to mitigate within one year, so that’s the amount given.
 She couldn’t mitigate, but the court says that risk shouldn’t be borne by ∆.

Having a psychological thin skull is not an excuse for failure to mitigate in a contract context.

Note: in tort, pre-existing thin skull condition will make ∆ responsible if

fails to mitigate.

Rationale: in tort,

hasn’t agreed to deal with ∆, and needs more protection as a result.
Wallace v. United Grain Growers [1997, SCC]
 Unless there is an independently actionable wrong, we don’t award damages for mental distress.

Breach of an obligation of good faith allows court not to award damages for mental distress, but to “bump up” the notice period.

Since Wallace, courts have said: o 1. No damages without IAW o 2. Obligation of good faith in employment contracts. No damages for mental distress as a result of breach, but increased notice period available.
 It really looks like they’re compensating mental distress under the cover of increased notice.
23

Honda v. Keays [2010, SCC]

Main effect: we no longer call Wallace damages an ‘extended notice period’.

Damages will be awarded not through an arbitrary extension of the notice period, but through an assessment of the actual damages arising from the wrongful act.

Bringing employment Ks into conformity with the Fidler model: where a component of the K clearly promises a benefit, can add to damages, measured in the ordinary way.

Fidler said IAW ≠ required; Honda reaffirmed this. o Hadley v. Baxendale principle: all recoverable where reasonably foreseeable.
BUT, you still need something in the K that makes it foreseeable – e.g. peace of mind Ks, etc.

Conceptual basis: status quo ante o Designed to put you in the position you would have been in, had you never entered into the K in the first place.

Reliance is the standard measure in negligence law (misrepresentation), and an alternative measure in K law
Reliance damages ARE available:

Where there is no reasonable expectation

reliance is used as the maximum claim in contract [see e.g. Esso v. Marden
1
]

When expectation damages are difficult to prove  reliance may be available as an alternative. [see e.g. McRae v. Commonwealth Disposals
2
, Anglia v. Reed
3
]
Reliance damages ARE NOT available:

When there are no expectation damages, or where reliance would give

a larger award than they would get with expectation damages

cannot put

in a better position than if the K had been performed [see Bowlay Logging ]
4 o Where expectation damages are calculable, they are the ceiling.

can’t
1 Esso v. Marden :

bought gas station based on misrepresented info re throughput capacity. Made much less money than would have if that had been the capacity, but since that was never actually possible, he got his reliance damages, as well as some opportunity costs for lost other work.
2 McCrae v. Commonwealth Disposals : K for salvage on sunken tanker, but it turned out there was no sunken tanker. Reliance damages awarded because expectation damages were impossible to prove.
3 Anglia Television v. Reed : expenditures made in anticipation of K were recoverable.
4 Bowlay Logging :

expenses were far more than anticipated profits. Held: can’t be awarded the reliance amount. They also can’t get additional expected profits, because there was more to be logged but also more to be lost – they were losing $ on every tree, so they would have lost even more $ if they continued. Where expectation damages are calculable, they are the ceiling.

can’t put self in better position by claiming reliance instead of expectation damages. ∆’s breach didn’t cause the loss in this case

entering into a losing contract did. To award reliance damages in excess of expectation would unsettle the allocation of risk b/w the parties, and would do more than putting

in the position they would have been in had K been performed.
24

put self in better position by claiming reliance instead of expectation damages .
o To award reliance damages in excess of expectation would unsettle the allocation of risk b/w the parties
Where Expected Profits are Not Determinable:

Courts will assume at least a break-even scenario, and the onus is on ∆ to disprove this.
[
Sunshine Vacations v. Hudson’s Bay Company
]
5 o Where we don’t know what the outcome of a K would have been, we’ll at least assume that

venture would have broken even (i.e. earned enough gross revenue to cover the expenditures under the K.) o Then the onus shifts to ∆ to prove that 
would have lost money on the K [so that Bowlay Logging applies] o Note: problem in Sunshine Vacations :
 CA said you can’t have lost profits and wasted expenditures, because that’s double compensation. This is true only if lost profits means gross profits, because if it’s net then the expenses have already been factored in and thus would not be compensated twice.

HOWEVER: There was $120k in expenses, and trial judge said
 would have made $100k in profit.
 If the $100k profit is net profit, there’s no overlap and the 
should get both.

If profit is gross profit, and therefore double compensation (as stated by the court), then wouldn’t the presumption of 
breaking even be rebutted?
Misc Rules on Reliance Damages

Courts may award lost opportunity amounts in reliance damages [see e.g. Esso v.
Marden ] o Court characterized
 ’s lost profits as reliance damages: if he had not invested in the gas station, he would have gotten a different job/source of income. So, he was entitled to his opportunity costs

the amount he would have earned had he never entered into the K.

Note: reliance damages may also include amounts thrown away trying to make the K work. These attempts to mitigate are a legitimate inclusion in wasted expenditures, but they are capped by reasonableness.
5 Sunshine Vacations v. Hudson’s Bay Company [BCCA]
: K to set up retail locations in Bay stores. Bay breaches K by renewing leases of best locations to an old customer,
 ’s competition. 
claims wasted expenditures (capital investment not recovered on breach) and lost profits. Held: First, can’t get both because that’s double compensation (Note: this is true, as long as “profit” means gross profits 
if it’s net, then the expenses have already been subtracted, and thus aren’t being compensated). Second, new principle: where we don’t know what the outcome of a K would have been, we’ll at least assume that  venture would have broken even (i.e. earned enough gross revenue to cover the expenditures under the K.)
25


Reliance is the standard measure in negligent misrepresentation cases
Negligent Misrepresentation Damages: Requirements (Hedley Byrne Principle)

1. Duty of care  must be an obligation in the relationship, or an undertaking of responsibility

2. Breach of that duty

statement made without taking due care

3. Statement is untrue

4.

relies on the statement to his/her detriment

5. Reliance is reasonable o In context – e.g. correlative expertise between parties.
Application

Applies in pure tort cases, and also in contract cases.

The basis of damages is the difference between a promise/guarantee and a negligent statement  reliance, rather than expectation

SCC in BG Checo : o “[T]he main reason to expect a difference between tort and contract damages is the exclusion of the bargain elements in standard tort compensation.” o This is why K law defaults to expectation damages and tort defaults to reliance.
Beaver Lumber v. McLenaghan

Facts: o 
bought prefab house from ∆, who recommended a third party to construct it. o Turns out that guy had never assembled a prefab home before, and it was a disaster. o Had things worked out as

hoped, would have had a house worth $37,709; actual value: $17,000. o Expenses: $21,400 for land and materials; $3200 to ∆. o Projected position = $13,109 profit; actual position = $7600 shortfall. o So

sued for the expectation damages of $20,709.

Held: reliance damages are the appropriate measure.

Reasons o Shouldn’t treat the suggestion as a guarantee, just a careless statement. So,  gets back the wasted money and is put in a break-even position. Status quo ante . o ∆ induced 
to enter the K, didn’t breach a term of their K. So, court puts him in pos’n as if ≠ entered K.
VK Mason v. Bank of Nova Scotia [SCC]

Facts o Negligent misrepresentation re financing. Bank tells builder everything is fine and project is properly financed. o Builder doesn’t get paid. o 
claimed for lost cost of doing the building, and the amount still owing on the
K.
26

o TJ awarded both the lost expenditures and lost NET profit (so no double compensation problem)

Issue: But can

only get reliance damages, per Beaver Lumber and other cases?

Held: Trial judge award upheld. o Court says they aren’t awarding lost profit on the K  awarding opportunity costs (following Esso v. Marden ) o But...they gave actual profit for this job, not some other job. o It’s a 
-favourable assumption: if they could do this well in this situation, court assumes

would do equally well elsewhere in the market. o Note, though, that it’s only a presumption – can be rebutted, but onus is on ∆ to do so.
Rainbow Caterers v. CNR

Facts: o 
caterer was given incorrect information about the number of meals to be provided. o Entered K on the incorrect information, and in carrying it out lost $1 million, which it claimed in damages.

Issue: everyone agreed that reliance damages applied, but the question is how to calculate them. o ∆ argued there are two roots of reliance:
 1. If ∆ hadn’t made statement/had made true statement,  wouldn’t have entered K, wouldn’t have lost money
 2. If ∆ hadn’t made statement/had made true statement, 
would still have entered K, but on different terms. o ∆ says, therefore, that the question isn’t what  ’s total losses are, but rather what the difference is between the loss actually suffered and the loss

would always have suffered on the alternative K it would have entered into.

Held: for

. Typical reliance damages apply.

Reasons – Sopinka: o ∆ argument is not invalid overall, it just doesn’t apply in this case. o Principle: where there has been a negligent misrepresentation inducing a
K, a court will presume that had the negligent misrepresentation not been made,

wouldn’t have entered into the K. o It’s a presumption – onus on ∆ to disprove. ∆ bears the risk.

Note: in BG Checo v. BC Hydro
, ∆ was able to prove that 
still would have entered a contract.

In that case, damages are the net difference b/w loss actually suffered on the actual contract (contract A) and the loss that would have been suffered anyway, had

entered into contract B. o Note: in tort, reliance damages CAN exceed expectation
 
recovers all of its losses even if it might have suffered some anyway in a different situation.

Dissent – McLachlin o Even if we assume that

wouldn’t have entered into the K, that doesn’t mean they should be entitled to all of the losses suffered as a result of entering the K
27


have to consider principles of remoteness and causation. o McLachlin senses that

lost such a high amount not just because ∆ gave bad estimate, but because

was incompetent

work crews were eating too much,

wasn’t properly controlling the business.

McLachlin says some portion of the loss suffered is attributable to
 bad mgmt/poor business practices. o Sopinka for the majority says it doesn’t matter, because 
would never have had the chance to be incompetent if they hadn’t entered the K. o McLachlin says ∆ should only suffer the consequences of 
reliance, as opposed to the damages that arise as a result of their own incompetence.

This argument has not yet been resolved in Canadian law.

Breach of K cases

e.g. K to hire a lawyer or surveyor to perform service, which is done negligently.

Issue: reliance vs. expectation o The answer is generally found by following causation: what did ∆ promise, and what loss is caused as a result of that promise?
Posesorski

Facts o Due to ∆ solicitor’s negligence, 
entered into deal for a property w/ unperfected title (encumbrance). o Purchase price: $325k. Actual value w/ encumbrance: $225k. o 
held the property for many years, then came to an agreement with the optionholder. Cost of eliminating: $260k. o Lost rents & expenses: $39,400 o Legal expenses: ~$40k

Issue:

wanted expectation damages

Held: reliance only. Expenses, plus $80k for the lost use of the $100k (difference in value.)

Reasons:

could never have entered into the deal they wanted, so they couldn’t get expectation.
Messineo v. Beale [1978, ONCA]

Facts:

wanted to buy Murch’s Point property. Purchase price $400k, expected value
$500k. Market value was actually $408k due to title defect.

Issue:

sought expectation – expected $100k profit
 Held: Can’t have expectation damages.

Reasons: o There was no chance that

could have actually obtained a property worth
$500k. o Promise is that lawyer would take care in identifying title defects  had promise been performed, title defect would have been found, but

still never would have obtained a property worth $500k.
28

Kienzle v. Stringer

The rule limiting

to out-of-pocket expenses is not invariable

may sometimes be expectation

Facts: o Three siblings. Parents owned a farm. Parents died and son wanted to stay on the farm and work it. Hired ∆ lawyer to help him buy the farm from his siblings. o Lawyer prepares a K to sell the farm from the estate, because he thought the estate still owned the farm. SO, K b/w estate and son, and cash from that goes into the estate to be distributed to the siblings. o The lawyer was the administrator, so he should have known, but the estate had been sitting for so long that by operation of a rule of law the property had passed to the sisters. o So,

goes through with K, estate is paid full price, but then it turns out the estate can’t give him the farm, because the sisters each have a third. o One sister just gives him her third, because she knows he paid the price and she’ll get her cut from the estate. o The other sister, though, makes him buy her third afresh, since the agreement with the estate was invalid. o So

sues solicitor.

Held: Damages = cost of perfecting title o Cost of buying the farm from the mean sister.

Reasons: o Causation
 
hired lawyer to arrange purchase of farm. Had ∆ not been negligent, he would have prepared a K with the sisters, not the estate. In this case, the amount of money to put

in the position he would have been in = his additional costs. The focus is on what was promised. o So, negligent performance of a service may or may not result in expectation damages, depending on an analysis of what was promised, what the K called for, and what loss the breach caused .

Restitution is both a remedy and a basis of liability. o Remedy: conceptualizing award to

based on wrongly-acquired benefit by ∆ o Restitution as a remedy can be ordered either in monetary form (damages, accounting), or through another type of court order (proprietary remedies, e.g. tracing, constructive trusts)
 Focus on ∆ benefit as opposed to 
loss. Can be very useful from an evidentiary perspective: o Overcomes problems of proof

e.g. where

can establish ∆ benefit but loss is speculative; onus on ∆ to show expenses to deduct from total benefit
29

 Strategically, ∆ gain may be larger amount than 
loss [ Whitwham , 6 Strand Electric , 7
Blake
8
]

May provide in rem relief (as opposed to in personam )
 in rem may give

priority over other creditors, or a claim to specific property-security o But see Philips v. Homfray 9

May provide some procedural advantages o E.g. limitation periods – may expire for ordinary tort, but different for K.
 Money/services paid by mistake (to ∆ or to 3 rd
party)

Waiver of tort (for trespass, conversion, etc.) [ Whitwham , Strand ] o Where ∆ derived a benefit from committing a tort, but hasn’t really caused  loss,

can “waive the tort” and sue as if they were partners. o Basically, asking court to treat it as a contract case, where

and ∆ were partners in an enterprise, and an implied term was that

would get the benefit -

otherwise why would

have “approved” the act? (They didn’t, really, but that’s the waiver of tort) o It’s a fiction, used to give a higher level of award without actually changing the law. o This whole fiction has now been abolished, and courts just accept that sometimes there is a restitutionary remedy for torts.

Gains from intentional torts (sometimes disguised as punitive damages?) [ Whitwham ;
Broome v. Cassell ]
10
6 Whitwham v. Westminster Brymbo Coal and Coke Company [1896, Eng. CA]
: ∆ tipped spoil onto  land, gained £900 advantage but only ~£200 diminished value. Sued for injunction and damages for trespass. Held: damages not limited to diminution of value; measured also based on value derived by wrongdoer from their tort.

didn’t just lose value in the land, they lost the use of the land

that was the value gained by ∆. So, really, it’s still a measure of 
loss, though the court does state explicitly that they’re aiming to take away ∆ gain.
7 Strand Electric Co. v. Brisford Entertainments Ltd. [1952, Eng. CA] : Due to misunderstanding around the sale of theatre & confusion as to who would own contents, ∆ misappropriated 
electronic control panels, and ultimately refused to return them. Issue:

would have trouble proving what was lost (would it have used circuit boards, rented them out, etc?) Held: ∆ to pay reasonable cost of renting circuit boards for period in which it retained them. Court flips the onus and assumes 100% utilization, gives

remedy measured by whole notional benefit – which is probably far more than

could have proved on compensatory damages.
8 AG v. Blake : ∆ was a turncoat spy, and then later he wrote a book about betraying England to the Soviets.
Breached undertaking of secrecy to Britain. Even though state couldn’t prove loss (b/c info was all in public domain from news etc.), ∆ was made to disgorge profits. Court backtracks hard and lists many things that aren’t sufficient to get this remedy: Cynical and deliberate breach ≠ sufficient. Breach enabling
∆ to enter more profitable K elsewhere ≠ sufficient. Entering new K putting ∆ out of power to fulfill K w/ 
≠ sufficient. So, must be a special case to get restitution: either a substitute for equitable relief or a public policy concern.
9 Phillips v. Homfray [1883, Eng. CA]
: ∆ mining coal from 
property. Court awarded the revenue of coal less the cost of doing the mining. Note: the $ saved wasn’t factored in, so ∆ still kind of got a benefit.
10 Broome v. Cassell : ∆ knew they were being defamatory, but made statements anyway. In such a situation, courts will award restitution disguised as punitive damages: “one man should not be able to sell
30

o Requirements [per Broome v. Cassell ]
 1. Knowledge that it’s against the law

2. Conscious choice to continue because the prospects of advantage outweigh the prospects of loss/penalty

Gains from crime [ Garland ;
11
Blake ]

Breach of fiduciary duty

Intellectual property – patents, copyright

Breach of confidence [ Peter Pan ;
12
Seager v. Copydex ;
13
Lac Minerals
14
] o If courts were confined to compensatory (expectation) damages, would be encouraging breach of K by creating an incentive to try, since the worst that would happen is you’d have to keep the original bargain. o Courts want to encourage bargaining in good faith. o Courts are comfortable with restitutionary remedy where there was a special relationship of confidence – not just any breach of K case will merit these.

Necessitous intervention o To get compensation for benefits conferred in an emergency – i.e. if there had been time, ∆ would have agreed to pay 
for the service of saving their life/property

Service per quantum meruit (spousal cases)

Total failure of consideration

Void/voidable Ks (fraud, unconscionability, mistake, frustration)

Advance payments/benefits under Ks that fail to materialize

Benefits conferred under an unenforceable K [ Degleman (1954, SCC) ]

Domestic property

constructive trust cases [ Becker v. Pettkus ]
15 another man’s reputation for profit.” Court calls it punitive damages, but there’s also an element of unjust enrichment.
11 Garland v. Enbridge [SCC] : Consumers Gas is overcharging. Benefit: ∆ got extra $. Detriment: customers had to pay. No juristic reason: K was illegal, so no valid reason to let ∆ keep profits. But: ∆ was operating under approved rate structure, acting in good faith, and had been somewhat flexible in their position. Once on notice, no more excuse. So SCC drew a line at the time they should reasonably have known the rate structure wasn’t ok, and forces disgorgement of profits after that time.
12 Peter Pan : ∆ stole confidential info from 
. Licensing arrangement with offshore firm, which stole special brassiere info and manufactured their own product, incorporating the stolen design features. Held: award calculated based on sales revenue less cost of manufacture – net profit measure. Note: ∆ also argued it was unfair to measure by full net profit, since ∆ is in the business already, and would have made some profit without the theft. However, Denning said the causal connection was strong enough that ∆ couldn’t have earned that stream of income w/o using the stolen info, and therefore declines to apportion.
13 Seager v. Copydex Ltd. (No. 2) [1969, Eng. CA] :

manufacturer of Invisigrip carpet grips; ∆ appropriated IP, incorporated into their products. Very difficult for

to establish loss – invention was in early stages, it would be highly speculative. Held: measured the benefit obtained by ∆. So, assume ∆ paid  the value of the idea, and apply damages based on royalties that would have been paid to

.
14 LAC Minerals [1989, SCC] :

owned mining co, believed valuable deposits on ∆ property. JV with ∆, plan to share revenue 50-50. But, in the course of negotiations,

disclosed enough info that ∆ could stake the property on its own w/o entering the K with

. Held: court imposed a constructive trust over property for

, for 100% of the beneficial value. So, more than

would have gotten if K had been upheld. Note: after judgment

and ∆ can bargain.
31


Breach of K? Maybe.

[per Garland ]
 1. ∆ must have acquired a benefit o The benefit can be positive (property, money, services) or negative (i.e. savings of some kind) o Does not have to be pecuniary, but must be quantifiable in monetary terms. o Onus on

to prove this component.

2. Detriment to

(causal connection) o Onus on

to prove.

3. Must be an absence of a juristic reason for the benefit (i.e. it must be unjust) o Most common juristic reasons: gifts, Ks. o Also, where required by operation of law. o Onus on

to prove

4. Other reasons to deny recovery o Onus on ∆ to prove this, once 
has established benefit, detriment and absence of juristic reason . o Possible reasons:

Public policy

Reasonable expectations [see e.g. Garland ]

5. Defences
 Would it be unduly oppressive/surprising for ∆ to have to pay back? o ∆ must prove o e.g. change of position; delay; estoppel; acquiescence

6. Choice of Remedy o Money o Constructive trust

7. Quantification

Can restitution be a remedy for breach of K? General rule is no, so far.

Competing policies: efficient breach vs. unjust enrichment o Efficient breach theory: generally,

is entitled to compensation for loss, but ≠ for ∆ savings/benefits. [See Bank of America v. Mutual Trust (2002, SCC) ] 16
 But restitutionary motives are often at work in defining “compensation” [recall Groves ]

Increasingly, in a narrow class of cases, restitution has been made an explicit
15 Becker v. Pettkus [1980, SCC] : Lived together, he was the primary wage earner but she provided nonmonetary benefits. It would be unjust to allow him to benefit without her getting something back. Thus, constructive trust imposed.
16 Bank of America v. Mutual Trust [2002, SCC]
: “Efficient breach should not be discouraged by the courts. This lack of disapproval emphasizes that a court will usually award money damages for breach of contract equal to the value of the bargain to the
 .”
32

contractual remedy [ Wrotham Park ;
17
Blake ]
 Limitation: it’s not a general remedy 
must be a special case for disgorgement o (a) as a substitute for equitable relief? o (b) as required by public policy? o So, basically, it’s a high threshold to get restitution.

Note: Wrotham Park is still considered a leading case, but it’s not certain. [see e.g.
Surrey Council v. Bredero ;
18
Jaggard v. Sawyer ]
19 transaction as ∆ having avoided a bargain with 
.

