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 ..................................................................................... 9
Problems of Proof ....................................................................................................................... 10
Ticketnet Corp v. Air Canada [1998, ONCA] – Laskin JA ................................................... 10
Time of Assessment
Golden Strait Corp v Nippon Yusen Kubishka Kaisha [2007, UKHL]
Damages for Breach of K w/ Alternative Modes of Performance........................................................ 12
Hamilton v. Open Window Bakery [2004, SCC] ................................................................... 13
Durham Tees Valley Airport Ltd. v. bmibaby Ltd. [2010, Eng. CA] .................................... 13
Ditmars v. Ross Drug Co. [1971, NBQB].............................................................................. 14
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 ............................................................................................... 15
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

1
 Fidler v. Sun Life [2006, SCC] .............................................................................................. 22
Aggravated Damages .................................................................................................................. 22
Turczinski v. Dupont Heating and Air Conditioning [2004, ONCA] .................................... 22
Wallace v. United Grain Growers [1997, SCC] ..................................................................... 23
Honda v. Keays [2010, SCC] ................................................................................................. 23
Reliance Damages .................................................................................................................... 24
General .................................................................................................................................................. 24
Reliance damages ARE available: ................................................................................................... 24
Reliance damages ARE NOT available: .......................................................................................... 24
Where Expected Profits are Not Determinable:............................................................................... 24
Misc Rules on Reliance Damages.................................................................................................... 25
Reliance Damages for Negligent Misrepresentation ............................................................................ 25
Negligent Misrepresentation Damages: Requirements (Hedley Byrne Principle) .......................... 25
Application ....................................................................................................................................... 25
Beaver Lumber v. McLenaghan ............................................................................................. 26
VK Mason v. Bank of Nova Scotia [SCC] ............................................................................. 26
Rainbow Caterers v. CNR ...................................................................................................... 26
Negligence and Reliance in Professional Services ............................................................................... 27
Posesorski ............................................................................................................................... 28
Messineo v. Beale [1978, ONCA] ......................................................................................... 28
Kienzle v. Stringer .................................................................................................................. 29
Negligent Rendering of a Service Apart from Contract
Breach of Fiduciary Duty where there is contract between parties
Restitutionary Remedies ......................................................................................................... 29
Basics .................................................................................................................................................... 32
Remedial Advantages: .......................................................................................................................... 32
Established Categories of Restitution Remedy: ................................................................................... 32
Requirements for Restitution to be Granted ......................................................................................... 34
Restitution in Contract .......................................................................................................................... 34
Quantum à Various Approaches ......................................................................................................... 35
Punitive Damages ..................................................................................................................... 36
Distinguishing Between Some Common Types of Damages ............................................................... 36
When are Punitive Damages Available? .............................................................................................. 37
Concerns .......................................................................................................................................... 37
The UK Position .............................................................................................................................. 37
Broome v. Cassell [1972, HL] ............................................................................................... 37
Canadian Jurisprudence ................................................................................................................... 38
US Jurisprudence ............................................................................................................................. 39
II. Limiting Factors .......................................................................................................... 39
Intro to Limiting Factors: ....................................................................................................... 39
Remoteness ............................................................................................................................... 40
Hadley v. Baxendale .............................................................................................................. 40
Parsons (Livestock) Ltd. v. Uttle Ingham [1978, QBCA] ..................................................... 41
Kienzle v. Stringer [1981, ONCA] ......................................................................................... 41
Matheson v. Canada [2000, NSCA] ....................................................................................... 42
Summary of Remoteness ...................................................................................................................... 42
Mitigation ................................................................................................................................. 43
Basics .................................................................................................................................................... 43
Cockburn v. Trusts Guarantee Co. ......................................................................................... 43
Apeco v. Windmill ................................................................................................................. 44
Erie County Natural Gas v. Carroll [HL] ............................................................................... 44

2
 Jamal v. Moola Dawood Sons & Co. [1916, PC (Burma)] .................................................... 44
Campbell Mostyn v. Barnett Trading ..................................................................................... 45
Time of Assessment .................................................................................................................. 45
Asamera Oil Corp. v. Sea Oil and General Corp. [1979, SCC] ............................................. 45
Dodd Properties v. Canterbury City Council [Eng. CA] ........................................................ 46
Perry v. Sidney Philips [1982, Eng. CA] ............................................................................... 46
Damages in Lieu of Specific Performance ............................................................................. 47
Wroth v. Tyler [1974, Eng.] ................................................................................................... 47
Semelhago v. Paramadevan [1996, SCC] .............................................................................. 48
Specific Performance in Real Estate Contracts .................................................................... 48
Background ........................................................................................................................................... 48
Domowicz v. Orsa Investments Ltd. [1993, ON Gen. Div.] .................................................. 49
McNabb v. Smith [1982, BCCA] ........................................................................................... 49
Semelhago v. Paramadevan [1996, SCC] (continued) ........................................................... 49
John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. [2001, ONSC] ................................... 49
Earthworks 2000 Design Group Inc. v. Spectacular Investments (Canada) [2005, BCSC] .. 50
Raymond v. Raymond Estate [2011, SKCA] ......................................................................... 50
Measurement Issues: Reinstatement or Diminution ............................................................ 50
Damage to Chattels ............................................................................................................................... 50
Dewees v. Morrow [1932, BCCA]......................................................................................... 50
Darbishire v. Warran [1963, Eng. CA] .................................................................................. 50
Miller v Brian Ross Motorsports Corp
O’Grady v. Westminster Scaffolding Ltd. [1962, QB] .......................................................... 51
Factors to Consider Re Reinstatement for Damage to Chattels:...................................................... 51
Damage to Real Property ...................................................................................................................... 52
Taylor v. Hepworths Ltd. ....................................................................................................... 52
Jens v. Mannix & Co. [1978, BCSC] ..................................................................................... 52
Kates v. Hall [1991, BCCA] .................................................................................................. 52
Destruction of Property
Liesbosch Dredger v Edison SS [1933, HL]
Betterment............................................................................................................................................. 54
James St. Hardware v. Spizziri [1987, ONCA] ...................................................................... 54
Safe Steps ............................................................................................................................... 54
Fontaine v. Roofmart Western Ltd. [2005, MBQB] .............................................................. 55
III. Remedies for Personal Injury .................................................................................... 55
Context: The Role of Tort in Dealing with Disability........................................................... 55
Andrews (The “Trilogy”): Overview of Methodology.......................................................... 56
Lump Sums: Finality vs. Accuracy ........................................................................................ 56
Advantages and Disadvantages ............................................................................................................ 56
Discounting ........................................................................................................................................... 56
Theoretical basis: ............................................................................................................................. 57
The Trilogy Mistake: ....................................................................................................................... 57
Law and Equity Act ......................................................................................................................... 57
Non-Pecuniary Losses.............................................................................................................. 58
The “Insurance Crisis”:......................................................................................................................... 58
New Theoretical Basis – The Functional Approach ............................................................................. 58
As Opposed To: ............................................................................................................................... 58
Basics of the Functional Approach .................................................................................................. 59
The Cap ....................................................................................................................................... 59
Logical Conclusions of the Functional Approach ........................................................................... 59

3
 Problems with the Canadian Approach............................................................................................ 59
Alternatives ...................................................................................................................................... 60
Pecuniary Losses: Lost Future Earnings ............................................................................... 60
Step 1: Estimate the level of earnings .............................................................................................. 60
Step 2: Consider length of working life ........................................................................................... 60
Lost Years ................................................................................................................................... 61
Step 3: Factor in Contingencies: ...................................................................................................... 61
Step 4; Account for Residual Earnings ............................................................................................ 61
Step 5: Deduct for Any Overlap with Cost of Care ......................................................................... 61
Step 6: Factor in Collateral Benefits ................................................................................................ 62
Step 7: Discount to Present Value ................................................................................................... 62
Note: Issue of Taxation ......................................................................................................................... 62
Theoretical Justification ................................................................................................................... 62
Practical Justification ....................................................................................................................... 62
Past Loss .......................................................................................................................................... 62
Compensating Future Losses of Children & Ps who did Unpaid Work ............................................... 63
Issues of Fairness ............................................................................................................................. 63
Addressing these Issues: .................................................................................................................. 64
Compensating Household Services: ................................................................................................ 64
Compensating Unwaged Work (or Underemployment) .................................................................. 65
Charitable and Religious Organizations...................................................................................... 65
Turenne ................................................................................................................................... 65
Cost of Care .............................................................................................................................. 65
Step 1: Assessment of Need ................................................................................................................. 65
Step 2: Determination of Standard by Which Needs should be Met .................................................... 65
Mitigation ......................................................................................................................................... 65
Test of Reasonable Expenditure ...................................................................................................... 65
General Notes on Determination of Standard .................................................................................. 66
Step 3: Project Need and Standard into Future ..................................................................................... 66
Contingencies re Needs and Levels ................................................................................................. 66
Step 4: Deductions and Adjustments .................................................................................................... 67
Mitigation ................................................................................................................................. 67
Objective Test: Assessing What a Reasonable Person Would Do ....................................................... 67
Thin Skull Situations ............................................................................................................................ 68
Collateral Benefits.................................................................................................................... 68
Categories of Collateral Benefits: ......................................................................................................... 68
1. Voluntary Family Care ................................................................................................................ 68
2. Charity.......................................................................................................................................... 69
3. Private Insurance .......................................................................................................................... 69
4. Employment-Based Benefits ....................................................................................................... 69
5. Public Benefits ............................................................................................................................. 70
(a) Social Welfare ....................................................................................................................... 70
MB v. BC [SCC] .................................................................................................................... 70
(b) Publicly Funded Care Programs ............................................................................................ 70
(c) Health Care Costs .................................................................................................................. 70
(d) Employment Insurance – Repayment ................................................................................... 70
Subrogation ........................................................................................................................................... 70
How Does it Work? ......................................................................................................................... 70
Structured Settlements as an Alternative to the Lump Sum ................................................................. 73
Fatal Accidents ......................................................................................................................... 75
Basics .................................................................................................................................................... 75
Theory of Compensation ...................................................................................................................... 75
Who Can Recover? ............................................................................................................................... 75

4
 Valuing the Dependency....................................................................................................................... 76
Non-Pecuniary Losses .......................................................................................................................... 77
IV. Injunctions .................................................................................................................. 77
Introduction .............................................................................................................................. 77
Framework: Categories of the Law of Remedies ................................................................................. 78
Liability Rules .................................................................................................................................. 78
Property Rules .................................................................................................................................. 78
Inalienability Rules .......................................................................................................................... 79
Timing of Injunctions – Three Options: ............................................................................................... 79
Scope of Injunctions: Three Options .................................................................................................... 79
Quia Timet ................................................................................................................................ 80
Mandatory Injunctions............................................................................................................ 81
Permanent Injunctions à Injunctions to Protect Property Interests ................................ 82
Possible Alternatives to Permanent Injunctions in Real Estate Cases:................................................. 85
1. Live and Let Live ......................................................................................................................... 85
2. Modify the Property Rights ......................................................................................................... 85
3. Remedial Alteration ..................................................................................................................... 85
4. Statutory Intervention à BC Property Law Act ......................................................................... 86
Injunctions to Address Nuisance ............................................................................................ 86
Injunctions to Address Public Rights..................................................................................... 89
1. Who Can Seek an Injunction to Enforce Public Rights? .................................................................. 90
2. How Will Courts Exercise Their Discretion re Whether to Grant Injunctions in This Context? ..... 90
Concerns .......................................................................................................................................... 90
When Can a Public Rights Injunction be Obtained? ....................................................................... 90
AGAB v. Plantation Indoor Plants ......................................................................................... 90
Robinson v. Adams [1924, ON] ............................................................................................. 91
AGBC v. Couillard ................................................................................................................. 91
AGNS v. Beaver ..................................................................................................................... 91
Reconciling Couillard and Beaver? ................................................................................................. 91
Interlocutory Injunctions ........................................................................................................ 92
General .................................................................................................................................................. 92
Introduction & Context .................................................................................................................... 92
Jurisdiction & Procedures ................................................................................................................ 92
Law and Equity Act s. 39 ............................................................................................................ 97
BC Supreme Court Civil Rules: .................................................................................................. 97
New Approach: Balancing the Risks ............................................................................................... 98
American Cyanamid ............................................................................................................... 98
Test for Interlocutory Injunction per American Cyanamid: ............................................................ 99
Nuanced Analysis of the Situation – Other things to Consider ..................................................... 100
Final Determination .................................................................................................................. 100
Pure Question of Law ............................................................................................................... 101
Mandatory Injunctions [see below] ........................................................................................... 101
Restrictive Covenants [see below] ............................................................................................ 101
Free Speech ............................................................................................................................... 101
No Undertaking ......................................................................................................................... 101
Assessing “Irreparable Harm” ....................................................................................................... 101
Yule Inc v. Atlantic Pizza Delight Franchise ....................................................................... 102
David Hunt Farms Ltd. v. Canada (Minister of Agriculture) [1994, FCA] ......................... 102
Mandatory Interlocutory Injunctions ............................................................................................. 103
Undertakings .................................................................................................................................. 104
Injunctions in Relation to Contract Law ............................................................................................. 105

5
 Contract Injunctions Generally ...................................................................................................... 106
Yule v. Atlantic Pizza ........................................................................................................... 106
What about at Trial? .................................................................................................................. 107
Questions about Fothergill Set the Stage for More Assertive Injunctions: ............................... 107
Vancouver Island Milk Producers v. Alexander [1922 BCCA] ........................................... 107
Metropolitan Electric Supply v. Ginder ............................................................................... 108
Thomas Borthwick ............................................................................................................... 108
How does this Mesh With the Concept of Efficient Breach? .............................................. 109
Assessing whether to grant a K Injunction: .............................................................................. 109
Using Injunctions to Enforce Restrictive Covenants ..................................................................... 109
Restrictive Covenants in Sale-of-Business Contracts ............................................................... 109
Cantol v. Brodi Chemicals Ltd. ............................................................................................ 109
Towers v. Cantin .................................................................................................................. 110
Other reasons why injunctions are more readily given in this context: .................................... 110
Restrictive Covenants in Employment Contracts ..................................................................... 111
Lumley v. Wagner [1852, Eng.] ........................................................................................... 111
Warner Brothers v. Nelson [1937, Eng.] .............................................................................. 111
Detroit Football Club v. Dublinski [1955, ONHC] .............................................................. 112
Page One Records v. Britain ................................................................................................ 112
Legal Architecture ..................................................................................................................... 112
Special Situations – Some Discrete Issues in Interlocutory Injunctions ............................................ 113
Defamation Speech ........................................................................................................................ 118
Canada Metal Co. v. CBC [1974, ON HC] .......................................................................... 118
Canadian Tire v. Desmond ................................................................................................... 119
Procedural notes about CBC: .................................................................................................... 120
Medical Treatment ......................................................................................................................... 120
Key Differences that Help Courts Make these Decisions: ........................................................ 121
Rasouli .................................................................................................................................. 121
Environmental Disputes and Aboriginal Interests ......................................................................... 122
MacMillan Bloedel v. Simpson [1996, SCC] ...................................................................... 122
Platinex v. Kitchenuhmaykoosib Inninuwug First Nation ................................................... 122
Constitutional Cases....................................................................................................................... 123
AG MB v. Metropolitan Stores: ........................................................................................... 123
RJR MacDonald v. Canada .................................................................................................. 124
Mareva Injunctions ............................................................................................................................. 125
The Established Rule ..................................................................................................................... 125
Lord Denning to the Rescue – Mareva .......................................................................................... 125
The Reception in Canada: Aetna.................................................................................................... 127
Jurisdiction ..................................................................................................................................... 127
Extraterritorial effect: ................................................................................................................ 128
Protections for D ............................................................................................................................ 129
Third parties ................................................................................................................................... 129
Anton Piller Orders ............................................................................................................................. 130

6
I. Damages
Basic Process for Assessing Damages:
1. Select π 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 D à designed to deprive wrongdoer of ill-
gotten gains
b. Reliance
i. Compensates π for expenditures made in reliance on promise by D
ii. Restores status quo prior to promise being made
c. Expectation
i. Puts π in position they would have been in had the bargain been fulfilled
ii. D 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 D
legitimate interests?
a. Mitigation
b. Remoteness

Expectation Damages
General Principles & Lost Profits
Theory and Background (from Fuller & Perdue)
• In some ways, restitution and reliance damages are easy to accept as appropriate remedies in
contract law à they are about redressing the balance between π and D, 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 π 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 π to prove all the minute ways in which π had relied
on D promise, which are just generally included in expectation damages.

7
 • 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: π bought product from D to manufacture swimming pool covers. Material defective,
shreds into customers’ pools.
• Issue/Arguments:
o D 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 π claims for lost profits in addition, because their business suffered as a result of the
damage to their reputation.
• Held: for π. 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, Ds 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 πs 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) à 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: π printing co bought new printing press from D, didn’t work properly. TJ awarded
damages for lost profits and the cost of the press.
• Issues/Arguments:
o (1) D argued that TJ award was double compensation.
o (2) What happens when π doesn’t have sufficient funds to mitigate?
• Held: TJ overruled; sent back for new trial
o Re π inability to mitigate:

8
 §D 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 π in position they would have
been in had the K been performed.
§ π 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 à 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, π 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: D offered to take back press and refund, but π 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 π had actually earned the profits, they would also have paid for the press.
It’s about putting π in the position as if K had actually been performed.
• Note: CA applied the doctrine too broadly in McLean.
o Yes, π 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 à 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 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

9
 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 à 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 π, but courts won’t hold Ds 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 π’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 π to prove damages, but where D wrong has prevented precise
proof, π can rely on projections (discounted to reflect certain contingencies)
• Facts
o π created an online ticket-booking software, made a deal w/ D to jointly develop it and
share revenues for a set period.
o D repudiated and at first π expected to get the software back but ultimately D never
returned it.
o π entered into new K with American Airlines. Different terms, but involved payment
to π of 750k for the software. When it became clear they weren’t getting the software
back, π had to renegotiate their K with American Airlines, and lost out on the 750k.
• Issue/Arguments: π sued D for lost profits and lost business opportunity.
o (1) π claimed $12 million in lost profits. D accepted breach but argued damages
should be limited to 750k, the difference between the first and second AA agreements.
o (2) π 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:
• D 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 à D
said that since AA was willing to buy and π was willing to sell for

10
 $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 D actions) and eager to mitigate
is NOT a proper measure of the value of the company.
• D shouldn’t profit from the poor bargaining position it left π in.
• Plus, π wasn’t seeking damages for the past/present value of the
software, only for the lost business opportunity due to D breach of
agreement and subsequent injunction.
o Issue (2) – calculation of lost profits: inclusion of expenses in damages
§ Arguments
• π 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, π argued, would double count the
expenses in favour of D, and would fail to put π 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 à would have had $10m had
everything worked out, but lost $2 million was wasted expenditure.
§ TJ interpreted the report as calculating π lost profits separately from expenses,
by deducting projected expenses and taxes from projected revenues (not
including the out-of-pocket expenses), then added the actual expenses (pre-
and post-repudiation) to the lost profit projections. π argued that the actual
expenditures were wasted expenditures, because they didn’t generate
offsetting revenue and b/c software had no residual value. π 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

11
 corresponding revenue as was expected.
• TJ basically just phrased things differently à 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.

Time of Assessment

Golden Strait Corp v Nippon Yusen Kubishka Kaisha [2007, UKHL]

• Stands for: accurate assessment of damages based on loss actually incurred
• Facts:
o One of terms of charter would have permitted P Nippon Yusen to cancel contract
if war broke out between US and Iraq
o Nippon Yusen repudiated contract and second gulf war began after
o P argued outbreak of war should be ignored and damages should be awarded for
entire remaining term of charter
o Majory HL rejected P’s argument
• Reasons:
o Because outbreak of war occurred before damages fell to be assessed, they could be taken
into account
o Accurate assessment of damages based on loss actually incurred, which goes to root of
compensatory principles that victim of breach of contract will be compensated for loss of
bargain
o Golden was trying to argue for compensation exceeding value of what it had lost
• Lord Bingham dissented:
o Damages should be assessed on date of breach, importance of certainty and predictability
in English commercial law
o If a party is compensated for value of what he has lost at the time that he loses it, and its
value at that time for any reason depressed, he is fairly compensated. This does not cease
to be because adventitious later events reveal that market at that time was depressed by
apprehension of risks that did not eventuate

Findlay v Howard [1919, SCR]

“where future damages are claimed, future conditions must necessarily be considered, and what better
evidence of conditions, which were in the future at the date of the breach, can be made than by
shewing, at the date of trial, what has actually occurred since the breach of contract?”

Damages for Breach of K w/ Alternative Modes of Performance

• Expectation damages are not necessarily the π’s actual expectation, but what π 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 D would most
likely have performed the K.

12
 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 D 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 D
might have validly exercised the termination right at some point.
• Reasons – Arbour J.
o General principle is that you adopt the mode of performance that is least profitable to
π and least burdensome to D, 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 D 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 à if they have set up their reasonable expectations in
the K, it’s fair to enforce that.
• Hamilton v. Open Window Bakery Ltd. [2004] 1 S.C.R. 303, 2004 SCC 9
• Held: appeal dismissed on issue of damages and allowed only on issue on costs
• Ratio: where a contract might be performed several ways, mode which is the least profitable to
P, and the least burdensome to D, is adopted
• Test is not how D would likely have performed his or her obligations under the contract but for
his or her repudiation. Non-breaching party need not be restored to position it would likely
have been in but for the repudiation BUT rather the position it would have been in had the
contract been performed

Durham Tees Valley Airport Ltd. v. bmibaby Ltd. [2010, Eng. CA]
• Facts: D agreed to fly two airplanes out of the airport for a 10-year term, but then stopped.
• Issue: D 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 à 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 à it would be absurd to assume the π
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.

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Ditmars v. Ross Drug Co. [1971, NBQB]
• Facts: Wrongful dismissal action à π 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 π a bonus
o Adds requirement of a bonus as a term of the K (says “virtual” but that word isn’t
really necessary à 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 whatever
figure he thinks is reasonable.

Lewis v. Lehigh Northwest Cement Ltd. [2009, BCCA]

• Facts: wrongful dismissal. π 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 π would have received a discretionary salary increase
during the notice period.
o π had been on extended medical leave during which he had no job performance to
assess and had made no contribution to D financial performance.

Cost of Performance or Lost Market Value

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 D of making good the wrong exceeds the value to π of
doing so?
• Sometimes there is an incentive to breach à 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.

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• 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 à 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 D of performance exceeds the losses from non-performance
o (b) When alternate opportunities to D are more valuable than π loss
• Efficiency explains the requirement of mitigation: reduction of joint costs of breach
• 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: π partitioned property and sold half to build a school; part of the deal was that buyer
would build a fence between the partitions. School never built, no more need for fence, and it
never got built. No evidence that D land was worth any more with or without the fence, but
the cost of building was several thousand pounds.
• 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 π by putting him as much as possible in same pos’n as had
he not suffered the wrong. It’s not about making the D pay what he has saved, but about

15
 compensating the π.
• 2. If π has suffered monetary loss, then that is obviously recoverable. If D has saved $ by not
doing what he K’d to do, that is irrelevant to the calculation of damages, as it was not a loss
by the π.
• 3. If π can establish that his loss includes the cost of doing work D failed to do (in breach of
K), then that sum is recoverable. Onus is on π to establish what his loss was.
• 4. π 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 π is obligated to a 3rd party to complete the work,
• Or perhaps by the existence of a statutory obligation;
• Could also be indicated simply by π proving he wants/intends to
complete the work.

Radford v. DeFroberville [1977]

• Facts
o π sued for breach of K to erect a wall on D property.
o π sold adjoining property to D in consideration for an agreement to build a wall
between them. But, D never completed the wall.
o Absence of physical barrier didn’t devalue the land; in fact, D argued higher value
than if wall were completed.
• Held: π gets cost of performance.
• Reasons:
o The principle is to put π (as far as money can) in the same pos’n he would have been
in had the K been fulfilled.
§ Note: this is not necessarily the same as putting π in as good a financial
position.
o Distinguishes Wigsell: in this case, there was convincing evidence that π did have a
real interest in having a fence.
o To assess whether a π wants to complete the work:
§ 1. Does π have genuine/serious intention of doing the work?
§ 2. Is carrying out the work reasonable for the π to do?
o In this case:
§ 1. Court found the requisite ‘fixity of intention’. Plus π gave undertaking
anyway. Court accepted that π wanted to do work and found that the
appropriate measure of damages was the cost of completion.
§ 2. Reasonable to carry out work?
• This is really a question of mitigation. D argued prefab fence would be
just as effective and less expensive.
• But, court did not accept this argument:
o Prefab fence ≠ permanent and π would have to maintain it
o Prefab fence ≠ what the π asked for.
o Although D argued future owner might not want a fence there,
so they could build another house in a corner of the lot, court

16
 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 π is not personally
living on the land but wants to do the work for benefit of his tenants?
• Apparently not.

Cotter
• Facts: mining companies, D breached K to drill well, π seeks cost of drilling well
• Held: In cases like this, π can only get proven economic loss suffered, not cost of performance.
o The only loss proven was $1000 for not having well. π 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; π (DV) holds lease to mining territory in northern ON. D takes
half interest and commits to doing a bunch of work, but then only does part and
abandons the project.
o π claims the cost of completing the work.
o D argues Cotter, you only get proven economic losses.
• Held: π 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, D had done almost nothing under the K, and full consideration had passed
from π.
§ D now owned half the property – took all the benefit from π, 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 π didn’t get that, so they didn’t get the value sought from
the K.

Groves v. John Wunder Co. [1939, Minn. SC]

• Facts: D K with π to remove fill; D 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 π wants a certain situation, court shouldn’t enforce the price of the

17
 land as a cap on that preference. BUT, these were commercial operators; π owned land
for an investment, and it’s highly unlikely that the π would actually spend $60k to
level the land if he knew it would only sell for $12k.
o If π pockets the $60k then turns around and sells the property, the court hasn’t
protected expectation à just conferred a massive windfall. But if π lives on the 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 π 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, D 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 π 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 π.
• Comments:
o But in this case, the πs 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 à you could buy several
farms for that price.

Ruxley Electronics and Construction Ltd. v. Forsyth [1996, HL]

• Stands for: consumer surplus à court can consider the personal/subjective value over a
straight market-value assessment
• Facts
o D built pool for π, but 6 inches shallower than K called for.
o ≠ effect on value of pool, or utility (can still dive into it) à 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 à higher than nothing, but less than full cost of
performance
• Reasons
o Court believes π 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 π interest w/o imposing undue liability on D (who was pretty

18
 much innocent in this case.)
o Court acknowledges loss of amenity à the personal satisfaction π would have had if
pool were made to spec.
o In most cases of this sort, neither alternative is really satisfactory à 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 à 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 π 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 πs didn’t find out until the
pictures were developed.
o D argued measure of damages should be the market value, $399 à give them their
money back.
o πs wanted the cost of redoing the whole wedding – $7000.
• Held: πs 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 π without unduly penalizing D.
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 à 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.