Where a wrong has resulted in benefit for ∆ at

expense, courts conceptualize the


Compensatory: o 1. Reasonable wayleave, rent [see e.g. Whitwham ; Strand Electric ; Wrotham
Park ]

Where the wrong consists of use of

property, court measures unjust enrichment by the amount ∆ should have paid had they bargained for the use in advance. o 2. Opportunity costs o 3. Royalty (capitalized) [see e.g. Seager ] o Note: really, all three of the above categories are about opportunity costs, and are compensatory in nature. Courts just start the quantification by looking at ∆ benefit.

Accounting/Disgorgement: o 4. Full value of wrongly acquired benefit (through constructive trust) [ Lac
Minerals ] o 5. Full gross revenue [see e.g. Blake ]

Note, though, that courts will often apply a net revenue figure, recognizing that benefit to ∆ ≠ full amount received, but the full amount less expended $/effort.
17 Wrotham Park Estate Co. v. Parkside Homes Ltd. [1974] : Restrictive covenant limited # of homes ∆ could build on the land. In breach of covenant, ∆ developer built 14 extra homes. Issue: no loss to  , but ∆ gained from breach of K. Held: ∆ stripped of a portion of the value it reaped from the property. Court said they would measure the wrongfully obtained benefit by the amount the court thinks reasonable parties would have come up with as a measure of the benefit. Basically, calculates how much developer would have paid

for the right to build the extra homes.
18 Surrey Council v. Bredero [1993, Eng. CA] : ∆ breached restrictive covenant and built 5 extra houses in development. Breach ≠ diminish value of 
property, but

argued deprived of an opportunity. Held: No deprivation, nominal damages only. Wrotyham Park award was not extendable into K law generally, only available on the basis of the “restitutionary principle.” The case was characterized as simple breach of K, and this restricted to standard lost value calculation of damages.
19 Jaggard v. Sawyer [1995, Eng. CA] : Court reconsiders Bredero and upholds Wrotham Park . ∆ built house on land that adjoined land affected by a restrictive covenant, and ∆ breached the covenant by giving right of access to the house over the protected land. Also in breach of K, ∆ gave access via roadway opposite

house. Could be characterized as trespass as well as breach of K.

wanted an injunction to prevent access to the house. To support that application, she said the damages would be nominal, and thus injunction necessary. Held: injunction unduly oppressive to ∆; 
entitled to monetary award, measured by her share of reasonable license fee that ∆ would likely have agreed to pay for permission to build. Court described the Wrotham Park approach as “appropriate even on pure compensatory principles.”
33


But in Blake there was some serious moral outrage going on, and that impacts the remedy. o 6. Account for full net profit [see e.g. Peter Pan ; Lever v. Godwin ; Phillips v.
Homfray ]
 ∆ has taken a benefit from 
. o 7. Apportionment [argued unsuccessfully in Peter Pan ; see Edwards v. Lees ]
20

Punitive: o 8. Punitive damages based on comparative profit/savings [see e.g.
Townsview ;
21
Broome v. Cassell ]

Quantum Meruit Awards: o 9. Quantum meruit based on market value (e.g. value received measure often applied in domestic cases

Often where contribution from one side is non-monetary (i.e. one spouse/cohabitant bringing in salary, the other providing childcare or other work in the home)
 Assess on quantum meruit basis and impose a constructive trust over the amount.

Labour cost of cooking, cleaning, childcare, but also mgmt aspect. How would the work be priced in the marketplace? o 10. Quantum meruit based on joint enterprise (e.g. value survived in domestic cases)
 In this measure, we don’t get too bogged down in the specific contributions.

Ongoing contributions into joint property, assess on the current value
(hence “value survived”), and then impose a constructive trust on that current value.

Non-Pecuniary  Compensatory o Damages for things that can’t be easily calculated in monetary terms. o Still awarded under the Hadley v. Baxendale principle of compensation for benefits promised under a contract. [see e.g. Wilson v. Sooter ; Ruxley ; Fidler v.
20 Edwards v. Lees : ∆ trespassing in cave under neighbour’s property, earning profit from selling tickets to tourists. Two differences from Peter Pan : 1. Court does use a net profit method here – revenue ≠ just gate receipts, but subtracts cost of putting the amusement together. 2.

Lees doesn’t get 100%, but only the portion that’s attributable to the wrong (trespass). So, court counts the attractions on either side of the property line, and uses a ratio to figure out the benefit.
21 Townsview Properties v. Sun Construction Co. Ltd. [1973, ONHC] : ∆ used 
property to build apartment buildings on ∆ property – vacant lot, ∆ filled it in afterward, no harm to 
property, but it made it easier for ∆ to build. 
couldn’t point to any special damage, only advantage to ∆, but sought punitive/exemplary damages for ∆ wrongful behaviour – unjustified and unwarranted trespass, resulting in substantial gain for ∆. Held: punitive/exemplary damages awarded, to strip ∆ of the gain (sometimes treated as restitutionary, b/c punitive damages are measured by the value of the benefit). However, no additional punishment on top of that, so this was not a strong deterrent. Best conceptualized as an unjust enrichment case.
34

Sun Life ] o No especially malicious behaviour or wrongdoing by ∆ is required – just breach of K. o Commonly awarded in tort cases

where personal injury is severe enough to cause pain/suffering, lost amenities, loss of enjoyment of life, etc, it’s considered foreseeable, and included as part of compensatory damages.

Aggravated

Compensatory o Courts are still working this out. o Basically, aggravated damages are compensatory damages in situations where there is an element of malice or high-handedness in the way ∆ has breached the
K or committed the tort. o Because of the particularly bad way in which the breach has happened,
 ’s damages are greater than they would have been otherwise
 ∆’s conduct aggravated the harm to

. o Will be awarded in tort, and sometimes in K, where courts want to provide increased compensation for additional harm suffered as a result of ∆ bad behaviour.

Punitive

Non-Compensatory o A step above aggravated damages

punishing bad behaviour regardless of
 damage. o Can be cumulative with regular non-pecuniary and aggravated damages [see e.g. Hill v. Church of Scientology 22 ]
Concerns

Punitive damages are a strange hybrid, and many judges are uncomfortable with the concept of punishment in a civil action.

Concerns against awarding punitive damages: o 1. Windfall to
 
beyond compensation o 2. Quasi-criminal mechanism, without the procedural protections of criminal law

Higher standard of proof (BRD vs. BOP)

Jury; guidelines in terms of sentencing

Not codified as in the Criminal Code

definition is just “offensive, high-handed, malicious, etc.”, something that offends the conscience of society/the court. o 3. Award amounts are extremely varied
The UK Position
Broome v. Cassell [1972, HL]
22 Hill v. Church of Scientology [1995, SCC] :

sued for defamation; ∆ systematic attempts to discredit through prolonged and intentional campaign to defame

. Held: $300k general compensatory damages.
$500k additional compensatory damages b/c of aggravated nature of the defamation (long time, extreme).
$800k in punitive damages above the compensatory damages.
35


Shows the English approach to punitive damages.

Two categories of wrongs that can merit punitive damages.

Facts o Defamation case (most punitive damages cases are defamation cases) o Follows a typical model: publisher/writer knows something is untrue but publishes anyway because they will get more sales.
 Issue: compensatory damages would be less than the value ∆ gained.

Held: minimal punitive damages awarded ($5000) – didn’t strip ∆ of the full gain.

Reasons o Punitive damages act as a deterrent, but to allow pure punishment contravenes the principles that have evolved to protect offenders.

No definition except in terms too vague to be admitted to a criminal code;
 No limit to punishment except that it can’t be unreasonable

No method for appeal aside from alleging a procedural mistake – can’t appeal the sentence itself. o If the court had felt it could go so far, it would have abolished punitive damages entirely. o But, that would be a legislative act, so instead, just gathered all precedents and fit them into two categories in which punitive damages can be awarded:

1. Oppressive, unconstitutional and malicious conduct by government agents; or
 2. Civil wrongs (torts) committed consciously with the intent of earning a profit where the tortfeasor has calculated that the profit will exceed the amount of compensatory damages to
 o It’s important to read this decision in the context of the court trying to narrow the availability of punitive damages.
Canadian Jurisprudence

In Canada, punitive damages are much more widely available than in the UK since
Broome v. Cassell .
 It’s not controversial at all to use punitive damages in torts cases o Very common in intentional tort cases

assault, battery, esp. sexual assault cases. Also defamation. o Controversial issue, though: double penalty.
 What about cases where there’s already a criminal sanction in place in relation to the same conduct – can a civil penalty be applied as well? Is this double jeopardy?
 Canadian courts say this doesn’t bar a civil action, though the existence of a criminal charge will be an important consideration in the civil trial and any damages assessment.

Breaches of fiduciary duty, breaches committed consciously to earn profit  available.
36


Negligence cases

available [see e.g. Robitaille v. Vancouver 23 ]

Contract cases

almost impossible [see Vorvis v. ICBC 24 ]. Until recently, never available [but see Whiten v. Pilot
25
]. o Doctrine of efficient breach tends to predominate. o But, where a secondary provision of the contract is breached, may recover punitive damages

available where the K is breached, and also something else actionable (i.e. other than the primary deliverable) is breached. o This is a narrow window [see e.g. Fidler v. Sun Life , in which the court declined to award punitive damages to an overly aggressive insurance company, because a robust and assertive defence by an insurance company of its position is not bad faith.]

In Whiten , ∆ exploited the bad financial position of
 s and attempted to delay and prolong proceedings to force

into dropping their claim.
∆’s own investigator said it wasn’t arson.
 So, key factors are: vulnerability of

and intentional conduct of ∆ aimed at grinding down the customer with no intention of behaving honestly.

Counter-argument: punitive damages might also have been retrievable through an action for intentional infliction of mental distress, fraud, etc. o There must be an independently actionable wrong in order for punitive damages to be awarded [ Whiten ].
US Jurisprudence

Some notorious US cases were referenced by the SCC in Whiten , showing the dangers of an out-of-control state of punitive damages.

However, in those cases, there is often a backstory to explain the high damages awards.
[see e.g. Lebeck v. McDonalds ;
26
BMW v. Gore ]
27
23 Robitaille v. Vancouver [1981, BCCA] :

hockey player, team & doctor decided he was malingering and made him play despite injury. Ultimately, injuries worsened, and he sued team and doctor for negligence. Held: beyond negligence. Court awarded $40k punitive damages for pressuring him to play.
24 Vorvis v. ICBC : SCC said you can’t have punitive damages in breach of K case unless the breach also amounts to an independently actionable wrong. Most courts interpreted this as meaning there had to be a tort – i.e. that the IAW had to be a separate civil cause of action, such as defamation.
25 Whiten v. Pilot : ∆ insurance co refuses to pay insurance on 
home. ∆ breached K by failing to pay, and also breached a contractual duty of good faith. Court says you can’t get punitive damages just for failing to perform the K – must have an independent wrong; in this case, the breach of the implied duty of good faith and fair dealing. So, two obligations in insurance Ks: (1) pay $ on occurrence of a specified risk, and (2) treat customers in good faith. A breach of the duty of good faith can give rise to an award of punitive damages. Whiten clarifies Vorvis : IAW doesn’t have to be a tort – can be a breach of something else in the
K. So long as it goes beyond the primary deliverable, and also is a breach of another element of the K which is independently actionable.
26 Lebeck v. McDonalds : Hot coffee, serious burn (needed skin grafts). Media had a field day with this one, but really the injury was severe so it’s not as crazy as portrayed, and also it got send back down and then settled for less than $600k (confidentiality agreement signed so we aren’t sure of exact amount).
27 BMW v. Gore : New car had a dent; ∆ repaired and sold it as new w/o disclosing that it wasn’t completely new. Jury awarded $4 million. But, really, it’s not as ludicrous an award as it sounds: evidence that this was the industry practice, and jury was trying to deal with more than just this one instance

sending a
37

 Things in the law of damages that protect ∆s

Considerations of courts when determining and limiting damages: o Harm

what is the loss suffered by

? o Justice as proportionality

there should be balance b/w wrong and remedy o Self-help or individual reliance by
 s

Sometimes
 s are in best position to mitigate consequences of a civil wrong o Efficiency

not all wrongs are necessarily things we want to discourage.
Courts are cautious in creating incentives/disincentives relating to particular activities/conduct o Judicial Administration  ease of administrating remedies. It’s impossible to achieve perfection in this, and very expensive. Sometimes courts will adopt seemingly-arbitrary rules to limit damages just because the quest for perfection isn’t worth the effort.
Hadley v. Baxendale

This case is always the starting point for policy and law on remoteness of damages.

Facts: crankshaft sent away to get fixed; delay resulted in loss of profit.

Held: court refused to award lost profits.

Reasons: o Profits will always be lost, but perfect compensation isn’t the only goal. o The court set out an approach that has been seen as very restrictive – The
Foreseeability Rule :

“Now we think the proper rule in such a case as the present is this:
Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things , from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both
parties, at the time they made the contract, as the probable result of the breach of it.
Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated.
” deterrent message to the industry. The case was sent back on the award – or, court said it would order a new trial unless the

settled for $50k, so they did so.
38

 “But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally , and in the great multitude of cases not affected by any special circumstances, from such a breach of contract. For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case, and of this advantage it would be very unjust to deprive them.“ o It’s a pretty strongly policy based rule:

People should be able to operate based on common sense assumptions.
If this isn’t the case, it would be really bad for commerce, because everyone would have to spend time worrying about all the possible consequences of any action they take.

It makes sense to facilitate risk-planning

that’s what contract is all about. We want to encourage parties to privately plan risks. o Note: this case was decided before:

Limited liability

the case was b/w entrepreneurs personally instead of companies

Liability insurance

there were no insurers for this sort of thing. o The words of the case aren’t really as strict as they sound, anymore, in light of these developments.
Parsons (Livestock) Ltd. v. Uttle Ingham [1978, QBCA]

Facts: o Lack of ventilation in storage hopper resulted in pigs dying of ecoli when their food went toxic.
 Issue: is vendor responsible for the pigs’ death?

Held: Not too remote. Vendor liable. o CA overruled TJ, who found that it was not reasonably foreseeable that mouldy pignuts would cause ecoli in pigs.

Reasons: o An unfit hopper, the point of which is to store food, could foreseeably cause illness in pigs.

Comments: o It’s all variable depending on how you ask the question 
Hadley can be flexible, and courts manipulate it depending on how the question is framed. o Apparently, no expert in pig food or pigs would ever think that mouldy pignuts would result in ecoli – it’s extraordinary. But, the less you know about pigs, the easier it is to say that improper food storage could cause illness. o So, don’t get bogged down in statistical probabilities or the words 
it all comes down to what the court thinks is a fair allocation of risk. o Firms that design, manufacture, sell and install food storage devices should be responsible for the risk of bad food caused by the device malfunctioning.
 People who sell products to store food shouldn’t be surprised at being held responsible for food that has been negatively affected by their
39

faulty product.
 They probably won’t be unfairly surprised at that responsibility, even if a pig expert (i.e. the farmer) would have been completely surprised by what happened.
Kienzle v. Stringer [1981, ONCA]

Facts o Recall: family farm dispute among siblings – son wanted to buy but lawyer made deal with estate instead of with siblings. o As a result of the delay in acquiring the farm,

missed an opportunity to buy another farm (because the sale was predicated on the sale of the family farm)

Issue: o 
action against lawyer for cost of perfecting title (which he got), but also for: o 1. Lost profit of $20k (because he stopped farming for two years) o 2. Lost secondary transaction

Lost profit on the acquisition of the second farm – increased in value by $44k by trial.

claimed $23k, the difference b/w appreciation on the farm lost and appreciation on the farm he had.

Held: $10k for one year lost farming profit, nothing on the secondary transaction.

Reasons: o Although the solicitor’s negligence did cause all the future losses, the court wouldn’t award 
damages for all of them. o Lost farming profit: one year was reasonable amount of time to disentangle himself from the mess. o Lost secondary transaction profits:
 Doesn’t even go to
Hadley v. Baxendale , just goes to policy: floodgates concern if lost opportunity costs could be awarded for land sale transactions.
 At the bottom line, it’s just kind of unfair to make a solicitor responsible for this risk, because a second transaction that a person was going to enter is entirely out of ∆’s control.

It would be disproportionate to the amount the solicitor was paid and the risk he agreed to take on to give this risk to him too
 proportionality. Fee is calibrated to value of property and associated risks, not in wider context.

Basically, court says we draw an arbitrary line because we have to know to stop somewhere, and the policy is to stop at the second transaction.
Matheson v. Canada [2000, NSCA]

Facts:

construction company successful bidder on federal gov’t project, but gov’t wrongfully cancelled K midway through and called
 ’s completion bond (a guarantee of satisfactory performance).

sued for breach of K and won, recovering all losses on the project.

Issue:

also sued for loss of subsequent projects – damage to reputation b/c of cancelled bond.
40


Held: no recovery of subsequent losses

Reasons o Although government did technically cause the loss of subsequent transactions, it’s not fair to hold them responsible for something they couldn’t foresee at time of K. o Court doesn’t want to go into statistical probabilities and the likelihood of this happening – just goes with what seems generally fair. o It wouldn’t be just to find that ∆ had taken on the risk of subsequent transactions. In contract law, one party doesn’t normally become the insurer of the other party’s financial health.

Issue is fairness

Policy is to encourage certainty, dispute resolution, and allocation of risk

So, consider: o Parties’ reasonable expectations in this type of K o The usual consequences of breach o Evidence (if any) of commercial expectations – how are the risks usually assigned? o Did the parties explicitly address the risk?
 
must take reasonable steps to minimize the damages from ∆ breach

In sale of goods cases, the mitigation requirement is basically codified: o S. 53 – Damages for Nonacceptance

(1) I f the buyer wrongfully neglects or refuses to accept and pay for the goods , the seller may maintain an action against the buyer for damages for nonacceptance.

(2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer’s breach of
K.

(3) If there is an available market for the goods in question, the measure of damages is to be ascertained (unless there is evidence to the contrary) by the difference between the K price and the market or current price at the time or times when the goods ought to have been accepted , or if no time was set for acceptance, then at the time of refusal to accept. o S. 54 – Damages for Nondelivery

(1) If the seller wrongfully neglects or refuses to deliver the goods to the buyer , the buyer may maintain an action against the seller for damages for nondelivery.

(2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller's breach of
41

contract.

(3) If there is an available market for the goods in question, the measure of damages is to be ascertained, unless there is evidence to the contrary, by t he difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered, or, if no time was set, then at the time of the refusal to deliver.
Cockburn v. Trusts Guarantee Co.

Facts o Company went into liquidation, ∆ wrongfully dismissed & sues for lost wages.

Salary at time of dismissal: $5000/year o 
bought a bunch of stuff at the company’s liquidation sale, and sold it for
$11k

Issue: did

mitigate out of any damages? o ∆ argued 
used his time to make profit, which he wouldn’t have been able to do if ≠ dismissed. o 
argued ≠ mitigation because it goes beyond what an employee would be expected to do. He became an entrepreneur/speculator. Didn’t have to do this.

Held:

mitigated out of damages

Reasons o Although ≠ required to mitigate in that way, the ability to make that money resulted from the breach of K – could not have happened but for the breach. o First, he got the inventory because the company went into liquidation. o Second, he had the time to buy/sell the inventory because the company dismissed him as a result of the liquidation.
Apeco v. Windmill

Facts: o 
owns warehouse; ∆ agrees to lease part for 5 years o ∆ breaches, 
finds new tenant. o 
sues ∆ for 5 years of rent, but ∆ says they mitigated by renting to the new tenant.

Held:

is entitled to the lost rent from ∆

Reasons: o Distinguishable from Cockburn
: yes, they had found a new tenant, but ¾ of the warehouse was vacant. If ∆ had stayed, the new tenant would have been in addition to ∆ - not instead. o So, in this case the second transaction hasn’t mitigated the loss suffered by 
. o Assess by considering causation: did the breach cause or permit the new transaction with subsequent benefit ?
 i.e. is the second transaction dependent on or independent of the breach?
Erie County Natural Gas v. Carroll [HL]
42


Facts o π manufacturer of quicklime. 8 year lease of gas rights on π property to ∆ gas co, w/ req’mt to supply π with gas. o ∆ sold the lease to a third party, who ≠ supply gas. o π built their own structure to obtain gas on their remaining portion of the property, at a cost of $60k. o At the end of the 8 year period, π sold the gas works for $75k. o π claimed the expenditure to get the gas, and also $125k for the cost of their own gas used
 Held: No award to π.

Reasons o π mitigated by selling the structure for $75k. o Also, court said it would be unfair to award the additional $125k value of the gas consumed, because then π would profit from ∆’s breach. One Lord called this a “grotesque” result.