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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 π’s true interest
• Nature of K à 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 D vs. windfall to π [Groves, Peevyhouse]
• Claim to specific performance?
• Owner’s intent to do work
• Reasonableness of work à size disparity b/w cost of performance and benefit achieved

Non-Pecuniary (Aggravated) Damages for Breach of K

Basics
• A common claim in tort law/personal injury cases à 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: π 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: π 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 à 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:
o Particularly in employment cases

20
 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. à 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, π 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: π 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 π.

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. D offers to reimburse
payment, but π 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]

• Facts: π argues house is worth less than it should be, due to airplane noise. Sues D surveyor for
damages.

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• 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 π 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 à 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, π 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. à so, it’s not really a huge step forward.
• Comments: note that the award is roughly equivalent to that in Farley à 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 à 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 D
§ 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.

Turczinski v. Dupont Heating and Air Conditioning [2004, ONCA]

• Facts
o Heating contractor didn’t do the job right.

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 o All parties agreed that it cost $10k to fix the problem/clean up the mess.
o But π also claimed loss of rent for three years, and mental distress. Argues special
negotiations.
o Had previously undiagnosed depression, bi-polar disorder, OCD à 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:
§ D didn’t have special knowledge to the threshold necessary to put them on
notice. π 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 à 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 D.
• 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 D responsible if π
fails to mitigate.
• Rationale: in tort, π hasn’t agreed to deal with D, 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.

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,

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 you still need something in the K that makes it foreseeable – e.g. peace of mind Ks,
etc.

Reliance Damages
General
• 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 à reliance is used as the maximum claim in contract
[see e.g. Esso v. Marden1]
• When expectation damages are difficult to prove à reliance may be available as an
alternative. [see e.g. McRae v. Commonwealth Disposals2, Anglia v. Reed3]

Reliance damages ARE NOT available:

• When there are no expectation damages, or where reliance would give π a larger award than
they would get with expectation damages à cannot put π 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. π can’t 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 D to disprove this.
[Sunshine Vacations v. Hudson’s Bay Company]5

1
Esso v. Marden: π 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: π 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. π can’t put self in better position by claiming reliance instead of expectation
damages. D’s breach didn’t cause the loss in this case à 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 π in the position they would have been in had K been performed.
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, π’s competition. π 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 à if it’s net, then the expenses have already been

24
 o Where we don’t know what the outcome of a K would have been, we’ll at least assume
that π venture would have broken even (i.e. earned enough gross revenue to cover the
expenditures under the K.)
o Then the onus shifts to D to prove that π 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 π would have
made $100k in profit.
§ If the $100k profit is net profit, there’s no overlap and the π should get both.
§ If profit is gross profit, and therefore double compensation (as stated by the
court), then wouldn’t the presumption of π 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 π’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 à 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.

Reliance Damages for Negligent Misrepresentation

• Reliance is the standard measure in negligent misrepresentation cases

Negligent Misrepresentation Damages: Requirements (Hedley Byrne Principle)

• 1. Duty of care à must be an obligation in the relationship, or an undertaking of responsibility
• 2. Breach of that duty à statement made without taking due care
• 3. Statement is untrue
• 4. π 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
à reliance, rather than expectation

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 π venture would have broken even (i.e. earned enough gross revenue
to cover the expenditures under the K.)

25
• 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 π bought prefab house from D, 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 π hoped, would have had a house worth $37,709; actual
value: $17,000.
o Expenses: $21,400 for land and materials; $3200 to D.
o Projected position = $13,109 profit; actual position = $7600 shortfall.
o So π 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, π gets back
the wasted money and is put in a break-even position. Status quo ante.
o D induced π 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 π claimed for lost cost of doing the building, and the amount still owing on the K.
o TJ awarded both the lost expenditures and lost NET profit (so no double compensation
problem)
• Issue: But can π 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 à awarding opportunity costs
(following Esso v. Marden)
o But...they gave actual profit for this job, not some other job.
o It’s a π-favourable assumption: if they could do this well in this situation, court
assumes π would do equally well elsewhere in the market.
o Note, though, that it’s only a presumption – can be rebutted, but onus is on D to do so.

Rainbow Caterers v. CNR

• Facts:
o π 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.

26
 o D argued there are two roots of reliance:
§ 1. If D hadn’t made statement/had made true statement, π wouldn’t have
entered K, wouldn’t have lost money
§ 2. If D hadn’t made statement/had made true statement, π would still
have entered K, but on different terms.
o D says, therefore, that the question isn’t what π’s total losses are, but rather what the
difference is between the loss actually suffered and the loss π would always have
suffered on the alternative K it would have entered into.
• Held: for π. Typical reliance damages apply.
• Reasons – Sopinka:
o D 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, π
wouldn’t have entered into the K.
o It’s a presumption – onus on D to disprove. D bears the risk.
§ Note: in BG Checo v. BC Hydro, D was able to prove that π 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 π entered into contract B.
o Note: in tort, reliance damages CAN exceed expectation à π 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 π 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 à have to
consider principles of remoteness and causation.
o McLachlin senses that π lost such a high amount not just because D gave bad estimate,
but because π was incompetent à work crews were eating too much, π wasn’t
properly controlling the business.
§ McLachlin says some portion of the loss suffered is attributable to π bad
mgmt/poor business practices.
o Sopinka for the majority says it doesn’t matter, because π would never have had the
chance to be incompetent if they hadn’t entered the K.
o McLachlin says D should only suffer the consequences of π 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.

Negligence and Reliance in Professional Services

• Breach of K cases à 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 D promise, and what
loss is caused as a result of that promise?

27
Toronto Industrial Leaseholds Ltd v Posesorski
• Facts
o Due to D solicitor’s negligence, π entered into deal for a property w/ unperfected title
(encumbrance).
o Purchase price: $325k. Actual value w/ encumbrance: $225k.
o π held the property for many years, then came to an agreement with the option-holder.
Cost of eliminating: $260k.
o Lost rents & expenses: $39,400
o Legal expenses: ~$40k
• Issue: π wanted expectation damages
• Held: reliance only. Expenses, plus $80k for the lost use of the $100k (difference in value.)
• Reasons: π could never have entered into the deal they wanted, so they couldn’t get
expectation.

Contributory fault
Isfeld v. Petersen Pontiac Buick GMC Inc. (2013), 556 A.R. 118, 2013 ABCA 251
• Facts:
o Campbell, solicitor for Isfeld failed to include easement discharge condition in
agreement, Petersen aware of omission but did not bring it to Campbell’s attention.
Considered Campbell’s liability secondary to Petersen’s in err
• Held: appeal allowed, equal apportionment is fair outcome
• Ratio: judgment amended to allow Campbell or Petersen to recover 50% of the amount paid to
Isfeld from the other.
o Parties not acting in concert in furtherance of common purpose, liability to Isfeld was
several, not joint, nothing in the reasons suggested one party was more or less to blame
than the other, equal apportionment of liability warranted
o Where the court was asked whether liability could be apportioned between two parties
who had separately breached different contracts causing the same damages. Upholding
the trial judge's decision that the parties should be severally liable, the court agreed
that that causes of action against the two defendants were "separate and distinct" and
"their promises to the plaintiffs were several, not joint".
o Dominion Chain Co v Eastern Construction Co [1978]: I am prepared to assume, for
the purposes of this case, that where there are two contractors, each of which has a
separate contract with a plaintiff who suffers the same damage from concurrent
breaches of those contracts, it would be inequitable that one of the contractors bear the
entire brunt of the plaintiff's loss, even where the plaintiff chooses to sue only that one
and not both as in this case.

Messineo v. Beale [1978, ONCA]

• Facts: π wanted to buy Murch’s Point property. Purchase price $400k, expected value $500k.
Market value was actually $408k due to title defect.
• Issue: π sought expectation – expected $100k profit
• Held: Can’t have expectation damages.
• Reasons:
o There was no chance that π could have actually obtained a property worth $500k.

28
 o Promise is that lawyer would take care in identifying title defects à had promise been
performed, title defect would have been found, but π still never would have obtained a
property worth $500k.

Kienzle v. Stringer
• The rule limiting π to out-of-pocket expenses is not invariable à 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 D 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, π 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 π sues solicitor.
• Held: Damages = cost of perfecting title
o Cost of buying the farm from the mean sister.
• Reasons:
o Causation à π hired lawyer to arrange purchase of farm. Had D not been negligent, he
would have prepared a K with the sisters, not the estate. In this case, the amount of
money to put π 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.

Negligent Rendering of a Service Apart from Contract

• Provision of services causes injury to 3rd parties who have no contractual relationship
with service provider
o White v Jones [1995, HL]: solicitor drew up will and his negligence deprived
beneficiary of legacy, solicitor held liable for loss
o Where negligent performance of a service causes loss of advantage that would
have resulted from proper performance of service, damages assessed by giving
financial equivalent of lost advantage
o Put P in position that would have been reached had proper advice or service been
provided

29
Breach of Fiduciary Duty Where There is Contract Between Parties
• M.(K) v M (H) [1992, SCR]: whether breach of confidence in a particular case has a
contractual, tortious, proprietary or trust flavor goes to the appropriateness of a particular
equitable remedy but does not limit the court’s jurisdiction to grant it

Party Autonomy Over Assessment of Damages

Basics
• General principles focus on unfairness of any contractual term, but specific rules that deal
with enforcement of clauses and arrangements whereby contracting parties seek to deal
with damages
o HF Clarke Ltd v Thermidaire Corp [1976, SCR]: SC determined that stipulated
damages clauses enforced only where amount selected was genuine pre-estimate
of damages that would likely flow from breach of contract. Stipulated damages
clause that was not a genuine pre-estimate was a penalty and accordingly
unforceable
o But if amount in question was pre-paid, so that in event of breach non breaching
party contractually stipulated to keep pre-payment, principles are different
o Term enforceable unless equitable principles operated to prevent relief from
forfeiture

Peachtree II Associates—Dallas LP v 857486 Ontario Ltd [2005, CA]

• Facts:
o Appeal from arbitrator’s decision that had already been dismissed by superior
court judge
o Concerns enforceability of remedy clause contained in two commercial
agreements entered into by the parties
o Penalty clause in this case concerned promissory notes provided by respondents
to appellants as part of investment deal, promissory notes deemed paid in full if
appellant defaulted on obligations
o Appellant breach of contract but arbitrator decided that although remedy clause
could be considered comparable to a penalty, breach was so grave that there
would be no relief from forfeiture
o Appeal dismissed
• Reasons:
o There is ironclad rule that all remedy clauses have penal consequences should be
struck down automatically
o Decided that this case was dealing with a relief from forfeiture and not with issue
of enforceability of penalty clauses
o Advantages in allowing parties to define consequences of breach on their own,
and in upholding the freedom of contract
• Cavendish Square Holding BV v El Makdessi [2015,UKSC]: true test is whether
impugned provision is secondary obligation which imposes a detriment on the contract
breaker out of all proportion to any legitimate interest of the innocent party in the
enforcement of the primary obligation

30
o Examination of the primary obligation—the term that was breached
o Secondary obligation—stipulated damages clause cannot be looked at in isolation
o The fairness of the primary term that has been breached will have some bearing
on whether the secondary obligation should be enforced

31
Restitutionary Remedies
Basics
• Restitution is both a remedy and a basis of liability.
o Remedy: conceptualizing award to π based on wrongly-acquired benefit by D
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)

Remedial Advantages:
• Focus on D benefit as opposed to π loss. Can be very useful from an evidentiary perspective:
o Overcomes problems of proof à e.g. where π can establish D benefit but loss is
speculative; onus on D to show expenses to deduct from total benefit
• Strategically, D gain may be larger amount than π loss [Whitwham,6 Strand Electric,7 Blake8]
• May provide in rem relief (as opposed to in personam) à in rem may give π priority over
other creditors, or a claim to specific property-security
o But see Philips v. Homfray9
• May provide some procedural advantages
o E.g. limitation periods – may expire for ordinary tort, but different for K.

Established Categories of Restitution Remedy:

• Money/services paid by mistake (to D or to 3rd party)
• Waiver of tort (for trespass, conversion, etc.) [Whitwham, Strand]
o Where D derived a benefit from committing a tort, but hasn’t really caused π loss, π
can “waive the tort” and sue as if they were partners.

6
Whitwham v. Westminster Brymbo Coal and Coke Company [1896, Eng. CA]: D tipped spoil onto π 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. π didn’t just lose
value in the land, they lost the use of the land à that was the value gained by D. So, really, it’s still a measure of π
loss, though the court does state explicitly that they’re aiming to take away D 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, D misappropriated π electronic control panels, and ultimately
refused to return them. Issue: π would have trouble proving what was lost (would it have used circuit boards, rented
them out, etc?) Held: D to pay reasonable cost of renting circuit boards for period in which it retained them. Court
flips the onus and assumes 100% utilization, gives π remedy measured by whole notional benefit – which is
probably far more than π could have proved on compensatory damages.
8
AG v. Blake: D 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.), D 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 D to enter more profitable K elsewhere
≠ sufficient. Entering new K putting D out of power to fulfill K w/ π ≠ 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]: D mining coal from π property. Court awarded the revenue of coal less the
cost of doing the mining. Note: the $ saved wasn’t factored in, so D still kind of got a benefit.

32
 o Basically, asking court to treat it as a contract case, where π and D were partners in an
enterprise, and an implied term was that π would get the benefit -à otherwise why
would π 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
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 Minerals14]
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, D would have agreed to pay π for the service of saving their life/property

10
Broome v. Cassell: D 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 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: D got extra $. Detriment: customers had to
pay. No juristic reason: K was illegal, so no valid reason to let D keep profits. But: D 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: D stole confidential info from π. 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: D also argued it was unfair to measure
by full net profit, since D is in the business already, and would have made some profit without the theft. However,
Denning said the causal connection was strong enough that D 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]: π manufacturer of Invisigrip carpet grips; D appropriated IP,
incorporated into their products. Very difficult for π to establish loss – invention was in early stages, it would be
highly speculative. Held: measured the benefit obtained by D. So, assume D paid π the value of the idea, and apply
damages based on royalties that would have been paid to π.
14
LAC Minerals [1989, SCC]: π owned mining co, believed valuable deposits on D property. JV with D, plan to
share revenue 50-50. But, in the course of negotiations, π disclosed enough info that D could stake the property on
its own w/o entering the K with π. Held: court imposed a constructive trust over property for π, for 100% of the
beneficial value. So, more than π would have gotten if K had been upheld. Note: after judgment π and D can
bargain.

33
• 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 à constructive trust cases [Becker v. Pettkus]15
• Breach of K? Maybe.

Requirements for Restitution to be Granted

• [per Garland]
• 1. D 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 π to prove this component.
• 2. Detriment to π (causal connection)
o Onus on π 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 π to prove
• 4. Other reasons to deny recovery
o Onus on D to prove this, once π has established benefit, detriment and absence of
juristic reason.
o Possible reasons:
§ Public policy
§ Reasonable expectations [see e.g. Garland]
§ Would it be unduly oppressive/surprising for D to have to pay back?
• 5. Defences
o D must prove
o e.g. change of position; delay; estoppel; acquiescence
• 6. Choice of Remedy
o Money
o Constructive trust
• 7. Quantification

Restitution in Contract
• 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, π is entitled to compensation for loss, but ≠ for D

15
Becker v. Pettkus [1980, SCC]: Lived together, he was the primary wage earner but she provided non-monetary
benefits. It would be unjust to allow him to benefit without her getting something back. Thus, constructive trust
imposed.

34
 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 contractual
remedy [Wrotham Park;17 Blake]
• Limitation: it’s not a general remedy à 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
• Where a wrong has resulted in benefit for D at π expense, courts conceptualize the transaction
as D having avoided a bargain with π.

Quantum à Various Approaches

• Compensatory:
o 1. Reasonable wayleave, rent [see e.g. Whitwham; Strand Electric; Wrotham Park]
§ Where the wrong consists of use of π property, court measures unjust
enrichment by the amount D 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 D 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]

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 π.”
17
Wrotham Park Estate Co. v. Parkside Homes Ltd. [1974]: Restrictive covenant limited # of homes D could build
on the land. In breach of covenant, D developer built 14 extra homes. Issue: no loss to π, but D gained from breach
of K. Held: D 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 π for the right to build the extra
homes.
18
Surrey Council v. Bredero [1993, Eng. CA]: D breached restrictive covenant and built 5 extra houses in
development. Breach ≠ diminish value of π property, but π 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. D built house on
land that adjoined land affected by a restrictive covenant, and D breached the covenant by giving right of access to
the house over the protected land. Also in breach of K, D gave access via roadway opposite π house. Could be
characterized as trespass as well as breach of K. π 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 D; π entitled to monetary award, measured by her share of reasonable license fee that D would likely
have agreed to pay for permission to build. Court described the Wrotham Park approach as “appropriate even on
pure compensatory principles.”

35
 §
Note, though, that courts will often apply a net revenue figure, recognizing
that benefit to D ≠ full amount received, but the full amount less expended
$/effort.
§ 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]
§ D has taken a benefit from π.
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.

Punitive Damages
Distinguishing Between Some Common Types of Damages
• Non-Pecuniary à 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. Sun Life]
o No especially malicious behaviour or wrongdoing by D is required – just breach of K.
20
Edwards v. Lees: D 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. π 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]: D used π property to build apartment
buildings on D property – vacant lot, D filled it in afterward, no harm to π property, but it made it easier for D to
build. π couldn’t point to any special damage, only advantage to D, but sought punitive/exemplary damages for D
wrongful behaviour – unjustified and unwarranted trespass, resulting in substantial gain for D. Held:
punitive/exemplary damages awarded, to strip D 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.

36
 o Commonly awarded in tort cases à 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 à 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 D has breached the K or
committed the tort.
o Because of the particularly bad way in which the breach has happened, π’s damages
are greater than they would have been otherwise à D’s conduct aggravated the
harm to π.
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 D bad behaviour.
• Punitive à Non-Compensatory
o A step above aggravated damages à punishing bad behaviour regardless of π damage.
o Can be cumulative with regular non-pecuniary and aggravated damages [see e.g. Hill
v. Church of Scientology22]

When are Punitive Damages Available?

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 π à 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 à 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]
• 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

22
Hill v. Church of Scientology [1995, SCC]: π sued for defamation; D systematic attempts to discredit through
prolonged and intentional campaign to defame π. 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.

37
 anyway because they will get more sales.
• Issue: compensatory damages would be less than the value D gained.
• Held: minimal punitive damages awarded ($5000) – didn’t strip D 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 π
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 à 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 à available.
• Negligence cases à available [see e.g. Robitaille v. Vancouver23]
• Contract cases à almost impossible [see Vorvis v. ICBC24]. Until recently, never available

23
Robitaille v. Vancouver [1981, BCCA]: π 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.

38
 [but see Whiten v. Pilot25].
o Doctrine of efficient breach tends to predominate.
o But, where a secondary provision of the contract is breached, may recover punitive
damages à 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, D exploited the bad financial position of πs and attempted to delay
and prolong proceedings to force π into dropping their claim. D’s own
investigator said it wasn’t arson.
§ So, key factors are: vulnerability of π and intentional conduct of D 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

II. Limiting Factors

Intro to Limiting Factors:
• Things in the law of damages that protect Ds
• Considerations of courts when determining and limiting damages:
o Harm à what is the loss suffered by π?
o Justice as proportionality à there should be balance b/w wrong and remedy
o Self-help or individual reliance by πs à Sometimes πs are in best position to
25
Whiten v. Pilot: D insurance co refuses to pay insurance on π home. D 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; D 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 à sending a deterrent message to the
industry. The case was sent back on the award – or, court said it would order a new trial unless the π settled for
$50k, so they did so.

39
 mitigate consequences of a civil wrong
o Efficiency à 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 à 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.

Remoteness
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.”
§ “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 à that’s what contract is all about.
We want to encourage parties to privately plan risks.

40
 o Note: this case was decided before:
§ Limited liability à the case was b/w entrepreneurs personally instead of
companies
§ Liability insurance à 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 à 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 à 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 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, π missed an opportunity to buy another
farm (because the sale was predicated on the sale of the family farm)
• Issue:
o π 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. π claimed $23k, the difference b/w appreciation on the farm lost and

41
 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 π 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 D’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 à 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: π construction company successful bidder on federal gov’t project, but gov’t wrongfully
cancelled K midway through and called π’s completion bond (a guarantee of satisfactory
performance). π sued for breach of K and won, recovering all losses on the project.
• Issue: π also sued for loss of subsequent projects – damage to reputation b/c of cancelled bond.
• 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 D 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.

Summary of Remoteness
• 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?

42
Mitigation
Basics
• π must take reasonable steps to minimize the damages from D breach
• In sale of goods cases, the mitigation requirement is basically codified:
o S. 53 – Damages for Nonacceptance
§ (1) If 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 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 the
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, D wrongfully dismissed & sues for lost wages.
§ Salary at time of dismissal: $5000/year
o π bought a bunch of stuff at the company’s liquidation sale, and sold it for $11k
• Issue: did π mitigate out of any damages?
o D argued π used his time to make profit, which he wouldn’t have been able to do if ≠
dismissed.
o π 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: π 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.

43
Apeco v. Windmill
• Facts:
o π owns warehouse; D agrees to lease part for 5 years
o D breaches, π finds new tenant.
o π sues D for 5 years of rent, but D says they mitigated by renting to the new tenant.
• Held: π is entitled to the lost rent from D
• Reasons:
o Distinguishable from Cockburn: yes, they had found a new tenant, but ¾ of the
warehouse was vacant. If D had stayed, the new tenant would have been in addition to
D - not instead.
o So, in this case the second transaction hasn’t mitigated the loss suffered by π.
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]

• Facts
o P manufacturer of quicklime. 8 year lease of gas rights on P property to D gas co, w/
req’mt to supply P with gas.
o D sold the lease to a third party, who ≠ supply gas.
o P 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, P sold the gas works for $75k.
o P claimed the expenditure to get the gas, and also $125k for the cost of their own gas
used
• Held: No award to P.
• Reasons
o P 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 P would profit from D’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 Ps were tapping into their own gas, which was always there and which could have
been done regardless of D behaviour.

Jamal v. Moola Dawood Sons & Co. [1916, PC (Burma)]

• Facts
o D backed out of share sale w/ P
o K price was $184,000 rupees. As a result of breach, P only got $75,000 rs.
o P 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: P did not mitigate out of damages, D still obligated to pay.
o Damages are measured at time of breach.

44
 § Waiting is at P risk, and if P is found to have mitigated out of damages by
waiting and selling at a higher price, then Ds should also be responsible if P
waits and is forced to sell at lower price.
o P can do whatever he wants after breach, but it’s at his own risk.
o Conceptually, P could have gone through with first K and then later bought and sold
shares again independently à shares are fungible.
o Distinct from Cockburn, in which P 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: D argued that market price of ham at time of breach was very good – trying to minimize
their damages on basis that P could have mitigated out of all damage.
o But then later, on appeal, D 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.
• Held: not impossible to resell goods, viable market existed.
o The two arguments made by D cannot be reconciled, and the Court of Appeal caught
this contradiction in finding that there was a viable market.

Time of Assessment
• 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 P loaned shares to D, ≠ returned on time, and much later P 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 P wanted highest list price of the shares in the time D held them, but they were worth
far less at time of breach.
o P argued sophisticated commercial actor, would have sold shares at highest price.
o P sought specific performance and damages.
• Held: Court awards damages according to a mid-range share price.
• Reasons
o Court accepts that P 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 P; 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 P 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 P is seeking/entitled to specific performance, they are entitled to hold off on

45
 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. Ps may also be entitled to hold off on mitigation depending on the state of the
market (e.g. volatile or illiquid) à reasonableness depends on context
§ Even though ≠SP, P 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.
§ P 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 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 P 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 P to organize finances,
arrange contractors etc à to move on from the breached K.
o Court allowed the P to wait 8 years in this case, during which time the cost of repairs
massively increased.
o Ps 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. Ds were denying liability
• That’s sort of ridiculous, since Ds 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. Ps 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 D.
• This is a dangerous argument: recall Radford v. DeFroberville: intent
to do the work is key in whether P can recover. So, in their anti-
mitigation argument, P here actually led evidence that undercuts their
main argument.
o D 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, D argued for 60%.

Perry v. Sidney Philips [1982, Eng. CA]

• Facts
o Defective property – surveyor D failed to detect the defect.
o P couldn’t afford to properly repair the defect at the time it was discovered.

46
 o P 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
o 1. Surveyor didn’t cause the defect à negligent survey just caused a delay in the
discovery of the damage, meaning that P spent a bit more on the property because he
didn’t know about the defect.
§ Hence, P 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 P could have protected himself against.
• No insurance for hidden defects
• The way you protect against this is by hiring a surveyor.

Damages in Lieu of Specific Performance

• Issue: these arise when P claims specific performance up to trial, then drops the SP claim at
trial.

Wroth v. Tyler [1974, Eng.]

• Facts:
o House price: £6000. D breached K for sale; P 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.
§ à You can’t get SP where it would require a third party to waive their legal
rights.
§ But, where P has a legitimate claim for SP, damages should be calculated in
lieu.
o Principle: P 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.

47
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 P was going to buy the house with $75k cash plus mortgage of $135, then sell 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.

Specific Performance in Real Estate Contracts

Background
• 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 à 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
à things that can be measured in money.

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 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 à 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.]

• 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 à only get those if you have a legitimate distinct interest in
SP.

McNabb v. Smith [1982, BCCA]

• Applied Domowicz to residential purchase
• D showed evidence that π 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 π of a damages award calculated in lieu of SP. Issue of hardship to
D, who ended up paying π ~125k more in cash damages than π actually lost. (b/c π
kept own home and avoided mortgage and carrying costs etc.)
o Court is balancing necessity of protecting π w/ order for SP (weak) with a desire to
protect D against undue/oppressive amt of damages (strong) à inclines against SP.

John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. [2001, ONSC]

• Facts:
o π = hotel builder/manager. Agreement to purchase land (vacant lot) from D co.
o Agreement req’d severance approval from city before proceeding. City granted
approval, subj to possibility that D 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 π or D, only other property owners.
o D tried to get out of the agreement; π sued for specific performance.
• Legal Issues: Specific performance – is performance of the K unique? Since Sopinka’s dissent

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 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.
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. π owned part interest in land and K’d w/ D 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 D 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 π 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

Measurement Issues: Reinstatement or Diminution

Damage to Chattels
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

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• Replacement: £85
• Same as Dewees - π not entitled to cost of repair where that cost exceeds that of a
reasonable substitute.

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.
§ π 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 π wouldn’t do the work
otherwise or isn’t actually going to do the work now, shouldn’t be
entitled to make D pay for it.
o Price was close to repair cost.
o Note: monetary value 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 π 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 wear-and-
tear/depreciation, thus increasing its value.

Miller v Brian Ross Motorsports Corp [2015, BCSC]

• Facts: P wanted 85k for loss of pleasure of being to drive his Ferrari during months of repair
• Held: P’s damages for loss of use of Ferrari during Material Period as $15k
• Reasons:
o Ferrari was insured for pleasure and only available for 6 days a month, P travelled to
Vancouver during Material Period
o P had evidence of rental rate for substitute Ferrari but didn’t take steps to rent it
o P wants to claim general or non-pecuniary damages for loss of use, which is intended
to compensate P for more intangible losses and not a matter of precise arithmetical
calculation
o In assessing general damages, court must, on a balanced consideration of evidence,
endeavor to tailor an award that is reasonable and fair as between parties Kates v Hall

Factors to Consider Re Reinstatement for Damage to Chattels:

• Intent to do the work
• Disparity/size of gap in cost

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• Availability of reasonable substitute
o [Appreciating or depreciating asset?]
• Degree of subjective attachment

Damage to Real Property

Taylor v. Hepworths Ltd.
• Facts: π owned shops & billiards hall. D caused fire and property is basically destroyed. π
claimed cost of rebuilding the hall.
• Held: Not awarded.
• Reasons
o π did not actually intend to rebuild the hall à it was only an investment property, and
rebuilding would not have been a good investment
o Basically, there was no diminution in value because π was going to have to tear down
the building to redevelop the site.
§ 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 π actually lives there and wants to stay.
o It’s like the factors discussed in Dodge:
§ π 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, π 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 à if he had done so, it would show real
intention to do the work
§ Failure to rebuild leaves judges a bit nervous à 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 π 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: D cut down several mature trees on π 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 π

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 property.
• Issue: Neither amount is really appealing. The question is: what interest of the π 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 D 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.
§ Court could have awarded higher punitive damages, but:
• Judge thought π was just after retribution.
• Plus, π 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.

Destruction of Property

Liesbosch Dredger v Edison SS [1933, HL]

• Facts:
o D’s steamship fouled moorings of P’s Liesbosch and didn’t free them until carried to
open sea, where it filled with water, sank and was total loss
o D believes all that is recoverable is market price of dredger with cost of transport and
interest
o P believes also entitled to damages in addition for loss during period of inevitable
delay before substituted dredger could arrive and start work
• Held: value of Liesbosch must be assessed by taking into account 1) market price of
comparable dredger in substitution 2) costs of adaptation, transport, insurance etc 3)
compensation for disturbance and loss in carrying out contract over period of delay between
loss of Liesbosch and substitute dredger could be used
• Reasons:
o Damages assessed as if appellants had been able to go into the market and buy a
dredger to replace Liesbosch
o The Kate: in the case of vessel being totally lost by collision, while on her way in
ballast to load under a charter, proper measure of damages against vessel solely
liable for collision was value of vessel at end of voyage plus profits lost under
charterparty
§ The same in The Racine where owner entitled to recover presumed net
loss of freight on all three charters less 10% for contingencies and her
value on her return to home port at end of three charters

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 o Liesbosch not under charter nor intended, but employed by owners n normal
course of business, essential part of plant they were using
§ Some substantial period was necessary for procuring substitute dredger,
they cannot be restored to their position unless they are compensated

Nan v. Black Pine Manufacturing Ltd. (1991), 55 B.C.L.R. (2d) 241, [1991] B.C.J. No. 910
• Facts: negligent destruction of property, issue was proper measure of damages, D didn’t
prove that property replacement would be a betterment
• Held: appeal dismissed
• Ratio: reinstatement was the beginning of an assessment of damages and judge not wrong
on facts in concluding it was the end as well, without any deduction for pre-loss
depreciation or post-reinstatement betterment
• They lost their family home, which is the nature of their damage and not some diminution
in the value of their land. Fair compensation requires that they be given back what they
had before (the only way is to award sum reasonably necessary to restore property to
condition in which it was before D effectively destroyed it)

Betterment
• 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):
§ π factory burned down by D; P 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 D torched π factory and forced π into that situation, and not fair
to make π 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.
§ Harbotts Plasticine [1970]: they got new building for old but they did what
they needed to to keep business going, replaced without extras, allowed cost
of replacement
o Factory burned down and π 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 Step Building Treatments v 1382680 Ontario Inc [2004]

• 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 [interest cost for
unexpected costs and expenses].
o Assumption: you can borrow the money to do the repairs, so only the interest is

54
 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.
o For example, if a machine, purchased in 1988, would need to be replaced in 1998, but
the plaintiff receives a new machine (with the same life expectancy) in 1993, as a
result of the defendant’s breach, the plaintiff’s machine has received an increase in life
expectancy of 5 years. Had the plaintiff replaced the original machine in 1998, he or
she would have expended a certain sum of money; by deferring the purchase of a new
machine for an additional 5 years, the plaintiff has the opportunity to invest that sum.
Interest is, therefore, calculated on that sum during those 5 additional years. This
interest sum is then prima facie deductible from the award for damages.

Fontaine v. Roofmart Western Ltd. [2005, MBQB]

• Facts: Shingles deteriorated before expected; π had to replace. But they did last for 10 years.
• Issue: if awarded full value of new shingles, π 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 π, and amount of
money spent.
o Betterment: 10 years.

III. Remedies for Personal Injury

Context: The Role of Tort in Dealing with Disability
• 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 à 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

55
 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

Andrews (The “Trilogy”): Overview of Methodology

• 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.
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

Lump Sums: Finality vs. Accuracy

Advantages and Disadvantages
• 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.

Discounting
• How courts deal with future changes in the value of money

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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:
§ 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,

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 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).

Non-Pecuniary Losses
• 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 à all awarded with general arbitrary sum

The “Insurance Crisis”:

• 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.
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

New Theoretical Basis – The Functional Approach

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 à comparability problems between injuries
and consequent awards.

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Basics of the Functional Approach
• Consideration: not so much the category of the injury, but the way that injury affects P’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 à 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.

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 P [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

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 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 non-pecuniary
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.
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 Ps (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 non-pecuniary
side, but uses the savings to provide compensation to a much broader class of
things on the pecuniary side.

Pecuniary Losses: Lost Future Earnings

• 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 à the total amount P 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.

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• 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 P 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]

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 à typically 50%

Step 3: Factor in Contingencies:

• Positive and negative impacts on awards
• Statistical contingencies: affect everyone
o Ds and Ps will bring evidence about general contingencies that would have impacted
P’s work years/income etc.
• Individualized contingencies: lost chances [see e.g. Conklin v. Smith, 1978 SCC]
o Can be positive or negative à in Conklin, the P was working toward a higher-paying
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 à in most cases, though, P
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

61
 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 à subtract inflation rate from interest rate and apply that percentage to discount the
value.
• S. 56 of Law and Equity Act

Note: Issue of Taxation

• 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, P 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 à …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.

62
Compensating Future Losses of Children & Ps who did Unpaid Work
• Where P 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:
§ 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 à 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 à 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 à D didn’t cause
the loss of societal inequality
28
Teno: P 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.

63
Addressing these Issues:
• It’s becoming common for courts to adjust upwards for female Ps, for two reasons:
o Enhance past statistics with the contingency of future improvement
§ The situation is improving, especially in relation to inequality of wages.
§ 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 P 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 à 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 replacement
cost per Fobel.
• Issues:
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.

64
Compensating Unwaged Work (or Underemployment)

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, D 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.

Cost of Care
Step 1: Assessment of Need
• Not a legal question
• Ensure sufficient expertise surrounding P 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 à physiotherapy, pain mgmt, etc.
o Ongoing daily care à attendants
o Transportation
o Prosthetics, drug costs
o Physical arrangements and special equipment à wheelchairs, vehicles
o General living support

Step 2: Determination of Standard by Which Needs should be Met

Mitigation
• Obligation to mitigate when injured – either by seeking alternate employment, or by seeking
treatments.
o Issue: if P doesn’t seek treatments, or stops at some point, is D 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 à 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?

65
• That’s about as detailed as the question gets – not a lot of refining.
• A P 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

Step 3: Project Need and Standard into Future

• 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 à 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 à probabilities and possibilities can be factored
into contingency format [see e.g. Schrump v. Koot30; Janiak]31
o Courts will factor in a possible future event at the rate of probability à it affects
damages, but discounted by probability that it won’t happen. So, for something with

29
Krangle [2002, SCC]: Group home was in best interests of P, and cheaper too
30
Schrump v. Koot: P suffered back injury, evidence of 25-50% chance of needing further back surgery. Adopting
civil std of proof, D 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 à 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.
31
Janiak: 75% chance that back surgery would eliminate the injury. D 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%.

66
 25% likelihood, give 25% compensation.

Step 4: Deductions and Adjustments

• Avoiding duplication with future earnings [Andrews para 53-55]
• Collateral benefits [see below]
• Family care:
o Presumption against conscription à 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] à in a constructive trist.
• Tax issues:
o Ignored in Andrews [para 84-85]
o The original idea: don’t worry about it à 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

Mitigation
• Janiak is the leading case on this.
• Most mitigation cases involve a P faced with some possible medical procedures that have
some chance but are not guaranteed to solve the problem, and P chooses not to proceed with
the treatment.
• Janiak set out an objective standard of reasonableness:

Objective Test: Assessing What a Reasonable Person Would Do

• (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
• (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.

67
 o But see Bougoin.32

Thin Skull Situations

• What if P 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: D must take P as found, and if as a result of a pre-existing psychological
disability, P 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 P 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 D 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…D will be
responsible.

Collateral Benefits
• 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 Ds 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.
o Collateral source benefits are now only deducted in fairly unusual circumstances.

Categories of Collateral Benefits:

1. Voluntary Family Care
• Recall: can’t conscript family members [Andrews]
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.

68
• 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.
• P 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 à 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 à so, no income loss
o Disability payments à where problem is more long term, but same effect
• Direct payment [Miller, Shanks]
• Indirect payment à total compensation theory [Cunningham]
o Idea: P 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.
§ 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 à 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 P is injured as a result of auto accident but suffers no income loss because they used

69
 sick leave, the court still won’t deduct from the award, because P 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 D with that cost, so P 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)

(d) Employment Insurance – Repayment

• Also subrogated.
• See EI Act s. 45

Subrogation
• When the other provider of assistance has claims against D 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

70
 o Implied Ks, equity à 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 à 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
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

71
 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 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

72
 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 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

Structured Settlements as an Alternative to the Lump Sum

• Development:
o Watkins v. Olafson [1989, SCC]
o Insurance (Vehicle) Act

73
• 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 P and D.
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
§ Ps 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
• Only under the Insurance (Vehicle) Act à so only for MVAs
• All other cases: only through negotiated agreement.
o Rules per Chesher v. Monahan:
§ Triggering consideration
§ “Best interests”
§ Onus on P 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

74
 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.

Fatal Accidents
Basics
• 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.

Theory of Compensation
• 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.

Who Can Recover?

• 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

75
 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 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

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

76
 o Less personal expenditure
o Contingencies affecting deceased
o Contingencies affecting survivors and period of dependency
o Discounted and tax gross-up

Non-Pecuniary Losses
• 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’ à now includes things that can be valued in
money.
o Unpaid work in the home, etc., can now be recovered
• 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. Peters33]
§ 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
Lian34]
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]

IV. Injunctions
Introduction
• Referred to as “specific”, specific performance is contract remedy where the court may,

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.

77
 instead of awarding damages, order D actually to perform a contract
• Injunction is order available to protect wide array of substantive legal rights, requiring person
to refrain from or to take a course of action, a failure to obey such orders may result in a
citation for contempt of court and fine or imprisonment
• Injunctions and specific performance are equitable remedies that are now available in general
law
• Where equity and common law conflicted equity would prevail, but it is but corrective and
supplementary
• Issues:
o Entitlement à definition of parties’ legal rights
o Remedy à quantification of those rights

Method of Equity and Remedial Selection

• Court must be satisfied that there is a substantive cause of action or violation of P’s rights, that
substitutionary relief would not adequately vindicate those rights, no discretionary factors
incline against specific relief
o Damages inadequate expressed as requirement that P must demonstrate that
irreparable harm would be suffered if specific relief not granted (damage to person or
property impossible to repair, legal wrong that causes no financial or economic harm,
injury that has not yet occurred or wrong that is continuing)
o Available at the court’s discretion, concerned about interests of D and efficacy and
efficiency of own processes
§ Balancing of costs and benefits of equitable relief when courts are asked to
enjoin a nuisance or order specific performance of a contract
• “whether this is case in which remedy at law is so inadequate that the court ought to interfere,
having regard to the legal remedy, the rights and interests of the parties, and the consequences
of this court’s interference” AG v Sheffield Gas Consumers Co [1852]

Framework: Categories of the Law of Remedies

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.
o E.g. where there is a social purpose or otherwise greater value
o We can see the social choice in negligence law à 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 à 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

78
 o Criminal sanctions
• Courts fluctuate between using property rules and liability rules à 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 à hockey, UFC, etc.

Timing of Injunctions – Three Options:

• Permanent
o Final resolution of a dispute between the parties
o Last forever (or until overturned on appeal)
• Interim
o Temporary à an order with a specific start and end date.
• Interlocutory
o A pre-trial injunction (preserve status quo until rights of parties finally determined at
trial)
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.

Scope of Injunctions: Three Options

• Negative/prohibitive
o An order to stop doing or not to do a particular thing
• Mandatory
o A positive order à rebuild something, e.g. right a wrong or repair damage done
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.
o In cases of urgency injunctions may be sought on an ex parte basis (in absence of
respondent)

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 o Quia timet are permanent order of court and not interlocutory orders, which have the
effect of quia timet injunction because they suspend further incursion of harm, but
suspension only operates for duration of interlocutory proceeding and my not create
permanent restraint on D

Quia Timet
• 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 D right to carry out their legal business on their property
§ Granting injunctions too readily would impede D’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 D.
• 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?
o 4. Consequences to D of granting an injunction

35
Fletcher v. Bealey: manufacturer bought facility to store waste (mountain of sulphuric material). P downstream
user of river water, concerned the material will leach into the river. P 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 D 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 D 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. “it remained then to be considered whether there was evidence
of actual nuisance committed or evidence of extreme probability of nuisance, if that which was being done was
allowed to continue. Difficulty in the way of P was that it was necessary for them to establish existence of actual
immediate nuisance and not a mere quia timet case of injury a hundred years hence” AG v Corporation of Kingston
[1865]
Mendez v Palazzi [1976]: P alleged growing roots of neighbour’s trees destroying rock garden, lawn and house
foundations, held roots were nuisance but damage not sufficiently substantial to award mandatory injunction to
remove trees. Must be proved damage will be irreparable, shown that if damage were to occur, it will come in such a
way that it will be impossible for P to protect themselves against it if relief is denied in quia timet action. P awarded
$500 for nuisance
36
Hooper v. Rogers: D removed a large part of soil holding upstream land. P was worried that the removal of
support would result in slippage. D 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 P 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.

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 §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 D
• 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]

Mandatory Injunctions
• 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) π 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 D is innocent (in the sense in Redland – Ds 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 D is not innocent (e.g. in Bellini Custom Cabinetry Ltd. v. Delight
Textiles Ltd.39), this can weigh against the D 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: D 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. P 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: D uphill strawberry farmer, π downhill brickmaker. Brickmaker is on its own quarry,
but they’ve dug so much clay downhill that π farm has started to sink. π seeks order that D take all necessary steps
to repair π land . Held: no order. CA says that while there is a nuisance, they are choosing in this case not to impose
the burden on D.
Lim v Titov [1998]: no mandatory injunction because wall is small infringement upon P rights, far removed from
house and 7 inches, no evidence of D’s deliberate trespass
Gross v Wright [1923]: wall on 2nd and 3rd floor too narrow by 4 and 8 inches, sought specific performance or
injunction, SC held conduct of D was breach of contract but also trespass because wall on P’s property was
constructed under false pretences, deceitful and wanton disregard for rights of P
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 D bad behaviour: they were supposed to
do surveys, and they did but then they life about what they found à said π could use laneway without trespassing,
but it was. Also Ds didn’t do other work they were supposed to do.

81
Permanent Injunctions à Injunctions to Protect Property Interests
• The law on permanent injunctions favours property owners (only in exceptional cases that P
limited to damages) Almost always available to restrain trespass and nuisance. [see Lewvest;40
John Trenberth v. National Westminster Bank]41
• Injunctions are generally the preferred remedy in real estate cases.
• Rationale:
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 π is the loss of their veto power à 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 π lost in terms of the bargain they might have been
able to strike [recall Wrotham Park]
• Sometimes, despite π’s strong claim to an injunction, courts will use their discretion to
suspend/delay an injunction, to mitigate the impact on D [see e.g. Woolerton v. Costain]43

Chattels
• Where an article has a special or unique value to the owner (ie; a rare piece of art) an
injunction will ordinarily be granted to protect the owner's interest - Chattels
• Though where the property is an ordinary article of commerce and easily replaceable the right
to equitable relief is more problematic.

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.]: D needed to repair building but
couldn’t do so without trespassing on π property (needed to use it as a staging area, bring materials across, etc.) –
but π doesn’t want them to do that. Court grants injunction, despite noting that π was fairly unreasonable and D 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: D laid pipes underneath the road. π owns property under the road, but
doesn’t own the road. So, can’t access the subsurface. No harm to π - 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. π has an interest, with
value à 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 π warehouse,
D crane swings over π property. No damage, but π 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 D 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.

82
 o note that for pre-trial injunctions there is restraint over the disposition of assets that are
the subject matter of the litigation may be used (Mareva injunctions)

Trespass to Land
• Refers to when there is direct interference with the exclusive possession of another person's
land o "so great, moreover is the regard of the law for private property, that it will not
authorize the least violation of it, no, not even for the general good of the whole community."
• An injunction is granted as a means of protecting those rights
• The right to an injunction has become synonymous with protection of property; the notion of
property includes the right to exclude all others from your land, except under contract
w/owner or w/consent
o "there is nothing which so generally strikes the imagination and engages the affections
of mankind, as the right of property; that sole and despotic dominion which one man
claims and exercises over the external
• Things of the world, in total exclusion of the right of any other individual in the universe." ï
thus in this case to award damages is to make a substitutionary award - substituting the right
to have exclusive control of the land w/money

Traditional Approach
• where there is direct infringement of a pltf's property rights an injunction will generally be
granted
• the balance of convenience and other matters may have to take 2nd place to the sacrosanctity
of privacy rights
• the difficulty w/this approach comes from the weakness of common law remedies:
o if an injunction is denied the pltf is left w/nothing
o but where do we grant an injunction, we might expose the def to exploitation at the
pltfs hands
o particularly where the trespass has occurred inadvertently
• Recently courts have been willing to look at new techniques
Nuanced Approach
• to avoid the potentially harsh traditional approach, courts have been willing to grant either
damages in lieu or suspend operation of an injunction. ie) temporary trespass Woollerton
• In newer cases the court will look to the following factors:
o permanence of the trespass
o social utility of the defendants conduct
o deliberateness of the defendant's actions

Goodson v Richardson
• Facts: Pltf owned lands beside the highway and a share in the water company. The defendant
owned some houses in the town and he didn’t like the water company’s supply so he wanted
to construct his own waterworks for his house, Def applied for permission to get pipes and he
was granted it subject to the landowners rights. He began laying them along the highway
adjoining Pltfs lands the Pltf and others applied for an injunction.
• Issue: Whether the pltf can get an injunction for the defendants trespass on their land?

83
• Rule: this case stands as an example of the impact of the social utility of a defendants conduct
may have on whether an injunction is granted. While here the social importance of the
defendants work doesn't appear to be a relevant primary consideration it may tip the scale
towards the idea of suspension of the injunction.
• Analysis: the court explains that the mere fact of trespass at the time of filing won't complete
an injunction - however b/c the pltf has a veto right on their land and the def invaded w/o
consent this would appear the proper subject for an injunction. Thus an injunction was granted
against the def b/c he disregarded the instruction to get permission. The court also finds there
was really no social utility to the intrusion and the pipeline would have been permanent.
• Conclusion: the injunction is granted.

• Wollerton and Wilson Ltd v Richard Costain Ltd

• Facts: the pltf owns a factory and warehouse on one side of the street. On the other side the
def are in the course of building a post office. The construction is major and during it a crane
has been swinging over the pltfs factory. The Pltfs have therefore claimed an interlocutory
injunction to restrain what they argued is an invasion of their airspace.
• Issue: Should the pltfs be granted an injunction for the crane?
• Rule: where the trespass is of a transitory and temporary nature, some courts may now be
more willing to confine the plaintiff to receiving damages for the trespass in lieu of an
injunction. - Case is about the permanence of trespass - temporary trespass
• Analysis: applying the analysis here the court fins the injunction shouldn’t really be granted
b/c they look at the economic realities of the case and the behaviors of the parties and found
the defendant didn't really come with clean hands.
• the trespass wasn't certain,
• there was a social utility to the project b/c it was the construction of a post office.
• the actions weren't deliberate and the def had tried to work with the pltf to come to a
solution - offered to pay. The Pltf argues that the absence of damage isn't a bar to
trespass - further they emphasize the tort of trespass and fact that it is ongoing. The court
recognizes there are a number of reasons why the injunction shouldn’t be granted;
practical necessity, only place to put it, it would stop operations which would extend the
contract, they offered to pay, the parties haven't been deliberate/flagrant, they also look at
the social utility of the project (can tip the balance)
• Conclusion: they grant an injunction but postpone it until after the project is meant to be
complete.

John Trenberth Ltd v National Westminister Bank Ltd

• Facts: Def argued that they needed to trespass on the pltfs land in order to make repairs to the
façade of their building. They had asked the pltf for permission but the pltf had repeatedly
refused to consent. The Def was a large bank.
• Issue: should the injunction be available/continued?
• Rule: where the defs actions are deliberate the court is much less likely to allow a
substitutionary remedy ($$) also it doesn't matter to the court the reasonableness of the
trespass or if the trespasser "felt" they had no other choice. A trespass is a trespass, intention
doesn't matter even if it is in good faith. - overall the case stands for the deliberateness of the
defendants actions. Where a def's actions are deliberate the court is less likely to allow a
substitute form of remedy.

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• Analysis: the court focused on the fact that the pltf had not consented to the trespass despite
the defs requests. The court also held there was an alternative to trespass in the form of taking
down the building. They argued that the trespass was for private benefit - there was no social
utility. Finally the court really emphasized that the bank had "chosen" to trespass.
o this case is interesting b/c it is completely contrary to Woollerton on the facts
o this differentiation is likely due to the fact that the court really saw no social value and
noticed that this was a bank therefore they could afford the cost - it wasn't a huge
hardship.
• Conclusion: the injunction is allowed to continue.

Possible Alternatives to Permanent Injunctions in Real Estate Cases:

• Where the conduct of the D is innocent, the burden of an injunction is oppressive, and other
discretionary factors weigh against granting an injunction in relation to property, 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 à where the defendant is innocent (i.e.

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 π 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.

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 hasn’t deliberately interfered) [see e.g. Clark v. McKenzie]47, and to grant an injunction would
be unduly burdensome on D.
• 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 Lighting48]:
o 1. The injury to π’s legal rights is small;
o 2. The injury can be estimated in money;
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 D 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 à 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 à the court can order payment of
damages and then transfer the property to D who has built the trespassing structure.

Injunctions to Address Nuisance

• 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.

47
Clark v. McKenzie [1930, BCCA]: When D built house, didn’t know they were trespassing. Minor interference
which barely reduced the property value. Held: π got $50 in damages, no injunction to tear down.
48
Shelfer v. City of London Electric Lighting [1895, Eng. Ch., Smith LJ]: Nuisance case; π seeking injunction
against a noisy electrical utility. Shift from the traditional approach - when damages can be substituted for an
injunction in nuisance. "it may be stated as a good working rule that"
1) if the injury to the plaintiff's legal right is small, 2) and is one which is capable of being estimated in money,
3) and is one which can be adequately compensated by a small money payment 4) and the case is one in which it
would be oppressive to the def to grant an injunction, then: damages in substitute for an injunction may be given.
49
Vaz v. Jong: Neighbours were already at odds due to a separate issue, and π sought injunction because D’s upper
porch and some eavestroughs overhung π’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 à D can fix the whole thing for about $2k. So, wouldn’t be oppressive to D. 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.

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• The key: balancing competing property rights (affected parties and public policy).
o Range of affected interests generally wider therefore costs of nuisance nd economic
and social costs of injunctive relief making offering injunctive relief more problematic
• Nuisance gives flexibility in two ways:
o 1. It’s much easier to balance interests and find a lack of nuisance à 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 à 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 judge-specific [see
e.g. Miller v. Jackson]50
• “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 à 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 à 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.

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 D interests.
So,no injunction, but because Denning ordered damages despite the lack of 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 à they are highly POV-dependent.
51
Spur v. Del Webb: huge cattle operation; developer bought thousands of acres w/ plan to turn into residential area.
Lots of manure, π developer sought injunction against the manure. Held: court granted the injunction, but required π
to pay D 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, π 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).

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 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 à π gets their order, but have to pay
D 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 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 P.
o Follow CP but consider both.
• Where there is a significant disparity between the harm to D and the gain to π, 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 D. [see e.g. 340909 Ontario v. Huron Steel]57

Flexible Approach
Millar v Jackson

53
Sammut v. Islington Golf [2005, ON Sup. Ct. J]: Golf balls breaking windows in nearby house; π 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 π home. Held: court granted an injunction against golfing on the third tee, so D 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 π’s
property in numbers that are greater than would be expected...” So...basically meaningless?
55
Boomer v. Atlantic Cement Co. Ltd.: Industrial pollution – relatively serious pollution from D 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 π “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 π 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 π and disadvantage to D. Factory
employed over 200 people, was a significant part of business, etc.
57
340909 Ontario v. Huron Steel [1990, ONCA]: π owned apartment building in Windsor, said tenants complained
about the noise at D steel stamping plant and that vacancy in apt bldg is high and property values down b/c of the
noise problem. D 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 D 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.

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The Canadian Approach
• Canadian courts have vacillated on the appropriate balance b/w absolute perfection of property
rights and the relative benefit and burden to the litigants and other third parties.
• For Canadian courts these issues have been of particular concern regarding environmental
pollution of the air and water in remote regions of the country where often the defendant
industry is the single largest employer in the region. The traditional approach in these cases
would have been to favour the individual property owner but now the interests of the
individual owner vs society will be balanced.

Robert J. Sharpe “Injunctions and Specific Performance”

• the Coase theorem notes that whatever initial assignment of rights is made by the law,
economic forces will operate so that the person who most values the right will acquire it in the
end. Thus market forces will tend to produce the most efficient allocation of resources
whether or not the law gives a right to use that resource to the party who can put it to the most
efficient use.
• the end result is said to be efficient because it maximizes net social wealth; the gain exceeds
the loss
• note: this theory assumes that both parties conduct themselves in a way to maximize their own
wealth.
• thus the overall idea is that economic forces will correct judicial decisions which produce
inefficient results
o thus the focus is on whether the gain from preventing the harm is greater than the loss
which would be suffered elsewhere as a result of stopping the action which produces
the harm
o Note that if there are few transaction costs then efficiencies can be ignored
• The article also sets out 3 levels of Entitlement:
o a property rule: someone who wishes to remove the entitlement from its holder must
buy it from him in a voluntary transaction in which the value of the entitlement is
agreed upon by the seller
o a liability rule: allowing the def to destroy the initial entitlement if he is willing to pay
an objectively determined value for it
o inalienability: that its transfer not be permitted b/w a willing buyer and a willing seller
• There are then 4 Remedial Possibilities:
o an injunction - the pltf is given a property type protection in that his right to be free of
x can only be taken away if he chooses to sell an then it must be at an agreed upon
price
o damages - the def is liable but the pltf is merely compensated.
o no liability- a property type protection in favour of the defendant.
o compensated injunction - injunction protection but only on the condition the plaintiff
buy out the defendant at a judicially determined price.