Comments: o However, the question re mitigation is really supposed to be whether the breach caused/permitted the earnings, and in this case it did not. o πs were tapping into their own gas, which was always there and which could have been done regardless of ∆ behaviour.
Jamal v. Moola Dawood Sons & Co. [1916, PC (Burma)]

Facts o ∆ backed out of share sale w/ π o K price was $184,000 rupees. As a result of breach, π only got $75,000 rs. o π held shares past breach date, then made a series of sales that cumulatively brought in $200,000. (So, higher price than K would have brought in, even)
 Held: π did not mitigate out of damages, ∆ still obligated to pay. o Damages are measured at time of breach.
 Waiting is at π risk, and if π is found to have mitigated out of damages by waiting and selling at a higher price, then ∆s should also be responsible if π waits and is forced to sell at lower price. o π can do whatever he wants after breach, but it’s at his own risk. o Conceptually, π could have gone through with first K and then later bought and sold shares again independently

shares are fungible. o Distinct from Cockburn , in which π could not have done what he did but for the breach.
Campbell Mostyn v. Barnett Trading

There may be a class of cases in which it is impossible to resell goods – e.g. because there is no market.
 Issue: ∆ argued that market price of ham at time of breach was very good – trying to minimize their damages on basis that π could have mitigated out of all damage. o But then later, on appeal, ∆ argued that there was no available market at time of breach, and damages should thus be assessed on the price 6 months after the breach.
43


Held: not impossible to resell goods, viable market existed. o The two arguments made by ∆ cannot be reconciled, and the Court of Appeal caught this contradiction in finding that there was a viable market.

General principle: courts assess damages at time of breach . o Further changes in price and increases in costs after the time of breach are typically not relevant o But, there are some exceptions:
Asamera Oil Corp. v. Sea Oil and General Corp. [1979, SCC]

Facts o π loaned shares to ∆, ≠ returned on time, and much later π and court discovered that they were sold to a third party.

Issue: how to assess damages when shares were never returned, and varied in value? o π wanted highest list price of the shares in the time ∆ held them, but they were worth far less at time of breach. o π argued sophisticated commercial actor, would have sold shares at highest price. o π sought specific performance and damages.

Held: Court awards damages according to a mid-range share price.

Reasons o Court accepts that π might have sold shares at higher value than at date of breach, but not so high that they would get the full highest price. o 1. Court endorses theory of damages put forward by π; damages are measured by the lost opportunity to sell the shares – i.e. to realize their value on sale.
o 2. The typical starting point for damages under a loan is at the time of breach.
You assess as though π had disposed of property on the date of breach, or as soon after as they were realistically able to do so. o 3. Sometimes, though, we will move the date of breach. o 4. If π is seeking/entitled to specific performance, they are entitled to hold off on mitigation, so long as they have a real/substantial interest in specific performance.
 Just because it’s in your writ doesn’t mean it’s a real/substantial interest.
 Typically can’t get SP for shares – they’re fungible. o 5. πs may also be entitled to hold off on mitigation depending on the state of the market (e.g. volatile or illiquid)

reasonableness depends on context

Even though ≠ SP, π was entitled to wait before buying new shares.
Successfully argued it wouldn’t be reasonable to go buy new shares right away, due to the illiquidity of the market.
 π argued they didn’t have to mitigate because shares were too risky now, but they had wanted SP. So, if they wouldn’t have bought the
44

shares, they wouldn’t have held the shares, so those arguments contradict in a rational commercial sense. (Supposedly.)
Dodd Properties v. Canterbury City Council [Eng. CA]

Facts o Two neighbouring buildings, one damaged during construction. o Value ↓ over time, by ~£30k o π wanted damages calculated at the later date, to account for the decline in value.

Held: damages assessed at later date

Reasons: o There will always be some reasonable period in which for π to organize finances, arrange contractors etc

to move on from the breached K. o Court allowed the π to wait 8 years in this case, during which time the cost of repairs massively increased. o πs argued it wasn’t reasonable for them to put their own $ at risk doing repairs at earlier date, for several reasons (none of which are especially convincing):
 1. ∆s were denying liability
 That’s sort of ridiculous, since ∆s deny liability all the time and it doesn’t typically let you off the hook for mitigation.

Maybe because it was government, in this case? Not at all clear from the judgment, though.
 2. πs didn’t want to spend their own money because (a) they had a cash problem, and (b) even if they didn’t, director testified that they still wouldn’t have spent the money before they were sure of recovering cost from ∆.

This is a dangerous argument: recall Radford v. DeFroberville : intent to do the work is key in whether π can recover. So, in their anti-mitigation argument, π here actually led evidence that undercuts their main argument. o ∆ argued they shouldn’t have to pay full amount of lost business. Since it’s less than 100% likely that they will actually experience loss because they may not conduct the repairs, ∆ argued for 60%.
Perry v. Sidney Philips [1982, Eng. CA]

Facts o Defective property – surveyor ∆ failed to detect the defect. o π couldn’t afford to properly repair the defect at the time it was discovered. o π claimed cost of repairs, and also damages for the physical inconvenience and stress of living in a crappy house (full of mould etc.) for 4 years as a result of the negligent survey.

Held: CA refused to award cost of repairs. Instead, awarded damages based on difference between cost paid and reasonable cost knowing about the defect. However, he gets the physical inconvenience b/c he had to stick with it due to impecuniosity
(and no failure to mitigate)

Reasons
45

o 1. Surveyor didn’t cause the defect 
negligent survey just caused a delay in the discovery of the damage, meaning that π spent a bit more on the property because he didn’t know about the defect.
 Hence, π gets difference between cost paid and cost he should have paid given the defects. o 2. Impecuniosity claim allowed

Consumer case, not commercial

Part of the reason people use a surveyor is to avoid financial risk
 The key: is it within the scope of the K? (i.e., what is the K about?)
 This is not a risk that π could have protected himself against.

No insurance for hidden defects

The way you protect against this is by hiring a surveyor.
 Issue: these arise when π claims specific performance up to trial, then drops the SP claim at trial.
Wroth v. Tyler [1974, Eng.]

Facts: o House price: £6000. ∆ breached K for sale; π sued for SP. o At time of breach, house was worth £7500. At trial, worth £11,500. o So, damages at time of breach = £1500. But if real and substantial claim for
SP, damages in lieu would be £5500.

Held: court awards damages in lieu of SP, totaling £5500

Reasons o Court wouldn’t grant SP, because it would cause husband to sue wife over charge, or SP subject to wife’s occupation rights.
 
You can’t get SP where it would require a third party to waive their legal rights.

But, where π has a legitimate claim for SP, damages should be calculated in lieu. o Principle: π couldn’t mitigate, and reasonably didn’t, because they expected
SP. So, court can push the time of assessment right up to trial. o Problem: people will always throw in a claim for SP even if they don’t want it, to push time of assessment. But must be real & substantial interest.
Semelhago v. Paramadevan [1996, SCC]

SCC adopts Asamera and Wroth .

Courts will take a different approach to damages and mitigation where there is a real and substantial interest in specific performance.

Facts: o House under construction at time of K. Purchase price = $205k o At time of trial, worth $325k o π was going to buy the house with $75k cash plus mortgage of $135, then sell
46

their old house for $190k. Value of old house at time of trial = $300k. o So, if no breach: up by $114k between -6000 mortgage and +120k on (new) house.

Held: o Damages in lieu of SP o Result of judgment:
 New house: +$120k;

Old house: +$110k;

Return on the $75k not spent: $20k;
 So, up by a total of $250k.

Reasons o Court says you can’t deduct the increase in value to the old house, but they let the reduction in mortgage costs stand because it wasn’t argued. Yes, it is a windfall, but SP would have been too.

Note: later cases have resiled from this a bit. o Picks up line from Asamera : need real and substantial interest to rely on SP claim to get damages in lieu.

This is important because of Asamera and Semelhago, which tell us that courts will take a different approach to damages and mitigation where there is a real and substantial interest in specific performance. o So, we need to know how to assess whether someone has a real and substantial interest in SP.

Up to a few years ago, SP was the prima facie rule in real estate Ks o There was a presumption that land is unique, damages inadequate and thus that
SP would always be available o Consumer surplus element, esp. w/ residential land. o It’s not just about living situation 
in UK especially, land was key to social status for a long time.

Changes (see Domowicz ; Semelhago ; Asamera ): o (1) Land is no longer key to voting, status, civic rights o (2) It’s often not unique
 Land is often bought as a commercial investment, even when it’s residential

Many people flip houses or otherwise buy land just to make revenue

things that can be measured in money. o (3) Even residential property is no longer really unique

Cookie cutter homes, many substitutes for the same property o (4) Courts: preference for damages

goal is to put people in as good a position but not better, and damages achieve this better than SP.

Problem of uncertainty about SP in real estate: it’s more difficult to advise clients now.
Domowicz v. Orsa Investments Ltd. [1993, ON Gen. Div.]
47


Most comprehensive analysis of this issue.

Fact: Bought apartment building in a suburb w/ 7 year delay.

Held: No SP.

Reasons o The longer the delay, the less likely a court will grant SP. o Asamera: “mitigate or litigate” – either mitigate to protect against escalating damages award, or get to litigating quickly so you minimize the possibility of price increases

SCC in Domowicz adopts this statement in obiter. o No damages in lieu of SP  only get those if you have a legitimate distinct interest in SP.
McNabb v. Smith [1982, BCCA]

Applied Domowicz to residential purchase
 ∆ showed evidence that 
planned to flip house – not entitled to SP.

At time of breach, buyer had already entered into transaction to sell the property for more than his purchase price. So, damages could fully compensate for his loss.
Semelhago v. Paramadevan [1996, SCC] (continued)

Facts: Residential Development

Held: No SP, sort of. o TJ gave SP, but SCC says in obiter that SP shouldn’t have been granted – i.e. it wouldn’t have been available if it had been in issue on the appeal o SCC also says that you don’t presumptively give SP with land anymore. o Huge windfall to

of a damages award calculated in lieu of SP. Issue of hardship to ∆, who ended up paying 
~125k more in cash damages than
 actually lost. (b/c

kept own home and avoided mortgage and carrying costs etc.) o Court is balancing necessity of protecting

w/ order for SP (weak) with a desire to protect ∆ against undue/oppressive amt of damages (strong)  inclines against SP.
John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. [2001, ONSC]

Facts: o 
= hotel builder/manager. Agreement to purchase land (vacant lot) from ∆ co. o Agreement req’d severance approval from city before proceeding. City granted approval, subj to possibility that ∆ might be req’d to construct an extension to a nearby road & dedicate it to city. Cost was set b/w $350-500k. o Building the road would not have benefited

or ∆, only other property owners. o ∆ tried to get out of the agreement; 
sued for specific performance.

Legal Issues: Specific performance – is performance of the K unique? Since Sopinka’s dissent in Semelhago, courts don’t assume that about land Ks anymore.

Held: SP awarded

Reasons: o This particular transaction merited SP, damages would be inadequate.
48

o Land was right next to a mall and Wonderland, so that was a specific attribute. o Evidence that they had tried to find a substitute but couldn’t find one that replicated all the features of the desired land. o Note: It would be highly speculative to calculate the damages in a monetary sense o SP is granted where damages are inadequate (i.e. it’s not just about money), but also where it is all about money but damages are too difficult to calculate.
Earthworks 2000 Design Group Inc. v. Spectacular Investments (Canada) [2005, BCSC]

Facts: Convenience store

Held: you can build a gas station w/ convenience store pretty much anywhere.
Damages ≠ inadequate. Not a unique or complicated business model like in Dodge.
Raymond v. Raymond Estate [2011, SKCA]

Facts: Farmland dispute.

owned part interest in land and K’d w/ ∆ for another portion.

Held: SP granted.

Reasons o Personal reasons why ownership of this particular family farm was unique. o Note, though, that farming is generally a commercial operation, so must look at rel’ship b/w ∆ and the property in question. Is it really tied to the family thing or is it just that he needs to expand? o TJ refused SP on grounds that he suspected

real interest in property wasn’t unique, but that it was actually part of a long-standing family feud in which he was seeking retribution against his siblings. o CA: that’s irrelevant, so long as we also believe he wanted this particular piece of property. o See list of factors at pg. 1029.

Proximity – yardsite for his cattle

Emotional attachment to the land (accepted)

Right across the road from his house
Dewees v. Morrow [1932, BCCA]

Cost of repair: $1458

Cost of replacement: $900

Court says only entitled to cost of reasonable substitute, not cost of repair
Darbishire v. Warran [1963, Eng. CA]
 Repair: £192
 Replacement: £85

Same as Dewees -

not entitled to cost of repair where that cost exceeds that of a reasonable substitute .
49

BUT :
O’Grady v. Westminster Scaffolding Ltd. [1962, QB]
 Repair: £253
 Replacement: £180-250

Held: entitled to repair even though repair costs exceed reasonable cost of substitute.

Reasons: o Personal attachment to the car.
 
had named it, replaced the engine three times already

So, he had shown that he was willing to spend the $, and that he HAD done the work.

Remember the policy from DeFroberville : if

wouldn’t do the work otherwise or isn’t actually going to do the work now, shouldn’t be entitled to make ∆ pay for it. o Price was close to repair cost. o Note: monetary value of the wasn’t fully ascertainable, as it kept appreciating due to status as classic car. o Plus, court noted that it was difficult to find a reasonable substitute given the condition he had kept it in. o Note that

was NOT allowed to claim for 5 months of rental cars while waiting to have car repaired.

Duty to mitigate; goes to time of assessment. o Court did make a deduction from the repair costs for betterment – the car was in slightly better condition than before, and avoided 5 months worth of wearand-tear/depreciation, thus increasing its value.
Factors to Consider Re Reinstatement for Damage to Chattels:

Intent to do the work

Disparity/size of gap in cost

Availability of reasonable substitute o [Appreciating or depreciating asset?]

Degree of subjective attachment
Taylor v. Hepworths Ltd.

Facts:

owned shops & billiards hall. ∆ caused fire and property is basically destroyed.

claimed cost of rebuilding the hall.

Held: Not awarded.

Reasons o 
did not actually intend to rebuild the hall  it was only an investment property, and rebuilding would not have been a good investment o Basically, there was no diminution in value because

was going to have to tear down the building to redevelop the site.
50


So, really, he saved money by not having to pay for the tear-down.
Jens v. Mannix & Co. [1978, BCSC]

Facts: Oil spill makes house uninhabitable; will have to dig up overburden and replace all contaminated soil, then build entirely new house. Property could likely be sold for more w/o house, since zoned commercially and has greater value as such.

Held: full value of repairs awarded by TJ; CA reduced for betterment.

Reasons o 
actually lives there and wants to stay. o It’s like the factors discussed in Dodge :
 
has proximity to car museum in which he keeps his cars

Local community likes it and gave exemption to have the museum on his property o Basically,

has a credible, proven subjective attachment to this particular property, which can’t easily be replicated. o Note: this would have been a tough case to argue:
 He hadn’t actually rebuilt the house 
if he had done so, it would show real intention to do the work

Failure to rebuild leaves judges a bit nervous

because he put up with the problem for 4 years, may not use the award to rebuild and may sell the land instead, garnering a windfall.

This is probably why they scaled back the award. o Betterment

Old house; tearing it down and building new one gives

an advantage, so court makes a 10% deduction for betterment and also deducts an amount for the increase in building costs over the 4 year delay.
Kates v. Hall [1991, BCCA]
 Facts: ∆ cut down several mature trees on 
property to get better view. Cost of replacement with fully grown trees (which may not even take) is $210k, but no diminution in value of

property.

Issue: Neither amount is really appealing. The question is: what interest of the

is the court seeking to protect?

Held: Court crafted a 3-part award, tied to this policy question. o 1. Repair interest: $21,000 to plant a bunch of smaller trees w/ greater likelihood of flourishing.

Because the trees do serve an important esthetic/privacy purpose, part of the award should be to spend a reasonable amount on repairs.
 This takes care of some repairs, but doesn’t address the functional interest o 2. Functional interest: $1000/tree for lost amenity

Subjective value of having nice, full-grown trees o 3. Punitive damages: $26,000 to deter ∆ behaviour

$210k would be too much, but some punitive amount is necessary to address the egregious and flagrant breach – intentional trespass and cutting down trees to make own property go up in value.
51


Court could have awarded higher punitive damages, but:

Judge thought

was just after retribution.

Plus,

didn’t even really live there – just a few weeks a year; and they owned 8 homes each worth multi-millions.

If you look at the overall award as punitive damages, 60k is pretty high.

General Principle : we deduct windfall amounts of increased value to property resulting from repairs
James St. Hardware v. Spizziri [1987, ONCA]

Facts: o Cites similar old UK HL case ( Harbotts Plasticine ):
 
factory burned down by ∆; replaced and updated to code etc. Got more valuable factory as a result; court refused to deduct for betterment in that case. Not fair that ∆ torched 
factory and forced
 into that situation, and not fair to make

spend own money on the repairs. Lord Denning: destruction of bldg isn’t the same as of car – can go into market and get a new car, but when mill was destroyed company had to replace it. o Factory burned down and

had to build to better std b/c of building codes.
Plus getting extra years out of factory

Held: o Court accepts (but does not apply) Waddams’ argument:

Courts should deduct for betterment, then add back in the opportunity costs of the money (this was done in Safe Steps)
Safe Steps

Calculate deduction for betterment by taking betterment value [how much it will increase] and subtracting from that the interest on the amount it will cost to do the repairs. o Assumption: you can borrow the money to do the repairs, so only the interest is counted against the betterment value. If you don’t get a loan, it’s assumed that you would have invested the money on a rate of return approximately equivalent to the bank’s interest rate.
Fontaine v. Roofmart Western Ltd. [2005, MBQB]

Facts: Shingles deteriorated before expected;

had to replace. But they did last for 10 years.

Issue: if awarded full value of new shingles,

getting a windfall for those 10 years’ coverage. But had to spend own money 5 years earlier than expected.

Held: court awarded 5 years of the value of the shingles (but actually only 2 years because it took a while to replace the shingles) o Looked at opportunity costs over time the advance was made by

, and amount
52

of money spent. o Betterment: 10 years.

Theoretical Basis o Compensation, deterrence, corrective justice, dispute resolution o Is tort the best way to achieve these goals? Alternatives?

Itemizing Damages o There must be a rationale for why particular heads of compensation are used, and in what amounts.

Tort law can act as a junior partner in injury response. Other sources include: o Workers compensation:
 Public compensation scheme, available in every province; provides compensation to people injured in the course of employment

Vastly most significant than tort law in providing compensation.
 Plus, worker’s comp is exclusive/exhaustive 
it’s a complete system; can’t go to worker’s comp then move to claim in tort law as well. o Provincial health insurance o Automobile insurance – first party no-fault benefits

People buy liability insurance, to cover them in the event that someone is injured, but we also have first party benefits to give compensation if the driver is injured.
 This helps keep smaller injuries out of court, reducing transaction costs of providing compensation. o Private disability insurance o Public disability plans (pensions): EI, social welfare, CPP

Tort as a problematic mechanism for addressing injury/disability. o See Dickson J’s comments in Andrews , at pg. 492. o Efficiency: litigation is uncertain, time consuming and expensive. o Tort provides uneven coverage. o Tort in the world of insurance does not promote deterrence o Occasional spectacular lump sum awards highlight:

(a) moral arbitrariness
 (b) pragmatic problems for prediction and management

SCC dealt with three cases at once: o Andrews v. Grand & Toy ; Teno ; Thornton v. Prince George School o Court came very close to legislating in these decisions. o Set out a highly systematic approach to personal injury damages

Special (past) damages

General (future) damages – itemize for appellate review and settlement predictability.
53

o Cost of care, standard of care, predictions.

Collateral benefits – how are these addressed?

Taxation: o (a) deducted from lost earnings? o (b) add-on for impact on award?

Discounting to a lump sum

Management fees, structured settlements
 See Dickson J’s comments in
Andrews at pg. 492

Courts need to consider the amount needed for annual support over a lifetime, but also how spending power will be reduced over time.

Shifting needs are an issue – a lump sum is a once-and-for-all decision. o Andrews, 21, has a remaining life span of 43 years, and is awarded $740k to provide for his needs over the next 43 years. o BUT, we don’t know what his needs will be over that whole time period. We sort of need to, though…

Contingencies o How courts deal with uncertainty and future changes.

How courts deal with future changes in the value of money
Theoretical basis:

Discount rate is a percentage that takes into account the combined effect of investment earnings and inflation. o A dollar today is worth more than a dollar tomorrow.

Theory: future value must take into account the negative effects of inflation, and the positive effects of compound interest.

Rule from the Trilogy: subtract inflation (3%) from interest rates (10%) to determine the discount rate (so, 7%). o So, to give $100/year:

Need $100 this year, 93 next year (100% minus 7%), 87 the following year (93% minus 7%), 81 the next year, and so on.
The Trilogy Mistake:

The inflation rate was higher than the court anticipated, and the difference meant that the assumed rate of return was basically halved.

Data in 1975: o Inflation: 10% o Long term inflation forecast: 3.5% o Long term bonds: $10% o So, to produce $100 in 45 years:
54


7% = $4.76

3% = $26.44 o $500,000 lump sum for 45 years (per Andrews )

7% = $34,346/year

3% = $19,798/year
Law and Equity Act

Corrects the error and facilitates settlement and adjudication

Discount Rates: s. 56 o (1) in this section:
 “discount rate” means the rate, expressed as a percentage, used in calculating the present value of future damages.
 “future damages” means damages to compensate for pecuniary losses to be incurred, or expenditures to be made, after the date of the trial judgment in a proceeding. o (2) The Chief Justice of the Supreme Court may make regulations prescribing:
 (a) the discount rate that is deemed to be the future difference between the investment rate of interest and the rate of increase of earnings due to inflation and general increases in productivity, and… [2.5% for future earnings]

(b) the discount rate that is deemed to be the future difference between the investment rate of interest and the rate of general price inflation.
[3.5% for cost of care] o (3) In a proceeding, the discount rate prescribed under (2)(a) must be used in calculating the present value of future damages that are intended to compensate for or are determined with reference to
 (a) loss of earnings because of partial or total loss of income-earning capacity, or

(b) loss of dependency under the Family Compensation Act o (4) The discount rate prescribed under (2)(b) must be used in calculating the present value of all future damages other than those referred to in (3).