Boomer v Atlantic Cement Co Ltd

Spur Industries Inc v Del E Webb Development

Injunctions to Address Public Rights

• Sometimes, the civil process is used to enforce criminal or quasi-criminal statutes, or to enjoin

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 a public nuisance.
• So, this doesn’t apply in situations where it’s a clearly established private right associated with
land à rather, it’s about generalized public rights, usually emanating from a statute.
• Two issues with regard to injunctions protecting public rights:

1. Who Can Seek an Injunction to Enforce 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.

2. How Will Courts Exercise Their Discretion re Whether to Grant

Injunctions in This Context?
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 D is a habitual D à 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

• D company was enjoined from violating the Lord’s Day Act, and disobeyed a court order by
continuing to operate on Sundays.

58
Gouriet v. Union of Post Office Workers: π wanted to send mail to South Africa during Apartheid

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• The SCC had struck down the Act, but the order still applied and thus D was in contempt
• Note: in another similar case, where the D 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
• 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

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 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.

Interlocutory Injunctions
General
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 à 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, Ds can get out of
jurisdiction
§ With the click of a button, Ds can move assets outside the national legal
regime.
• 1975-1980: American Cyanamid, Mareva, Anton Piller à 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

• Exist as a way of protecting the interests of any claimant to ensure they can get what they
want.
• Essentially they provide effective management of litigation so as to prevent the incursion
of irreparable losses (that the money obtained at trial wouldn’t compensate –
Wilburforce) by a successful litigant
• An interlocutory injunction can be granted at any stage of the proceedings prior to final
judgment

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 • Thus they are for a specified period of time, or until a certain event occurs.
• It isn’t about maintaining the status quo as much as it is about identifying existing and
potential risks that both parties will experience while waiting for trial as well as risk in
the conduct of the trial and enforcement of the judgment
• These types of injunctions deal w/the period leading up to trial; effectively it is a way of
protecting your rights so that the trial litigation is meaningful
• It will normally arise before any information gathering has occurred (before discovery)
o “An injunction is an order granted by a court of competent jurisdiction that
instructs a (legal) person, to do, or refrain from doing, a particular thing. Thus, an
interlocutory injunction is simply an injunction granted during any proceedings
prior to judgment. It is one of the most potent weapons in the court’s remedial
arsenal.” Berryman
o “Unlike a damages judgment, whether the successful pltf must seek further
judicial remedies for enforcement and where the court thus plays a rather passive
role, an interlocutory injunction is immediately binding on the party to whom it is
addressed and invites proceedings for contempt if the order is disobeyed.”

Attraction of Interlocutory Injunctions:

1. the speed of application – an interlocutory injunction can be obtained at any time of day
2. the application can be made ex parte (w/o notice to def)
3. the injunction can be granted in advance of any final determination of the dispute
• note: it is a coercive remedy b/c its ex parte thus there is a risk it will be imprudently
used
• this risk is increased by the fact that the order is granted in absence of fulsome evidence
and pleadings/arguments
• to lawyers they are also attractive because they get around jurisdiction issues; the grant of
the injunction places the matter in the jurisdiction of the court

Tensions:
• that litigants should be free to act as they please prior to being adjudicated at trial as
liable
• the need to provide interim relief to preserve the essence of the subject matter in dispute.
• There are always concerns that judges shouldn’t make quick decisions – they should
understand both sides of the argument – this doesn’t happen when an interlocutory
injunction is granted.

Jurisdiction: derives from 2 sources

1. “Just and Convenient” Equitable Relief
a. in most common law provinces there is a statute that contains the fusion of law and
equity from old Judicature Acts – BC Law & Equity Act s.39(1) – court has power to
award Interlocutory injunction when just and convenient
2. Inherent Jurisdiction of a Superior Court
a. Operates in two ways:
o Ensure that there will always be a court to vindicate a legal right where one is
found to exist

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 o Pltf must show an interlocutory injunction is necessary to protect an
existing, recognized legal right, one that is justiciable
o Concerns the inherent jurisdiction held by superior courts to control their own
procedures, of which the granting of interlocutory injunctions is one
manifestation
o This aspect asks whether a pltf must have a justiciable substantive
claim within the court’s jurisdiction before granting an interlocutory
injunction.

Appellate Court Review of Interlocutory Injunctions:

• b/c the granting of an injunction is a discretionary matter – Hadmor Productions Ltd v
Hamilton the function of the CA is different – the CA must defer to the judge’s exercise
of discretion and not interfere w/it merely on the ground that members of the CA would
have exercised discretion differently
• the function of the CA is to review thus they can set aside the exercise of a judge’s
discretion on the grounds that it was based on a misunderstanding of the law or of the
evidence before him or on an inference that a particular set of facts existed that did not
(as can be demonstrated by evidence available now), or on the ground that there has been
a change in the circumstances that would have justified his acceding to an application
• thus to overturn an injunction the CA must reach a conclusion that the TJ’s exercise of
discretion should be set aside for one of these reasons such that it should be entitled to
their own discretion.

General Principles to Assess:

1. The underlying merits of the claim (that there is an actual claim there) sufficient
degree of merit (MERIT)
2. The harm that would arise from the granting (or not granting) of the injunction)
would make damages an inadequate remedy (HARM)
3. The balance of convenience favours the granting of an injunction (BALANCE)

Guiding Principles:
1. Delay by the applicant will count against granting an injunctive remedy
2. Existing conduct is a stronger basis than future conduct
3. The relative disadvantage of each party in suffering irreparable harm is significant
4. Where everything else is equal, the underlying merits may be determinable.
“it is where there is doubt as to the adequacy of the respective remedies in damages available to
either party or to both, that the question of balance of convenience arises.” American Cyanamid

Permanent Injunction Factors & Test:

• Issuance is discretionary thus determining whether it is appropriate to grant a permanent
injunction the court will look at the nature of the rights that the injunction is sought to
protect and the surrounding circumstances, and attempts to balance the equities b/w the
rights.
1. Whether an enforceable right and a threat/violation of that right exists,
2. Whether the applicant will suffer demonstrable harm

94
 3. The hardship that would be caused to the defendant if a permanent injunction was
granted compared to the hardship that would be caused to the pltf if he/she had to
resort to only an award of damages
4. The conduct of the parties,
5. The effectiveness of an injunction – Cadbury Schweppes Inc v FBI Foods Ltd

TEST FOR AN INTERLOCUTORY INJUNCTION:

1. Threshold accessibility test – Assessment of Underlying Merits
• There must be an infringed legal right
• There must be evidence that points to this infringement
o This describes the minimum level of proof that the pltf must demonstrate on both
of these elements before the court will even consider granting an interlocutory
injunction
o The sufficient standard of merit is assessed on a scale that depends on the facts –
strong prima facie, prima facie, good arguable case, an action that isn’t frivolous
or vexatious, a substantial question to be tried, a real question, a serious question
o Not that when the effect of the injunction will amount to a final determination he
court will more closely examine the merits of the case – Prince Rupert Grain Ltd
• The classic model required the ptlf to demonstrate a strong prima facie case – balance of
prob
o This led to problems b/c it led to an increase in applications and parties relied on
it as a preliminary assessment of the merits
o Thus it often finalized the case b/c it required very strong grounds in evidence so
it was thought to predict the outcome and thus many cases ended up settling.
• This model was changed in American Cyanamid C à serious question to be tried “the
court must be satisfied that the claim is not frivolous or vexations; in other words there is
a serious question to be tried.”
• In Canada this decision was met w/mixed reception and thus while generally followed the
other standards also survived
• In RJR MacDonald the court adopted American Cyanamid

2. Irreparable harm
a. Assess the pltf – the applicant has to show that if the court doesn’t grant the injunction
the applicant will suffer irreparable harm that cannot be compensated by damages
• Thus where a pltfs only claim is for damages they won’t be successful in getting
an injunction.
• RJR – court held “irreparable refers to the nature of the harm suffered rather than
its magnitude. It is harm which either cannot be quantified in monetary terms or
which cannot be cured, usually because one party cannot collect damages from
the other. Examples of the former include instances where one party will be put
out of business by the court’s decision (RL Crain v Hendry) where one party will
suffer permanent market loss or irrevocable dmage to its business reputation
(American Cyanamid) or where a permanent loss of natural resources will be the
result when a challenged activity is not enjoined (MacMillan Bloedel Ltd v
Mullin). The fact that one party may be impecunious does not automatically

95
 determine the application in favor of the other party who will not ultimately be
able to collect damages, although it may be a relevant consideration.”
• The chances of getting an injunction improve if when assessing the harm it is
found he could not be adequately compensated by damages.
b. Assess the def
• “if the defendant were to succeed at trial in establishing his right to that which
was sought to be enjoined, he could be adequately compensated under the pltfs
undertaking as to damages for the loss he would have sustained.
• The idea here is if damages are an appropriate remedy then the harm to the def
would be too much.
• For irreparable harm ask; how much harm is irreparable, how is the harm
irreparable and who will suffer the irreparable harm?
3. Balance of convenience
• At this stage of the analysis the court weighs the position of the parties and assesses
which party will suffer more damage if the injunction is or isn’t granted.
o Remember these are most often granted ex parte so the judge only had one side
• Factors the court will consider in assessing the balance:
o Adequacy of damages as a remedy for the application if the injunction is not
granted, and for the respondent if an injunction is granted
o The likelihood if damages are awarded they will be paid
o The preservation of the contested party
o Other facts affecting whether harm from the granting or refusal of the injunction
would be irreparable
o Which of the parties has acted to alter the balance of their relationship and so as to
affect the status quo;
§ The court is likely to prefer to leave things as they are, rather than alter the
balance
o The strength of the applicants case
o Any factors affecting public interest
o And any other factors affecting the balance of justice and convenience – CBC v
CKPG Television
• Overall the balance of convenience issue will always depend upon the circumstances of
the particular case
• Test comes from RJR MacDonald Inc v Canada

Undertakings: note that when an applicant applies for an injunction they are also required to give
an undertaking to pay damages that may be caused by the injunction should the court later
determine that the injunction should not have been granted.
• the effect of this is that the applicant is liable for damages which are the natural
consequence of the injunction – Village Gat Resources Ltd v Moore
• undertakings are referred to in Rule 10-4(5) “unless the court otherwise orders, an order
for pre-trial or interim injunction must contain the applicant’s undertaking to abide by
any order that the court may make as to damages.”
• “the rule is, that whenever the undertaking is given, and the pltf ultimately fails on the
merits, an inquiry as to damages will be granted unless there are special circumstances to
the contrary.” Griffith v Blake.

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Procedurally How to Get an Injunction:
Rule 10-4 gives the court the power to grant an injunction
Applications for pre-trial injunctions
(1) An application for a pre-trial injunction may be made by a party whether or not a
claim for an injunction is included in the relief claimed.
Applications for pre-trial injunctions before proceeding started
(2)An application for a pre-trial injunction may be made before the start of a proceeding
and the injunction may be granted on terms providing for the start of the proceeding.
Applications for interim injunctions without notice
(3)If an application for a pre-trial injunction is made without notice, the court may grant
an interim injunction.
Injunction by court order
(4)An injunction must be imposed by order of the court.
Undertaking as to damages
(5)Unless the court otherwise orders, an order for a pre-trial or interim injunction must
contain the applicant’s undertaking to abide by any order that the court may make as to
damages.
Application for injunction after judgment
(6)In a proceeding in which an injunction has been or might have been claimed, a party
may apply by petition after judgment to restrain another party from the repetition or
continuance of the wrongful act or breach of contract established by the judgment or from
the commission of any act or breach of a like kind.
Rule 8-1 Governs the Application process, Rule 8-1(3) sets out the application form. Your
application must be set out in a notice of application and be accompanied by the supporting
affidavit.
• Sets out the order sought
• The factual basis
• The legal basis
• The material to be relied upon
• The jurisdiction
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” à 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 à goes to court and to D
o Summarize factual and legal arguments you will make, and then D 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.

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 § 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 will
happen
§ More commonly: you do it when you don’t want D 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 D 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 D
will take action before the injunction drops.
o 8-5(7) à must tell D 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 Ds to huge reciprocal risks
§ This undertaking is a mechanism used by courts to protect Ds too:
• Say D 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 π 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 D can be compensated.
• D doesn’t have to establish cause of action. If D 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 à lowers the threshold
• Facts: Dispute over patent relating to absorbable sutures. π has patent, D invents its own and
starts marketing it in same jurisdiction.
• Issue: π thinks D 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

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 vulnerable – who has a higher risk of suffering?
§ If ≠ granted, π vulnerable. If granted, D vulnerable. We call the comparison of
vulnerabilities the “balance of convenience”

American Cyanamid v Ethicon

Facts: American Cyanamid was the registered proprietor of a patent for absorbable sutures. The
respondent controlled the market on the other form of sutures. The appellant started to eat into
their market. The respondent (Ethicon) launched its own absorbable suture. The Appellant
alleged that the respondents suture infringed its patent and launched an interlocutory injunction
action to restrain the respondent from marketing absorbable sutures in the UK. At trial the
injunction was granted, this was reversed by the CA. Both courts applied the prima facie test.

Issue: What is the correct threshold for granting interlocutory injunctions?

Rule: Establishes the test above for granting interlocutory injunctions. The court in this case
effectively lowered the threshold to requiring that the court be satisfied that the claim is not
frivolous or vexatious. That there is a serious question to be tried, and that the pltf has a real
prospect of succeeding. The rationale for this was based on the unreliability of making
determinations on conflicting affidavit evidence of substantive claims w/o benefit of detailed
argument and in a climate of judicial haste. The “court no doubt must be satisfied that the claim
is not frivolous nor vexatious, in other words that there is a serious question to be tried.”

Analysis: in this case there must be some evidence that you will suffer some harm and that this is
b/c they are using your information or methods in this case under your patent.
• The court held the higher threshold could still apply when; the court is called on to
enforce a restrictive covenant, when courts are called on to make interlocutory mandatory
injunctions, free speech situations, intellectual property cases, labour/trade disputes, take-
over bids
• As for harm, the governing principle is that the court should first consider whether
o if the pltf were to succeed at the trial in establishing his right to a permanent
injunction he would be adequately compensated by an award of damages for the
loss he would have sustained as a result of the def’s continuing to do what was
sought to be enjoined between the time of the application and the time of the
trialàIf damages in the measure recoverable at CL would be adequate remedy
and the defendant would be in a financial position to pay them, no interlocutory
injunction should normally be granted, however strong the plaintiff’s claim
appeared to be at that stage.
If, on the other hand, damages would not provide an adequate remedy for the pltf in the event
of his succeeding at the trial, the court should then consider whether, on the contrary
hypothesis that the defendant were to succeed at the trial in establishing his right to do that
which was sought to be enjoined, he would be adequately compensated under the plaintiff’s
under-taking as to damages for the loss he would have sustained by being prevented from
doing so between the time of the application and the time of the trial àIf damages in the
measure recoverable under such an undertaking would be an adequate remedy and the

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 plaintiff would be in a financial position to pay them, there would be no reason upon this
ground to refuse an interlocutory injunction.

Application:
1) they found it was clear in this case that it was a serious question not a frivolous claim
2) they fount that if the def who already had a majority in the market was allowed to go
forward then it would make the Appellants objective impossible.
3) Thus on the balance of convenience they favoured granting an injunction.

Conclusion: The appeal was allowed and the injunction granted.

Note: the American Cyanamid test was affirmed in Yule v Atlantic Pizza Delight Franchise
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 à 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
π 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 π?
o If not, no injunction.
o If yes, move on to step 3.
• 3. Is there a risk of irreparable harm to D?
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 à 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 π
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

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 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.

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 D, 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 à 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 π 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 π 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 D won’t pay
§ Might be b/c D doesn’t have the wherewithal,
§ Or, more often, where D is or seems to be dishonest

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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.
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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 • 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 π a monopoly over a time period to est a
market share, brand recognition, exclusive rel’ships, and it’s tough to 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 π would have getting an injunction at trial if they
don’t get it today à problem of restoring the status quo.
§ Say court refuses to grant injunction now, and the parties continue to compete
in the market à after 3 years, D 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 π in enforcing their right then.
§ But, if π in the wrong, D will have lost the advantage of being in the market.
§ But the status quo is that D 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

• π has exclusive rights to open franchise stores, D repudiating.
• Court seems to think D is wrongly repudiating the K, and π is being unfairly treated
• If injunction isn’t granted, π will be put out of business, will lose reputation, goodwill in
marketplace will deteriorate à all things that are difficult to measure.
• Also, court subtly considers interests of third parties: 29 employees of π 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 D as to π. D can supervise,
and π is making them money
• American Cyanamid test affirmed here

Mott-Trille v Steed
• Facts: this was a motion brought by the pltf to prevent the defs from proceeding with a
hearing to determine the pltfs status within the Jehovah’s Witness religion
• Rule: A finding of a serious issue is sufficient, once that determination is made the court
considers whether the harm may be adequately compensated for by damages and which side
the balance of convenience favours.
• Conclusion: the injunction was granted in this case bc it was found that it would cause
irreparable harm b/c he wouldn’t be able to speak to Jehovah’s Witnesses

Jamieson Laboratories Ltd. v. Reckitt Benckiser (2015), 130 C.P.R. (4th) 414, 2015 FCA 104
• Facts: Jamieson prohibited with injunction from using word OMERGARED and recall of
products and materials using the word.
• Held: appeal dismissed
• Ratio: Reckitt at risk of irreparable harm if injunction not issued to prohibit Jamieson potential
infringing behaviour, balance of convenience favoured Reckitt, Jmieson engaged in re-
branding well aware that Reckitt might take legal action against it.

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• Reckitt made serious issue of potential trademark infringement. Potential harm would be
impossible to quantify if Jamieson was permitted to continue to undermine market position in
Canada. To avoid potential damage to its reputation, Jamieson granted variation to injunction
to remove the word and replace it within 30 day period for complying with injunction

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 π 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 π stand to suffer irreparable harm?
§ Easily measured in damages - $4-5k.
§ But b/c of legal impediment, π probably wouldn’t be able to get the full
amount of damages.
o 3. Harm to D?
§ National stakes are high – industry could suffer huge losses
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 à 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 π is

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 D property so they built a fence. π sought mandatory injunction to take down the fence. Held: no
injunction. Reasons: goes beyond status quo; would give π the whole relief they want at trial; hard to formulate in
specificity.

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 high, courts will grant them [see Prairie Hospitality].62

Undertakings
• π has to compensate D for losses if D wins at trial
o e.g. Cyanamid
o it’s a significant form of insurance for Ds in dealing w/ that balance of convenience
consideration.
• The point is to indemnify Ds against wrongfully obtained injunctions.
• There is a longstanding debate about when D can claim damages pursuant to the undertaking.
Two views:
o 1. π has to pay out on the undertaking only when π has done sthg wrong by way of
obtaining the injunction
§ i.e. there has been bad faith or dishonesty, π 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 à except in exceptional circumstances,
D will always be compensated (exceptional such as P who were public bodies and
acted in public interest to hold situation in statu quo until rights determined, or D
although he succeeded on technical grounds, had been guilty of conduct which did not
move the court to exercise its discretion in his favour) these allow for court to refuse a
reference as to damages, AG for Ontario v Yeotes [1982]: D found loophold that
allowed him to continue a checker boarding scheme
§ SCC adopted this view in Viewegar Construction v Rush & Tompkins
Construction Ltd
§ Historical reasons:
• Test for injunctions used to require a strong prima facie case
o Given that, πs could say at the end that they were acting
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 πs to get the injunctions, that doesn’t really
track anymore.
• So now, D 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 D
behaviour. E.g. where D only prevails on a technical legal rule, but they don’t
have clean hands. That’s what ‘exceptional circumstances’ is about.
• π 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

62
Prairie Hospitality: Injunction granted. D just had to continue to provide information à the injunction wasn’t
very intrusive, and the risk of irreparable harm to π was much greater. Plus, D appeared to be wrongfully
repudiating. Only for a limited period of time

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 undertaking.
• Other waived undertakings: environmental disputes, e.g. a FN band who has little money and
D stands to lose huge amounts of $ if logging etc. is shut down à 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 D 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
• undertakings are referred to in Rule 10-4(5) “unless the court otherwise orders, an order for
pre-trial or interim injunction must contain the applicant’s undertaking to abide by any order
that the court may make as to damages.”
o “the rule is, that whenever the undertaking is given, and the pltf ultimately fails on the
merits, an inquiry as to damages will be granted unless there are special circumstances
to the contrary.” Griffith v Blake.
• Court can require D to give undertaking to protect applicant where interlocutory injunction has
been refused Cemasco Management Ltd v Analysis Film Releasing Corp [1979]

Potash Corp. of Saskatchewan Inc. v. Barton (2013), 427 Sask. R. 206, 2013 SKCA 141
• Facts: Barton agreed to provide info on antitrust pricing activities to private law firms engaged
with PCS, PCS sued Barton and obtained interlocutory injunction, injunction set aside and
PCS discontinued action. After injunction P did not work as lawyer again, sought damages for
loss of income and mental distress (psychological stress), reimburse for solicitor fees because
injunction resulted in Barton needing legal assistance
• Held: appeal allowed in part, cross appeal dismissed
• Ratio: award for mental distress should be increased (to 50k), Barton entitled to damages for
loss of income and pension benefits
• Appeal from refusal to award punitive damages dismissed
• Injunction prevented Barton from obtaining work and made serious allegations that called
reputation into question, entitled to damages for loss of income and pension benefits until 65,
damages calculated based on base income of 109k
• PCS’s actions high handed and vindictive but did not amount to abuse of process and therefore
no basis to award punitive damages

Sibley & Associates LP v. Ross (2011), 106 O.R. (3d) 494; 2011 ONSC 2951

Facts: P brought up action against former employee and mother for damages for conversion and
fraud, applied for interim Mareva injunction

Held: application granted in part

Ratio: In cases of fraud, Mareva requirement that there be risk of removal or dissipation can be
established by inference, as opposed to direct evidence. Inference can arise from circumstances
of fraud itself

Evidence of fraud was so strong in this case that coupled with surrounding circumstances, gave

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rise to inference that there was real risk that D would attempt to dissipate or hide assets or
remove them from jurisdiction. Appropriate to grant Mareva order freezing D’s bank accounts
Carey v. Laiken, [2015] 2 S.C.R. 79, 2015 SCC 17

Facts: contempt proceedings against C alleging breach of terms of Mareva by returning 400k to
S for whom holding it in trust. Injunction enjoined any person with knowledge of order from
disposing of or dealing with assets of various parties (such as S)

Held: appeal dismissed, in contempt. Mareva injunction prohibited dealing with money held in
trust and C’s conduct showed he understood that.

Ratio: all that is required to establish civil contempt is proof beyond reasonable doubt of
intentional act or omission that is in breach of a clear order of which alleged contemnor has
notice. Even assuming existence of funds protected by solicitor-client privilege at the time of
transfer, C’s assumed duty to guard privilege did not conflict with duty to comply with order.

Contempt proceedings: liability phase (where case on liability proceeds and defence is offered),
and if liability is established, a penalty phase. Once contempt has been found, finding is usually
final and may only be revisited in certain circumstances (if they comply with their order, purges
contempt, new facts or evidence come to light). Evidence here should have been filed in the first
hearing.

Party faced with contempt motion is not entitled to present partial defence at liability stage and
then have a second “bite at the cherry” at penalty stage. Would defeat the purpose of the first
hearing.

Injunctions in Relation to Contract Law

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

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 remedy.
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 D starts selling his milk directly to vendors.
• Held: No injunction.
• Reasons:

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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 π asks for injunction: don’t force relationship,
just tell D 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 D 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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 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.
• 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

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 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?
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

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 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, Perrin, Forster & Crosby Inc v Cantin [1999, SC]

• 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. Against KPMG from soliciting business from former
company, soliciting employment or engaging services of any employee of former with
assistance of Cantin
• The injunction was also not oppressive. KPMG agreed they would have hired her anyway.

BMO Nesbitt Burns v Ord et al

Facts: Two investment dealers led BMO to go work at another investment firm. Their former co
wanted to prevent them from working in the industry for 2 years thus they wanted an injunction
stipulating this and to prevent the solicitation of clients.
Issue: Could the court grant this type of interlocutory injunction
Rule: in this case the court held that the public interest in protecting clients interest tipped the
balance in favour of granting an interlocutory injunction.
Analysis: Canadian courts are now focused on the issue of the interests of the investors clients
over the dealers & financial advisors, focused on the public, even without an explicit regulatory
requirement to inform them that this duty exists.
• Historically the interests of the clients weren’t taken into account even thought the
advisors book of business is extremely important in the industry b/c it is an aggregate of
investor clients and securities
• At one point the court described it as a type of property interest – owned by the dealer
• This case is interesting b/c of the point that the clients interests were a factor that was
considered. They were transformed from just being part of the book to persons who had
independent interest that were to be taken into account and protected.

Conclusion: The injunction was granted.

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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 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.

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 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 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

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 and frame the facts can have a big impact on the way the courts exercise their discretion.

Interlocutory Injunctions in Labour Disputes

• Controversy for procedural fairness, courts’ intervention limited to suppression of illegality
and not directed to underlying causes of conflict, anti-unionism in reaction of judges to trikes
and picketing
• Courts of Justice Act RSO 1990 C.43
o 1) Labour dispute defined as dispute or difference concerning terms, tenure or
conditions of employment or concerning association or representation of persons in
negotiating or arranging terms or conditions of employment
o 3) Court must be satisfied that reasonable efforts to obtain police assistance, protection
and action to prevent or remove alleged danger of damage to property
o 5) Interim injunction to restrain person from act in connection with labour dispute may
be granted for a period of no longer than 4 days
o 6) 2 days notice of motion for interim injunction to restrain person from act in
connection with labour dispute given to responding party to any other person affected
o 8) Where notice as required by subsection (6) is not given, the court may grant an
interim injunction where,
§ (a) the case is otherwise a proper one for the granting of an interim
injunction;
§ (b) notice as required by subsection (6) could not be given because the delay
necessary to do so would result in irreparable damage or injury, a breach of
the peace or an interruption in an essential public service;
§ (c) reasonable notification, by telephone or otherwise, has been given to the
persons to be affected or, where any of such persons are members of a labour
organization, to an officer of that labour organization or to the person
authorized under section 89 of the Labour Relations Act to accept service of
process under that Act on behalf of that labour organization or trade union, or
where it is shown that such notice could not have been given; and
§ (d) proof of all material facts for the purpose of clauses (a), (b) and (c) is
established by oral evidence.
• AG v Ontario Teachers’ Federation [1997]: the teachers cannot have it both ways. If the want
to label their conduct “political protest” and make submissions in court based on that label,
they cannot limit the AG’s motion to procedure which governs labour dispute of s102
stringent requirements
• To gain an interlocutory injunction, a plaintiff will have to demonstrate that
o (a) as a practical matter, the interlocutory motion will finally resolve the matter—the
plaintiff must show that it has a strong prima facie case;
o (b) because the issue involves access to property, the plaintiff will more easily be able
to demonstrate irreparable harm; and
o (c) the plaintiff can comply with s 102(3) of the Courts of Justice Act , and that
reasonable efforts to obtain police assistance, protection, and action to prevent or
remove any alleged danger of damage to property, injury to persons, obstructions, or
interference with lawful entry or exit to and from the premises in question, or breach
of the peace have been unsuccessful. Sobeys Inc v United Food and Commercial
Workers Canada, Local 175 , 2013 ONSC 1207 at para 33.

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 • Labour Relations Code 1996
o Jurisdiction of Board
o 136(1) Except as provided in this Code, the board has and must exercise
exclusive jurisdiction to hear and determine an application or complaint under this
Code and to make an order permitted to be made.
o (2) Without limiting subsection (1), the board has and must exercise exclusive
jurisdiction in respect of
§ (a) a matter in respect of which the board has jurisdiction under this Code,
and
§ (b) an application for the regulation, restraint or prohibition of a person or
group of persons from
• (i) ceasing or refusing to perform work or to remain in a
relationship of employment,
• (ii) picketing, striking or locking out, or
• (iii) communicating information or opinion in a labour dispute by
speech, writing or other means.
o Jurisdiction of Court
o 137(1) Except as provided in this section, a court does not have and must not
exercise any jurisdiction in respect of a matter that is, or may be, the subject of a
complaint under section 133 or a matter referred to in section 136, and, without
limitation, a court must not make an order enjoining or prohibiting an act or thing
in respect of them.
o (2) This Code must not be construed to restrict or limit the jurisdiction of a court,
or to deprive a court of jurisdiction to entertain a proceeding and make an order
the court may make in the proper exercise of its jurisdiction if a wrongful act or
omission in respect of which a proceeding is commenced causes immediate
danger of serious injury to an individual or causes actual obstruction or physical
damage to property.
o (3) Despite this Code or any other Act, a court must not, on an application made
without notice to any other person, order an injunction to restrain a person from
striking, locking out or picketing, or from doing an act or thing in respect of a
strike, lockout, dispute or difference arising from or relating to a collective
agreement.
o (4) A court of competent jurisdiction may award damages for injury or losses
suffered as a consequence of conduct contravening Part 5 if the board has first
determined that there has been a contravention of Part 5.

Interlocutory injunctions protecting IP and Confidential Information

Patent Infringement
• Patent-related litigation excluded from ambit of American Cyanamid model
• Question is how much reliance can be placed on prior patent scrutiny process
• Lower threshold applied but the need to show irreparable harm difficult to surmount in
patent infringement where D’s undertaking to keep an account of profits will often meet
P’s attempt to show damages as being inadequate remedy Teledyne Industries Inc v Lido
Industrial Products Ltd [1978]

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 • When on a motion for interim injunction for infringement of patent, some evidence of
infringement offered and other general principles application to injunction are satisfied, if
motion is opposed, although no evidence to contrary filed, rule of practice should be
considered, but unlikely to tip scales against P
• On the other hand, in cases such as Aluma [ Building Systems Inc v JG Fitzpatrick
Construction Ltd (1974), 17 CPR (2d) 275 (FCTD)] … the presumption of the validity of
the patent disappears because of the introduction of evidence to VIII. Protecting
Intellectual Property and Confidential Information 771 the contrary: Circle Film
Enterprises Inc. v. Canadian Broadcasting Corp. , [1959] SCR 602 at p. 606. There, the
evidence was of such a nature as to raise serious and substantial issues on the question of
both infringement and validity of the patent and showed that the defendant had an
arguable case. In such circumstances, the rule of practice might well tip the scales of
discretion against the issuing of the injunction. The rule of practice must be considered in
all such applications but is not an absolute bar to an injunction.

Trademark Infringement
• Where a registered trademark is allegedly being infringed, the Federal Court of Appeal
has clearly endorsed American Cyanamid . See Turbo Resources Ltd v Petro Canada Inc ,
[1989] 2 FC 451 (CA); Syntex Inc v Novopharm Ltd (1991)
• Where the action is for passing off, the courts have also applied American Cyanamid ,
although if the matter is likely to be dispositive of the dispute, the courts have placed
importance on the strength of the plaintiff’s case. See, for example, Hoffmann-La Roche
v Apotex Inc (1982), 72 CPR (2d) 183 (Ont HC).

Copyright Infringement
• Section 34(1) of the Copyright Act , RSC 1985, c C-42 states: Where copyright has been
infringed, the owner of the copyright is … entitled to all remedies by way of injunction,
damages, accounts, delivery up and otherwise that are or may be conferred by law for the
infringement of a right.
• Appropriate test is same as that applied in Turbo Resource Ltd v Petro Canada Inc, the
serious issue to be tried test
o "(a) where a plaintiff's recoverable damages resulting in the continuance of the
defendant's activities pending trial would be an adequate remedy that the
defendant would be financially able to pay, an interlocutory injunction should not
normally be granted;
o (b) where such damages would not provide the plaintiff an adequate remedy but
damages (recoverable under the plaintiff's undertaking) would provide the
defendant with such a remedy for the restriction on his activities, there would be
no ground for refusing an interlocutory injunction;
o (c) where doubt exists as to the adequacy of these remedies in damages available
to either party, regard should be had to where the balance of convenience lies;
o (d) where other factors appear to be evenly balanced, it is prudent to take such
measures as will preserve the status quo;
o (e) where the evidence on the application is such as to show one party's case to be
disproportionately stronger than the other's, this factor may be permitted to tip the

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 balance of convenience in that party's favour provided the uncompensable
disadvantage to each party would not differ widely;
o (f) other unspecified special factors may possibly be considered in the particular
circumstances of individual cases" - The court stated that "the balance of
convenience is of paramount importance".
• In 1997, the Copyright Act was amended to include a “wide injunction” ( Copyright Act
, RSC 1985, c C-42, s 39.1, as amended by SC 1997, c 24, s 20(4)). This new section
allows a copyright owner to seek an injunction enjoining infringement for work in which
the plaintiff claims copyright and which is the subject matter of the dispute. However, it
also allows the plaintiff to enjoin infringement of other copyright works that the plaintiff
may subsequently find in the possession of the defendant and that were not initially in
issue, including those for which the plaintiff never held copyright at the time the
proceedings were commenced. For the application of this new provision see Microsoft
Corp v 9038-3746 Quebec Inc , 2006 FC 1509, 57 CPR (4th) 204.

Confidential Information
• cause of action is proof that one party has conveyed to the other information in a fashion
to make it clear to the other person that it was communicated in confidence and that other
person misused information in unauthorized manner
• 1. Privacy interest a person has in keeping from public personal details (interlocutory
injunctions granted to prevent publications of confidential hospital records X v Y [1988])
(publication of details associated with matrimonial proceedings where P seeking to
divorce husband, person convicted of murder and sexual assaults in high profile case
MEH v Williams [2011]
o P establish existence of facts in respect of which there is reasonable expectation
of privacy and D’s intention to intrude, and publicity given to those private facts
considered highly offensive to objective reasonable person
o Tort claim based on privacy may have right to privacy balanced against freedom
of expression
• 2. Trade secrets, customer lists or particular manufacturing processes, interlocutory
injunctions readily granted. Danik Industries Ltd v Just Rite Bumpers & Accessories Ltd
[1993]

Ex Parte Applications
• Allowed when it is either not feasible to serve the def in a timely fashion or where the pltf
requires the element of surprise to protect its position.
• J. O’Sullivan outlines the special characteristics of an ex parte injunction in Griffin Steel
Foundaries Ltd v Canadian Association of Industrial Mechanical and Allied Workers
• Not it is an extraordinary remedy and thus should only be granted where in the most
extraordinary circumstances and then only for as short a period of time as necessary to enable
notice to be served on those sought to be enjoined.
o Should not be given for an indefinite period and should be dissolved promptly once it
appears that the material facts were not presented to the judge who granted the
injunction.
• Note also the pltf could still obtain a new injunction just not ex parte. In the affidavit the
application must fully and fairly state the case within the knowledge of the pltf so that the

116
 court can see the prima face case is fair in the aspect in which it is presented to court. There
must be no concealment or misrepresentation. All material facts should be brought before the
court b/c the def isn’t present – thus there is meant to be a high level of full and frank
disclosure
• Full and frank disclosure requirements were set out in Pulse Microsystems Ltd v SafeSoft
Systems Inc
i. Disclosure of material facts – those which are material for the judge to know when dealing
w/ the application as made. Materiality is for the court to determine not the pltf.
1) The applicant must make proper inquiries before the application is made. This is an objective
test and covers facts that the applicant could have known if reasonable steps had been taken
over such inquiries.
2) The extent of these inquiries must depend on all the circumstances of the case including:
a) The nature of the applicants case
b) The probable effect on the defendant if the order is granted, and
c) The degree of legitimate urgency at the time of making the inquiries.
3) If material non-disclosure is proven then the court should ensure that the applicant is
deprived of any advantage he or she may have derived from the wrongfully obtained
injunction. However whether the fact was not disclosed is of sufficient materiality to justify
or require immediate discharge of the order w/o examination of the merits depends on the
importance of the facts to the issues which were to be decided by the judge on the
application. The innocence of the applicant in either not perceiving the relevance of the non-
disclosed fact or not being aware of the fact itself is an important but not decisive
consideration.
4) Not ever omission to disclose will automatically result in the discharge of the injunction.
Ultimately it is a question of how the court should exercise its discretion.

Interlocutory injunctions against unknown persons: john and jane doe orders
• Interlocutory injunction used to prevent protesters picketing a P’s business, where P’s IP
rights are being violated by unknown street or market vendors
• Use of a John and Jane Doe order
• Injunction can be made against person who is unknown, and be effective against a person
who is not a party to the litigation Macmillion Bloedel Ltd v Simpson [1996]
• Also used where court has agreed to keep identity of litigant hidden from the public John
Doe v CBC [1993]
• Rolling order is hybrid Anton Piller type of order (civil search warrant) designed to deal
with counterfeiting and pirating of IP

Appellant Court Review

• Hadmor Productions Ltd v Hamilton [1983]: interlocutory injunction is discretionary relief
and discretion is vested in HC judge by whom application for it is heard. On an appeal or
refusal of interlocutory injunction the function of appellate court is not to exercise
independent discretion of its own but defer to judge’s exercise of his discretion and not
interfere with it merely on ground that memes of appellate court would exercise discretion
differently, review only. May set aside for misunderstanding of law or evidence before him,
or decision is so aberrant that it must be set aside on ground that no reasonable judge
regardful of his duty o act judicially could have reached it

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Special Situations – Some Discrete Issues in Interlocutory Injunctions
Interlocutory Injunctions in Defamation Actions—Speech
Canada Metal Co. v. Canadian Broadcasting Corp [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
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.
§ π 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, appeal dismissed. 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:
o beyond doubt defamatory,
o are clearly untrue (so no defence of justification could
succeed), and
o are not fair comment on true or admitted facts.
• è 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.

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 § 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 Ds
• But bear in mind, you can’t just go in with an affidavit that says “my client believes what
they’re saying is true” à 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”
• The burden of this high threshold is on the plaintiff à burden to establish that the
allegations are untrue.
o But, can’t establish fully in preliminary hearing, but plaintiff has to give affid.
saying this is not true and this is why we believe that.
o π has to hit the basic cause of action – untrue, libelous, ≠ aware of any defences.
§ Ok, so π just can’t be silent on the issue of truth, b/c that leaves them open
to the justification defence. But D still has to prove their defences.

Canadian Tire v. Desmond [1972, HC]

• Facts: D sign “Canadian tire cheated me will they cheat you?”
• Held: interim injunction granted against libelous sign (sept 13-20, continued under 27,
Nov 24) but dissolved at 5pm March 17 1972 unless statement of claim served and filed
prior to that time
o Cheat means defrauded, which requires an intention by D to deceive, and
there’s no evidence of that, so it’s clearly libelous.
o So, judge didn’t hold π 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)
o Picketing wrongful a) if it is featured by defamatory statements, b) if carried on in
such a manner as to disclose a purpose other than peacefully obtaining or
communicating information, 3) if it is part of a conspiracy to injure
o Preventing publication of allegedly defamatory material is through contempt of
court powers once litigation has been commenced64
o Publication ban65
o Canada v Canadian Liberty Net [1998] 66

64
AG v Times Newspapers Ltd [1974], newspaper published critical articles of pharmaceutical company that
manufactured morning sickness control pills (birth defects, slowness in settling PI claims), another article planned,
injunction to prevent publication. Order granted on basis that publication of article would prejudice fair outcome of
civil dispute and constitute contempt of court and tarnish administration of justice
65
Dagenais v CBC [1994] A publication ban should only be ordered when: (a) Such a ban is necessary in order to
prevent a real and substantial risk to the fairness of the trial, because reasonably available alternative measures will
not prevent the risk; and (b) The salutary effects of the publication ban outweigh the deleterious effects to the free
expression of those affected by the ban (at 878).
66
Anti-semitic and racist comments, Supreme Court indicated in matters of pure speech American Cyanamid test
inappropriate, application of irreparable harm and balance of convenience viewed as grievously undermining right
of freedom of expression. Declined to rule on appropriate threshold test, but Champagne v College d’enseignement
general et professionnel de Jonquiere [1997] prior restraint of allegedly defamatory material will only be justified in
the rarest of cases.

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Procedural notes about CBC:
• On the day of: documentary was airing at 6pm. 3pm πs get injunction, served on D at
5pm à “don’t allege anything about π buying experts”
• A few months later, CBC wins on appeal à 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.
• Principle: You don’t have to be named in the injunction to have to honor the injunction.
o 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.
• 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.
o 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 à 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
functionality/consciousness and no hope of recovery)
• Court decisions are highly nuanced, tied to facts of specific cases. [see Jin v. Calgary
Regional Hospital67 and CS v. Capital Health Authority]68
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
• An ICU bed with a ventilatory and the attendance that would be required in these types of

67
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.
68
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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 cases à 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:

o 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 à a little
time may solve the problem.
o Whereas in CS, the π 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.
o 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
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 à but ultimately they decided to hear

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 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, π 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 à 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, π 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 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
• π 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

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 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
à 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
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 D 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

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 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
§ 2. Where case involves a pure question of law that really can be decided at
the interlocutory stage, court can use higher threshold.
o πs in constitutional cases will almost always face irreparable harm
§ Because of the nature of the right à 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 π 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.

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 § But where the injunction will have the effect of suspending the law across
the board, then public interest is a weightier factor.

Mareva Injunctions
• Balances two competing interests: 1) that assets of D are sacrosanct until judgment (Lister) 2)
the need to prevent D from removing assets from jurisdiction of court in attempt to thward the
legitimate claims of P

The Established Rule

• Lister v. Stubbs69 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 D 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.
• There were some Mareva-type orders granted before this case, but this is the leading/first
fully reported case.
• Mareva v. Int’l Bulkcarriers SA [1975, CA]
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

69
The injunction was refused because the money was not that of the plaintiffs so as to make the defendant a trustee
(relationship debtor and creditor), but was money to which the plaintiffs would be entitled to claim in the action, i.e.
‘a debt due from the Defendant to the Plaintiffs in consequence of the corrupt bargain which he entered into’ but (a)
the money which he had received under that bargain could not be treated as being money of the Plaintiffs ‘before
any judgment or decree in the action had been made’ The court will not grant an injunction to restrain a defendant
from parting with his assets so that they may be preserved in case the plaintiff’s claim succeeds. A claim relating to
the acceptance of bribes was not within a proprietary claim.
We are asked to hold that it is – which would involve consequences which, I confess, startle me. One consequence,
of course, would be that, if Stubbs were to become bankrupt, this property acquired by him with the money paid to
him by Messrs Varley would be withdrawn from the mass of his creditors and be handed over bodily to Lister and
Co. Can that be right? Another consequence would be that, if the Appellants are right, Lister and Co could compel
Stubbs to account to them, not only for the money with interest, but for all the profits which he might have made by
embarking in trade with it. Can that be right? ‘

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 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

Mareva Compania Naviera SA v International Bulkcarriers SA

• Facts: Mareva was a ship-owner they let it to the def who used it for a charter in the far
east.
o During the let it was sub-chartered to a 3rd party. The money from the sub-charter
was paid into a bank account in London and fromt his money the def paid the pltf
2 of three required payments.
o The def told the pltf they couldn’t pay and the pltf treated that as repudiation of
the contract. The pltf brings forward a claim for damages and the unpaid fees.
They ask for an injunction b/c they believe the money will disappear.
o They brought an ex parte application for the funds.
• Issue: Can the court grant an interlocutory injunction to freeze the def’s assets?
• Rule: this case sets out what a Mareva Injunction is and its jurisdiction. When it appears
there is a debt that is due and owing and that there is a danger that the def may dispose of
their assets before the judgment then the court has jurisdiction to grant an interlocutory
injunction judgment to prevent him from disposing of those assets.
• Test:
1. The pltf must demonstrate the existence of a strong prima facie case against the
def
2. The pltf must establish that the balance of convenience favours granting an
injunction; important factors to determine this are:
a. The existence of a real risk that the assets of the def will be removed from the
jurisdiction of dissipated before any judgment or award is satisfied,
b. The existence of a scheme to avoid judgment creditors
c. The extent to which the proposed order would restrict parties from carrying on in
the ordinary course of business,
d. The extent to which the interests of 3rd parties may be affected by the order.
3. The pltf must give an undertaking in damages, supported in suitable cases by a bond or
security – Silver Standard Resources Inc v Joint Stock Co Geolog

Conclusion: the injunction was granted to restrain the def from removing or disposing of money
in the London bank account.
o In the UK this is now called a “freezing injunction” an is included in the rules of Civil
Procedure

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 o In Australia the Mareva Injunction is not an injunction but an order; to be issued against
parties to a proceeding against whom final relief may be granted, to ensure effective
exercise of the court’s jurisdiction involved, and against non-parties where those orders
are necessary to facilitate the administration of justice.
o In the US in Grupo Mexican de Desarrollo v Alliance Bond Fund Inc it was held that
there is no room for a Mareva type order in the US
o This decision was based on the fact that there was a longstanding rule that a debtor’s
assets were sacrosanct before judgment and thus this was better left to the
legislature.

The Reception in Canada: Aetna Financial Services Ltd v Feigelman [1985, SCR]
• There was a gradual and uneven adoption by provincial courts until a cautious adoption
by the SCC in Aetna. 70
• These orders are prone to exploitation, dangerous for Ds à threshold is high.
o Emphasis on the draconian nature of the remedy and the concern for risk-
balancing.
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]71
§ It’s always open to D 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 D to return to
court w/in a few days to present arguments.

Jurisdiction
• The concept means national jurisdiction – typically won’t cover interprovincial

70
this was the application of a Mareva Injunction in Canada. Aenta was a federal company and consolidated its
operations. The sub-company brought an action for an injunction against Aenta the def wanting to restrain them
from transferring assets away from MB. The SCC noted that a Mareva Injunction is an exceptional remedy and in
this case they accepted it as a remedy available in Canada. Though in this case they found the injunction shouldn’t
be granted.
71
Rasu: π seeking injuction over ship/equipment of Ds, to be part of construction project in other country. Court
said can’t seize those assets not part of dispute and prevent D from taking their construction actions. Injunction
denied, following matters to take into consideration in determining exercise of discretion 1. The plaintiff must
demonstrate a good arguable case; 2. The assets in question need not be limited to money but could include goods
within the jurisdiction; 3. Where the injunction might compel the defendant to provide security, it might tilt the
scales in favour of issuance of the injunction.

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 transactions.
o You don’t need to have another trial in Ontario to get assets D 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 inter-
provincial asset transfers [But see Southin J in Gateway Village]72

Extraterritorial effect:
• Court needs jurisdiction over D.
• Issue: once they have that, can they make orders about D’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]73
• Derby v Weldon (no 3 and 4) [1990, CA]: P sought worldwide Mareva injunction against
D, based on breach of contract, negligence, breach of fiduciary duty. Order granted D
appealed. The fewer the assets within jurisdiction the greater the necessity for taing
protective measures in relation to those outside it.
o 3rd requirement of Mareva is that it doesn’t conflict with ordinary principles or
international law (nature and content of order and the effect on third parties)
o injunction restrains those to whom it is directed from exercising what would
otherwise be their rights and indirectly affects the rights of some third parties to
give effect to instructions from those directly bound by order to do
o following proviso made: Provided that, in so far as this order purports to have any
extraterritorial effect, no person shall be affected thereby or concerned with the
terms thereof until it shall be declared enforceable or be enforced by a foreign
court and then it shall only affect them to the extent of such declaration or
enforcement unless they are: (a) a person to whom this order is addressed or an
officer of or an agent appointed by a power of attorney of such a person or (b)
persons who are subject to the jurisdiction of this court and (i) have been given
written notice of this order at their residence or place of business within the
jurisdiction, and (ii) are able to prevent acts or omissions outside the jurisdiction
of this court which assist in the breach of the terms of this order.

72
Gateway Village: Ds owned Arby’s up on Blanshard, and it wasn’t working out well so they were selling their
restaurants in BC. π supplier was owed $, suing for just over 65k. D was an AB corp, only had the one restaurant in
Victoria. Sold it, wanted to transfer proceeds back to AB bank accounts. BC π sought injunction. Southin: Strong
case – looked like D really did owe that $. But no evidence of any wrongdoing -D 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 π pursuing judgment remedy in AB. Inconvenience of π in pursuing the judgment
there might well defeat the claim.
So, as a lawyer, get the facts in, but tell your client’s story.
73
Mooney v. Orr [1994, BCSC]: D shady financial arrangements, gradually moving all assets out of BC into
Cayman Islands. BCSC granted a worldwide injunction. Factors for determining judicial discretion to grant mareva
that had extraterritorial effect: a. the nature of the transaction (local, national, international) giving rise to the cause
of action; b. the risk inherent in the transaction; c. the residency of the defendant; d. enforcement rights for
judgment creditors in the jurisdiction where the respondent’s assets are located; e. the amount of the claim; and f.
the history of the defendant’s conduct.

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Protections for D
• These injunctions are super intrusive/burdensome.
• Courts try to even the playing field.
• Undertakings – if π freezes D assets for 2 years and D bus goes bankrupt and then D
prevails at trial, π 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 à 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 à 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 and AA-LL Ltd 1982
CA]74
o Distinction: technically not bound as parties to the order, but anyone w/
knowledge of a court order ≠ breach or in contempt
rd
• 3 parties are usually banks.
• They have to do searches, but no disclosure to π
o So, they have to go into the accounts and find out what kind of assets of D are in
their control à but don’t have to tell π that.
• π’s undertaking covers the cost to 3rd 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)

74
Facts: There was a fraud scheme by the defendants. When the pltfs became aware of it they successfully obtained
Anton Piller and Mareva injunctions.
Issue: what are the requirements of the bank under a Mareva Injunction?
Rule: Juristic Principle: as soon as the bank is given notice of the Mareva injunction it must freeze the def’s
account. It must not allow any drawings or anything to be made on it nor anything to be written before or after the
injunction as this would obstruct the course of justice.
Analysis: The bank will be indemnified for any costs of the injunction by the pltf; this is b/c there is an implied
request to freeze the account and this gives rise of the implied promise to recoup any expense and indemnify against
any liability. Sometimes this will mean the pltf gives an undertaking to the bank. The second step for the pltf is to
give specific notice to the bank about what they are to do or not do. This should be as specific as possible. Thirdly if
a pltf cannot identify a bank account or asset specifically they may request a bank or 3rd party to do a search
whether the bank holds any assests of the def. The pltf will pay the cost of this search. Fourth the judge have on the
application the names of the banks and 3rd parties to which the injunction is to apply but this doesn’t preclude the
plf from including others. Fifth there is now a maximum amount to be restrained, particularly where a def’s assets
exceed the pltfs claim. Also the def gets normal living expenses and any monies in a joint account should be
covered by the injunction. Also if it is granted ex parte the court may only grant the injunction for a few days until
the other party can be heard, thus the pltf must give notice to the banks immediately. They should also give
undertakings, and finally for the injunction to be fully effective it is very desirable that the def should be required in
a proper case to make discovery.

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Anton Piller Orders

• This is a special injunction that is granted ex parte and usually applied for when a party
thinks the other is going to destroy documents.
• The aim of an Anton Piller Injunction is to:
o Secure property that is infringing intellectual property rights held by the pltf o
o To preserve evidence necessary for the pltf to prove his substantive claim at trial o
o To enforce the restraint of trade clauses upon termination of employment where there
is a fear that the def has wrongfully removed confidential client lists or other docs.
o As a supplementary feature of a Mareva Injunction to secure the seizure of assets and
their location for subsequent judgment.
(As such these are: usually held in camera, particularly important to patent, trademark and
copyright areas, can supplement a Mareva Injunction, should be exceptional, and they really only
work to ensure unscrupulous defs cannot circumvent the court’s processes by being forewarned,
making relevant evidence disappear.)
• These are provided for in the inherent jurisdiction of the court as “just and convenient”
thought they can also be provided for within the Rules of practice relating to interim
inspection and preservation of property – though note these types of rules are meant for
certain circumstances.
• Test:
1. There must be an extremely strong prima facie case
2. The damage (potential or actual) must be very serious for the pltf
3. There must be clear evidence that
a. the def’s have in their possession incriminating documents or things, and
b. there is a real possibility that they may destroy such material before any
application inter partes can be made

• Protective Safeguards:
o The def must be advised of their right to consult counsel before permitting entry
o the search must be conducted during regular business hours to permit such
consultation
o the defs must be advised of the right to assert solicitor-client privilege and the
privilege against self- incriminating
o the items sought should be specified (in the order)
o the material filed in support should be served w/the order,
o the order should specify the persons who may conduct the search and seize items
o the pltf must provide undertakings as to the limited use to which the material seized
will be put
o the pltf must make a detailed list of the items seized, have that list approved by the def
and must provide a receipt to the def
o the search must be supervised by a solicitor who acts as an independent officer of the
court.
o the supervising solicitor must provide a report for delivery to the def and file it w/the
court within a short time after the execution of the order – Grenzservice Speditions
Ges

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• Procedural Safeguards:
1) Independent supervising solicitor – key role is to ensure that the execution of the order
and everything that flows from it was undertaken as carefully as possible and w/due
consideration for the rights & interest involved
2) A form of order that is very specific as to what property is covered
3) Search requirements
4) Service on the court of a report

• Two Forms:
o 1) Injunction to Dispose of the Issues:
§ can dispose of the issues of trial – ie) cases where the injunction effectively
ends the dispute b/w the parties the applicant uses the order to recover
property in which they have a proprietary interest, like confidential papers or
to ensure the withdrawal or sale of commodities that infringe upon the pltfs
trademark, patent or copyright – here the subject matter of the order is in
essence the subject matter of the dispute.
o 2) Injunction to Preserve Evidence:
§ To preserve evidence to further support the substantive cause of action. This
category is distinguished by the fact that the pltf may have no proprietary
interest in the property which is not the subject matter of the dispute (they
don’t own it) and the importance of the documents to the pltf is there
evidentiary value to prove a substantive cause of action.
• Banks may be on party that would particularly use this type of action
• Joe and Jane Doe orders are a unique form of “rolling order” a hybrid sort of Anton Piller
type of order which is designed to deal w/counterfeiting and pirating of intellectual
property.
o Thus it is possible to get an injunction against a party who is unknown and who is
also therefore not a party to the litigation – MacMillan Bloedel Ltd v Simpson
o Meant to protect against transient vendors to allow the search of their premises and
property to seize offending materials – usually patents, copyrights

Jurisdictional Base
• three possible sources of jurisdictional base for Anton Piller orders
• function of general court’s powers to grant injunctions where it is just and convenient
• function of court’s inherent jurisdiction to govern its own procedures
• various practice rules relating to interim inspection and preservation of property
found in all the common law provinces

Anton Piller KG v Manufacturing Processes Ltd

• Facts: pltfs were German computer thing manufacturers, their UK agents were being asked to
sell their materials they found out that they were trying to sell confidential material so the pltf
brought an application for an injunction to search for evidence of these transactions. The TJ
granted an interim injunction.
• Issue: whether this type of injunction could be granted?