The conundrum: money can’t buy happiness. Pain and suffering is not commensurable
(can’t be measured in money)

Issue: how do we compensate something with money that can’t really be measured in money? o The old approach: pain & suffering, lost amenities or enjoyment of life, lost expectation of life  all awarded with general arbitrary sum

Sense that tort awards were getting out of control.
 Courts’ approach in personal injury cases didn’t lend itself to predictability. o Judges and juries were just tossing out numbers and it was difficult to see the parameters for an award.
55

o Uncertainty bred a litigation explosion – can’t settle if you don’t even know what the range of damages is.

Dramatic escalations in auto insurance premiums

Defensive medicine: o Doctors fleeing North America to practice in jurisdictions where the fear of tort litigation wasn’t so high. o Changing medical practice b/c doctors were always trying to protect against liability.

Public services and amenities (schools, parks) o Rash of closures of fun playground equipment, ridiculously overprotective safety measures put in because of the fear of liability/increased costs.

Media focus on spectacular awards
As Opposed To:

The Conceptual Approach o Trying to capture human facilities and ascribe costs to them
 Sometimes described as a “meat chart” approach. Injury, and a dollar value associated therewith. o Does get some certainty, but not the best.

The Personal Approach o Developments on the conceptual approach: take the same chart, but personalize it. o A hand injury to one person might not be as serious as to another, depending on their personal circumstances.
 E.g. a pianist’s hands are arguably more valuable. o Lends itself to ‘invidious’ comparisons 
comparability problems between injuries and consequent awards.
Basics of the Functional Approach

Consideration: not so much the category of the injury, but the way that injury affects
π’s life, and the way in which money can be used to replace/address what was lost.

Substituting one imperfect system of measurement for other imperfect systems.
The Cap

Controls social costs.

In Andrews , the court imposed a rough upper limit: o Unless in exceptional circumstances, the max award in this category is $100k. o This was done explicitly on the basis of the insurance crisis

social costs can be taken into account here as a matter of policy, to maintain some regulation on those costs.
 The ‘rough upper limit’ really operates as a cap – no courts have made awards above it.

Note inflationary increase: as of October 2012 the upper limit is about $342k.
56

Logical Conclusions of the Functional Approach

Not based on severity of the injury, but on ability to use money [See Lindal at para 17]

The same injury in two different people will likely have different non-pecuniary losses.

Issues: lost years, age
 Unconscious or vegetative π [see Wipfli ; Tonneguzzo ; Brimacombe ; Bystedt ] o Consistency? Factors? o Factors to consider in compensating for non-pecuniary loss in a brain injury case:

Ability to appreciate what has been lost

E.g. experience pleasure, pain, enjoyment, sadness

Attempts to communicate

Attentional abilities

Memories

Life expectancy
Problems with the Canadian Approach

Berryman et al
 The functional approach isn’t really applied in practice. o So, basically, everyone talks about the functional approach, but then everyone runs to the meat charts and uses them anyway.
 The cap doesn’t apply to aggravated damages in other areas o E.g. defamation ( Hill ), debate re sexual assault cases o This appears to create anomalies

Problem of compression/relative unfairness o Any award above the cap will be overturned. o The cap is meant to be reached only by really extreme injuries, etc. o Most personal injury cases aren’t about quadriplegia, they’re about whiplash and broken bones, etc. o But, awards for these things are creeping up. o So, the cap really just means that catastrophic cases aren’t getting much in comparison – not much (if anything) more than the basic injury cases o Because of the lack of regulatory scaling, the real costs of insurance and litigation are resulting from these minor injuries.

Chaos below the cap: no jury direction, no scale, no consistency o Technically, no one uses the word “cap” – judgments still call it the rough upper limit. o But no case has ever exceeded that limit, so it’s really a solid ceiling on nonpecuniary damages for personal injury.
Alternatives

Take the functional approach seriously

Remove cap entirely and leave it to juries

English model: common law conceptual approach with guidance

Australian model: statutory scale based on severity o Start at the top (most catastrophic) and scale down.
57

o So, e.g. quadriplegia = 100% of cap awarded, then lesser amounts depending on severity of injury o This model may encourage settlement (since it makes it easy to calculate damages), meaning there will actually be more money for πs (since less money spent on litigation)

Eliminate non-pecuniary damages altogether in personal injury cases o Money would be reallocated to other purposes o New Zealand has essentially abolished the tort system:

Statutory no-fault compensation scheme. Small amounts on nonpecuniary side, but uses the savings to provide compensation to a much broader class of things on the pecuniary side.

Issue: o It’s easy to quantify the lost earnings up to trial: the actual amount of money that was lost as a result of not being able to work. o BUT: it’s tougher to determine what future earnings would have been.

Theoretical basis: (see Cooper-Stevenson) o Lost actual earnings o Lost earning capacity o Lost working capacity
Step 1: Estimate the level of earnings

Probable earnings plus chances [ Andrews ]
Step 2: Consider length of working life

Pre-accident lifespan and estimated retirement date

Important: lost future earnings are based on pre-accident lifespan

the total amount π might have earned.

Note: we used to estimate that people would retire around 65, unless other factors impacted it. But now that mandatory retirement has been eliminated, parties get into arguments about this more often.

Complicating feature: the issue of lost years o Example: A 20 year old is catastrophically injured, and prior to the accident would have worked until 65. As a result of the accident, lifespan shortened by
20 years, such that they will die at 45. o Lost earnings will be calculated on the basis of pre-accident lifespan, and from that award π is supposed to pay costs of living while they live, and then they will die and [theoretically] won’t have used it all because of having fewer years. o Issue: windfall to estate?

Basically, the unused portion will increase the estate and mean that the heirs will get a larger inheritance than they otherwise would have. o Note: living expense deduction for lost years [ Tonneguzzo , 1994 SCC ]
58

Lost Years

In Andrews and Tonneguzzo , courts deducted 50% from the lost years o Because they won’t actually live to the age they would have, deduct for the lost years for the windfall to the estate

typically 50%
Step 3: Factor in Contingencies:

Positive and negative impacts on awards

Statistical contingencies : affect everyone o ∆s and πs will bring evidence about general contingencies that would have impacted π’s work years/income etc.

Individualized contingencies : lost chances [see e.g. Conklin v. Smith , 1978 SCC ] o Can be positive or negative

in Conklin
, the π was working toward a higherpaying career, so the court awarded more on the change that he might have made a career change.

Caution: avoid double discounts and resist over-estimates o Double Discounts: see e.g. Andrews

Court estimated his working life at 65, but CP pension would have kicked in at 55, so they set that as the limit.

Then, they deducted 20% from the award for the chance, among other things, of early retirement.
 Factored in a possible unemployment period as well.
 Advice: don’t accept a 20% contingency deduction, because it’s probably too high – even though that happens all the time. Bring statistical evidence to bear, because actuaries have info on everything.
Step 4; Account for Residual Earnings

Consider the difference between pre-accident earning capacity and post-accident residual earning capacity [see e.g. McCabe ]

Earnings are only going to be reduced to zero in catastrophic cases

in most cases, though, π may earn less or will be unable to work full-time.
Step 5: Deduct for Any Overlap with Cost of Care

You would already have spent money on food etc., so if the cost of care calculation includes that sort of expenses (i.e. in a nursing home), deduct for this. o Deduct fully over the course of the prior life expectancy
Step 6: Factor in Collateral Benefits

Other sources of income replacement o E.g. employer wage continuation, sick benefits, disability insurance
Step 7: Discount to Present Value

See above

subtract inflation rate from interest rate and apply that percentage to discount the value.

S. 56 of Law and Equity Act
59

 In calculating lost earning capacity, we generally don’t take taxation into account. o i.e. courts calculate lost earnings on a pre-tax basis, even though awards are not taxed.

So, in Andrews , π was awarded based on loss of $1000/month, even though he would really only have taken home $800/month after tax if he hadn’t been injured.

Windfall?
Theoretical Justification

It’s a capital asset

…this seems wrong. o Idea: the award is a valuation of the person’s earning capacity, not their actual lost earnings. o Basically, the court says you’re valuing the earning capacity as an asset.
 But… no we’re not.
Practical Justification

Buffers errors

The calculation is complicated

Difference may be partly offset by tax on income from award o Income from award is subject to the usual rules of taxation. o So, maybe that justifies it. We just ignore it on both sides and pretend it’s a wash.
 It’s not really equal, but it may be close enough that it’s not worth the effort to adjust the system.
Past Loss

See Insurance (Vehicle) Act, s. 98: o Despite any other enactment or rule of law but subject to this Part, a person who suffers a loss of income as a result of an accident or, if deceased, his or her personal representative, is entitled to recover from designated defendants, as damages for the income loss suffered after the accident and before the first day of trial of any action brought in relation to it , not more than the net income loss that the person suffered in that period as a result of the accident .

Past income loss is replaced on a post-tax basis, per s. 98.

Basically, we know what the take-home pay is, so we replace that.
 Where π has work history [e.g. Andrews ], can use direct evidence. o Use current wage as a baseline o Consider educational and motivational track record o Consider evidence re life plans as basis for adjustments and contingencies

Children and unwaged work: lack of individualized evidence causes problems of calculation. o Conventional sums vs. individualized awards:
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
Teno ,
28
Fenn and Penso : $6000 awarded in each case as a rough estimate of annual earning capacity.

Courts have shifted from Teno model to statistical methods assessment
Issues of Fairness

What are the key indicators of success? Can we agree on these? o E.g. height; birth order; parental education attainment, socio-economic status, and ethnic origin

But, is it really fair to replicate the outcomes of an unfair world? Is it worth court time to do this?
 Response: the tort system isn’t there to fix the world; it’s just there to replicate it 
The whole compensation model is based on replicating what the outcomes would have been, but for the tort.

Male/female: if you compare prospects of 4 year old boy and 4 year old girl, you get a disparity of about 25% o (1) wage disparity o (2) labour force participation – women are more likely to be in and out of the labour force.

The tort system is just perpetuating these inequalities.

Gender factors in damages assessments o Statistical inequality (wage rates and labour force participation) o Individualized gender-specific contingencies (labour force participation)

Gender neutral statistics o Tucker “the measure of the plaintiff’s earning capacity should not be limited by statistics based upon her sex”
 The court chose male earning staples to make the prediction.

(Tucker is discussed/described in McCabe v. Westlock )

Court then deducted for contingency, and based on an unexplained contingency basically brought it back down to the female earnings rate. o McCabe – corrective justice vs. distributive justice

tort didn’t cause the loss, and damages are not the instrument for remedying social inequality

Corrective justice vs. distributive justice:

Function of tort law;

Also look at it in terms of fairness to the defendant  ∆ didn’t cause the loss of societal inequality
Addressing these Issues:
 It’s becoming common for courts to adjust upwards for female πs, for two reasons: o Enhance past statistics with the contingency of future improvement
 The situation is improving, especially in relation to inequality of wages.
28 Teno : π suggested taking mother’s earnings as model for the child. Court says no evidence that child would also become a teacher. Chooses $7500 as conventional sum, just above poverty line, and then reduces by 20%. Problem: there was no evidence that she would be impoverished and on welfare, either.
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
Participation rate is still a significant issue, but the wage gap is narrowing. o Offset deduction with lost homemaking capacity

Even unwaged work can represent a loss of earning capacity

So, might start w/ lower participation rates and get a lower number, but might increase the number to account for the fact that, but for the accident, a π might have worked in the home without a wage but enhancing the economic welfare of the home.
Compensating Household Services:

[see Fobel and McIntyre ]

Issue: how do you measure lost homemaking capacity, then?

Household services are made up of: (1) direct labour and (2) managerial functions o So, can be broken up into different functions. For things that have market wage rates, compare with those – e.g. cost of childcare, gardener etc. o Courts haven’t used a lot of evidence to value the managerial side of homemaking, likely because there isn’t really a labour market for that. Unless you’re super rich, maybe?

Past loss o Where there has been an actual expenditure: special damages based on actual cost. o Where no expenditure and work left undone or done inefficiently: compensated on loss of amenity basis

based on hypothetical cost [per Fobel ] o Where work was done by others: in trust awards.

Future loss o Where services will be replaced: full cost included as cost of care o Where services may not be replaced: impairment compensated based on

Issues: replacement cost per Fobel . o 1. What counts as work?
 Not all expenditure of energy counts as work o 2. Wage rates are low

So much of household work is performed on an unwaged basis that it makes the market rates low for that work

If all homemakers got wages for that work, labour costs for household work would increase substantially.

One idea to address this: o Can use the individuals’ evidence of what they value labour at o The value of household labour is related to the opportunities lost or given up.
 For example, say you’re a practicing lawyer and you take two years off to raise children. The value of childcare to you is your lawyer’s salary for those two years. o But… that really promotes inequality since it’s valuing the same work differently for different people.
Compensating Unwaged Work (or Underemployment)
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Charitable and Religious Organizations
Turenne
 Facts: Teacher, but member of religious order, vow of poverty so she didn’t take any wage for teaching. Accident, ∆ claimed no damages b/c no lost wages.

Held: Compensated in the full amount someone else would have earned in that circumstance o She was working as a teacher, compensate her accordingly. o Voluntary choice to deploy earning capacity in a way that she didn’t earn anything.

Not a legal question
 Ensure sufficient expertise surrounding π to assess injuries, consequences, prognosis, and build around that an understanding of medical/rehabilitation needs

The most important categories of need are: o Medical treatment o Rehabilitation

physiotherapy, pain mgmt, etc. o Ongoing daily care

attendants o Transportation o Prosthetics, drug costs o Physical arrangements and special equipment

wheelchairs, vehicles o General living support
Mitigation

Obligation to mitigate when injured – either by seeking alternate employment, or by seeking treatments. o Issue: if π doesn’t seek treatments, or stops at some point, is ∆ responsible?

But see Andrews : there is no duty to mitigate associated with the standard of compensation – only a duty to be reasonable. o There is no duty to accept less than the appropriate amount of compensation
 that’s not mitigation. o Note: Dickson J said it wrong in Andrews : he said there is no duty to mitigate in a personal injury case, but really there is – just not in relation to the standard of care you’re entitled to.

There is a general duty to mitigate, which applies to the level of need [ Janiak ] o If there is good evidence that a treatment will resolve the injury, you can’t ignore that option then seek damages instead.
Test of Reasonable Expenditure

Would a reasonable person of ample means make the expenditure on themselves?
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 That’s about as detailed as the question gets – not a lot of refining.
 A π is not entitled to unlimited expenditures just because it’s someone else’s money, but ≠ limited by personal circumstances/impecuniosity. o The test is the level of expenditure that a reasonable person with some budget constraint (but a big budget) would spend on themselves.
General Notes on Determination of Standard

Consideration of Social Cost? o Relevant only in choosing between acceptable alternatives

Level of care o Expectation of ordinary level of family care only o Home care fully funded where preferred and appropriate [ Andrews , Bystedt ], but sometimes institutional care is preferable

This will depend on the level/duration of family support, the need for multidisciplinary care, the expected benefits of socialization, etc. [See
Krangle ]
29

Consider life expectancy (post-accident)
Contingencies re Needs and Levels

Recall, these can be positive and negative on the award amount

Frequent mistake: deducting for early death. o Avoid double deduction re duration/lifespan [ Andrews para 50] o Early death is already factored into the actuarial tables used to calculate average lifespan for that condition.

Contingencies basically guarantee either over- or under-compensation [ Andrews para
51] o 20% is the conventional deduction [see e.g. Andrews ]. o This often results in under-compensation

if you’ve really done a detailed analysis of the factors, why would you need an additional deduction for presumed contingencies?

Contingencies can be individualized based on evidence

Can use contingencies where there is a need to evaluate chances of a future event occurring that would merit additional compensation

probabilities and possibilities can be factored into contingency format [see e.g. Schrump v. Koot
30
; Janiak ]
31
29 Krangle [2002, SCC] : Group home was in best interests of π, and cheaper too
30 Schrump v. Koot : π suffered back injury, evidence of 25-50% chance of needing further back surgery.
Adopting civil std of proof, ∆ says not proven things will get worse, and can’t give damages for sthg not likely to occur. Held: that’s the std when dealing w/ things that HAVE happened before trial (e.g. establishing causation), but when dealing w/ future events we take a more nuanced approach

treat the future event not as sthg that will or won’t happen, but as a contingency. In this case, because it was an appeal, the court just said that it looked like the jury had added an extra ten or twenty thousand to the award, which covered that contingency.
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o Courts will factor in a possible future event at the rate of probability

it affects damages, but discounted by probability that it won’t happen. So, for something with 25% likelihood, give 25% compensation.

Avoiding duplication with future earnings [ Andrews para 53-55]

Collateral benefits [see below]

Family care: o Presumption against conscription

we don’t want to calculate the award so as to force a family to care for the injured party o But: voluntary family care (over and above the norm) will be compensated
[ Bystedt para 164 & 181]

in a constructive trist.

Tax issues: o Ignored in Andrews [para 84-85] o The original idea: don’t worry about it

can be expensive to figure out tax consequences, and they aren’t likely to be high because of medical costs etc. o But now, we think the deduction for health care costs won’t be enough, so the award will be too low. o So, a gross-up, per Watkins v. Olafson [1989, SCC]

See relation to periodic payments o Structured settlements

Note: the income from a lump sum damages award is subject to taxation, but the lump sum itself is not (ITA exemption for damages awards)

Guardianship and management fees

Janiak is the leading case on this.
 Most mitigation cases involve a π faced with some possible medical procedures that have some chance but are not guaranteed to solve the problem, and π chooses not to proceed with the treatment.

Janiak set out an objective standard of reasonableness:

(1) Medical Opinion – what are the professionals saying? o How unanimous? How good is the medical science backing up the recommended course of treatment? Are doctors/specialists divided on the question? o In Janiak , everyone seems to have agreed on a 70% chance of significant (even
100%) improvement

Note, this is the chance of success, as opposed to the risks of surgery
31 Janiak : 75% chance that back surgery would eliminate the injury. ∆ said no damages because future prognosis is 100% cured. Held: also a chance that it wouldn’t cure the injury. So, awarded damages and deducted 75%.
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
(2) Risk-benefit analysis o The medical treatment itself might be dangerous o So, is the promised benefit worth the risk? o In Janiak , it was just ordinary surgery, so there were those risks but no additional, and the benefit to be gained and the chance of success were high. o But see Bougoin .
32
 What if π reluctance to undergo treatment stems from a genuine psychological condition/fear of the treatment?

Courts have imported the traditional tort thin skull rule into this area, to carve out an exception to the mitigation principle.
 But it’s still very narrow.
 General rule: ∆ must take π as found, and if as a result of a pre-existing psychological disability, π is unable or unwilling to pursue a course of treatment, that is an excuse and there will be no obligation to mitigate.
 Two requirements to bring a π within the exception: o (1) Condition must be pre-existing

Has to be medically established o (2) Condition must be pathological

(i.e. an illness)
 Can’t just call your family in to say you’ve always been afraid of hospitals, e.g.

It was noted in class that there may not have been any cases that have come within this exception yet.
 It’s not clear how religious beliefs would play into this test o ≠ illness, so not within the test, but maybe a sub-category test or something like that will be created.
 Note: if ∆ caused the reluctance, it’s not a thin skull issue, it’s a foreseeability issue. o If it’s foreseeable that the tort would cause the lack of mitigation…∆ will be responsible.

Issue: if partner cares for injured party in the home, should the person still get compensation for the costs of nursing?

If no loss suffered, there is a windfall.

But, we balance this windfall concern with a concern against subsidizing ∆s for benefits from collateral sources.

In principle, the rule is that collateral benefits are deducted. o But in reality, there are so many exceptions that the principle is almost reversed.
32 Bougoin [2006, ONHC] : Slip & fall resulted in chronic phantom pain; psychiatrist recommended cutting off the leg to solve it. Division in medical opinion; in particular, the risk-benefit analysis was significantly different from Janiak . Back surgery is one thing; amputating a limb is another, particularly when the promised benefit is far more speculative.
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o Collateral source benefits are now only deducted in fairly unusual circumstances.
1. Voluntary Family Care

Recall: can’t conscript family members [ Andrews ]
 But, some level of ‘normal’ care may be expected [
Bystedt para 181]

Avoid the windfall problem through in-trust awards o i.e. hold that part of the award in trust for the person doing the caregiving o ON has gone further: family members in personal injury cases get their own direct cause of action for their caregiving
2. Charity

Probably the earliest exception to the deductibility rule
 Courts have long held that charitable contributions aren’t taken into account o E.g. if neighbours bring you food; mutual assistance from community groups, etc.
 Rationale: courts don’t want to disincentivize voluntary charitable providers of assistance
3. Private Insurance

It is now well-established that privately purchased insurance is not deductible.
 π is entitled to a windfall due to their individual prudence. [see Bradburn ]

Cunningham v. Wheeler goes through the insurance exception
4. Employment-Based Benefits

Can Bradburn be extended into the private insurance sphere?

Employment-based benefits deducted if not paid for. [ Ratych v. Bloomer (1990, SCC) ] o But see Cunningham , which came to the opposite conclusion

Gratuitous coverage from employer does tend to be deducted o Doesn’t fit private insurance model 
haven’t paid for it, because haven’t bought it. o But, it often fits the charity model, so it may be safe anyway.