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• Rule: the proposed order is at the extremity of this courts powers. Such orders, therefore, will
rarely be made, and only where there is no alternative way of ensuring that justice is done to
the applicant. The test is set out above and requires three essential elements. ** needs three.
• Analysis: There was a strong prima facie case and it was clear this would cause substantial
damage to the pltf. It is also clear that they need this evidence and that there is a possibility
the def would destroy it if it wasn’t taken. In Anton Piller orders a strong prima facie case
means that you have an overwhelming likelihood of winning. Also the possible damage to the
pltf has to be very serious. Ie) completely ruining a reputation or such a destructive activity
that it will be impossible to recover from.
• Conclusion: the Anton Piller injunction was granted. The Undertaking of the pltf to refrain the
infringement of copyright and to allow the employees to go and get the documents.

Celanese Canada Ltd v Murray Demolition Corp [2006, SCR]

• Facts: Celanese Canada operated a plant for the production of vinyl in Edmonton. They hired
the def to demolish the plant. They alleged that Murray secretly copied confidential
information from the plant and was using it to construct a factory in Iran. They got an Anton
Piller order. The lawyer (indept) who conducted the search unknowingly sent all the
information including confidential information to Cassels Brock the pltfs lawyers. The
problem in this case was how the Injunction was carried out.

• Issue: Should the def’s lawyers be barred from participating?

• Rule: Stands to demonstrate the risks of using Anton Piller orders and the necessary
safeguards. Binnie “an Anton Piller order bears an uncomfortable resemblance to a private
search warrant. No notice is given to the party against whom it is issued. Indeed, defendants
usually first learn of them when they are served and executed, without having had an
opportunity to challenge them or the evidence on which they were granted. The defendant
may have no idea a claim is even pending. The order is not placed in the hands of a public
authority for execution but authorizes a private party to insist on entrance to the premises of
its opponent to conduct a surprise search, the purpose of which is to seize and preserve
evidence to further its claim in the private dispute. The only justification for such an
extraordinary remedy is that the pltf has a strong prima facie case and can demonstrate that on
the fats, absent such an order, there is a real possibility relevant evidence will be destroyed or
otherwise made to disappear.
• ** Key is that you actually show that the defendant has possession of the documents you want.
Stringent safeguards exist to ensure there isn’t misuse of this remedy. Safeguards are set out
above; they intend to provide protection for the rights of both parties regarding the conduct of
the search and its procedure.

• Analysis: the objective of this order is to permit preservation of evidence for use in civil legal
proceedings while ensuring fairness of the civil search and seizure process to the def. It
contemplates further process after the authorized search w/respect to return and maintenance
of evidence seized. Your affidavit would argue that the defendant won’t comply w/disclosure
w/o this.

• Conclusion: the order was found insufficient and the lawyers had to be removed rom the file.

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Fila Canada Inc v Doe [1996]
• Facts: Pltf asked for an ex parte application in camera to get a rolling Anton Piller order
against unknown defendants.
• Rule: This case is an example of a rolling Anton Piller order. Rolling orders are executed
against street vendors and transient flea market vendors although should be framed in broad
terms to encompass the search of a number of areas. Court noted this application doesn’t need
to be done in camera in many cases b/c the identity of the def isn’t known. Temporary quality
because it will contain a provision allowing for its variation or termination at any time on
court’s motion

Anton Pillers
• Developed primarily in the context of theft of intellectual property
• Intended to prevent irreparable harm to π à usually the loss of critical evidence needed
to establish case at trial.
• Scenario: Think D 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 π they can knock down the door – just telling Ds to open the
door.
o Important distinction: π doesn’t have any right to use force on an Anton Piller
order à whereas a real search warrant does allow police to break down the door.
o It’s just an order to D that if you don’t open door court will put them in jail.
• Circumstances: an alternative to discovery
• Fraud à surprise à 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 Ds
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, π solicitor had dual role:
• Solicitor went to court to get the injunction, but also executed it.
• In the course of execution, you are office of the court – have to

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 make sure your client et al aren’t acting outside the order.
• Order will often specify what you can take away, e.g. à have to
watch your client.
• This was putting π lawyers in difficult pos’n.
§ Standard practice now: appoint a supervising solicitor.
• So, π lawyer gets injunction, participates in deployment as π
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, π goes in, seizes documents, many of which are correspondence
b/w D and solicitor à so, privileged.
o Also may get D’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 π 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.
§ 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.

Bill of Discovery: Norwich Orders

• Another way to secure documents is a pre-action discovery order, or what was
historically known as an equitable bill of discovery. Renewed life was breathed into this
order in the House of Lords decision in Norwich Pharmacal Co v Customs and Excise
Commissioners , [1974] AC 133.
• Under the order, a third party to anticipated proceedings, but one who will not be added
to the action, is ordered to provide information that is essential to the applicant to enable
an action to be launched against a named defendant. That evidence may be necessary to
identify wrongdoers, to find and preserve evidence that will substantiate the claimant’s
claim, and even to trace and preserve assets.
• In GEA Group AG v Ventra Group Co , 2009 ONCA 619, 96 OR (3d) 481 at para 51 the
Ontario Court of Appeal laid down the following criteria in order to obtain a Norwich
order:
o (i) Whether the applicant has provided evidence sufficient to raise a valid, bona
fide or reasonable claim;
o (ii) Whether the applicant has established a relationship with the third party from
whom the information is sought such that it establishes that the third party is
somehow involved in the acts complained of;
o (iii) Whether the third party is the only practicable source of the information

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 available;
o (iv) Whether the third party can be indemnified for costs to which the third party
may be exposed because of the disclosure, some [authorities] refer to the
associated expenses of complying with the orders, while others speak of damages;
and
o (v) Whether the interests of justice favour the obtaining of the disclosure. This
criteria was adopted from Mason J’s judgment in Alberta (Treasury Branches) v
Leahy , 2000 ABQB 575 at para 106, aff’d 2002 ABCA 101, leave to appeal to
SCC refused, [2002] SCCA No 235.

Anti Suit Injunctions

• seeks to restrain one of the parties from prosecuting a suit against the other in another
jurisdiction
o usually when there are procedural advantages in another jurisdiction such as
access to jury trial, different forms of proof such a strict liability and access to
punitive or triple damages
• restrains party from prosecuting their suit in other than the natural jurisdiction

Amchem Products Incorporated v British Columbia (Workers’ Compensation Board) [1993, SCR]
• Facts:
o Action commenced in U.S. courts, P largely resident in Canada, most of corporate
defendants with some connection with state where action brought
o Anti-suit injunction sought in Canadian courts to prevent action in U.S. courts
Principles governing the determination of appropriate forum and governing
comity between courts
o Appeal from a judgment granting an interlocutory injunction restraining tort
proceedings in a foreign court. The appellants commenced an action in Texas
against the respondents for injuries caused by exposure to asbestos. The
appellants were residents of British Columbia and most of the respondent
companies carried on business in Texas. The respondent corporations had no
connection with British Columbia. The respondents were granted an anti-suit
injunction in British Columbia preventing the continuation of the Texas action.
• Issue: Whether or not an injunction appropriate.
• Rule: Since the court determines a foreign court's jurisdiction in an anti-suit motion, such
an application should only be heard where the foreign court failed to decline jurisdiction
on the basis of the forum non conveniens test and a serious injustice would occur. When
a foreign court assumed jurisdiction on principles inconsistent with the forum non
conveniens test and it could not reasonably have reached such conclusion if it had applied
the proper principles, the domestic court must determine whether an injustice would
occur if the foreign action proceeded. In the present case, there was sufficient connection
with Texas and the Texas court assumed jurisdiction according to the due process clause
of the U.S. Constitution. The application of this provision conformed to the Canadian rule
of private international law for determining the forum conveniens, and the decision of the
Texas court regarding its jurisdiction should be respected
• Held: Appeal allowed.

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o When a foreign court assumes jurisdiction on a basis that generally conforms to
our rule of private international law relating to forum non conveniens, that
decision will be respected and a Canadian court will not purport to make the
decision for the foreign court
Test: determine whether domestic forum is natural forum, whether there is
another forum that is more appropriate (consistent with principles of private
international law?), establish that continuation would deprive of legitimate
juridicial advantage of which it would be unjust to deprive them by proceedings
o This presupposes that, as a general rule, the English or Brunei court must
conclude that it provides the natural forum for the trial of the action, and further,
since the court is concerned with the ends of justice, that account must be taken
not only of injustice to the defendant if the plaintiff is allowed to pursue the
foreign proceedings, but also of injustice to the plaintiff if he is not allowed to do
so. So, as a general rule, the court will not grant an injunction if, by doing so, it
will deprive the plaintiff of advantages in the foreign forum of which it would be
unjust to deprive him. [Emphasis added.]

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SPECIFIC PERFORMANCE

Principles
• Equitable remedy of SP is an order that a contracting party perform their contractual
undertakings or else risk being in contempt of court
• Alternative to a damages award, commonly used as injunctive relief concerning
confidential information or real property
• Awarded as a matter of discretion, where common law damages are inadequate
• Relief available to promisee:
o Specific—intended to secure for promisee the very benefit that he was promised,
as when the court confers promised benefit on injured party or orders the
defaulting promisor to do so
§ Better suited to objective of putting promisee in position in which he would
have been had the promise been performed
o Substitutional—intended to provide him with something in substitution for that
benefit, as where court awards injured party money damages
• Test
o claim must be substantial and legitimate
o damages must be inadequate remedy or the property must be irreplaceable
o there must be a reasonable prospect of success

Specific Relief
• Doesn’t require cooperation of defaulting promisor
o If promise is to deliver goods, officer of court may seize and deliver them
o If it is to convey land, he may execute binding conveyance
o If it is to pay money, he may seize and sell enough of promisor’s assets to yield
required sum
o Practical impediments are at a minimum

• Specific relief requires cooperation of the promisor

o Promise to act in a play
o Paint a house
o Build a building
o Some form of coercion may be needed, so that practical impediments are substantial

Donald Clark
• Asamera Oil Corp v Sea Oil & General Corp: before a P can rely on a claim to SP, some
fair, real and substantial justification for his claim to performance must be found
o Court has to be persuaded that in particular circumstances of case a monetary
award would provide inadequate relief
o In rem relief: A type of legal proceedings, taken in an admiralty court in
a common law jurisdiction, against the ship (and sometimes against cargo and/or
freight) (the res) as defendant, in respect of particular types of maritime claims
(e.g. to enforce a claim secured by a maritime lien (infra) or a statutory right in
rem(infra)). The taking of an action in rem is generally accompanied by

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 the arrest (supra) of the res, which provides pre-judgment security for the claim
and confirms the admiralty court’s in rem jurisdiction. Where an action in rem is
successful, the judgment may be enforced against the res by way of judicial sale.
If the defendant files an appearance in the action in rem, however, the action
proceeds as a combined action in personam and in rem, and an eventual judgment
in the plaintiff’s favour may then be executed against both the res and the
defendant’s other personal assets.
o In personam: A type of legal proceedings directed against the defendant
personally (e.g. an action for breach of contract, the commission of a tort or delict
or the possession of property). Where an action in personam is successful, the
judgment may be enforced against all of the defendant’s assets, real and personal,
moveable and immoveable. See Tetley, M.L.C., 2 Ed., 1998 at pp. 958-985.
The jurisdiction of a court to try actions in personamis referred to as the court’s in
personam jurisdiction.
o Shiloh Spinners Ltd v Harding: equity expects men to carry out their bargains
and will not let them buy their way out by uncovenanted payments
• Judicial credibility on the line when court orders specific enforcement. Should not put
legal system at risk if the making of an order
o Where there is reason to believe that D may simply disregard OR
o Compliance with which would require continuing judicial monitoring Royal Bank
of Canada v Proprietes Cite Concordia Ltee (No 2)
• Third party interests generally secondary to those in contracting parties themselves
UNLESS interest of 3rd party bona fide purchaser under contract executed before he
acquires knowledge that property has already been contractually promised to an earlier
buyer.
o Between two innocent parties the law protects interests of 3rd party by denying
original promisee specific relief and awarding only damages against contract
breaker

Sale of Goods and Services

Falcke v Gray [1859, Ch]

Held: The English Court held that a court of equity would entertain a bill for specific
performance of a contract for the sale of a valuable chattel where adequate compensation
could not be obtained at law.
• However, in a case where it was proved that the price was greatly inadequate, and the
purchaser knew it to be so, the court, under the circumstances, refused to decree specific
performance, and dismissed the bill, although it would not give relief to a vendor seeking
to set aside the contract.
• Where a party sells by auction, the court will not relieve on the ground of inadequacy of
price. White v Damon [1788]
• The court will enforce specific performance of a contract to purchase chattels, if damages
will not be an adequate compensation.
o But where the contract, although not actually fraudulent, was one in which the
parties were not on an equal footing, plaintiff knowing, and the purchaser being

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 ignorant, of the value of the thing sold, and the price appeared to be inadequate,
the court refused relief.
• General rule with hard bargains is that court will not decree specific performance because
it is in discretion of court for advancement of justice
o Wedgwood v Adams [1843] court exercises discretion and decrees specific
performance unless it would be highly unreasonable to do so and it must depend
on circumstances of each case
o Generally court will not interfere
• Onus of proving that they had notice (that she had entered agreement with D and by
virtue of which she could not sell them to another person) lies on P, in this case notice not
sufficiently proved
• Gleason v Ship Dawn Light [1997]: refused to grant SP in case involving sale of a ship on
grounds that ship was not unique or irreplaceable and that damages would be an adequate
remedy
o Uniqueness of the subject matter is a function not simply of the attributes of
subject matter but also of the relevance of those attributes to the purchaser
o Purchaser of custom painted electric guitar will not obtain specific enforcement of
contract because of its one of a kind appearance if he purchased it for its sound
quality

Third Parties
• Suppose A undertakes to convey property to B, and then later conveys the property to C.
B can join C as a defendant in an action against A for specific performance. Whether B
will succeed against C will in general turn on whether C had knowledge of the promised
conveyance to A.
o Canadian Long Island v Irving Wire Products [1975]: if stranger to contract gets
possession of subject matter of contract with notice of it, he may be liable to be
made a party to an action for SP of the contract upon equitable grounds of his
conscience being affected by notice
o Law clear that where contract capable of specific enforcement, purchaser acquires
equitable interest as against subsequent transferees unless they are purchasers in
good faith
o Taylov v Eisner [1993]: Kyle J held granting specific performance compelling 3rd
parties to deliver up animals would be undue hardship

Consideration and Specific Performance

• “equity will not aid a volunteer”
o SP only available if some consideration is present
o Webb v Dipenta [1925]: mere inadequacy of the consideration, unaccompanied by
any element of fraud or misrep would hardly afford him a good defense
• Tamplin v James [1880]: SP denied on grounds of D’s mistake if mistake is not serious
enough to justify rescission and P is better left with common law damages claim
• Baxter: sale of land worth 6k for 180 didn’t shock court’s conscience enough
o Black v Wilcox [1976]: court set aside agreement where land worth 30k sold for
5.2k and a lifetime right for vendor to live nearby house on farm 250
§ Combination of bargain and overreaching of D should lead to contract

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 being set aside
§ Many cases such as these due to unconscionability and lack of business
acumen

Sale of Goods Act (RSO 1990 c.S.1)

• 50. In an action for breach of contract to deliver specific or ascertained goods, court may,
if it thinks fit, direct that contract be performed specifically, without giving D option of
retaining the goods on payment of damages, and may impose terms and conditions as to
damages, payment of price and otherwise as the court seems just
• “specific goods” are goods identified and agreed upon at the time the contract of sale is
made
• “ascertained goods” usually refers to goods identified or earmarked by seller after making
the contract, as seller intends to supply to buyer in fulfilment of contract
• Butler v Countrywide Finance Ltd [1993, HC]: chattels sold were not unique and could
be replaced, P brought action for SP or damages in alternative
o P's claim to rectification failed. Although at various points in the history of the
negotiations there were negotiations pertaining to those chattels actually situate at
the motor inn, at the critical point of time the intention of the parties was to sell all
the chattels. In addition to the four conditions required for rectification as noted
by Tipping J in Westland Savings Bank v Hancock [1987] 2 NZLR 21,
rectification was available for only one kind of mistake; where the writing
misstates the parties' actual agreement. Here the writing reflected the intent of the
parties
o Estoppel required: (1) the creation or encouragement of a belief or expectation;
(2) some action in reliance thereon; (3) detriment accruing as a result of that
reliance. The defence of estoppel failed. D did not encourage any belief or
expectation in P as to the subject-matter of the sale, at least at the critical time
§ Gillies v Keogh [1989] 2 NZLR 327 (CA) followed.
o Specific performance should be available in relation to sale of goods actions
particularly if there was a commercial uniqueness about the goods. However in
this case specific performance would place D in a position where it would have
considerable difficulty in complying in specie. The chattels on the list were
described in very vague terms. Specific performance was therefore not available
§ If chattels new or in warehouse or far fewer and easily identified, specific
relief would have been granted
§ JC Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 applied.
o The plaintiff was entitled to damages. Section 52 of the Sale of Goods Act 1908
was a statutory expression of the first rule in Hadley v Baxendale (1854) 9 Exch
341. If there was an available market for the goods, the normal measure of
damages when a seller failed to deliver the goods was the difference between: (1)
the market price of the relevant goods at the time fixed for delivery; and (2) the
contract price. If there was no available market a buyer's damages were assessed
under s 52(2). The measure of damages was the estimated loss directly and
naturally resulting in the ordinary course of events from the seller's breach
§ Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145 applied.

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o A Court must not let the difficulties of translating an economic loss into monetary
terms stand in the way of an assessment of damages. In a sale of goods case
where damages for breach frequently have to be measured at some point by
reference to the market value of goods, the fact there is no readily ascertainable
market in the goods does not prevent an assessment of substantial damages. The
plaintiff was entitled to damages under s 52 of the Sale of Goods Act in the sum
of $58,690 plus GST which was arrived at after averaging the adjusted chattel
lists supplied by both parties and then deducting a percentage for depreciation
from the new valuations (see p 639 line 1).
§ Chaplin v Hicks [1911] 2 KB 786 (CA) and McRae v Commonwealth
Disposals Commission (1951) 82 CLR 377 followed.
o In addition, special damages were available to the plaintiff under s 55 of the Sale
of Goods Act. It was within the actual contemplation of D that if it did not deliver
all the relevant chattels P would have to go into the market and recover the same
for itself
o Judgment for P for damages.

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Replevin
• To obtain goods that have been sold but not delivered is for buyer to bring action for
replevin of goods
• Courts of Justice Act RSO 1990 c C.43 104
o 1) In action where recovery of possession of personal property is claimed and
alleged that property a) was unlawfully taken from possession of P or b)
unlawfully detained by D, court may make interim order for recovery of
possession of property
o 2) Person who obtains possession of personal property by obtaining or setting
aside interim order is liable for loss suffered by person ultimately found to be
entitled to possession of property

Rules of Civil Procedure RRO 1990, reg 194

Motion for Interim Order
44.01(1) An interim order under section 104 of the Courts of Justice Act [RSO 1990, c C.43]
for recovery of possession of personal property may be obtained on motion by the plaintiff,
supported by an affidavit setting out,
(a) a description of the property sufficient to make it readily identifiable;
(b) the value of the property;
(c) that the plaintiff is the owner or lawfully entitled to possession of the property;
(d) that the property was unlawfully taken from the possession of the plaintiff or is
unlawfully detained by the defendant; and
(e) the facts and circumstances giving rise to the unlawful taking or detention.
(2) The notice of motion shall be served on the defendant unless the court is satisfied that
there is reason to believe that the defendant may improperly attempt to prevent recovery of
possession of the property or that, for any other sufficient reason, the order should be made
without notice.

Order to Contain Description and Value of Property

44.02 An interim order for recovery of possession of personal property shall contain a
description of the property sufficient to make it readily identifiable and shall state the value of
the property.
Disposition of Motion Where Made on Notice
44.03(1) On a motion for an interim order for recovery of possession of personal property made
on notice to the defendant, the court may,
(a) order the plaintiff to pay into the court as security twice the value of the property as stated in
the order, or such other amount as the court directs, or to give the appropriate sheriff security
in such form and amount as the court approves, and direct the sheriff to take the property from
the defendant and give it to the plaintiff;
(b) order the defendant to pay into court as security twice the value of the property as stated in
the order, or such other amount as the court directs, or to give the plaintiff security in such
form and amount as the court approves, and direct that the property remain in the possession
of the defendant; or
(c) make such other order as is just.

Where Made Without Notice

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(2) On a motion for an interim order for the recovery of possession of personal property made
without notice to the defendant, the court may,
(a) order the plaintiff to pay into court as security twice the value of the property as stated in the
order, or such other amount as the court directs, or to give the appropriate sheriff security in
such form and amount as the court approves, and direct the sheriff to take and detain the
property for a period of ten days after service of the interim order on the defendant before
giving it to the plaintiff; or
(b) make such other order as is just.

Condition and Form of Security

44.04(1) Where an interim order for the recovery of possession of personal property requires
either party to give security, the condition of the security shall be that the party providing the
security will return the property to the opposite party without delay when ordered to do so,
and pay any damages and costs the opposite party has sustained by reason of the interim
order.
(2) Where the security is by bond, the bond shall be in Form 44A and shall remain in force until
the security is released under rule 44.06.
(3) Where the bond is to be given by a person other than an insurer licensed under the Insurance
Act to write surety and fidelity insurance, the person giving the bond shall f irst be approved
by the court.

Setting Aside Order

44.05 The court on motion may set aside or vary an interim order for the recovery of possession
of personal property or stay enforcement of the order.

Release of Security
44.06 Any security furnished pursuant to an order made under rule 44.03 may be released on the
filing of the written consent of the parties or by order of the court.

Duty of Sheriff
44.07(1) Before proceeding to enforce an interim order for the recovery of possession of
personal property, the sheriff shall ascertain that any security required by the order has been
given.
(2) The sheriff shall serve the order on the defendant when the property or any part of it is
recovered or as soon thereafter as is possible.
(3) Where the sheriff is unable to comply with the order, or it is dangerous to do so, the sheriff
may move for directions from the court.
(4) The sheriff shall, without delay after attempting to enforce the order and in any event within
ten days after service of the order, report to the plaintiff on what property has been recovered
and, where the sheriff has failed to recover possession of all or part of the property, on what
property has not been recovered and the reason for his or her failure to recover it.

Where Defendant Prevents Recovery

44.08 Where the sheriff reports that the defendant has prevented the recovery of all or part of the
property, the court may make an order,
(a) directing the sheriff to take any other personal property of the defendant, to the value of the

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 property that the sheriff was prevented from recovering, and give it to the plaintiff; and
(b) directing the plaintiff to hold the substituted property until the defendant surrenders to the
plaintiff the property that the sheriff was prevented from recovering.

Examples
Karaim (Ed) Trucking Ltd v Ducharme (1996): the plaintiff sold and delivered a trailer to the
defendant which was secured by a chattel mortgage. The plaintiff alleged that the defendant
had made no payments and did not respond to demands to pay. The plaintiff sought interim
recovery of the trailer under Manitoba Queen’s Bench Rule 44. The plaintiff sought to
distinguish the Heaman case on the basis that in this case, the plaintiff did have previous
possession of the trailer. The master dismissed the plaintiff’s motion on the ground that there
was no evidence of an “unlawful detention” by the defendant as the plaintiff had made no
demands on the defendant for the return of the trailer. If original possession by the plaintiff is
not a prerequisite to a claim for replevin, then a disappointed buyer of goods has a choice of
remedy against a seller who wrongfully refuses to deliver up possession. If the plaintiff
proceeds under s 50 of the Sale of Goods Act , it seems well settled that an order for specific
performance of the contract relating to specific or ascertained goods will not be granted if
damages are an adequate remedy. This is so notwithstanding that title to the goods may have
passed to the plaintiff – buyer. If the disappointed buyer sues in replevin and it is alleged that
the defendant seller of goods refuses to deliver them up and unlawfully detains them, the
plaintiff may recover if title has passed ( O’Rourke v Lee (1859), 18 UCQB 609).

Long-term contracts for the supply of goods or services

• Also known as relational contracts, contemplate repeated or continuous purchase or
supply of goods over lengthy period
o Requirements contract: using entire requirement from particular supplier
o Output contract: selling only to one particular wholesaler
• Court has traditionally been slow to decree SP of these contracts
• Dominion Iron & Steel Co v Dominion Coal Co [1908, SC]
o Coal company profitably ended contract, steel company claimed damages for
losses and SP
Sky Petroleum Ltd v VIP Petroleum Ltd [1974, Ch]
Facts: The plaintiffs, Sky Petroleum, entered into a contract with the defendant, VIP Petroleum,
and agreed to purchase at a fixed price their entire order of motor petrol and diesel fuel for their
filling stations for the next ten years.
• A minimum annual quantity for the order of petroleum was stated in the contract.
• During a time when there was limited fuel supplied and the plaintiffs could not find
another source, the defendants attempted to terminate the contract on the basis that the
plaintiffs had broken the credit terms of the agreement between the parties.
• The plaintiffs brought an action to restrain the defendants from withholding supplies.

Issue: The facts of this case were quite rare on the basis that the defendants were the only
supplier to the plaintiff at the time of the fuel supply restrictions.
• The case was concurrently pending trial to determine some of the matters of the dispute
between the parties so it was important for the court to focus on the concept of whether
specific performance could be enforced in the circumstances

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Held: The court held that an injunction, under the circumstances would essentially be an order of
specific performance of the contract to sell, which would normally be refused on the basis that
damages would be sufficient.
• However, in the rare situation where the defendant was the only supplier and the only
method which would enable the plaintiff to carry on their business, an injunction would
be granted as damages would no longer be a sufficient remedy.

Long-Term Contracts for the Supply of Goods or Services

There is a problem with fungibility in these cases, which makes the supervision argument more important.
Unlike a unique good, that involves a one-off transfer, it becomes more difficult when the court must take
away the plaintiff’s goods from a pool of goods.

Dominion Iron & Steel Co. v. Dominion Coal Co. (1908) NSSC
Facts: The trial judge found breach of a supply contract for coal. The plaintiff did not claim damages,
but asked for specific performance (delivery of the coal). The contract had an arbitration clause for
review of the transaction every 5 years.
Issues: Are the plaintiffs entitled to specific performance?
Holding: Yes.

Reasoning: Justice Russell explained that the “ground for specific relief” is the inadequacy of a legal
remedy (namely, damages). Russell finds that the damages are inadequate because market conditions
may change (which makes the assessment of damages over the course of a long contract difficult) and the
payment of a lump sum may ruin the defendant company. The arbitration clause makes things more
difficult, Russell explained. Presumably, the parties could make a going-transaction adjustment if one or
the other was incurring too much cost.

Russell relied on Taylor v. Neville, in which the court ordered specific performance for a long-term
contract for the supply of iron.

Rationale: When the assessment of damages would be conjectural, in situations with long-term
supply contracts, a court could enforce the contract. These are akin to “unique” goods.

Critique: The House of Lords overturned the NS court’s judgment. The plaintiff is entitled to two types
of damage:

1. Damages owing to the wrongful repudiation of the contract [and then to treat the contract as
over], and
2. Damages owing because of the defendant’s actions committed before the breach.

The court may enforce specific performance when the supply contract involves “unique” goods. This is
problematic, because the assessment of uniqueness may vary. For example, Dominion Steel could claim
that Dominion Coal’s coal is unique, because the material is presumably close to its production site, and
available at a lower cost. A plaintiff may also depend on the supply of goods and denial of such goods
may ruin the plaintiff’s business. See Fruits de mer Oceans Ltée v. Lanteigne et autres.

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Ryan v. Mutual Tontine (1893) Court of Appeal
Facts: The plaintiffs sought the enforcement of a covenant in a lease for a residential flat. The covenant
stated: “a resident porter appointed an removable by the lessors, but who shall be an act as the servant of
the tenants.” The porter was supposed to be in constant attendance, clean the common areas, and receive
and deliver the tenants’ mail, among other things. The defendants appointed a porter that neglected his
duties.
Issues: Is the plaintiff entitled to an injunction that will prevent the hiring of an irresponsible porter, and
compel the hiring of a responsible one? The plaintiff also claimed damages. Is the plaintiff so entitled?
Holding: The plaintiffs are entitled to damages only.

Reasoning: Lord Esher stated a rule: a court cannot enforce a part of a contract, except if it the contract
falls within an exceptional class (namely, contracts to create railways). Lord Lopes agreed with Esher, and
added, ”the court will not compel specific performance with there is another adequate remedy.” Lopes
accepted the trial judge’s damage award and held that the plaintiff could always file subsequent actions for
future breaches.

Lord Kay recognized that if the court compelled specific performance, it would have to supervise the
execution of the contract.

Rationale: A court will not order specific performance of part of a contract – especially if that
contract is for personal service.

In Posner v. Scott-Lewis, the Chancery Division articulated a test where a court may order specific
performance of a personal service contract.

a. Is there sufficient definition as to what the defendant has to do to comply with a court order?
b. Will the court have to supervise to an unacceptable degree?
c. What hardships will the parties suffer?

The general rule is that the court will not enforce building contracts; however, Tannenbaum shows that
money cannot get substitute performance, because the defendant now owns the land. No sum of money
will guarantee the construction of the road.

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Tanenbaum v. W.J. Bell Paper Co. Ltd. (1956) Ont. Supr. Court
Facts: The plaintiff sought specific performance of a contract for the construction of a roadway [like
Wicksteed Avenue] and pipe to connect his land to the defendant’s land.75 The defendant constructed the
roadway and pipe, but to a lesser quality.
Issues: Is the plaintiff entitled to specific performance?
Holding: Yes.

Reasoning: Justice Gale stated the “railway rule” for specific performance of service contracts:
• “Where a person [the defendant] undertakes accommodation works on lands possessed by him,
• In consideration for obtaining those lands or in consideration of the purchase price of other lands sold
by him [defendant has obtained possession of the land via the contract],
• If the particulars of the work are sufficiently clear and defined, &
• The court concludes that damages will not provide an adequate remedy for the breach [the plaintiff
had a substantial interest in the performance], per Wolverhampton & Walshall R. Co. v. London &
North-Western R Co.

The court is still concerned with supervision and liberty, and therefore the court will examine the actual
obligations.

The court rejected the defendant’s three arguments against specific performance.

The defendant argued that the terms of the agreement were not sufficiently clear. The court held that it
will not insist on a standard of complete precision, but it will give effect to the intention of the parties.
All that the defendant had to do was to copy the essential elements of a named street.

The court then considered the substitution of damages. In this case, there are two sources of damage: the
cost of future repairs, and the decrease in the value of the enjoyment of the plaintiff’s land. The court
would have to “speculate” as to those costs.

The defendant also argued that it had partially performed the contract and that produced a usable road.
The disparity between the defendant’s performance and the terms of the contract is not slight [such that a
court could refuse performance]. Once development of the plaintiff’s land begins, it will be out of
possession of the roadway to make effective repairs, and therefore the reconstruction should proceed
sooner rather than later.

Rationale: The court enforces the rule from Wolverhampton. When contracts involving the transfer
of land are at issue, the court may be more inclined to order specific performance.

Why not assess the loss as the cost to repair the road? You cannot get substitute specific performance,
because the plaintiff does not own the land – the defendant does!

75

147
In Dynamic Transport Ltd. v. O.K. Detailing Ltd., the Supreme Court of Canada ordered delivery of a
piece of land to the plaintiff. If not, the court ordered the defendant to pay the plaintiff damages in result
of the loss of bargain – which in this case, amounted to a loss of $147 000.

Personal Service Contracts

Giles & Co. v. Morris (1972) Chancery Division

Facts: The outgoing director made an agreement with the incoming director, the plaintiff, that he would
take over the position. The Board of Directors did not hire him. The plaintiff asked for specific
performance.
Issue: Is the plaintiff entitled to specific performance?
Holding: Yes and No.

Reasoning: The plaintiff cannot get substitute specific performance [because this was a contract to enter
into a contract]. Therefore the plaintiff can get performance.

The court enforced the hiring agreement, but then the company can then hire and fire Giles. The court will
not compel the Board to perform the subsequent service agreement. The plaintiff will be entitled to
damages.

Rationale: The company likely will not compel performance of a personal service contract.

In all of these cases, it is hard to assess damages and the services are unique. However, the court would
have difficulty supervising the order. There are also liberty problems. The court can, however, impose a
negative order on the defendant not to act. It is easy to tell to see if a person broke the negative covenant.

Money might serve as compensation, but the plaintiff cannot use that money to acquire exact substitute
performance.

Lumley v. Wagner (1852) Chancery Court

Facts: The defendant agreed to sing for the plaintiff and not for any other parties.
Issues: Is the plaintiff entitled to an injunction to compel the plaintiff to sing?
Holding: No, but he is entitled to a negative injunction.

Reasoning: The defendant bound herself not to sing for others. However, a court can order a negative
injunction to compel the defendant to fulfill her agreement.

The court distinguishes Clarke v. Price – a case in which the court refused to order the defendant to take
notes as he had agreed – because there was no negative covenant in that contract. The court also
distinguishes Hooper v. Brodrick, because in that case, the defendant did not breach the terms of the lease.

In this case, the defendant did break her contract, and therefore, the court sought to enforce the terms of the
covenant.

Rationale: Where a contract for personal service stipulates both a negative and a positive covenant
for exclusive performance, the court may enforce the negative covenant when the defendant is in
breach – if the enforcement does not compel performance.

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Warner Bros. v. Nelson (1937) Court of Kings Bench
Facts: The defendant entered into a contract with WB for exclusive service for a year. Before the
termination of that contract, the defendant entered into another contract with another film producer.
Issue: Is the plaintiff entitled to a negative injunction?
Held: The court orders the injunction, for (the lesser of) the duration of the continuance of the contract or
for three years in the jurisdiction of the court (in the UK).

Reasoning: The plaintiffs argued that the “enforcement of the negative stipulation in this contract will not
put the defendant in the position that she must either perform the stipulation or starve.” The defendant is at
liberty to earn her living in another way. Conversely, the defendant argued that the effect of enforcing the
stipulation would be that the defendant must work for the plaintiff – that a negative covenant is merely a
corollary to the positive covenant.

Justice Branson felt bound by the Lord Chancellor’s dictum in Lumley v. Wagner as he stated that the court
“operates to bind men’s consciences, as far as they can be bound, to a true an literal performance of their
agreements.” The defendant, having broken her positive undertakings to perform for the plaintiff, is not
barred from doing business whatsoever. The court will use its discretion to consider whether it ought to
limit an injunction.

“The defendant is stated to be a person of intelligence, capacity and means, and no evidence was deduced
to show that, if enjoined from doing the specific acts otherwise than for the plaintiffs, she will be unable to
employ herself.”

The provision of the contract which states that a breach may “cost the producer great and irreparable injury
and damage” indicates that an order for damages is not an appropriate remedy.

Rationale: Where a contract for personal service stipulates both a negative and a positive covenant
for exclusive performance, the court may enforce the negative covenant when the defendant is in
breach – if the enforcement does not cause undue hardship.

These two cases show how the enforcement of the negative covenant would compel performance of the
positive agreement.

Detroit Football Co. v. Dublinksi (1955) Ont. HCJ

Facts: The plaintiff, DFC, sought to enjoin the defendant from playing football for the Argonauts while
under contract with Lions. The restraint of trade clause read: “the player promises … not to play football
or engage in activities related to football for any other person … except with prior written consent of the
Club.”
Issues: Is the plaintiff entitled to the interlocutory injunction?
Holding: Yes.

Reasoning: Justice Wells quoted Halsbury’s Laws of England to explain that “where there is a substantial
question to be investigated, and that matters ought to be preserved in statu quo” the court can order the
injunction. The plaintiff must show a strong prima facie case in support of the right which he asserts, and
that the injunction will protect the plaintiff from suffering irreparable injury, which cannot be adequately
remedied by damages.

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Although the defendant argued that without being able to play for the Argonauts, he would be unable to
earn a livelihood, Wells cites affidavit evidence to explain that the plaintiff has expended considerable
sums to scout and to train the defendant. This evidence was not contradicted – and therefore, Wells
relied on it.76

Rationale: When a plaintiff can show that it will suffer “irreparable harm” such that it cannot be
adequately assessed by damages, and the plaintiff has a strong prima facie case for an injunction, the
plaintiff may be entitled to one.

Critique: The Ontario Court of Appeal overturned the injunction, because the injury could be assessed in
financial terms. The plaintiff purchased another player. Although the substitute player was less “efficient
and skilful,” the plaintiff did not establish that it suffered a loss because of that (no decline in gate revenue).

The plaintiff proved damages of $6 950 – the difference between the costs of paying the substitute player
and the credit of non-payment of the defendant’s salary (and others traded away), and therefore, the court
ordered the defendant to pay that amount.

Courts will enforce restrictive covenants to prevent harm to the plaintiff business. In this case, Dublinski
playing for the Argonauts will not harm Detroit. It may be that the court did not like the covenant.

Page One Records, Ltd. v. Britton (1967)

Facts: The plaintiffs, Page One, brought an action against the defendants, the band the Troggs and their
new managers, for breach of the Page One management contract. The plaintiffs and the Troggs had agreed
in February 1966, that the plaintiff “shall … advance the professional career of [The Troggs] ...” By
December 1966, the Troggs became an established group and were financially successful.
Issues: Are the plaintiffs entitled to a negative injunction?
Holding: No.

Reasoning: The defendants have not established that the plaintiffs breached their management contract.
Justice Stamp distinguished Lumley v. Wagner and accepted the defendants’ argument that: ‘an injunction
is never granted which would have the effect of preventing an employer discharging an agent who is in a
fiduciary position vis-à-vis the employer.”

Stamp determined that the Troggs could not act as their own managers and that they could not survive
without managers. If Stamp ordered the negative injunction, he effectively would enforce the contract.

Rationale: If the parties are in a relationship of trust/confidence, the court likely will not order a
negative injunction to enforce a restraint of trade clause.

The following case is very rare, but it fits with the supervision and liberty framework. Substitute specific
performance is not possible, because the employee is close to retirement.

Hill v. CA Parsons & Co. Ltd (1972) Court of Appeal

76
This argument came up in the Schroeder case. This provides the justification for the covenant – it does not give
justification for the injunction, however.

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Facts: The plaintiff, an employee of 35 years and two years from retirement, sought an injunction ordering
his employer to restrain the employer from implementing a notice to terminate his employment, from
imposing conditions on him without his consent, and from conspiring with others to impose such
conditions. The employer accepted terms from a trade union to require that their employees all be
members of such union. The plaintiff refused membership and received notice of termination, with only
one month’s notice. This is a wrongful termination case.
Issues: Is the plaintiff entitled to the injunction?
Holding: Yes.

Reasoning: Lord Denning explained that given the plaintiff’s experience and standing in the company, one
month’s notice was grossly insufficient.

The servant normally is eligible for damages for breach of an employment contract – where the dismissal
was unjust or without due notice. Denning stated that the rule is determinative, and that a court can order
an injunction to stop the master from treating the contract as at an end. In this case, the employer did not
want to terminate the contract – but had faced pressure from the rival union.

Denning referenced the Industrial Relations Act – not yet in force – which likely would have protected the
plaintiff in this case.

Lord Sachs concurred, and stated that in rare cases, the court can grant an injunction to restrain a defendant
from terminating the plaintiff. Sachs considers the three main grounds that normally support the
termination of the contract:

1. Unlike most cases, the confidence of the employer and employee is not compromised, as both
parties desire to maintain a working relationship,
2. Damages do not provide an adequate remedy, because the employee likely cannot gain alternate
employment77, and
3. Reinstatement is possible.

Sachs recognizes his discretion to act and cites this case as an exceptional one, where it would be
appropriate to do so.

Rationale: A court may order the specific performance of an employment contract, when the
employee and employer agree and when reinstatement is possible.

Critique: Lord Stamp does not accept that the court should apply a statute not yet in force. The court did
not have the opportunity to hear the rival union to take its position into account. The Lumley case did not
operate in the employee’s favour. The defendant was in economic straights and needed the agreement with
the rival company to save its business. Lord Stamp was not convinced that damages would not be an
adequate remedy.

Land Contracts
Specific performance is often a matter of course for land contracts, because the courts have regarded
land as a unique good. The courts have made exceptions, as in the case of Bashir v. Koper, because the

77
This does not appear to be a determining factor.

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plaintiff sought to use the land as an investment. Specific performance should not enable a plaintiff to use
the delay period between the breach and the trial as a “risk-free” period (essentially along the same lines
as mitigation of damages).

Courts have put three principle arguments forward – but the authors of the Red Book have countered:

1. Damages would not put the plaintiff in the same position – parties can place a value on the land, and
the court can assess it appropriately.

2. No amount of damages would necessarily compensate the plaintiff – damages can be assessed and the
court can use its discretion (as it does to award specific performance) to determine the appropriate
quantum.

3. The purchasers have an equitable estate in the land – the full property does not pass from vendor to
purchaser until the legal and equitable titles are transferred. Therefore, neither party has a complete
interest in the realty: one that would compel the court to decide in favour of one party the other.

The principle that specific performance should be granted for contracts that involve the sale of realty no
longer appears to be the standard position of the common law. In cases where the realty is treated by the
parties as a commodity or where the plaintiff has concurred that its damage can be assessed in monetary
terms, the court may not award specific performance.

The following case illustrates the importance of mitigation of damages. A court will assume that the
plaintiff mitigated its damages as would a reasonable person at the time of breach.

Be careful with these cases, is the plaintiff (buyer or vendor) asking for the land or for money (either
substitute specific performance, or damages, etc.).

Evolving away from Traditional Position

Denied because P didn’t make a case for inadequacy of damages

Domowicz v. Orsa Investments Ltd. (1993) OSC

Facts: The defendants reneged on a deal to sell the plaintiffs an apartment building that the plaintiffs
were going to renovate and lease.
Issues: Are the plaintiffs entitled to specific performance?
Holding: No.

Reasoning: Justice Adams stated that “monetary relief constitutes the normal remedy for a breach of
contract.” Adams then discusses Fuller and Purdue’s “Reliance Interest in Contract” to consider the
extent of the damages. The law, Adams says, “does not hold promisors accountable for all loss arising
from their conduct.” Judges must account for policy aims as well (see Hammond J., Butler v.
Countrywide Finance Ltd. above).

A judge must assume that the breach is an efficient one, and therefore the defendant should compensate
the plaintiff for the plaintiff’s lost expectation – to vindicate the plaintiff’s right, but to reward the
defendant for an economically efficient decision. The plaintiff had duty to mitigate its loss and it should
not be rewarded for allowing losses to accumulate.

Adams referred to Bashir v. Koper, to explain that often property is an investment – it is detached from
other purposes (such as voting, residence, dignities, etc.). The plaintiff can receive adequate
compensation for its lost profits on the investment.

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The plaintiff argued, presumably like in Bashir v. Koper, that no two pieces of land are alike and that it
should not be forced to accept the judgment of the court as to the potential value of the land. Again,
however, the plaintiff should not be entitled to a risk-free period to hold out for a potential gain, when it
could have mitigated its loss and filed a later claim for damages for lost profit.

Rationale: A breach of contract for the transfer of land will not give a prima facie right for specific
performance. The court will consider the plaintiff’s intended use for the land and if the use is for
financial gain, it will consider whether the plaintiff attempted to mitigate its loss.

Modern position away from “as a matter of course” approach to SP of land contracts

Semelhago v. Paramadevan (1996) SCC

Facts: The plaintiff sued for specific performance for the sale of a house. The defendant conveyed the
home to a third party. The value of the house at issue increased by $120 000; however, the value of the
plaintiff’s house increased by $110 000 from trial to closing.
Issues: Is the plaintiff entitled to specific performance?
Holding: No.

Reasoning: Justice Sopinka explained, “courts have tended to treat all real estate as being unique and to
decree specific performance unless there was some other reason for refusing equitable relief.” Now, the
common law position has shifted such that it is up to the plaintiff to establish that the property is
unique.

The court should not encourage people to stop mitigating their losses because of an expectation of specific
performance.

Rationale: Damages constitute the default remedy for breach of contract for sale of land contracts.

This decision, however, had a major impact on the legal profession, as lawyers must now counsel their
clients that an uncertainty exists in the law related to the sale of realty. Clients can choose to apply for
specific relief, but they may also have to mitigate their losses per Domowicz, should the court find that the
plaintiff could have acquired a substitute property and filed for damages.

Mountain v. Mountain Estate (2012), 112 O.R. (3d) 721, 2012 ONCA 806
Facts: G claimed oral agreement with parents if he stayed on farm and farmed with them, would
receive farmland and assets if his parents stopped farming. Died and no assets transferred to G
before death. H (wife) and L (daughter) as D, L filed counterclaim, H died before trial.

Held: appeal allowed, new trial required

Ratio: trial judge erred in concluding that because there were no signed documents, no oral
agreement.
• Valid and binding oral agreement doesn't depend on existence of formal written
document but terms for the purchase and sale of real property are the parties, property
and price. If those are agreed on then contract may be found without need for evidence of
written agreement.

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 • Also erred in application of doctrine of part performance. Doctrine of part performance
not limited to consideration of acts of P and need not be consistent only to alleged
contract

The shift in the common law’s position on specific performance for the sale of land demonstrates a
gradual erosion of specific performance relief, for exceptional cases, like malicious breaches of contract.

The following judgment deals with specific performance in contracts of lease.

Verral v. Great Yarmouth Borough Council (1981) QB CA

Facts: The National Front, a right-wing extremist party, rented a hall from the Council for their convention.
A new Council was elected in the interim period. It rescinded the contract.
Issues: Is the plaintiff entitled to specific performance?
Holding: Yes.

Reasoning: Lord Denning overruled Thomson v. Park, a case in which a licensor revoked a license,
because the licensor has the “power” to revoke, even if it does not have the “right” to do so. The licensor
can thus pay damages for breach of contract.

Denning relied on Winter Garden v. Millennium Productions to hold that a licensor should not deny a
person with the right to enter a premises entry if the licensee behaves himself. The assembly in this case
was a lawful one, and Denning accepted testimony that “there has never been any trouble inside the
meeting.”

Rationale: A renter may be entitled to specific performance of a rental contract for premises when
the renter has not breached any conditions of the agreement, and where the risk of breach is
negligible.

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John E Dodge Holdings Ltd v 805062 Ontario Ltd [2001, SC]
Facts: Action by Dodge Holdings for an order of specific performance requiring 805062 Ontario
to complete a sale of land.
• 805062 was a wholly-owned subsidiary of Magna International. Magna acquired 42 acres
in Vaughan, Ontario, and succeeded in getting part of it zoned for commercial use.
• It made 805062 the registered owner of the lands, and 805062 contracted to sell a parcel
of the commercially-zoned lands to Dodge for the development of a hotel.
• Dodge had selected the area as particularly suitable because of other commercial activity
nearby that would bring in customers, and because the zoning was particularly favourable
for hotel and banquet facilities.
• In order to grant the necessary subdivision, Vaughan required that 805062 complete a
road and dedicate it to municipal uses. While neither 805062 nor Dodge needed the road
for access, Dodge offered to pay half the costs. Not wishing to deal any longer with
Vaughan, 805062 walked away from its agreement with Dodge.
• It argued that the agreement had been contingent on planning approval as stipulated in the
standard-form commercial contract the parties used. The boilerplate phrase there stated
that the agreement was effective only if 805062 as vendor complied with subdivision
controls, acting diligently to do so. 805062 said that it was commercially absurd and
unjust to require it to build an unneeded road in the circumstances.

Held: Action allowed. Specific performance ordered

Reasoning: the agreement of purchase and sale was to be completed. 805062 and Magna were
highly experienced developers and negotiated a binding agreement, fully aware that a severance
was required for completion. They acted improperly, breaching their express covenant to obtain
subdivision rights. There was nothing commercially absurd about requiring them to pay for the
road. Their breach was arbitrary, capricious and unreasonable. The property was uniquely suited
to Dodge's requirements, such that an order of specific performance was appropriate.

In the following two judgments the Saskatchewan Court of Appeal usefully articulates the
relationship between the uniqueness criterion from Semelhago and the requirement that damages
be an inadequate remedy.

Raymond v Raymond Estate [2011, SKCA]

Facts: Appeal by the plaintiff from trial judgment awarding him damages for the breach of an
agreement by his parents to sell their respective interests in farmland to him.
• The parents were deceased. The appellant already had an undivided one-quarter interest
in the property and he had operated his cattle and farming operation on it for over 40
years with his parents.
• There were no reasonable yard-sites located in proximity to the appellant's home which
was immediately across the road.

HELD: Appeal allowed. An order for specific performance was substituted requiring the transfer
of the parents' interests to the appellant.

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Reasoning: The trial judge failed to actually assess whether the appellant's expectation interest
under the agreement for sale could be protected by a monetary award of sufficient value to allow
him to purchase substitute property.
• The judge failed to conduct a critical inquiry as to the nature and function of the land in
relation to the appellant. It could not be said that the land was, or that the appellant
treated the land as, more akin to a commodity than a tract of land having special
attributes not found in any other farmland.
• If there was any farmland in respect of which compensatory damages was inadequate, it
was typically that farmland directly across the road from a farmer's home quarter.

Harle v 101090442 Saskatchewan Ltd [2014]

Facts: Appeal by the defendants, the Harles, from a finding of breach of contract and an order
for specific performance granted in favour of the plaintiff, 101090442 Saskatchewan.
• The plaintiff was a developer who offered to purchase farmland owned by the defendants.
The defendants, by counter-offer, requested that a leaseback of the land be in place prior
to closing, to be relinquished on any land required for development.
• The plaintiff accepted the counter-offer. After the closing date, the defendants returned
the purchase price and refused to transfer title on the basis that the parties had not reached
agreement on the terms of the leaseback. Litigation ensued.
• The defendants argued that the contract should not be enforced because the leaseback
was not in place prior to closing.
• The trial judge found that the defendants never indicated that an essential term had not
been agreed upon prior to closing. At all times, the defendants acted as if the deal was
complete. The parties did not intend to defer their lease obligations until a formal lease
was executed. The uniqueness of the land for residential and commercial development
based on its proximity to Regina justified an order for specific performance.
• The defendants appealed. They submitted that the parties' agreement lacked certainty and
was dependant on a condition that was not fulfilled at the closing date. They submitted
that damages were an adequate remedy, as the property was acquired for investment
purposes and was not unique.

HELD: Appeal allowed in part. SP set aside, matter remitted to trial judge for assessment of
damages

Reasoning: The trial judge did not err in concluding that the parties' agreement did not fail for a
lack of certainty.
• The parties used standard form documents to create a sale and lease of real property
recognizable at law.
• The fact that they disagreed over interpretation of the clauses did not render the
agreement uncertain. Despite misstating the jurisprudence, the trial judge did not err by
concluding that the parties intended to be bound by their agreement before the formal
lease document was executed based on their conduct and concessions.
• Even if the requirement for a lease to be in place before closing prevented the deal from
being enforceable, the defendants were required to do more than ignore the draft lease.
The judge properly found that the parties' conduct following the closing date was not
indicative of an agreement to extend closing.

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 o However, the judge erred by ordering specific performance by treating the
uniqueness of the property and the adequacy of damages as distinct questions.
The judge was instead required to assess adequacy of damages prior to resorting
to consideration of the remedy of specific performance.
o The judge also failed to give sufficient consideration of the nature of the
transaction and the uncertainty of the plaintiff's development plans. The matter
was remitted to the trial judge to assess damages based on the evidence adduced
at trial.

Certificates of Pending Litigation

• P should seek steps to put prospective purchasers on notice of claim so that D doesn’t
convey away the property while litigation is pending
• Actual notice of registration of notice on title to the property Registry Act RSO 1990
S.70: constitutes notice to all persons claiming interest in land, subsequent to registration
despite defect in proof for registration
• P can register notice of agreement of purchase and sale or obtain a certificate of pending
litigation and register it against title to the land in question (Ontario is Courts of Justice
Act r42 Civil Procedure)
o For cert of pending litigation, establish that interest in land is in issue
• Whether certificate should be vacated = test for determining whether interlocutory
injunction should issue
o Whether there is substantial issue to be tried
o Balances equities between parties

Discretionary Reasons for the Denial of Relief

Equitable Defences
THESE DEFENCES ONLY APPLY TO EQUITABLE CLAIMS

Seldom are equitable remedies the prima facie choice of courts. The plaintiff generally must establish the
inadequacy of damages. Even in cases of the sale of land – a commodity thought of typically as being
unique – the courts have moved away from equitable remedial orders.