More difficult: when employee has a contractual entitlement to the benefit o Paid sick leave

so, no income loss o Disability payments

where problem is more long term, but same effect

Direct payment [ Miller , Shanks ]

Indirect payment  total compensation theory [ Cunningham ] o Idea: π did pay for the benefit – maybe not explicitly, but they bargained for it. o Where there is evidence that the sick leave or other relevant policy was explicitly bargained for, and there are wage tradeoffs in exchange, you will get to keep it. Because it’s like private insurance at that point. o We discussed in class the distinction between collective bargaining Ks (where everything is explicitly bargained for) and individual employment Ks.
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
What you would do: bring employer into court and ask whether they budgeted the disability benefit as part of their total employment costs.
They will almost certainly say yes. o The need for evidence in these cases has been gradually diluted:
 Courts get less concerned about hearing evidence, because it’s just common sense. Benefits are part of an employee’s total compensation package.

Sick leave is also exempted from the collateral benefit rule

you pay for sick leave. o Most Ks provide for a certain amount of sick leave, and employee has to designate a day as a sick day – it’s like a bank account. o If π is injured as a result of auto accident but suffers no income loss because they used sick leave, the court still won’t deduct from the award, because π has spent their sick leave on the recovery from the accident. o Similar to private insurance – chose to buy the protection by spending sick days here.
5. Public Benefits

Probably the only place where the collateral benefit rule still applies, fairly strongly.
(a) Social Welfare
MB v. BC [SCC]

Facts: assault resulting in income loss, which was offset by social welfare benefits.

Held: social welfare benefits are taken into account, award reduced accordingly.

Reasons o Not paid for, and don’t fit the charity exemption
 Note rationale: deducting it won’t discourage government from providing social welfare. o This applies to other statutory benefits as well.
(b) Publicly Funded Care Programs

At least, those where entitlement is independent of income [see e.g. Krangle ]

If program is on limited budget and therefore entitlement is discretionary (i.e. distributed by an administrator who decides on basis of need), then courts won’t deduct it. o Charge ∆ with that cost, so π won’t be on the public program.

Courts apply a contingency where public care programs are deducted: always a risk that government might change the program, so we add a contingency for that. o If there’s any evidence that the program you will benefit from is at risk, then the court may deduct it all and then add back in a contingency for the chance that it will disappear.
(c) Health Care Costs

Subrogated.

Note: ICBC claims are exempt for efficiency (government against government lawsuits are pointless)
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(d) Employment Insurance – Repayment

Also subrogated.

See EI Act s. 45

When the other provider of assistance has claims against ∆ through the injured person.

A lot of the problems described above are now dealt with through subrogation.
How Does it Work?

(1) By contract in private insurance o Note: most of tort law is just insurance companies fighting each other

(2) By operation of law o Implied Ks, equity

courts find ways to make the outcome they want happen

(3) By statute o E.g. Health Care Costs Recovery Act (2009)

Public insurer has claim for any costs associated with an injury resulting from a tort

Note: gives provincial health minister a subrogated right of recovery in relation to medical expenditures in personal injury accidents

Except in automobile accidents

ICBC is the government too, so this would only serve to increase transaction costs.

Provisions:

"health care services" means o (a) benefits as defined in the Hospital Insurance Act , o (b) benefits as defined in the Medicare Protection Act , o (b.1) benefits as defined in the Pharmaceutical Services
Act , o (c) payments made by the government under the
Continuing Care Act , o (d) expenditures, made directly or through one or more agents or intermediate bodies, by the government for emergency health services provided in respect of a beneficiary under the Emergency and Health Services
Act , and o (e) any other act or thing, including, without limitation, the provision of any health care treatment, aid, assistance or service or any drug, device or similar matter associated with personal injury,

(i) for which a payment or expenditure is or may be made, whether directly or through one or more agents or intermediaries, by the government in respect of a beneficiary, and

(ii) that is designated by regulation under section 25 (2) (b) [regulations] ;

Beneficiary's right to recover
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o 2 (1) If, as a direct or indirect result of the negligence or wrongful act or omission of a wrongdoer, a beneficiary suffers a personal injury for which the beneficiary receives or could reasonably be expected to receive one or more health care services, the beneficiary may, subject to sections 6 [government may intervene in proceeding or assume conduct of claim] and 20 (2) and
(3) [payments to the government] , recover from the wrongdoer

(a) the past cost of health care services, and

(b) the future cost of health care services. o (2) Subsection (1) applies whether or not the personal injury was caused in whole or in part by the wrongdoer. o (3) For the purposes of subsection (1) but subject to section 20 (2) and (3) [payments to the government] , payment or expenditure by the government, whether directly or through one or more agents or intermediaries, under any of the Acts referred to in the definition of "health care services" or under any other government plan or scheme of insurance for past and future costs referred to in subsection (1) must not be construed to affect the right of the beneficiary to recover those costs in the same manner as if those costs are paid or payable by the beneficiary. o (4) The past and future costs referred to in subsection
(1) may be recovered as damages, compensatory damages or otherwise.

Obligation to claim o 3 (1) If, in his or her own name or as a member of a class of persons under the Class Proceedings Act , a beneficiary referred to in section 2 (1) [beneficiary's right to recover] of this Act or his or her personal or other legal representative commences a legal proceeding against a person alleged to be the wrongdoer for damages arising from or related to the beneficiary's personal injury or death, the beneficiary or his or her personal or other legal representative must include a health care services claim in that legal proceeding.

Government has subrogated right o 7 (1) The government is subrogated to any right of the beneficiary referred to in section 2 [beneficiary's right to recover] to recover the past and future costs of health care services under that section. o (2) For the purposes of subsection (1), the government may commence legal proceedings, in its own name or
70

in the name of the beneficiary, for recovery of those past and future costs of health care services. o (3) If a legal proceeding is commenced under section 3
(1) [obligation to claim] after the commencement of a legal proceeding referred to in subsection (2) of this section, the 2 legal proceedings are, unless the court orders otherwise, to be consolidated.

Government has independent right to recover o 8 (1) Despite section 2 [beneficiary's right to recover] and independent of its subrogated right under section 7
[government has subrogated right] , if, as a direct or indirect result of the negligence or wrongful act or omission of a wrongdoer, a beneficiary suffers a personal injury for which the beneficiary receives or could reasonably be expected to receive one or more health care services, the government may recover from the wrongdoer

(a) the past cost of health care services, and

(b) the future cost of health care services.

24 (1) Subject to this section, this Act applies in relation to any personal injury suffered by a beneficiary, whether before or after this subsection comes into force.

(3) This Act does not apply in relation to health care services that are provided or are to be provided to a beneficiary in relation to o (a) personal injury or death arising out of a wrongdoer's use or operation of a motor vehicle if the wrongdoer has, when the injury is caused, coverage under the plan, as those terms are defined in the Insurance (Vehicle)
Act , o (b) personal injury or death arising out of a tobacco related wrong as defined in the Tobacco Damages and
Health Care Costs Recovery Act , or o (c) personal injury or death arising out of and in the course of the beneficiary's employment if compensation is paid or payable by the Workers' Compensation Board out of the accident fund continued under the Workers
Compensation Act . o Insurance (Vehicle) Act s. 84:

84 (1) On making a payment of benefits or insurance money or assuming liability for payment of benefits or insurance money, an insurer

(a) is subrogated to and is deemed to be the assignee of all rights of recovery against any other person liable in respect of the loss, damage, bodily injury or death of a person to whom, on whose behalf or in respect of whom the payment of benefits
71

or insurance money is made or to be made, and

(b) may bring action in the name of the insured or in its own name to enforce the rights referred to in paragraph (a).

(3) If the interest of the insured referred to in subsection (1) is limited to loss of or damage to a vehicle or loss of its use, the insurer has conduct of the action.
 (4) If the insured's interest is not one described in subsection (3), and the insured and the insurer cannot agree as to

(a) the lawyers to be instructed to bring the action in the name of the insured,

(b) the conduct of the action or matters pertaining to it,

(c) an offer of settlement or its apportionment, whether an action has been commenced or not,

(d) acceptance of money paid into court or its apportionment,

(e) apportionment of costs, or

(f) commencement or continuance of an appeal, either party may apply to the court for determination of the matters in question, and the court must make the order it considers reasonable having regard to the interests of both parties. o Employment Insurance Act, s. 45

Development: o Watkins v. Olafson [1989, SCC] o Insurance (Vehicle) Act

Advantages and disadvantages o Guaranteed income (avoid fluctuations) o Avoid dissipation o No need for tax gross-up on care costs o Income sheltered from tax
 The income from a structured settlement ≠ taxable.
 This is a big advantage – amount that can be saved, and the savings can be shared between π and ∆. o No (or lesser) need for a management fee o Still based on prediction
 You don’t get to the structured settlement amount without making some predictions, so it’s still uncertain o Inflexible & lack of control
 Usually can’t be reopened, but could do it in some circumstances
 πs often dislike structured settlements because they lose control.

See Chesher v. Monahan

Mechanics o CL: arise in one of two ways:

(1) Negotiated settlement

(2) Through court order
72


Only under the Insurance (Vehicle) Act

so only for MVAs

All other cases: only through negotiated agreement. o Rules per Chesher v. Monahan :

Triggering consideration
 “Best interests”
 Onus on π to rebut o Note factors in Chesher , and ways to improve:

Guarantees

Higher rates

Occasional lump sums

Under the BC Insurance (Vehicle) Act, any award over $100,000 for a Motor Vehicle
Accident comes as a structured settlement: o Structured judgments o 99 (1) The court must order that an award for pecuniary damages in a vehicle action be paid periodically, on the terms the court considers just,

(a) if the award for pecuniary damages is, after section 83 has been applied, at least $100 000 and the court considers it to be in the best interests of the plaintiff, or

(b) if

(i) the plaintiff requests that an amount be included in the award to compensate for income tax payable on income from investment of the award, and

(ii) the court considers that the order, that the award be paid periodically, is not contrary to the best interests of the plaintiff. o (2) Despite subsection (1), the court must not make an order under this section

(a) if one or more of the parties in respect of whom the order would be made satisfies the court that those parties do not have sufficient means to fund the order, or

(b) if the court is satisfied that an order to pay the award periodically would have the effect of preventing the plaintiff or another person from obtaining full recovery for damages arising out of the accident. o (3) If the court does not make an order for periodic payments under this section, it may make an award for damages that includes an amount to offset liability for income tax on income from investment of the award.

At CL, no civil claim for fatal accidents.
 Deceased’s cause of action dies with them, and family members rarely have loss. o Employers had actions for loss of employees, and husbands had actions for loss of wives, but that has all been overcome by legislation.

Now, establishing a cause of action: you as a family member are not suing for the deceased’s loss on their behalf, but for your own loss as a survivor.

What can be recovered? Compare different Acts.
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
Loss of economic benefit.

Family members in particular have an expectation of support from other family members
 It’s possible to place quantifiable value on that: the economic value that you would have expected.

See Family Compensation Act : o S. 1 – Definitions:

"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. o S. 2 – 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. o 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
74

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.
 ….

(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.

Child, spouse, cohabiting/marriage-like parties

S. 2 overrules the common law.

S. 3 allows for bringing an action in the name of a deceased for the benefit of family members o The award is global, but damages are actually divided among survivors and calculated differently depending on who they are (children, spouses, etc.)

The remedies side of this issue is valuing the dependency

See Keizer .

Factors: o Deceased’s likely income o Deceased’s other monetizable contributions (e.g. housekeeping) o Less tax on deceased’s income o Less personal expenditure o Contingencies affecting deceased o Contingencies affecting survivors and period of dependency o Discounted and tax gross-up

Judicial interpretation: unless the Acts specifically state otherwise, damages are for pecuniary loss only o Grief, pain & suffering: not recoverable. Sort of.

Courts have been broadening the meaning of pecuniary loss in these cases. o No longer limited to ‘the loss of money’

now includes things that can be valued in money. o Unpaid work in the home, etc., can now be recovered
75


Loss of care, guidance, support o Children’s claims

These are considered pecuniary loss [ McDonnel Estate (1997, BC)]

Generally, awards are reduced as age of child increases [ McDonnel ]

But not always – it depends on evidence [ Bjornsen ]

May even be available for adult children where there is a special dependency of children on the parents, etc. o Parents and siblings

Children typically diminish the wealth of a household, not increase it.

Nevertheless, where a proven special relationship exists between a child and parent, courts may make awards to parents for loss of care, guidance, family support from a child. [See e.g. Mason v. Peters
33
]

The argument can be made in any case, but it will require evidence to convince the court.

Cultural evidence has been convincing in some cases [see e.g.
To and Lian
34
] o General damages for grief – vary across the country

Not available in BC – pecuniary only

Available in AB at a set rate o Problems of individualization

Inefficient dispute resolution;
 Incommensurable injuries

Arbitrary conventional sums in some provinces [see commentary in
To ]

Injunctions are equitable remedies that are now available in general law

Issues: o Entitlement

definition of parties’ legal rights o Remedy

quantification of those rights
Liability Rules

Damages

Most familiar causes: negligence and breach of contract

We confine people to damages when we want to let people violate the right when necessary in exchange for an objectively-determined amount of money.
33 Mason v. Peters [SCC] : 14 year old boy, lived with single mother. Special relationship: some dependency, household guidance, etc. Held: court gave mother a modest award for loss of support/guidance of child.
34 To and Lian : Chinese families, emigrated. Filial piety, loss of future expectancy. Cultural evidence taken into account in granting the award.
76

o E.g. where there is a social purpose or otherwise greater value o We can see the social choice in negligence law

we aren’t going to make it illegal to drive cars, for example, so we have to allow for some risk.
Property Rules

These apply in situations where we feel owners should have the power to veto any use of the right

except if they choose to trade that right.

We use property rules in situations where we want to establish markets

Available remedies: o Equitable remedies o Criminal sanctions

Courts fluctuate between using property rules and liability rules

this course is about what factors play into the determination of how to categorize a remedy.
Inalienability Rules

A much smaller category of rights

These cover situations where a social choice is made to vest people with a right, but for some reason we don’t want those rights to be tradeable, either through a market or by consent

Examples: o Voting o Reproductive material/organs (you can give it away, but you can’t sell it) o Assisted suicide?
 Can people enter into private arrangements to have someone help them die? o Prostitution? o Assault can be sold, in some circumstances

hockey, UFC, etc.

Permanent o Final resolution of a dispute between the parties o Last forever (or until overturned on appeal)

Interim o Temporary

an order with a specific start and end date.

Interlocutory o A pre-trial injunction o As court wait times have increased, these have become more common. o Things may change/trouble may arise while you’re waiting to get to court on something, o To address this problem, interlocutory injunctions are available to freeze the status quo while waiting for trial.

Negative/prohibitive o An order to stop doing or not to do a particular thing
77


Mandatory o A positive order

rebuild something, e.g. o Often goes hand-in-hand with negative/prohibitive (e.g. stop destroying and rebuild) o Courts are more hesitant in their usage of mandatory orders

Quia Timet o Means “because it is feared” or “that which is feared” o For situations where no damage has occurred but it is feared. o Seeking an order to prevent anticipated damage – from something that hasn’t yet happened.

Issue: how do judges decide whether or not to award an injunction where the harm complained of may not yet have happened?

Starting principle: courts will sometimes grant injunctions where the damage has not yet occurred, but the damage has to be “imminent”
. [ Fletcher v. Bealey ]
35 o Policy rationale: have to weigh rights of both properties
 Consider ∆ right to carry out their legal business on their property

Granting injunctions too readily would impede ∆’s right to use their property and engage in their lawful activities. o The “imminence” requirement has later been characterized not as a concept about time, but as a question of inevitability. [ Hooper v. Rogers ]
36
 Imminence is a function of probability, severity and burden on ∆.

Factors to be considered by the court [Per Fletcher v. Bealey ]: o 1. Risk/probability that harm will occur

There must be a high risk that something bad will happen. o 2. Severity of the harm

The harm must be severe – irreparable; something that damages wouldn’t resolve. o 3. Chance of avoiding harm

Could something be done in the meantime to avoid the harm?
35 Fletcher v. Bealey : manufacturer bought facility to store waste (mountain of sulphuric material). π downstream user of river water, concerned the material will leach into the river. π business makes paper, needs perfectly clean water to make paper. Hasn’t been affected yet, but worried that it will be a problem as waste leaches in. Held: no injunction. Court said the danger has to be imminent, which it wasn’t in this case. Policy to allow ∆ to use their own property. Judge had a positive expectation for future technological developments, such that before this became a problem there would be a way to prevent it. Not worth the burden on ∆ to prevent them from disposing their waste when the risk is not high and the harm wouldn’t be all that severe. Low probability was the point that killed it here – it was not at all certain that the harm would happen.
36 Hooper v. Rogers : ∆ removed a large part of soil holding upstream land. π was worried that the removal of support would result in slippage. ∆ said it hadn’t happened yet so there was no imminent danger. By the time of this application, the parties were in a toxic relationship and π doesn’t want it to continue. Doesn’t really want an injunction, wants damages, but you can only get them in place of an injunction. Held: court grants the damages, which presupposes approval of the injunction. Reasons: the land will slip, and nothing is going to stop it from happening. Court characterized imminence as a question of inevitability, rather than immediacy.
78

o 4. Consequences to ∆ of granting an injunction

The first three factors are balanced against this last consideration

Risk is a function of probability and severity, and these are balanced against the burden on ∆

Courts are very careful with quia timet injunctions, in part for fear that the progress of society will be stifled [See Palmer v. Nova Scotia Forest Industry ]
37

Where the relationship between the parties has turned toxic, for example, a court may choose to grant damages in lieu of an injunction [ Hooper v. Rogers ]

Note: Hooper v. Rogers would have been a mandatory injunction, if the court hadn’t given damages instead.

Four Factors [per Redland Bricks v. Morris ]
38
: o (1)

must show very strong probability on the facts that grave damage will occur to him in the future o (2) damages have to be an inadequate remedy

There is often a presumption with land that damages aren’t adequate, but recall that courts are changing their attitudes toward land. o (3) Benefit and burden have to weigh in favour of the injunction

So, the benefit of the injunction has to outweigh the burden.
 Where ∆ is innocent (in the sense in Redland – ∆s weren’t acting in bad faith or doing something they weren’t entitled to do), courts will take cost of compliance into account and will weigh that cost against the benefit to be achieved.
 Where ∆ is not innocent (e.g. in Bellini Custom Cabinetry Ltd. v.
Delight Textiles Ltd.
39 ), this can weigh against the ∆ and in favour of the injunction. o (4) if the court decides a mandatory injunction is appropriate, then the court must give clear definition of the order

37 Palmer v. Nova Scotia Forest Industry : ∆ was going to spray some extremely toxic herbicides in the forest. Held: no injunction. Although there’s a good possibility people will be hit by the spray, consequences aren’t clear because dosage would be so low. Court doesn’t want to shut down an important part of the economy (forest spraying) unless the risk is proven to be higher. π argued for a precautionary principle, such that things must be established as safe before allowing their use. However, court rejected this as impracticable and not in conformity with accepted practices. If such a standard were enforced, a lot of things would be removed from use and it would basically be disastrous. Courts don’t want to slow the progress of society with overzealous injunctions.
38 Redland Bricks v. Morris : ∆ uphill strawberry farmer,

downhill brickmaker. Brickmaker is on its own quarry, but they’ve dug so much clay downhill that 
farm has started to sink.

seeks order that ∆ take all necessary steps to repair

land . Held: no order. CA says that while there is a nuisance, they are choosing in this case not to impose the burden on ∆.
39 Bellini Custom Cabinetry Ltd. v. Delight Textiles Ltd.
: Laneway dispute. The benefit wasn’t trivial, but the cost of compliance was huge. Court granted the injunction. Unimpressed with ∆ bad behaviour: they were supposed to do surveys, and they did but then they life about what they found

said

could use laneway without trespassing, but it was. Also ∆s didn’t do other work they were supposed to do.
79


The law on permanent injunctions favours property owners. [see Lewvest ; 40 John
Trenberth v. National Westminster Bank

Rationale:
]
41

Injunctions are generally the preferred remedy in real estate cases. o It’s a similar idea to specific performance in land contracts. o Consumer surplus concerns, straight damages often inadequate, no substitute available, etc. o The best way to protect a property right is through the use of an injunction.
That way, no one can interfere with your right without striking a bargain. o We want to create a market around these rights, and injunctions are the best way to do this.