These cases will introduce some element of morality, in a way in which ordinary orders for damages or
debt are made.

Equity Will Not Aid a Volunteer

A volunteer is someone that acquires a right without having given consideration to the debtor. For the
purposes of orders related to specific performance, the court will not consider contracts under seal
singularly as evidence of consideration.

If a plaintiff is trying to invoke equity to give it something, and the plaintiff has not paid, the court may
not enforce. This is relevant in trust cases. If a third party purchaser has no notice, and has paid no
value (that is, the third party purchaser received the trust property as a gift), we have two innocent party.

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In that situation, since the third party did not pay, the third party’s rights are weaker. The third party
will then hold the good on constructive trust for the plaintiff.

The rule, however, applies to two-party cases.

Riches v. Burns (1924) Ont. Supreme Court

Facts: The plaintiff bought land from the defendant. Later that month, the plaintiff obtained an option to
purchase another parcel of land. These two transactions were distinct, according to the findings of the trial
judge. The document evidencing the option was under seal. The plaintiff never paid the $1 consideration
for the option. The defendant sent notice to the plaintiff that he was planning to sell the land. The plaintiff
never received notice and the defendant did not sell.
Issues: Is the plaintiff entitled to exercise the option?
Holding: No.

Reasoning: Justice Riddell held that the seal was not sufficient to assist the plaintiff in affirming his option
to buy.

Rationale: Equity will not grant specific performance when the plaintiff has not paid “good and
valuable” consideration for the right at issue.

The contract is valid, and the plaintiff may be entitled to damages, but not specific performance.

Lack of Mutuality
• Crucial factor is not the availability of SP to the D at the time of the contract but the
assurance to the D (by some means other than common law remedy of damages) that
after performance, P’s side of the contract will be carried out
• An infant/minor cannot obtain an order of specific performance because the court cannot
compel specific performance against him: Flight v. Boland (1828)
• Defence of lack of mutuality: if D sought to enforce P’s promise (of personal services for
example), court could not order to fulfil unexecuted promise

Price v Strange [1978, CA]

Facts: P completed the repairs to the interior of the building but was not allowed to carry out the
external repairs because, on 17 May, defendant repudiated the agreement. D (landlord) then had
the exterior repairs done at her own expense. She continued to accept rent from plaintiff at the
increased rate until 27 September. P brought an action against her for claiming specific
performance of the agreement to grant an underlease or damages in lieu thereof.

Reasoning: critical time for mutuality to be present is date on which court is to make order for
SP. Fact that mutuality may not have existed at earlier time is irrelevant. Mutuality not present at
the time of breach of contract because P’s obligation to repair and renovate apartment would
have required constant supervision of court, precluding D from obtaining SP. By time of hearing,
repairs and renovations had been completed, no reason why D would not have been able to
obtain SP against P. Mutuality was present at date of hearing and P obtained order for SP.

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Held (1) the relevant time for considering the defence of want of mutuality was not the date of
the contract but the date of the trial. If at that date the court could not ensure that any
unperformed obligations of plaintiff would be specifically performed, it would not, as a general
rule, compel defendant to perform his obligations specifically.
• However it was open to the court to order the specific performance of a contract which
was not initially mutual in point of remedy, if at the date of the trial any obligations on
the part of plaintiff which could not, by their nature, be specifically enforced had been
performed;
• (2) a decree of specific performance would be granted notwithstanding that plaintiff had
not carried out all the agreed repairs, for
o (a) by standing by and allowing plaintiff to spend time and money carrying out
the interior repairs, defendant had created an equity against herself,
o (b) all the repairs had been carried out and therefore she was not in danger of
being ordered to grant an underlease without any remedy except in damages for
non-performance of the agreement to carry out repairs, and
o (c) she could be fully recompensed by a proper financial adjustment for the work
which she had carried out herself. In any event, she had waived the defence of
want of mutuality, since she had not only permitted plaintiff to start on the agreed
repairs, but had also accepted the increased rent payable under the contemplated
underlease and had continued to do so after her purported repudiation of the
agreement.

Beswick v Beswick:
Facts: The deceased agreed to transfer to his nephew the goodwill and the trade utensils of his
business in consideration for his employment as a consultant and for the payment of a sum of
money every week to his widow for her life.
• The deceased died, and the nephew made only one payment to the widow. The widow, in
her capacity as the administratrix and in her personal capacity, sued the nephew and
sought for an order for specific performance of the agreement.
• The nephew claimed that the widow could not sue on the agreement since she was not a
party to it.
Held: The Court of Appeal held that the widow, as the administratrix of a party to the contract,
was entitled to the order. Further, the court in its equitable jurisdiction had power to order the
nephew to pay the arrears during the widow’s life. Also, the widow, in her personal capacity,
could enforce the obligation under the agreement by virtue of s 56 of the Law of Property Act
1925.

Reasoning: The House of Lords decided that the aunt had no right to sue her nephew in her own
capacity as she was not a party to the contract. This overturns Denning's findings in the lower
court allowing third parties to sue for benefits that were guaranteed to them under a contract.
However, in her capacity as the administratrix she is able to sue him for the specific performance
of his promise that was made in the contract.
§ Third parties cannot sue for breach of contract when they were not a party
to the contract, even if they were named as a beneficiary of the contract.
§ Executors of wills can sue for specific performance of promises made in
contracts with the deceased.

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 • Waugh v Slavik [1975, BCSC]
o Can Waugh sue to specifically enforce agreement given that some of beneficiaries
under it had not provided consideration (common law spouse and former wife)
o Beswick v Beswick decided Sp of contract can be ordered where persons between
whom consideration passed or their personal representatives are parties to action,
even if strangers to contract who have not given consideration may benefit from
decree
o Mutuality between Waugh and Slavik, each could have sued the other for SP,
Slavik repudiated agreement, Waugh disregarded repudiation and treated contract
as if it still existed, sue for SP
o Result is sharing estate of Bowers in accordance with agreement

The Clean Hands Doctrine

“He who comes to equity must come with clean hands.” A party cannot enforce a contract that is
connected to something that is unlawful.

Cerilli v. Klodt (1984) Ont. Superior Court

Facts: The defendant agreed to sell his house for $45 200 by certified cheque, and $4 800 case on
closing. He did not tell his wife, as he was planning to keep the cash. When his found out, she consented
to the sale. The defendants did not proceed with the sale.
Issues: Is the plaintiff entitled to specific performance of the sale?
Holding: No.

Reasoning: Justice Southey cited Alexander v. Rayson to explain that the court will not enforce
contracts that are void for public policy. In this case the intention of the co-contractors was unlawful [the
defrauding of the defendant’s wife].

Rationale: The court is under an obligation not to enforce agreements when they discover
“illegality” even if the parties do not raise the claim.

In the following case, HK Bank of Canada, the purchasers were aware that the vendors had breached a
previous obligation. Mere knowledge of fraud did not seem to be enough.

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HK Bank of Canada Ltd. v. Wheeler Holdings Ltd. (1993) SCC

Facts:
The subsequent purchaser is attempting to buy the property, but it was aware of the earlier breach of
contract.

Issues: Can CMHC impeach purchase, given the second mortgage the second mortgage was obtained
unlawfully?
Holding: No.

Reasoning: Justice Sopinka explained that Town House and Wellington flagrantly breached their
mortgage with CHMC. It does “taint all the transactions involving property subject to those obligations.”
CHMC must establish that the respondent, HKBC is guilty of wrongdoing amounting to unclean hands.

Sopinka did not find evidence of misconduct on the part of HKBC. He could not infer from the facts that
HKBC had knowledge of an attempt to circumvent the conditions in the CHMC mortgage.

Rationale: The plaintiff, who seeks to establish relief based on a claim that the defendant acted with
unclean hands, must show that a party knew [or ought to have known] that the party was acting
unlawfully.

Bolianatz Estate v Simon [2006, SKCA]

Facts: Appeal by Bolen, the administrator of the Bolianatz Estate from the dismissal of his
application to have the respondent, Simon, disentitled to receive a legacy from the Estate.
• The testator executed his will and named three beneficiaries of the residue of his estate,
Bolen, who was the deceased's brother, another brother, and Simon. Simon was named as
executor of the Estate and was the son of a female friend of the deceased.
• When the will was executed, the testator was not aware that Simon was stealing money
from him. Simon was subsequently convicted of fraud and was ordered to make
restitution to the Estate for the amount of the fraud.
• Simon renounced his position as executor and Bolen was appointed administrator. Bolen
argued that Simon should not have been entitled to receive benefits under the Will. The
Chambers judge found that she could not infer that the testator would necessarily have
excluded Simon from receiving a gift under the Will had he known of the theft.
HELD: Appeal dismissed.

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Reasoning: The Chambers judge could not infer any intention on the part of the testator. It was
open to the Chambers judge to draw the inference that Simon was named as executor because the
testator believed him to be trustworthy.
• There was not the same basis for drawing an inference regarding his naming as legatee.
The purpose of the fraud had to be to obtain the legacy in order to disqualify the legatee.
Equitable principles could not be used to override the clear provisions of the Will.
• The clean hands principle was applicable only in cases where a plaintiff was seeking
equitable relief, which was not the case here, and the ex turpi causa principle operated as
a defence only.

Laches - Delay
This is the equitable equivalent to common law limitation periods. Two distinct branches to laches
doctrine, either will suffice as defence to a claim in equity. Mere delay is insufficient to trigger laches
under either of its two branches. Considers whether delay of P constitutes acquiescence of results in
circumstances that make prosecution of action unreasonable.

Grauer Estate v. Governemnt of Canada (1986) Fed. Court

Facts: The plaintiff sought a declaration that the expropriation of its land for the construction of the
Vancouver Intl. Airport was “made without or in excess or jurisdiction.” The plaintiffs never assented to
the expropriation or accepted compensation. The government claimed that the plaintiff should be barred by
reason of laches.
Issues: Can the government claim laches?
Holding: No.

Reasoning: Justice Collier cited Snell’s Principles of Equity:

1. Acquiescence by the plaintiff – the plaintiff is aware of its rights, can complain of an infringement, but
lets too much time to elapse.
2. Change in the defendant’s position – the plaintiff’s delay results in loss of necessary evidence
necessary to meet the claim.

Time is no bar to equitable claims unless the plaintiff acquiesces.

Collier determined that although some witnesses are dead, there is still sufficient evidence to defend the
claim. The plaintiff tried at several stages to pursue its claim, and have maintained occupation since the
expropriation.

Rationale: When the plaintiff has not acquiesced its rights, it may continue to pursue the claim even
if several years have passed.

McConnell v. Huxtable (2014), 118 O.R. (3d) 561, 2014 ONCA 86

Facts: action brought for unjust enrichment seeking remedial constructive trust in real property
owed by respondent, sought monetary reward.
• Respondent brought motion for summary judgment dismissing action as statute-barred as
not brought within 2 year limitation period in Limitations Act 2002.

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 • Motion judge found 10 year limitation in Real Property Limitations Act applied. No
legislative gap and no limitation period for action

Held: appeal dismissed, 10 year limitation

Reasoning: claim for unjust enrichment in which claimant seeks remedial constructive trust in
another’s property is an action to recover land within Real Property Limitations Act.
• “Recover” means to obtain land by judgment of court, and seeking equitable interest in
land through imposition of constructive trust. 10 year limitation applied, P’s alternative
claim for monetary award sheltered under s4. Limitations Act applied to equitable claims

Delay when combined with other factors regarded as fatal to P’s claim for permanent injunction though
not to the equitable remedy of compensation

Cadbury Schweppes Ltd. v. FBI Foods Ltd. (1999) SCC

Facts: The plaintiff, Cadbury, applied for an interim interlocutory injunction to restrain the defendant, FBI,
from using confidential information. The manufacturer continued to make the product, but Cadbury
allowed this to continue to five years.
Issues: Is the plaintiff entitled to the injunction?
Holding: No.

Reasoning: Justice Binnie reaffirmed the three findings of the trial judge.

Firstly, Binnie determined that the plaintiff knew that FBI had been selling a copy of “Clamato Juice”
minus the clam broth since 1983-1984. The plaintiffs wrote a cease and desist letter but did not follow up
for another six years. The delay and acquiescence may bar an injunction but not relief altogether.

Binnie suggested that the law might “lose its deterrent effect” if it would allow defendants to pay
compensation for misuse of confidential information – even if the information had contributed only
minimally to the defendant’s gains. However, the injunction, “if granted, would have inflicted damage on
the appellants disproportionate to the legitimate interest of the respondents.”

Rationale: A claim for an injunction to enforce a confidentiality agreement may be denied in favour
of damages, when the delay period was too long.

Hardship
In the hardship cases, we focus on the defendant party primarily. This is a moral/sympathy argument.
Fairness and sympathy arguments may be different. The defendant is not asking to be alleviated from the
breach, but only from specific performance.

It makes sense that courts will refuse specific performance/injunction and not monetary damages, because
the equitable relief can cause particular harm. This is like the refusal of specific performance for
liberty/supervision reasons. In Patel, there is a particular problem with specific performance, which
does not occur with damages.

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Patel v. Ali (1984) Chancery Division
Facts: The parties entered into a contract for the sale of the defendant’s house. The plaintiff asked for
specific performance, because the bankruptcy trustee secured the house. The circumstances surrounding
the defendant have changed: she does not speak English, her husband left her for Pakistan, she has three
young children, and she was fitted with an artificial leg. The defendant relied upon the assistance of her
neighbours. The members of the Muslim community offered to pay for the damages.
Issues: Is the defendant entitled to specific performance?

Holding: No. If the neighbours pay the damages, the court will not give specific performance. The
bankruptcy explains why the order was conditional, because the plaintiff would protect the house
from seizure.

Reasoning: Justice Goulding determined that the court may recognize hardship as a ground for denying
specific performance in favour of damages. The discretion is fairly broad, as evidenced by City of London
v. Nash, in which the court refused demolition of certain houses, because the demolition would be a public
loss and of no benefit to the plaintiff.

Goulding determined that potential buyers and sellers risk hardship when the purchase or sell property;
however, just as frustration or mistake can void a contract, hardship can void a claim for specific
performance. The unforeseen circumstance does not need to be to the same degree as legal frustration.

The court will also consider the circumstances surrounding the contract – namely, how the order would
affect third parties (in this case, the defendant’s three children). In this case, damages are an effective
remedy, but Goulding did not explain why. He merely determined that an equitable remedy would have
caused hardship to the plaintiff.

Rationale: Hardship incurred by a party may preclude the other from receiving specific
performance. That hardship need not attain the level of frustration for breach of contract.

The authors of the Red Book cite Justice Cory in Stewart v. Ambrosina to explain, “such hardship must
have existed at the time the contract was made and cannot be hardship that has arisen subsequently from a
change of circumstances … [because] if not then difficult problems may arise” to determine how long after
formation hardship will preclude the possibility of an equitable remedy.

Negative Covenants
Traditionally held that courts have little discretion to deny injunction to restrain party from breaching an
express negative covenant, except where this would be tantamount to specifically enforcing a contract
that cannot be specifically enforced (such as a personal service contract in Lumley v Wagner)

Doherty v. Allman (1878) House of Lords

Facts: The plaintiff leased two premises for periods exceeding 900 years. The defendant covenanted to
“preserve, uphold, support, and maintain … all improvements made and to be made thereon” as

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storehouses. The defendant lessee wanted to renovate and improve the buildings to facilitate his business.
The plaintiff reserved the right to re-possess himself of the leases.
Issues: Is the plaintiff lessor entitled to an injunction ordering the defendant to comply with the covenant?
Holding: No.

Reasoning: Lord Cairns determined that the defendant did breach his contract, though “in the lapse of a
portion of a very long lease of this sort, would become absolutely useless as a store[house].”

Cairns determined that the property will undoubtedly increase [ameliorating waste] in value with the
improvements by the defendant. There is no injury to remedy and therefore the application fails.

Rationale: The court will not enforce a covenant that disadvantages both parties.

Fothergill v. Rowland (1873)

Facts: The plaintiffs, ironmasters, contracted with the defendants for the exclusive supply of coal generated
from a seam in the defendant’s mine. The plaintiffs were entitled to that exclusivity by virtue of a contract
of loan to extend the defendant’s operations. The defendants breached by selling the coal to another buyer
at a higher rate.
Issues: Are the plaintiffs entitled to specific performance?
Holding: No.

Reasoning: Jessel MR stated that the plaintiffs are entitled to damages amounting to the market price for
the coal that the defendant failed to supply them. The damages in this case are are ascertainable. If the
court ordered the defendant to stop selling coal [negative injunction], then it would compel performance of
the contract in a round-about way (see Lumley v. Wagner).

In addition, Jessel did find an authority that stated that the court will, by default, enforce a mandatory
covenant by specific performance. The court has the discretion to determine the appropriate remedy.

Rationale: The court will not enforce a supply contract by ordering specific performance when
damages are ascertainable, even if the defendant has covenanted only to sell to the plaintiff.

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Metropolitan Electric Supply Co. v. Ginder (1901) Ch. Division
Facts: The defendant contracted with the plaintiff for the supply of electricity: a contract which included
a provision that stated, “the consumer agrees to take the whole of the electric energy required for the
premises … for a period no less than five years.” The defendant breached.
Issues: Is the plaintiff entitled to specific performance?
Holding: Yes. However, the defendant can apply for relief if the plaintiff does not provide the defendant
with a full supply.

Reasoning: The defendant argued that the covenant was a negative stipulation, which stated that the
plaintiff is not entitled to buy electricity from another by implication, because he agreed to buy all of his
electricity from the plaintiff. Justice Buckley distinguishes Lumley v. Wagner because that case dealt
with personal service contracts. “I therefore think that the fact that the contract is affirmative in form
and not negative in form is no ground for refusing an injunction…”

Rationale: The court reserves the right to enforce specific performance for contracts of supply.

Thomas Borthwick v. South Otago Freezon Ltd (1978) NZCA

Facts: Borthwick and South Otago had a contract of service. The contract was for 20 years, with
amendments considered every three years. New management at South Otago repudiated the contract
with three days notice and reduced the services provided to the plaintiff.
Issues: Is the plaintiff entitled to specific performance to enjoin the defendant from changing the
contract?
Holding: Yes.

Reasoning: Justice Cooke cites Lord Cairn’s dictum in Doherty v. Allman, where he discounted “the
mere technical differences between negative words and affirmative words in a covenant,” because “so
long as it is fair and right and proper that the Court should enforce the bargain which is made, the Court
does enforce it.”

The court ought to look at the nature of the contract between the parties and whether breach is properly
remedied by damages.

“The main significance of an express negative covenant … is twofold. It enables the court readily to
define what the defendant may be enjoined from doing; and it emphasises that the defendant has
unequivocally accepted this obligation, thus tending to make it more difficult for him to set up hardship.”
78

The damages stipulation in the contract are low, and not an appropriate remedy.

The amendment and arbitration provisions, Cooke explains, makes it in the public interest that the court
enforce the contract, because the defendant had the opportunity to renegotiate the bargain.

Cooke found no practical difficulties in enforcing the contract – because it involved routine matters as
between the parties. The injunction would not impose hardship upon the defendant – and the court did

78
This makes little sense, given that an affirmative covenant can do the same. All we need to do is look
at Lord Cairn’s dictum.

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not prejudice the defendant from applying for rescission if it does.

Rationale: The court reserves the right to impose for contracts of service when the defendant has
no grounds for breach and when the parties can resume business afterwards.

The court did not compel South Otago to perform its contract via a mandatory injunction –
because the company can stop operating.

Recall, however, Propriété Cité Concordia v. Banque Royale, the court compelled the Royal Bank to
maintain its operating hours.

COVENANTS TO KEEP OPEN A BUSINESS

SBI Management v. Wabush Co-op (1985) NFLD SC

Facts: The plaintiff, a mall owner and lessor, sought to refrain the defendant from ceasing operations of
its supermarket. The covenant read: “the Tenant shall not leave said Leased Premises unoccupied or
vacant, but shall continuously …”
Issues: Is the plaintiff entitled to specific performance?
Holding: No.

Reasoning: Justice Steele summarized the plaintiff’s arguments: it will suffer irreparable harm not
measurable by damages, it will reduce traffic to the mall, it will lose rental income from other tenants,
and it will lose the defendant’s rental income.

Steele explains that the court could not enforce the mandatory order to keep the lessee in business
(because it is a service contract). The problems with enforcing the order are such that the court could not
hope to supervise the administration of the business. The plaintiff is limited to a remedy in damages.

Rationale: A court will not compel a business that is losing money to continue to operate and abide
by its lease.

The following case is the most important case in the section. This case is nearly identical to the Propriété
Cité Concordia case.

This is a moderately difficult contract to do something. The House of Lords overturned the decision,
effectively restating the common law’s attitude that the contract was too difficult to supervise. There are
many ways not to comply with the order, which makes it difficult to enforce.

The court of appeal probably thought that supervision was not a problem, because Safeway would be
worried about its reputation [like Propriété Cité Concordia].

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*Co-Operative Insurance Society v. Argyll Stores (1996) Ch.

Facts: The plaintiff leased a unit to the defendant for the operation of a Safeway supermarket. The
defendant was a key/anchor tenant. The defendant gave notice that it was closing the store. The plaintiff
offered decreased rent and permitted it to assign its lease to another store. Instead, the defendant left,
stripping the store of the fixtures.
Issues: Is the plaintiff entitled to specific performance?
Holding: Yes.

Reasoning: Lord Roch identified a paradox in this case: the court has greater difficulty enforcing specific
performance because the defendant left and stripped the premises of the fixtures, thus making it harder to
assign the lease or to order performance.

Damages are inadequate, because the other tenants (3rd parties), must file a claim against Safeway. The
plaintiff cannot sue on their behalf.

The plaintiffs were not guilty of delay and even offered to reduce the rent. It is possible to “define with
sufficient certainty the obligations which the order would enjoin the defendants to meet in carrying on the
business of a supermarket.”

Rationale: The court can order specific performance to punish wanton behaviour, even if the
advantage to the plaintiff is out of proportion to the costs to the defendant.

This case was overturned on appeal to the House of Lords.

The House of Lords allowed Argyll’s appeal and said the judge’s exercise of discretion was
correct so that no specific performance could be awarded. Setting out reasons,
(1) it was settled practice that no order would make someone run a business
• (2) enormous losses would result from being forced to run a trade
• (3) framing the order would be hard
• (4) wasteful litigation over compliance could result
• (5) it was oppressive to have to run a business under threat of contempt of court
• (6) it was against the public interest to require a business to be run if compensation was a
plausible alternative. Lord Hoffmann said the following.
“ The purpose of the law of contract is not to punish wrongdoing but to satisfy the
expectations of the party entitled to performance… The exercise of the discretion as to
whether or not to grant specific performance starts from the fact that the covenant has been
broken. Both landlord and tenant in this case are large sophisticated commercial
organisations and I have no doubt that both were perfectly aware that the remedy for breach
of the covenant was likely to be limited to an award of damages.
The interests of both were purely financial: there was no element of personal breach of

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 faith… No doubt there was an effect on the businesses of other traders in the Centre, but
Argyll had made no promises to them and it is not suggested that CIS warranted to other
tenants that Argyll would remain. Their departure, with or without the consent of CIS, was a
commercial risk which the tenants were able to deploy in negotiations for the next rent
review.

REMEDY STIPULATION
• Limiting discretion of court over grant and extent of remedies under contract is
contractual provision specifying nature and limits of recourse available if contract has
been breached
o Arbitration clauses
o Specify whether or not a specific remedy will be available in the event of breach,
such as abortive provision for SP
• Quadrant Visual Communications Ltd v Hutchison Telephone [1993]: contract for sale
of business provided that sums due under agreement payable free from equity, set off or
other deduction whatsoever.
o Court concerned with purported effect of unusual phrase “free from any equity”
o Can’t be used to fetter discretion of court, once court is asked for equitable
remedy of SP, discretion cannot be fettered
• Psenica v Dee Zee Construction Ltd [1999]: “employee entitled to injunction relief” was
a non-competition clause that was overly broad and unenforceable. Issue of contractual
right to have injunctive relief is not conclusive and only a factor in the exercise of the
discretionary power of the court
o However important on influence upon exercise of discretionary power of court to
grant temporary injunction

Tang v. Zhang (2013), 41 B.C.L.R. (5th) 69, 2013 BCCA 52

Facts: deposit “on account of damages” and because vendors able to sell property for higher
price, no damages suffered and not entitled to deposit
Held: appeal allowed, deposit forfeited
Reasoning: Agnosti v Winter wrongly decided, no longer good law. In light of purchaser’s
failure to complete purchase, deposit forfeited to vendors. Deposit generally forfeited by buyer
who repudiated contract and such forfeiture not dependent on proof of damages. Contractul term
forfeiting deposit “on account of damages” did not alter nature of deposit

• General principles for real estate deposits:

o 1st question of whether deposit or payment made to seller in advance of
completion of purchase forfeited to seller upon buyer’s repudiation of contract
was a matter of contractual intention.
o 2nd where parties used word deposit to describe payment, that word was to be
given its normal meaning in law.
o 3rd true deposit ancient invention of the law designed to motivate contracting
parties to carry out bargains. Deposit generally forfeited by buyer who repudiated
contract, not dependent on proof of damages by other party.

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 o 4th deposit constituted an exception to usual rule (sum subject to forfeiture on
breach of contract unlawful penalty unless it represented genuine pre estimate of
damages). Finally, contractual term that deposit to be forfeited on account of
damages on buyer’s failure to complete did not alter nature of deposit but could
be construed to mean that if damages were proven the deposit would be applied
against them. If no damages shown, deposit still nevertheless forfeitable, subject
to expression of contrary intention.

Redstone Enterprises Ltd. v. Simple Technology Inc. (2017), 137 O.R. (3d) 374, 2017 ONCA

Facts: purchase and sale of warehouse for 10,225,000. Agreement was for deposit of 300k, paid
additional deposit of 450k to obtain 6 month extension for time of closing. Failed to obtain
paperwork, P entitled to be paid 750k which was being held in trust

Held: appeal allowed, deposit forfeited

Ratio: fact that applicant suffered no damages did not itself render forfeiture of entire deposit
unconscionable. Finding of unconscionability must be exceptional one, strongly compelled on
facts of case. While in some cases a large deposit (without anything else) could be found
unconscionable, deposit in this case not grossly disproportionate.

This was straightforward commercial real estate transaction undertaken in expectation of profit
by both sides and no inequality of bargaining power between them. No fiduciary relationship,
both parties sophisticated. Nothing to suggest applicant unconscionably abused bargaining power
in asking for additional deposit of 450k to grant requested extention.

Amount of forfeiture increased to contractual amount of 750k

Ottawa Community Housing Corp. v. Foustanellas (2015), 125 O.R. (3d) 539, ONCA 276

Held: appeal allowed in part

Ratio: D participated in defraud public housing corporation and falsified more than 1000
invoices for carpet installation. 250k for punitive damages appropriate but trial judge erred in
holding all Ds liable on joint and several basis and in awarding punitive damages against estate
of one D. Joint and several responsibility cannot be imposed for punitive damages.

Punitive damages are intended to achieve objectives of retribution, specific and general
deterrence and denunciation.

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