Where there has been a trespass, the harm to

is the loss of their veto power

the ability to exclude other people except with their consent. [ Goodson v. Richardson ]
42 o Note: this is a bit circular, since the only reason people have this veto power is because the courts grant injunctions. o Note: we can also look at what the

lost in terms of the bargain they might have been able to strike [recall Wrotham Park ]

There is a

Sometimes, despite
 ’s strong claim to an injunction, courts will use their discretion to suspend/delay an injunction, to mitigate the impact on ∆ [see e.g. Woolerton v.
Costain ]
43
 Where the conduct of the ∆ is innocent, the burden of an injunction is oppressive, and other discretionary factors weigh against granting an injunction in relation to property,
40 Lewvest v. Scotia Towers : Overswinging crane case. Established sacrosanct status of property.
41 John Trenberth v. National Westminster Bank [1979, Eng. Ch., Walton J.] : ∆ needed to repair building but couldn’t do so without trespassing on 
property (needed to use it as a staging area, bring materials across, etc.) – but

doesn’t want them to do that. Court grants injunction, despite noting that
 was fairly unreasonable and ∆ was just doing what they were legally obligated to do (to repair the bldg).
This is a somewhat extreme case, but it stands as a reaffirmation of courts’ tendency to favour injunctions for property owners.
42 Goodson v. Richardson [1874] : Trespass: ∆ laid pipes underneath the road. 
owns property under the road, but doesn’t own the road. So, can’t access the subsurface. No harm to 
- no physical interference with a usable piece of real estate. So, what has been lost to merit an injunction? Court said the loss was veto power.

has an interest, with value

the power to exclude other people except if they strike a bargain with him. So, this is an invasion of land in a series of trespasses to the gain/profit of trespasser w/o consent of owner. Court says damages are inadequate because there are no calculable damages. BUT, nowadays they could consider what would have come out of a negotiation on the matter (though at the time of this case that option hadn’t been set out yet).
43 Woolerton and Wilson Ltd. v. Richard Costain Ltd. [1970, Eng. Ch., Stamp J] : Construction near
 warehouse, ∆ crane swings over 
property. No damage, but

successfully argued that injunction was needed to protect veto power. Court granted the injunction but suspended its application for 12 months.
This effectively negated the need for the injunction, since ∆ would be done the construction by then. Stamp
J said he was following Goodson, but he wasn’t really. Stamp J. said that
Shelfer only applied in nuisance, not in trespass, where only nominal damages can be recovered – so there’s no room to substitute damages for an injunction in trespass cases. BUT, even if that statement were accurate at the time, it’s definitely not accurate now.
80

courts have four alternative routes:
1. Live and Let Live

In cases of minor trespass, e.g., courts may adopt a de minimis approach: yes, there has been a trespass, but it’s so minor that the right it infringes won’t be enforced [see e.g.
Bertram v. Builders Association of North Winnipeg ; but see also Trenberth where the court chose to enforce anyway.]
44

Where there is an established use of property by non-owners, an injunction may not be granted. [see Behrens v. Richards ]
45
2. Modify the Property Rights

In an age of air travel, it’s no longer realistic to treat overhead air travel as trespass.
It’s nuisance, and it’s measured by whether it interferes with reasonable use – no presumptive injunction. [ Bernstein v. SkyViews ]
46

An overswinging crane will at most be considered a nuisance, not a trespass.
[ Kingsbridge Developments v. Hanson Corp.
(1990, ONHC) ] o It’s part of a new understanding of property rights, under which your rights are circumscribed as you leave the ground. o While you may have veto power/right of exclusive dominion in relation to the physical/grounded portion of the property, rights fade as you go higher in the air. o Up in the air, it becomes a right to reasonable use, but not exclusivity.
3. Remedial Alteration

Courts may grant damages instead of an injunction  where the defendant is innocent
(i.e. hasn’t deliberately interfered) [see e.g.
Clark v. McKenzie ]
47
, and to grant an injunction would be unduly burdensome on ∆.

This option is becoming more appealing to judges, because (as noted above) courts can now craft damages for loss of the bargain they should have had, and can compensate landowners accordingly for interference w/ their property.

Courts can substitute damages for an injunction where [per Shelfer v. City of
London Electric Lighting
48
]: o 1. The injury to
 ’s legal rights is small; o 2. The injury can be estimated in money;
44 Bertram v. Builders Association of North Winnipeg [1915, MBKB] : There is no apparent difference between this case and John Trenberth , but Trenberth is the primary case and Bertram is an outlier.
45 Behrens v. Richards : Local village always used a certain path across property, but no legal right. New owner seeks injunction to prevent people from using the property. Held: No injunction. Yes, no legal right, but that had always been the way the property was used, and

knew that when they bought it.
46 Bernstein v. SkyViews
: Overflight airplane photos of property ≠ trespass. Measured in nuisance by whether the action interferes w/ reasonable use/enjoyment of property.
47 Clark v. McKenzie [1930, BCCA] : When ∆ built house, didn’t know they were trespassing. Minor interference which barely reduced the property value. Held:

got $50 in damages, no injunction to tear down.
48 Shelfer v. City of London Electric Lighting [1895, Eng. Ch., Smith LJ] : Nuisance case;

seeking injunction against a noisy electrical utility.
81

o 3. The injury can be adequately compensated in money; and o 4. The case is one in which it would be oppressive to the ∆ to grant an injunction

Canadian courts have consistently applied Shelfer – in a trespass context as well as nuisance. [see e.g. Vaz v. Jong ]
49
4. Statutory Intervention

BC Property Law Act

S. 34: the BC Supreme Court can make an order allowing modest trespass on neighbours’ property if necessary to conduct repairs o In practice: if owner objects, trespasser has to go to court and get an order giving them that authority. o So, this takes care of cases like Trenberth .

S. 36: where you build something on neighbour’s property and you are innocent, the court can modify the property lines on payment of an appropriate amount of money. o Basically a codification of Clark v. McKenzie

the court can order payment of damages and then transfer the property to ∆ who has built the trespassing structure.

In nuisance injunctions, the interest being protected is still an interest in land, but not the veto power: it’s the right to reasonable use and enjoyment of property .
 Nuisance is generally an indirect interference with owner’s reasonable use and enjoyment, arising out of the use of a neighbouring property.

The key: balancing competing property rights.

Nuisance gives flexibility in two ways: o 1. It’s much easier to balance interests and find a lack of nuisance 
as opposed to trespass, which is pretty much yes/no.

There is very little room for interest-balancing in trespass, but the definition of nuisance is predicated on this idea: it must be unreasonable

this leaves courts with the discretion. o 2. Even where nuisance IS found, the remedy can be tailored to the situation.

Most dramatically by giving damages instead of an injunction
 There’s really no bright-line test for nuisance – it’s highly fact-specific and judgespecific [see e.g. Miller v. Jackson ]
50
49 Vaz v. Jong : Neighbours were already at odds due to a separate issue, and

sought injunction because
∆’s upper porch and some eavestroughs overhung  ’s property. Held: injunction granted, but court noted that they were not presumptively obligated to do so. Court distinguishes Lewvest (prefers nuisance to trespass in air cases, but even if trespass we can import a damages assessment). Applying the Shelfer factors: it’s a fairly trivial interference and it could be compensated in money, but it could also just be fixed, for a relatively modest cost. Just cut off a bit of the porch and move the downspout

∆ can fix the whole thing for about $2k. So, wouldn’t be oppressive to ∆. But if it were oppressive (e.g. if the cost were much higher), court would have the power to order damages instead of an injunction.
50 Miller v. Jackson [1977, Eng. CA]] : Cricket balls coming over into a development, a few times/year.
Three judges made three different findings: Denning MR said no nuisance no injunction; Cumming-Bruce
LJ said nuisance but no injunction since it’s too extreme and we want to allow people to play cricket;
Geoffrey-Lane LJ said nuisance and injunction, on basis that physical danger to property owners means no room for balancing ∆ interests. So, no injunction, but because Denning ordered damages despite the lack of
82

 “First in time” is not an excuse for nuisance [despite Denning MR in Miller v. Jackson ; see Spur v. Del Webb ]
51 o Something can become a nuisance due to changing nature of a neighbourhood. o If an established use was always a defence to a nuisance claim, it would freeze the status quo

different areas couldn’t evolve to new uses over time. o Geoffrey-Land and Cumming-Bruce hit this policy concern in Miller v.
Jackson , even though Lord Denning doesn’t. o BUT, ‘first in time’ status might factor into the selection of a remedy.
 “Character of the neighbourhood rule” [per
Miller v. Jackson ] o What is reasonable depends on the character of the neighbourhood. o Farming communities vs. industrial vs. residential areas  different standards of acceptable use/behaviour. o What constitutes a nuisance will vary depending on the normal/existing practice in the neighbourhood, up to a point.

Public interest will factor in o But beware of competing public interests [ Miller v. Jackson ; Palmer v.
Burnaby ]
52 o Note: while allowing free use of a public park may be in the public interest
[ Miller v. Jackson ], this will not apply on private property, such as a golf course [ Sammut v. Islington Golf ]
53

Injunctions cannot be overly broad - usually won’t prohibit an activity entirely, just put limits on it [see e.g. Cattel v. Great Plains ]
54

Courts may choose to award Compensatory Injunctions
 
gets their order, but have to pay ∆ damages for it. [see e.g.
Spur v. Del Webb ]

A court may award damages in lieu of an injunction, which may include both past and nuisance finding (probably so there would be a clear 2:1 decision between him and C-B). The big balancing factor: public interest in letting people play cricket. There are more people in favour of cricket than people whose windows are being smashed by cricket balls. Though note that there is also a public interest in housing developments, so be careful about public interest considerations

they are highly POVdependent.
51 Spur v. Del Webb : huge cattle operation; developer bought thousands of acres w/ plan to turn into residential area. Lots of manure,

developer sought injunction against the manure. Held: court granted the injunction, but required

to pay ∆ the value of his farming operation as a going concern. Rationale: First in time ≠ excuse; tons of manure in what would soon be a residential area = nuisance/health hazard. So, injunction required, but compensation necessary.
52 Palmer v. Burnaby [2006, BCSC] : Too many concerts in the park,

seeking injunction to shut them down. Held: no injunction. Live and let live. Yes, concerts can be noisy, but the city was trying to contain the noise and stop the concerts at a reasonable house, and also the public interest weighs in favour of allowing the concerts to continue (over the interest in peace and quiet in the neighbourhood).
53 Sammut v. Islington Golf [2005, ON Sup. Ct. J] : Golf balls breaking windows in nearby house;

knew there was a golf course there when he moved in. Golfing ≠ public park – can’t use public interest argument.
Planning permission was given, houses were built, therefore the golf course has to do something to prevent the balls from flying over into

home. Held: court granted an injunction against golfing on the third tee, so
∆ has to rearrange the course.
54 Cattel v. Great Plains [2008, SKCA] : TJ gave absolute injunction against golf balls; CA overturned as overly broad. Can’t prohibit playing golf – the neighbourhood is used for playing golf and the occasional stray ball should be tolerable. CA reworded injunction to “enjoin the golf course from allowing users to strike golf balls onto the
 ’s property in numbers that are greater than would be expected...” So...basically meaningless?
83

future damages. [see Boomer v. Atlantic Cement Co. Ltd.
]
55

Canada Paper v. Brown o Canadian equivalent of Boomer , except they went the other way – company couldn’t continue b/c it would be appropriating property rights of π. o Follow CP but consider both.
 Where there is a significant disparity between the harm to ∆ and the gain to 
, courts are reluctant to grant an injunction [see Bottom v. Ontario Lead Tobacco ]
56

Courts may suspend or delay a nuisance injunction, rather than imposing an immediate requirement on the ∆. [see e.g. 340909 Ontario v. Huron Steel ] 57

Sometimes, the civil process is used to enforce criminal or quasi-criminal statutes, or to enjoin a public nuisance.

So, this doesn’t apply in situations where it’s a clearly established private right associated with land

rather, it’s about generalized public rights, usually emanating from a statute.

Two issues with regard to injunctions protecting public rights:

Generally the AG – chief law officer, charged with enforcement of criminal law and general protection of public rights/duties.

Individuals generally cannot, except: o Where statute confers a private cause of action

This is somewhat common – trading statutes. o Where an individual can prove that they are specially and directly affected

Goes beyond generalized offense at the criminal act; they must be uniquely affected by the wrong.
55 Boomer v. Atlantic Cement Co. Ltd.
: Industrial pollution – relatively serious pollution from ∆ factory.
Analysis is focused on social utility: an injunction will stop the pollution, but will also shut down factory that produces useful/necessary things and is an important part of the local economy. Majority says shutting down the plant would be sufficiently burdensome that they would withhold the injunction and grant

“permanent damages” – damages for past and future harm. Do an estimate of the likely future harm and pay for that. However, in this case the court didn’t actually make this award – they awarded the injunction and said it would be withdrawn once the parties agreed as to damages. Minority argues that denying

this injunction basically amounts to expropriation of their land. But, that’s not really the point – someone is inevitably going to lose rights here (either right to clean air or to carry on business). The problem is symmetrical.
56 Bottom v. Ontario Lead Tobacco [1935, ONCA] : Air smelled like tobacco, tars released into the air.
Huge industry at the time. Held: no injunction. Greatest disparity between gain to

and disadvantage to ∆.
Factory employed over 200 people, was a significant part of business, etc.
57 340909 Ontario v. Huron Steel [1990, ONCA] :

owned apartment building in Windsor, said tenants complained about the noise at ∆ steel stamping plant and that vacancy in apt bldg is high and property values down b/c of the noise problem. ∆ counter: employ a lot of people, have brought engineers in to try to diminish the noise and don’t want to be shut down. Held: court allowed ∆ to operate, giving them 6 months to complete the already-planned work on the bldg to decrease noise. Wrote injunction such that they just had to do what they were already planning to do – get the sound down a bit – without forcing them to shut down the factory.
84

Concerns

[per Gourier ]
58

Double Penalty o Criminal sentence and also injunctions = overlap. o It’s rare to get both criminal and tort damages in a sexual assault case, e.g.

Judicial Legislation

Issues of process and proof o There is a lower burden of proof in civil court o Single judge, no jury o No access to some defences – e.g. constitutional arguments about statutes o Basically, it’s much easier to get an injunction than a criminal conviction. So, you could be innocent of the criminal offence but then guilty of contempt of court re the injunction. o A statutory bar is arguably already an injunction.
When Can a Public Rights Injunction be Obtained?

1. Where there are health and safety issues

2. Where the penalty in the statute is inadequate, and
 3. Where ∆ is a habitual ∆ 
repeated flouter of the statute; keeps getting fines and not stopping.

These three factors probably apply to 90% of injunctions granted to enforce public rights
AGAB v. Plantation Indoor Plants
 ∆ company was enjoined from violating the Lord’s Day Act, and disobeyed a court order by continuing to operate on Sundays.
 The SCC had struck down the Act, but the order still applied and thus ∆ was in contempt

Note: in another similar case, where the ∆ violated an injunction while appealing it, the
CA struck down the injunction but found them in contempt for violating it.
Robinson v. Adams [1924, ON]

The equitable jurisdiction of a civil court cannot be invoked against a crime .

There may also be a civil wrong done to an individual, but where parliament has forbidden acts, then unless a private property right is also affected, civil courts shouldn’t interfere and forbid by injunction something already forbidden by parliament.

Also, try not to touch the criminal law with civil.
AGBC v. Couillard
58 Gouriet v. Union of Post Office Workers :

wanted to send mail to South Africa during Apartheid
85


Facts o Note: you can have a private nuisance that is also a public nuisance.

Some nuisance came from common law into criminal offences – e.g.
CC s. 180: criminal nuisance.

AGs and Courts have set a residual jurisdiction where the AG can bring actions regarding public nuisances.

Issue: this case was about a prostitution issue o Street solicitation is the (a) part that’s illegal. It’s kind of a nuisance based offence – keeping sidewalks clear, etc. o In 1978, Hutt v. the Queen added a requirement that conviction was only available on these provisions where the behaviour was “pressing and persistent”

The policy was to avoid public annoyance, so the SCC in Hutt said that you had to establish a certain level of public annoyance to pursue a penalty.

The police felt that with this high bar they could never get convictions, so they felt they couldn’t enforce anymore. o So, the province brought an action for an injunction, on the basis that street solicitation is a common nuisance.

Held: McEachern J granted the injunction, even though the behaviours required in the criminal code probably couldn’t be established. o Common law grows with the times.

Note: the actual effect of this was to shut down street solicitation in the West End of
Vancouver, and move it all to the other side of Granville.
AGNS v. Beaver

Same issue as Couillard . NS AG basically brought the same application.

The NSSC and CA refused the injunction.

Reasons: o You have the whole criminal code – use that. And if you can’t use it, it’s not the courts’ job to change it. o It was the SCC who interpreted the law to make it difficult to charge street prostitutes, so why should other courts provide a way around that?
Reconciling Couillard and Beaver?

How can the BCSC step in to ‘solve’ a problem where the SCC has made the ruling that caused the difficulty? o Where the SCC says we won’t interfere with street solicitation unless the behaviour is ‘pressing and persistent’, why can another court step in and create an inconsistent enforcement scheme?

Note: a bunch of municipalities tried to ban street solicitation, but the SCC struck down those laws as unconstitutional, since cities aren’t allowed to make criminal law.
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Introduction & Context

These are injunctions given before trial

They are designed primarily to deal with the risk of harm that litigants are exposed to as a result of delays associated with trial.

Interlocutory injunctions have been available for hundreds of years, but have dramatically increased in usage recently o People used to be able to get into court faster, so it wasn’t as necessary to get a pre-trial injunction. o Also, the traditional approach and threshold made it difficult:
 The old rule was that you needed a strong prima facie case  so, you had to show that you were likely going to win at trial.

Challenges in civil procedure: o Social, economic, and technical developments have created problems o In the 1970s, a crisis in civil litigation began.

There was a lengthy time period before court, time spent in court, then a delay while waiting for judgment

Delays of 1-3 years are not at all unusual. o Plus, things outside of court have sped up considerably:

Due to globalization, computing, and worldwide banking, ∆s can get out of jurisdiction
 With the click of a button, ∆s can move assets outside the national legal regime.

1975-1980: American Cyanamid , Mareva , Anton Piller

three important cases decided by UK courts, basically creating three new remedies. o Cyanamid establishes a general broad framework for all interlocutory injunctions
 Sets out new rules about how they’re going to be made available, analyzing the risks
Jurisdiction & Procedures
Law and Equity Act s. 39

Injunction or mandamus may be granted or receiver appointed by interlocutory order o (1) if emergency, order can be given where “just or convenient” 
don’t get too reliant on that; still strict. o (3) order can be requested/granted before the cause
BC Supreme Court Civil Rules:

R. 8 – Orders other than at trial o Notice

goes to court and to ∆ o Summarize factual and legal arguments you will make, and then ∆ is aware; it’s like a mini-trial. o 8-5: you can get an order without notice to the other party, in cases of urgency.

It can be almost as informal as calling up and saying “I need a judge, right now”
 Sometimes, if an order isn’t granted within two hours, something bad
87

will happen
 More commonly: you do it when you don’t want ∆ to know what’s happening.

Ex parte order – given absent the other side’s knowledge.

Mareva injunctions are often done ex parte – get it b/c you think ∆ is dishonest and will transfer out of the jurisdiction. If you needed to give notice and two days’ prep time, it will often be self-defeating, since ∆ will take action before the injunction drops. o 8-5(7)

must tell ∆ promptly after order made.

R. 10-4 – Injunctions o 10-4(5) unless court orders otherwise, a pre-trial injunction application must contain applicant’s undertaking to abide by any order that the court may make as to damages.
 These remedies expose ∆s to huge reciprocal risks
 This undertaking is a mechanism used by courts to protect ∆s too:
 Say ∆ has to shut down business for 2 years as a result of the injunction, but then wins at trial. So they lost two years of income. Now

has to pay up for that, because wrongly subjected to an injunction for that period.

So, if courts are mistaken in granting the injunction in the first place, then ∆ can be compensated.
 ∆ doesn’t have to establish cause of action. If ∆ wins at trial, they just remind the judge about their lost business due to the injunction. The fact that the injunction is dissolved means liability is established, by virtue of the fact that the injunction shouldn’t have been granted in the first place. (May still need to hash out the correct amount of damages, though.)
New Approach: Balancing the Risks
American Cyanamid

New approach to interlocutory injunctions

lowers the threshold

Facts: Dispute over patent relating to absorbable sutures.

has patent, ∆ invents its own and starts marketing it in same jurisdiction.

Issue:

thinks ∆ has violated their patent, so they seek an injunction to stop them from selling in the jurisdiction until a trial can determine whether there is an infringement.

Held: Injunction granted; new test set out.

Reasons: o To demand a strong prima facie case really defeats the purpose of interlocutory injunctions, which is to provide some relief in advance of resolving the issue.
 Note: there’s now a greater risk that courts will be wrong about injunctions. o The court in Cyanamid moves away from the merits of the case and considers instead the balance of convenience/risk
 No longer trying to guess who will win or lose, but rather who is more
88

vulnerable – who has a higher risk of suffering?
 If ≠ granted, 
vulnerable. If granted, ∆ vulnerable. We call the comparison of vulnerabilities the “ balance of convenience
”
Test for Interlocutory Injunction per American Cyanamid:

1. Serious issue to be tried? o Can’t decide cases on the merits at this early stage 
just establish a threshold of a serious question.

Not frivolous or vexatious o Court must believe there is a bona fide dispute between the parties. Might even believe

will lose, just has to be a serious question for the courts – a bona fide legal case to make that couldn’t be dismissed at preliminary stage. o So, if no serious issue, application fails and no injunction will be granted. o If there is a serious issue, move on to step 2.

2. Is there a risk of irreparable harm to

? o If not, no injunction. o If yes, move on to step 3.
 3. Is there a risk of irreparable harm to ∆? o If not, the injunction will be granted. o If yes, continue to step 4.

4. Balance of Convenience o Courts assess who is most at risk: a fluid, discretionary assessment. o So, at this point in the analysis, the biggest thing the judge is worrying about it the risk of being wrong

the balance of convenience is a function of the consequences to the parties of getting or not getting the injunction. o Note: in RJR MacDonald
, the court said you don’t consider irreparable harm to the

until you hit the balance of convenience assessment, but it doesn’t really matter because these are the things that are getting assessed, at one stage or another.
Nuanced Analysis of the Situation – Other things to Consider

So, the basic principle is that you go through the Cyanamid test and assess whether irreparable harm is evenly balanced.
 You aren’t supposed to look at the merits as in the past, but there are some situations where the merits become relevant, so you always need to be aware of them.
Final Determination

Where the injunction is really a final determination of the case, courts do have to look at the merits of the case [ NWL v. Woods ]
59 o Where a judge knows the case will never actually get to trial, and everything depends on whether or not the injunction is granted, they will consider the merits of the case and decide on that basis.
59 NWL v. Woods : Non-unionized ships flying flags of convenience coming into port; unionized workers boycotting. Court knew this was a temporary dispute and that whatever order they made would conclude the issue. Granting or refusing the injunction amounted to deciding the case.
89

Pure Question of Law

Where a judge just has to assess based on the law (i.e. no issues of fact) they will make the decision up front. [ C-Cure ]
60
Mandatory Injunctions [see below]

Telling someone to do something in advance of trial may raise a greater chance of irreparable harm to ∆, since positive steps are required.

As a result, courts are more cautious about awarding mandatory interlocutory injunctions.
Restrictive Covenants [see below]

Designed to restrict the ability of employees to compete with employer once they leave employment

Can restrict livelihood if too broadly drafted

so courts are careful in awarding injunctions to enforce restrictive covenants

Higher threshold, because they are often determinative of the issue. So, strong prima facie indication of a serious issue is required.
Free Speech

Courts are cautious in granting interlocutory injunctions where the issue is a question of freedom of expression, etc.
No Undertaking

Where

cannot afford to post the undertaking (see below), a court may still grant an injunction where there is a strong case on the merits.
Assessing “Irreparable Harm”
 Courts ask: why aren’t damages appropriate?

Two baskets into which injunction-appropriate situations fall: o (1) Where there is an interest of

that can’t be properly measured in monetary terms

Might be immeasurable b/c too complicated/speculative

E.g. 20 year K breached near beginning
 Or might be just b/c it’s something that isn’t measurable in money o (2) Where ∆ won’t pay
 Might be b/c ∆ doesn’t have the wherewithal,
 Or, more often, where ∆ is or seems to be dishonest

This is where we get Anton Piller orders and Mareva injunctions

See e.g. Cyanamid: parties competing over patent. o 1. Court says the point of a patent is to give

a monopoly over a time period to est a market share, brand recognition, exclusive rel’ships, and it’s tough to
60 C-Cure : When, because there’s no real conflict as to facts, or where it’s possible to determine what facts will be proven at trial (i.e. we know who will win), then a judge can make the call right away.
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predict the advantage of that monopoly over the time of the patent (in terms of market share, brand loyalty, customer rel’ships, etc.) o 2. Irreparable harm b/c of difficulty

would have getting an injunction at trial if they don’t get it today 
problem of restoring the status quo.

Say court refuses to grant injunction now, and the parties continue to compete in the market

after 3 years, ∆ will wrongly, but realistically, have est’d a market presence and clients who have relied on the product etc. It will be difficult to get it taken off the market, and would have negative reputation consequences for

in enforcing their right then.

But, if

in the wrong, ∆ will have lost the advantage of being in the market.
 But the status quo is that ∆ hasn’t yet started in the market (about to, but hasn’t yet). All else being equal, courts will preserve the status quo.
Yule Inc v. Atlantic Pizza Delight Franchise
 
has exclusive rights to open franchise stores, ∆ repudiating.
 Court seems to think ∆ is wrongly repudiating the K, and 
is being unfairly treated
 If injunction isn’t granted, 
will be put out of business, will lose reputation, goodwill in marketplace will deteriorate

all things that are difficult to measure.

Also, court subtly considers interests of third parties: 29 employees of

who will be out of work if he can no longer operate the franchises

Held: Injunction granted. Not the same type of irreparable harm to ∆ as to
 . ∆ can supervise, and

is making them money
David Hunt Farms Ltd. v. Canada (Minister of Agriculture) [1994, FCA]

Stands for: courts will take into consideration an admission against interest by one of the parties.

Facts o Cattle infected w. mad cow. Government of Canada decided to slaughter lots of cows.

Trade competition issues w/ the US (closing borders to cows etc.) o 
sues for interlocutory injunction to stop government from killing his cows

Held: injunction granted.

Analysis: Cyanamid test o 1. Definitely a serious issue to be tried.

Government appears to have authority, but could be many legal arguments about why it’s unnecessary or shouldn’t be done here. o 2. Does

stand to suffer irreparable harm?

Easily measured in damages - $4-5k.

But b/c of legal impediment,

probably wouldn’t be able to get the full amount of damages. o 3. Harm to ∆?

National stakes are high – industry could suffer huge losses
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o 4. Balance of convenience?
 Strategic decision: in a related case, gov’t agreed ≠ to kill cows in
Nova Scotia because they had an early court date set. Quarantined the cows for 6 months til trial.

The court in Hunt says equality is an important issue

gov’t said that elsewhere, and they think it can be achieved here as well, so gov’t has in essence admitted that it won’t suffer irreparable harm if injunction is granted.
Mandatory Interlocutory Injunctions

May require a higher level of proof
 There’s no rule of law that says you can’t get a mandatory interlocutory injunction, but courts don’t like to grant them at the interlocutory stage because they tend to go past maintaining the status quo [see Sheperd Homes ] 61

It is possible to get a mandatory interlocutory injunction – you just have to watch out for those special concerns, but if the injunction is not especially intrusive and the risk of harm to

is high, courts will grant them [see Prairie Hospitality ].
62
Undertakings
 
has to compensate ∆ for losses if ∆ wins at trial o e.g. Cyanamid o it’s a significant form of insurance for ∆s in dealing w/ that balance of convenience consideration.
 The point is to indemnify ∆s against wrongfully obtained injunctions.

There is a longstanding debate about when ∆ can claim damages pursuant to the undertaking. Two views: o 1.

has to pay out on the undertaking only when

has done sthg wrong by way of obtaining the injunction
 i.e. there has been bad faith or dishonesty,

has done sthg inappropriate to get the injunction

This view is represented by McBrantny J. in Viewegar analysis

Misrep of facts, maliciously or improperly obtains injunction. o 2. Competing view says that it’s automatic  except in exceptional circumstances, ∆ will always be compensated
.

SCC adopted this view in Viewegar Construction .

Historical reasons:

Test for injunctions used to require a strong prima facie case o Given that,
 s could say at the end that they were acting
61 Sheperd Homes (quoted in Films Rover ): New development; term of lease says no one will build a fence.
Trying to create a nice, pastoral setting. However, nearby farmers weren’t maintaining their fences, and farm animals were coming onto ∆ property so they built a fence. 
sought mandatory injunction to take down the fence. Held: no injunction. Reasons: goes beyond status quo; would give

the whole relief they want at trial; hard to formulate in specificity.
62 Prairie Hospitality
: Injunction granted. ∆ just had to continue to provide information 
the injunction wasn’t very intrusive, and the risk of irreparable harm to 
was much greater. Plus, ∆ appeared to be wrongfully repudiating.
92

appropriately, met the high threshold and it was just the judge who was wrong. So then at the end they would say they shouldn’t have to pay damages because for some reason they lost at trial.
 But now it’s so much easier for  s to get the injunctions, that doesn’t really track anymore.
 So now, ∆ has the right, except in exceptional circumstances, to collect on the undertaking.
 In some situations courts don’t allow collection: where they really frown on ∆ behaviour. E.g. where ∆ only prevails on a technical legal rule, but they don’t have clean hands. That’s what ‘exceptional circumstances’ is about.
 
can’t post an undertaking to pay damages if they can’t afford it. o Means they may not be able to get an injunction if they won’t be able to compensate. That is often fatal, but court can exercise its discretion to waive the req’mt of an undertaking.

Other waived undertakings: environmental disputes, e.g. a FN band who has little money and ∆ stands to lose huge amounts of $ if logging etc. is shut down 
courts may, but may not, allow it to move forward anyway. o Depends on third parties, losses to community etc.
 Can often be used as a way for ∆ to obtain a better legal costs order than they would otherwise get o General rule in Canada: winner gets costs, which compensates for (a small portion of) legal fees
Contract Injunctions Generally
 There’s no doubt that SP is a limited remedy in contract cases and is primarily confined to real estate.

Generally, in employment contracts, SP is not available. o Damages are adequate. o SP forces parties into relationships they don’t want to be in and they’re just going to end up back in court. o SP also creates problems of supervision.

Injunctions may offer a slightly more robust remedy than damages, without the problems of specific performance. o Much easier to enforce – phrase them negatively and it’s easy to assess when someone has broken the requirements. o Courts assume that when something is worded in the negative, an injunction is the only way to enforce the parties’ promise.
Yule v. Atlantic Pizza
 Court: we’re going to enjoin the defendant from doing anything to interfere with the plaintiff’s ability under the contract to manage his franchises because damages are not an appropriate remedy.
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o The courts said the plaintiffs stood to suffer a huge loss to reputation, etc, which didn’t seem to be compensable in damages. So the contract had to be kept going until trial.
What about at Trial?

The potential loss (reputation, good will) is the same, so is it also true at trial that injunctions are more widely available than SP?

 o The Traditional View: No. [See Fothergill ]
63
Injunctions are not more readily available than SP in contract cases, and where SP would not be ordered, an injunction would not be ordered. The injunction is just a roundabout way of ordering SP.
The plaintiff can be fully compensated by an award in damages. Not a case for SP. Just a sale of goods.
Questions about Fothergill Set the Stage for More Assertive Injunctions:

1. Are damages really adequate in this case? o The price of coal was fluctuating. o The plaintiff had built a railway line for the defendant o The contract was for another two or three years into the future. o So how do you measure damages? The safest way is to wait until the three years was up and then sue for damages suffered and show what the damages are. o It’s difficult: what are the quantities of coal and what’s the price of coal? o Note: the more difficult they are to calculate, the more likely it is that damages will be inadequate

2. Is this really equal to SP? Does an injunction raise the same problems as SP? o An injunction is much easier to define than SP. (“Don't do X vs. Do “X”) It’s much more black and white o Can’t really order SP on this K, because we don’t know what that is: the K said
“all the coal” – what does that mean? o Really, it’s just a negative K: says you can’t sell to anyone else.
An injunction could say the same thing, and would reinforce the K. o Parties won’t be coming back to court – it’s basically on or off right now. So, an injunction would work better than SP here.
Vancouver Island Milk Producers v. Alexander [1922 BCCA]

Canadian illustration of Fothergill.

Facts: Three-year K whereby a farmer agreed to sell all his milk to the milk marketing board. Price of milk goes up and ∆ starts selling his milk directly to vendors.

Held: No injunction.
63 Fothergill : K for coal. Opportunity to sell for a higher price to other people arises so defendant breaches contracts and sells to other people. Plaintiff sues. Court says it will not award SP, because it involves the sale of goods, which are fungible and thus can be adequately compensated in damages. So

asks for injunction: don’t force relationship, just tell ∆ they can’t sell coal to anyone else – just enforce the negative side of the K. Held: no. the obvious result of that injunction would be to force ∆ to perform the K; since court wouldn’t order that straight up, they won’t do it in a roundabout way.
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
Reasons: o Milk is fungible, damages are calculable, the loss is not irreparable. o The key factor: the K had a liquidated damages clause that specified that if either of the parties breached the contract, the damages would be $500.
The parties had contracted for an efficient breach model, so the court allows them to stick to that.
Metropolitan Electric Supply v. Ginder
 The alternative/“emerging” approach. o Courts will grant injunctions, even in situations where they would not grant SP, if they’re of the view that the injunction is necessary to protect plaintiff from irreparable harm, so long as there is no substantive reason to avoid the injunction . o The most commonly-cited substantive reason to avoid the injunction is that it’s going to force the parties into a co-operative relationship they’re not really capable of being in.

Facts: Long-term requirements contract. o A requirements contract is one in which a buyer agrees to take all of his or her requirements for a certain thing (here, electricity) from one supplier.
Note: an exclusive supply K is the same thing but the other way around: where supplier agrees to provide all their supply to one buyer. o These are the types of cases (exclusive requirement, exclusive supply) where courts are most willing to expand the range of the injunction.

Held: Injunction granted. In appropriate cases, injunctions can be used. o The court says SP can’t be ordered because they can’t assess what that would entail. The buyer hasn’t promised to take electricity at all. What they’ve promised is to not take electricity from anyone else. So it is conceptually possible to grant an injunction of that negative promise. o There are no definitional or supervision issues, so the court grants the injunction.
Nothing close or collaborative about the parties (electrical co and person), so there’s no concern about forcing people into a relationship.
Not a JV and not likely to cause much friction. o The appeal is that it solves the dispute today without forcing the plaintiff to go back to court three years from now to argue what the damages remedy should be. o However, we’ll still only grant these injunctions where damages are inadequate
This is a long term arrangement that is intended to lock them in long term. How would damages be calculated? Can they go out and arrange Ks with other parties? That wouldn’t cover the full benefit obtained from this K.
Thomas Borthwick

Exclusive supply contract

Facts: The defendant slaughterhouse agreed to supply one distributor with all its product. The court gives quite a detailed evolutionary analysis of how courts enforce injunctions differently from SP.
95


Held: Court grants injunction. Slaughterhouse may not sell to third parties.

Reasons o 1. There does not have to be an express negative covenant. It can’t be implied. o 2. There may be practical reasons to avoid SP (long term, necessary good faith) but the injunction may be a practical way to provide the plaintiff with what it needs.
Adopts paragraph from Corbin on p. 1163 and says that where SP raises technical or practical concerns, it’s fine to use an injunction even if that injunction has the same practical effect as SP.
However, it’s only done where damages are inadequate.
Here they are inadequate because it’s a long-term arrangement meant to give a distributor a secure source of supply so it can go out and enter other contracts with the people it’s going to sell do.
Difficult to measure what the loss of that would mean. o Second step is: Are there any substantive reasons not to enforce the injunction?
The most common reason is that the courts will not force the parties into an antagonistic relationship.
Here the court decides that it’s not a partnership or a joint venture and slaughtering cows is a relatively standardized, mechanistic business where the relationship between the parties is kind of irrelevant to carrying out the contract.
How does this Mesh With the Concept of Efficient Breach?
 JC: It’s sort of because the contracts have been drafted this way. By making the covenant negative, you’re sort of saying that damages aren’t an appropriate remedy.
That you wanted this thing and no other thing.
Assessing whether to grant a K Injunction:

1. Should the court exercise its discretion to grand an injunction? o Cassels mentioned that we seem to need a negative covenant, or at least to be able to imply one. o The parties seem to be deciding that damages are going to be inadequate, when they impose a negative covenant – maybe the courts are just deferring to the decision of the contracting parties?

2. Are there any reasons not to award? o Most common reason is forcing the parties to return to/continue in a bad relationship o Ask whether the relationship requires good faith.
Using Injunctions to Enforce Restrictive Covenants

Restrictive covenants usually come up in sale of business Ks that include a term saying
“And X agrees not to enter into this trade for X years in the same geographical area”

Also in employment contracts.
Restrictive Covenants in Sale-of-Business Contracts

Issue: how should the courts balance the freedom to enter into contracts with the public policy in favour of free competition?
96

o Consider the importance of letting people work and not preventing them from earning a livelihood.
Cantol v. Brodi Chemicals Ltd.

Court refuses to grant injunction to enforce a clause in employment K that would prevent the employee from selling plumbing fixtures.

Three points: o 1. These cases are different from the American Cyanamid model. A strong prima facie case that the clause is valid is required . Para 12 of Cantol . o 2. Even if there is a strong prima facie case, irreparable harm is going to get a harder look. Damages are really going to have to be inadequate. o 3. There is a paradox in these cases. In order to be valid, a restrictive covenant has to have a short duration. If the employer tries to prohibit the employee from working in the same industry for 10 years, it’s illegal. What that means is that these cases are usually decided at the interlocutory stage. So this is going to decide the case.
Towers v. Cantin

You can sometimes get an injunction.

Facts: High-placed executive with insurance company. Gets hired away by KPMG who basically hired her to get her customers from her former company. Former company seeks an injunction.

Held: Granted. First of all, there’s no question that the covenant was legal and that it was breached.

This case involved the establishment of major business relationships over a long period of time and the goodwill was significant.

The injunction was also not oppressive. KPMG agreed they would have hired her anyway.
Other reasons why injunctions are more readily given in this context:

1. Easy to enforce

2. Courts assume that when a contractual clause is stated in the negative then an injunction is kind of the only way to protect the plaintiff’s interest. There was an old rule of equity (p. 1153) that said where there was a negative covenant, the courts had to issue an injunction. This is no longer the case, but there is a general presumption that for negative covenants, damages are not adequate and injunctions are the proper remedy.
Restrictive Covenants in Employment Contracts

This involves one of the closest to absolute rule that exists in the law: You cannot get specific performance of a personal service contract.

In the ordinary employment contract, damages are adequate. Note that this assumes the employee’s services are not unique – the adequacy of damages is predicated on the fungibility of employee services.

Employment contracts are a paradigm of good faith and consideration. You have to get along in order for it to work. Courts are realistic about forcing a disgruntled
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employee/r to work together.

If the court is forcing someone to work, it’s state-sponsored enforcement of labour, which is the same thing as slavery or indentured servitude and we don’t care for that.

The problem is, it’s a little more complicated when it comes to issuing an injunction.

Where there is an explicit negative covenant in the employment agreement, while SP can’t be ordered, injunctions can be issued, sometimes.
Lumley v. Wagner [1852, Eng.]

First case where this happened.

Facts: W had a contract to sing for L for three months and would not sing for anyone else. The courts say they would never force her to sing. But they can stop her from singing for someone else. And they did.
 So long as the injunction doesn’t necessarily amount to an order of SP, we will grant the injunction.
Warner Brothers v. Nelson [1937, Eng.]

Gives nuance to Lumley
 “Bette Davis case”

Facts: Bette Davis had a contract with WB. Required her to give WB her exclusive services to perform in movies for them and not to work for anyone else. So the contract had positive and negative features.

Held: The court builds on Lumley and grants the injunction.

Points: o 1. An affirmation that SP will not be granted. You can’t make someone do a job. o 2. But you can grant an injunction so long as its necessary effect is not to grant
SP. This is the “sing or starve” rule. If the necessary effect of the injunction is that she will remain idle and unpaid or work for the employer, then the court will not grant the injunction. But so long as she has other options and the injunction won’t necessarily compel her to work, then the court will grant the injunction. o 3. There does have to be irreparable harm. The mere fact that there’s a negative covenant does not remove the court’s discretion. The court here says that an injunction will only be granted if there’s irreparable harm. Here, the court said that Bette Davis was irreplaceable and was a unique asset. WB also had Bette
Davis movies they were about to market and if she could go make other movies their movies would be less valuable. o 4. These are not restraint of trade cases. Not so concerned about the employee.
The contract here is inside the employment relationship. It’s not saying she can’t work after she’s employed. She has a job. She just can’t have two jobs. So this doesn’t raise restraint of trade concerns because she is currently capable of plying her trade. o The clause said that Bette Davis would not, during the contract, render any services in business of any other person or engage in any other occupation . So the clause, literally enforced, would have created a sing or starve situation.
So the court doesn’t enforce the clause as written. They write the order in a narrower fashion, saying it’s only about making movies and also that it’s only for three years (the
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time that was reasonably necessary to protect current Bette Davis movies) o JC: Does it mean anything that the two leading cases both involve women?
Detroit Football Club v. Dublinski [1955, ONHC]

Facts: Quarterback for Detroit hired by the Argonauts.

Held: No injunction granted. His services are not that unique. There are lots of QBs.
The loss can be compensated in damages. And this is a football-or-starve situation.
Page One Records v. Britain

(The Troggs case)
 Facts: The Troggs sang “Wild Thing,” in case you didn’t know. Further, Cassels seems legitimately convinced they were one of the most important bands of all time. The
Troggs wanted to break ties with their manager. Manager sued for injunction.

Held: No injunction.

Reasons o 1. An injunction would have compelled performance. The Troggs couldn’t work without a manager. Note that this is much more employee-favourable than
Bette Davis. Because the Troggs could have worked without a manager, just not as a band. o 2. The situation lacked mutuality. If they were forced to use the manager, the manager wasn’t forced to work for them. They would be vulnerable to exploitation because it was possible that the court would force them to only use the manager, the manager stopped working or stopped going a good job, the band couldn’t sue for SP. The court refused to put them into that position. This is the principle of mutuality.
This isn’t a big problem in most employment cases, because the employer usually just has to pay money. o 3. The court says that damages were easily calculated.
Legal Architecture

Not rocket science. There are easily-stated general principles, but the way you tell the story and frame the facts can have a big impact on the way the courts exercise their discretion.
Speech
Canada Metal Co. v. CBC [1974, ON HC]

Facts: o radio broadcast will say some bad things about a company that’s contaminating a community with lead. o Company wants an injunction against the broadcast until they’ve had their trial
– say it’s defamatory. o CBC is going to say the company is buying experts

Analysis
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o Cassels: on the surface, this is a case where an injunction is easily argued

Serious issue to be tried: √
 Irreparable harm: √

Reputation will be harmed permanently by allegation of paying experts
 Balance of convenience? What’s the harm in asking CBC to delay a few months to allow a trial to sort out the issues o But, in this case, an interlocutory injunction would be a prior restraint on freedom of speech
 You don’t shut down speech on basis of an allegation that it may be defamatory

Procedural background: o TJ granted the injunction because he said he couldn’t see a way in which this wasn’t defamatory.
 
came in at 3pm the day of the broadcast, only judge available, and w/o word from CBC the judge got only one side of the story. o CBC appeals injunction

Held: injunction was granted by TJ, but CA overturned. We read the much later appellate decision. o Came after portions of the broadcast were actually played on the radio o ONCA establishes principles:

A court will not grant an interlocutory injunction on basis of serious issue to be tried, or on basis of strong prima facie case, but only on basis that it is irrebuttable that the material will be defamatory.

Court must be satisfied that the words are:

(a) beyond doubt defamatory,

(b) are clearly untrue (so no defence of justification could succeed), and

(c) are not fair comment on true or admitted facts.
 
all of this must be proven at the criminal or beyond criminal degree of proof before a court will grant an injunction o Practice point: the decision is still being rendered on the basis of affidavits.
Generally, where you swear something to be the case you have to provide the grounds on which you believe it is the case.
 CBC’s affidavits weren’t supported by this explanation of why they believed; court cut them significant slack, saying that what they believe to be true is a complex assessment of science, and they are documentarians who have pulled together the evidence of scientists.
 So, the courts relaxed the rules of civil procedure for ∆s
 But bear in mind, you can’t just go in with an affidavit that says “my client believes what they’re saying is true” 
opposing lawyer is at least supposed to be able to cross-ex or critique the affidavit, which isn’t really feasible if it just says “I think what I’m saying is true” o The burden of this high threshold is on the plaintiff  burden to establish that the allegations are untrue.
 But, can’t establish fully in preliminary hearing, but plainiff has to
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give affid. saying this is not true and this is why we believe that.
 
has to hit the basic cause of action – untrue, libelous, ≠ aware of any defences.

Ok, so

just can’t be silent on the issue of truth, b/c that leaves them open to the justification defence. But ∆ still has to prove their defences.
Canadian Tire v. Desmond
 Facts: ∆ sign “Canadian tire cheated me”

Held: injunction granted against libelous sign o Cheat means defrauded, which requires an intention by ∆ to deceive, and there’s no evidence of that, so it’s clearly libelous. o So, judge didn’t hold 
to the incredibly rigorous std of CBC, and we don’t really know exactly why, but someone probably told a better story (it’s just not in the judgment so we can’t see)
Procedural notes about CBC:

On the day of: documentary was airing at 6pm. 3pm
 s get injunction, served on ∆ at
5pm

“don’t allege anything about

buying experts”

A few months later, CBC wins on appeal

so the injunction should never have been granted.

In the interim, though, on the night of: CBC went ahead with the broadcast, but did some on-the-fly editing. They read out parts of the injunction on the air to explain what they weren’t allowed to allege/refer to.

CBC was sued by Canadian Metal for contempt of court o Held: CBC was found in contempt of court. So were the individuals involved in the broadcast, even though they weren’t specifically named in the injunction. o Principle: You don’t have to be named in the injunction to have to honor the injunction.
 SCC: you may not be bound by injunction as a party to it, but if you know about it then it’s still contempt if you know about a court order to take steps to breach that court order. o Principle: you can be in contempt for violating the letter of the injunction
[which they didn’t do – they broadcast the injunction itself], or if you violate the spirit of the injunction.
 It’s no excuse to say you excised those portions then filled in those gaps with the court saying what they were going to say.
Medical Treatment

Possibly a lower threshold than for speech

These are difficult cases for the courts.

Typically these are disputes on the treatment of a terminally ill person

either dispute among family members or between family members and doctors/health authority. o Patients who are terminally ill or in a permanent comatose/vegetative state (the lowest possible diagnosis on the brain injury scale; implies no
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functionality/consciousness and no hope of recovery)

Court decisions are highly nuanced, tied to facts of specific cases. [see Jin v. Calgary
Regional Hospital
64
and CS v. Capital Health Authority ]
65 o In both of these cases: families argued as substitute decision-makers that there was something left that they or the person would value; doctors argued there was no hope, and a fine line between prolonging life and prolonging death. o Concern: doctors swear an oath to do no harm, and courts shouldn’t force them to undertake treatment practices that they feel violate this oath.

Note: in the background, diplomatically unmentioned, is the issue of cost to the healthcare system o Problem of social choice regarding cost o An ICU bed with a ventilatory and the attendance that would be required in these types of cases

costs $3-5k per day. o Should courts be commandeering scarce public health dollars for these patients?

Whose life will not be saved as a result of an emergency ward having, say, $1million less per year?
Key Differences that Help Courts Make these Decisions:

1. Time o In Jin , the family was just looking for a little more time.
 The eldest son was in China and hadn’t made it back to Canada yet to say goodbye.

The family just got the information; father had only been put into ICU and on ventilator a few days before.

So, the judge allows some time for the psychological adjustment

a little time may solve the problem. o Whereas in CS , the

was a dedicated daughter who was in total denial about her mother’s death

The situation looked pretty intractable; time did not seem to be making any difference.

2. The terms of the order sought were slightly different between the two cases o In Jin , the only procedures currently being applied: he was in intensive care, on a ventilator, and there was no DNR order. o In CS , there were a lot of positive measures keeping her alive: ventilator, lots of drugs and procedures. o Balancing: patients and their representatives get autonomy over treatment decisions, but doctors shouldn’t be forced to do things they think are bad/wrong/harmful.
 It’s one thing to say “don’t pull the plug on a ventilator”, and another thing to say “spend a few hours of your time and resources every day
64 Jin v. Calgary Regional Hospital : Brain injury resulted from a fall. Family suing for injunction to prevent hospital from withdrawing life support for Mr. Jin, and to prevent hospital from putting a DNR on his chart. Held: injunction granted.
65 CS v. Capital Health Authority [AB] : Mother has terminal cancer, family suing to prevent hospital from withdrawing support etc. Held: no injunction.
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applying a treatment you think is wrong.” o So, in Jin , the court said the hospital could withdraw all other treatment, but couldn’t unplug the ventilator. If they were going to do that, had to give 72 hours notice so the family could go to court again and seek an injunction, if necessary.
Rasouli

ON case, recently got leave to appeal to SCC

Facts: o R went into hospital for brain operation, got an infection and was left in what doctors said was a permanent vegetative state. o Family believed there was some spark still there. o Ventilator to breathe – lungs weren’t working.
 ONCA gave injunction in May 2011, SCC gave leave to appeal but it hasn’t been argued yet.

A recent news story indicated that Mr. R had some degree of consciousness; his doctors raised his prognosis from totally vegetative to one step above.

So, SCC had to have a mini-hearing to determine whether the action is moot, since the facts are different from those in front of the TJ now

but ultimately they decided to hear it on the original facts.

This is a prime opportunity for legislative intervention.
Environmental Disputes and Aboriginal Interests
MacMillan Bloedel v. Simpson [1996, SCC]

Company had legal license to log;
 One of several cases emerging from dispute around MacMillan’s logging operations in the Clayoquot Sound area in BC

Seeking injunction to prevent petty criminal activity

Standing issue: does company have right to bring action? o Recall Gouriet
: shouldn’t give standing to enforce criminal law, should really be the AG (HL in Gouriet said we don’t want “officious intermeddlers” to come to court and second guess the discretion of the AG not to pursue something.) o But,

has land rights here, which are being infringed. So, that makes it a trespass case and they do have standing.

Issue: John Doe/Jane Doe usage o Usually you use this where you’ll know by trial who is involved, and just need a preliminary order before you have that info. o But here, they didn’t know the names of everyone involved, and wanted to have the injunction cover anyone. o SCC: that’s ok 
an injunction binds anyone who knows about it, so it’s fine whether people are named or not. The John Doe/Jane Doe procedure is really just a courtesy, highlighting that other people will be bound.

At the end of the day,

photocopied many, many copies of the order, and anytime someone came by in the woods they’d hand them a copy and read it to them, as would
103

the police.

There were more than 500 arrests made as a result of these orders.
Platinex v. Kitchenuhmaykoosib Inninuwug First Nation

Dispute re crown land owned by third party
 
had mineral rights in NW ON

License allows exploratory drilling for mineral samples

But, also, KI first nation. Ceded the land to the crown under their treaty, but still have use rights (hunting etc.)

So, issue: how do you reconcile the two competing interests?

Courts sets out the approach (following Cyanamid architecture): o 1. Is there a serious issue to be tried?
 Yes, but we’d never figure out at trial whether it’s a strong or weak case. Esp b/c aboriginal rights over land etc. are still being worked out. o Issue: the Duty to consult
 When there’s a proposal to take up crown land, and a competing right to that land, the primary duty of gov’t is to consult and accommodate.

Judge explains that the duty of consultation and accommodation does not mean a duty to obtain agreement.
 If he doesn’t give an injunction, just running roughshod over the aboriginal rights, but if he does, then he seems to be giving them a veto.

TJ decides on balance of convenience that between the competing interests, he should favour the first nation. o 2. Harm?

Only harm to company is financial, but cultural harm to FN.
 And, neither gov’t nor company had done anything by way of consultation or accommodation.

So, even if injunction gives KI a veto power, the company brought it on itself by making zero effort to consult and accommodate.
 Note: company was going to be hit by severe financial harm.
 Won’t be compensated b/c FN couldn’t give undertaking

And, facing bankruptcy o The real interest they had was in consultation. Judge isn’t completely blind to this

accompanies injunction w/ order:
 Band give back equipment it seized

Immediately put consultation process in place.
 i.e. injunction won’t sit forever – just gives parties an incentive to get to the bargaining table and engage in this process.
 After the injunction was granted, parties met and couldn’t resolve, injunction ran out and they wound up back in front of the same judge. o Reading between the lines, looked like judge now saw that FN was trying to use the duty to consult as a veto. o Lawyer for company did better job: showed low impact, that they had tried to engage in negotiations
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o Refused injunction to FN and granted order to company to do their investigation o Band then took bulldozers to mining co landing field; 6 band members went to jail o Mining co walked away and sued ON gov’t for $5 million o Same judge sentenced the 6 chiefs/elders to 6 months in jail, but they were released on everyone’s agreement after one month. o Cassels: a heroic attempt by a judge to balance the interests in this case.
Constitutional Cases
AG MB v. Metropolitan Stores:

Legislation: o When a group of employees first unionizes, they try to negotiate a first contract. o It can be very difficult to get to agreement on this. o So, legislation says agency can come in and impose things on the employers.

Employer suing to have legislation declared unconstitutional

In the meantime, they want to freeze everything pending the final determination of the issue.

Govt of Manitoba: want the injunction availability test not to apply where the ∆ is government – should be a starting point/presumption of validity of government action, unless/until law is overturned by a court. o Want a strong prima facie case to rebut the presumption of constitutional validity o How can they protect the public interest without this presumption? Don’t we assume law is passed for benefit of public?

SCC rejects this argument, but fixes the problem o 1. There’s no presumption of constitutional validity: Cyanamid is the law in
Canada in re interlocutory injunctions. o 2. BUT: we’ll consider that issue in the balance of convenience assessment.
 The most important factor is the public interest as it plays out in the balance of convenience.

SCC gives a presumption that government represents the public interests
RJR MacDonald v. Canada

Nuance: reaffirms American Cyanamid (and Metropolitan Stores ) in a slightly different context.

Facts: Tobacco companies seeking an injunction after QC CA has already upheld the constitutionality of the law.

Decision o We’ll give it to you that there’s a serious issue to be tried o Court notes exceptions to Cyanamid – there is a higher threshold in two situations: [pg 1237]

1. Where case is, in fact, a final determination of the matter
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
2. Where case involves a pure question of law that really can be decided at the interlocutory stage, court can use higher threshold. o  s in constitutional cases will almost always face irreparable harm

Because of the nature of the right

Charter rights aren’t quantified in damages

Even if you could quantify, can you collect?

Is there a damages remedy against government for losses you suffer during the tenure of an unconstitutional law? Not clear.

Given the early state of development of monetary remedies for losses suffered in this context, we’ll assume

will always suffer irreparable harm o But the court doesn’t care – it’s multi-billion dollar companies (that are poisoning people) and we don’t really care if it costs them a bit more to put labels on their cigarettes. o So, the only real issue in these cases is the balance of convenience o Court rejects the status quo as a factor
 Partly, because it’s really hard to determine what the status quo IS, in these cases. o All things being equal, we’ll really just have to look at the merits of the case at that point. But, it’s pretty much always decided on a judgment of the balance of convenience. Cassels can’t think of any that have gone past that. o RJR did win in the end, on the free speech point. o Note: distinction b/w exemption cases and suspension cases

In some cases, litigant is just looking for themselves to be exempted from the law, and courts will be much more relaxed in granting the injunction, because there’s not a huge public interest issue.

But where the injunction will have the effect of suspending the law across the board, then public interest is a weightier factor.
The Established Rule

Lister v. Stubbs and policy of no execution before judgment o A person’s property cannot be seized prior to judgment.

Exceptions: o R. 10-1 BCSC Rule: where property is actually the subject matter of the dispute you can get a pre-trial order to freeze assets.

E.g. action over who owns the car o Note: Mareva covers different assets – not related to dispute, but needed to satisfy a judgment.

Problems: globalization, flags of convenience, corporate shells, international banking. o Concern that a losing ∆ will be able to defeat a judgment by transferring all assets out of jurisdiction before judgment comes down.
Lord Denning to the Rescue – Mareva

Significant law reform.
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
There were some Mareva-type orders granted before this case, but this is the leading/first fully reported case.
 Mareva v. Int’l Bulk Carriers o Denning takes a step forward: used to think you couldn’t seize assets before judgment, but in some situations courts have jurisdiction to do that. o Finds this power in the Judicature Act (our Law and Equity Act) – reflects inherent jurisdiction of court to grant orders they think just and convenient.

Cites Beddow v. Beddow in support of the inherent jurisdiction to create these new orders.

Discussion: J Act goes back to 1850 – how did it take until 1970s to figure out this power? o Aus Judge: seems unlikely that [this right] should have been slumbering for over a century

George Jessel in Beddow : o Denning = reformer. Jessel = classic black letter lawyer, very focused on precedent and not progressive. o Denning actually cut off the end of Jessel’s sentence: “I have pwr to grant injunc in any case where right and just to do so according to sufficient legal reasons and only on settled legal principles.

Principles: o Risk balancing
The Reception in Canada: Aetna

There was a gradual and uneven adoption by provincial courts until a cautious adoption by the SCC in Aetna .

These orders are prone to exploitation, dangerous for ∆s  threshold is high. o Emphasis on the draconian nature of the remedy and the concern for riskbalancing. o Cyanamid rule does not apply in the case of Mareva injunctions.

Criteria o Strength of case o Risk of asset removal/dissipation – mere movement of assets insufficient – must be evidence of effort to defeat claim/judgment (sort of – sometimes courts are flexible on this) o Risk of insolvency not sufficient – not about simple security and does not alter priorities

Just because you may not be able to collect on your judgment, you don’t get to jump the creditor queue. o Balance of convenience
 e.g. chattels, cont’d business dealings [see Rasu ] 66
 It’s always open to ∆ to tell their sad story and convince a court they’d be subjected to undue hardship [ Rasu ].
 Note: orders are granted ex parte, but order generally allows ∆ to
66 Rasu :

seeking injuction over ship/equipment of ∆s, to be part of construction project in other country.
Court said can’t seize those assets not part of dispute and prevent ∆ from taking their construction actions.
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return to court w/in a few days to present arguments.
Jurisdiction

The concept means national jurisdiction – typically won’t cover interprovincial transactions. o You don’t need to have another trial in Ontario to get assets ∆ has moved there.
You just register your judgment there, it’s not that difficult. o So, SCC in Aetna says we typically won’t grant Mareva injunctions for interprovincial asset transfers [But see Southin J in Gateway Village ] 67
Extraterritorial effect:
 Court needs jurisdiction over ∆.
 Issue: once they have that, can they make orders about ∆’s property outside of Canada? o Conceptually, they don’t have jurisdiction over the property outside country, but they can order the person. o It’s possible to get worldwide injunctions, but only in extreme cases [see
Mooney v. Orr ] 68
Protections for ∆

These injunctions are super intrusive/burdensome.

Courts try to even the playing field.

Undertakings – if

freezes ∆ assets for 2 years and ∆ bus goes bankrupt and then ∆ prevails at trial,

will be liable for the loss.

Full disclosure o Because it’s ex parte, lawyer applying must ensure judge is fully apprised of what the other side’s case may be 
if you know facts that court would want to know, but your client hasn’t put into their affidavit, you have to find a way to tell the court why your case might not be as strong as your client says it is.
Full disclosure of the facts are necessary. o Just try to ensure that if your client has those facts, they disclose them.

Early return

as described above. Can go back to court w/in a few days to argue.
Third parties

Third parties are bound if given notice of the order [see Z Ltd. v. A-Z ] o Distinction: technically not bound as parties to the order, but anyone w/
67 Gateway Village : ∆s owned Arby’s up on Blanshard, and it wasn’t working out well so they were selling their restaurants in BC.

supplier was owed $, suing for just over 65k. ∆ was an AB corp, only had the one restaurant in Victoria. Sold it, wanted to transfer proceeds back to AB bank accounts. BC

sought injunction. Southin: Strong case – looked like ∆ really did owe that $. But no evidence of any wrongdoing -
∆ just wanted to put the $ in its AB bank account, where its head office was. So, no motive as other judgments have looked for. Takes Aetna to stand for strong presumption against Mareva injunctions w/in
Canada, but only a presumption. Granted injunction on basis that sum was too small to justify

pursuing judgment remedy in AB. Inconvenience of

in pursuing the judgment there might well defeat the claim.
So, as a lawyer, get the facts in, but tell your client’s story.
68 Mooney v. Orr [1994, BCSC] : ∆ shady financial arrangements, gradually moving all assets out of BC into Cayman Islands. BCSC granted a worldwide injunction.
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knowledge of a court order ≠ breach or in contempt

3 rd
parties are usually banks.

They have to do searches, but no disclosure to
 o So, they have to go into the accounts and find out what kind of assets of ∆ are in their control

but don’t have to tell

that.
  ’s undertaking covers the cost to 3 rd
parties of complying w/ the Mareva injunction.

Notice to third parties will typically carve out things that the bank is allowed to do o May meet its own obligations (e.g. pay charges on letter of credit, bank guarantee, credit card)

Developed primarily in the context of theft of intellectual property

Intended to prevent irreparable harm to
 
usually the loss of critical evidence needed to establish case at trial.

Scenario: Think ∆ is stealing your IP; you expect that if you start the action and seek evidence, they, as criminals, will get rid of the evidence. o This wasn’t a big problem when you could get into court fast, and before information was digital.

Starting point: Entic v. Carrington – no search and seizure before full court process. o No one can enter private property and take away material.
 That’s still the law, but courts can grant Anton Piller orders that do allow this, sort of.

Lord Denning, who created them (of course) said explicitly that he was not giving out a
“civil search warrant”. o Courts aren’t telling 
they can knock down the door – just telling ∆s to open the door. o Important distinction:

doesn’t have any right to use force on an Anton Piller order

whereas a real search warrant does allow police to break down the door. o It’s just an order to ∆ that if you don’t open door court will put them in jail.

Circumstances: an alternative to discovery

Fraud

surprise

ex parte

Requirements o Very high threshold: “If Mareva injunctions are nuclear, this is the borg” o Extremely strong prima facie case o Evidence of possession of incriminating docs/things o Evidence of risk of loss/destruction o Irreparable harm
 Protecting ∆s o It’s significantly intrusive, so there are protections. o Full factual disclosure on application (may be exposed to trespass charges, punitive damages if obtain order fraudulently) o Role of supervising solicitor
 For the first ten years of these orders,

solicitor had dual role:

Solicitor went to court to get the injunction, but also executed it.
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
In the course of execution, you are office of the court – have to make sure your client et al aren’t acting outside the order.

Order will often specify what you can take away, e.g.

have to watch your client.

This was putting

lawyers in difficult pos’n.
 Standard practice now: appoint a supervising solicitor.

So,

lawyer gets injunction, participates in deployment as
 lawyer, but there’s an independent lawyer who supervises the whole thing, solely as an officer of the court.
 Some debate as to whether you need supervising solicitor at every site where you exercise an Anton Piller order

This question comes up in regard to rolling orders – where you have street vendors, flea markets etc. selling copyrighted material, but dispersed around a large area.

A draft order indicates how the court foresees possible problems: o E.g. in Celanese ,

goes in, seizes documents, many of which are correspondence b/w ∆ and solicitor

so, privileged. o Also may get ∆’s own trade secrets, etc. o So, the typical Anton Piller order assigns the supervising solicitor to sort through all the docs taken, to ensure

doesn’t see things they shouldn’t.

Rolling Orders o Often the point isn’t to get stuff for litigation; you’re just trying to shut down a counterfeit operation e.g. o Tshirt vendors – you aren’t going to sue them, it’s too small time. But you get an order to seize the counterfeit material and thereby stop it from being sold outside a stadium, e.g.
Red Hot Video

Counterfeit copies of porn movies.
 First part of order: can’t hide or dispose of any of the material. Preserve it.

Second: regular injunction: stop copying our porn.
 Third: gag order. Don’t notify anyone else who’s been supplied.
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