Primary and Secondary Rights

Primary Rights:
What the law tells you to do. Those which exist in and per se: which are, as it were, the
ends for which the law exists: or which sub-serve immediately the ends or purposes of
law.
N.B. They exist before their breach.
Ex: Right to physical integrity, right to use and enjoyment of a property
Ex: Creation of a K = Right to performance of the K.
Ex: Being govern by the common law create a right not to be battered, defamed, etc.
Secondary Rights (The Remedies):
Those which I call secondary or sanctioning (I style them sanctioning because their
proper purpose is to prevent delicts or offences), arise from violations of other rights
and duties, or from injuries, delicts, or offences.
N.B. Rights and duties arising out of injuries
Ex: Breach of K, defamation create a secondary right to damages
Lep Air Services Ltd v Rolloswin Investments Ltd: “[On the termination of a contract by
X, and by the acceptance of a repudiation by Y, X’s] primary obligations come to an end
… But for his primary obligations there is substituted by operation of law a secondary
obligation to pay to [Y] a sum of money to compensate him for the loss … sustained as a
result of [X’s] failure to perform the primary obligations.”
In Photo Production v Securicor [1980] AC 827: ‘Leaving aside those comparatively rare
cases in which the court is able to enforce a primary obligation by decreeing specific
performance of it, breaches of primary obligations give rise to substituted secondary
obligations on the part of the party in default, and, in some cases, may entitle the other
party to be relieved from further performance of his own primary obligations. These
secondary obligations of the contract breaker…arise by implication of law...’
Two areas of remedies law:
The law of damages (Common Law Derive)
Ex: Compensatory damages
The law of coercive remedies (Equitable Remedies)
Ex: Injunctions, Specific Performance, Mareva Order, Anton Piller Order
Three Different Views
Monist View:
The remedy is simply a mirror of the plaintiff’s cause of action and is set by the law as
appropriate to the specific primary right in question.
Ex: If you have a right to 200 apples, you have a remedy of 200 apples (specific
performance)
 Dualist View:
Once liability has been determined, the court can exercise its discretion to choose the
most appropriate remedy in the particular case at hand.
Ex: Once the plaintiff has proved a breach of contract, under a dualist view the court
should have a discretion as to what remedy is granted, and the court can choose
from a large range of potential remedies based upon particular considerations (how
much would it cost to move the crane, best solution for both parties so we don’t
have
to go the court every week about this)
N.B. Remedies make rights living in the real world
Modern View (Intermediate):
Strong but non-absolute link between the primary right and the secondary right. Thus,
there is a default remedy for a particular cause of action, but if circumstances require it
the court can depart from that remedy.
Legal Realism:
All we have is a bunch of institutions (judges) that might order something to happen.
The law is a sort of predication of what the judge will do.
Objective:
The remedies in law are meant to cure legal wrong, assisting somebody whose rights
have been illegally infringed.
Ex: Defendant has breached its contract with the plaintiff or committed a tort
N.B. There is no right without a remedy to protect it
Ex parte United States, 257 U.S. 419, 433 (1922): ‘Legal obligations that exist but
cannot be enforced are ghosts that are seen in the law but are elusive to the grasp.’
4 Objectives
Objective Nominate remedies
Compensation (most common goal of a remedy) Damages
Go back to status quo. Make somebody whole. Put the victim Equitable damages
where they would have been if the harm would not have occurred. Statutory damages

Restitution (bring back to the plaintiff’s pocket what was rightfully Account of profits
is) Restitutionary Damages
(ex : deposit in a real-estate transaction… restoring the deposit)
(close to unjust enrichment)
Punishment (eye for an eye, revenge, deterrent purposes) Exemplary (or Punitive) Damages
Statutory Penalties
Coercion (compelling the person to do or undo what they did Injunction
wrongfully) Specific performance
Specific Recovery of Goods
Action for Agreed Sum
N.B. Compensation, restitution and punishments are purposes.
Coercion is meant to force the wrongdoer to undo the wrong.
Specific Performance For Breach Of Contract
- Rarely granted (usually damages instead)
- John Stuart Mills : It must be justified to prevent harm before restraining someone’s liberty
(Harm Principle)
Ex: Decreeing prison if 200 apples are not delivered is a way more serious infringement
to someone’s liberty vs giving damages.

Relation Between Common Law and Equity

Courts of Justice Act, R.S.O. 1990, c. C.43 (Ontario)
Rules of law and equity
96 (1) Courts shall administer concurrently all rules of equity and the common law. 
Rules of equity to prevail
(2) Where a rule of equity conflicts with a rule of the common law, the rule of equity
prevails.
Jurisdiction for equitable relief
(3) Only the Court of Appeal and the Superior Court of Justice, exclusive of the Small
Claims Court, may grant equitable relief, unless otherwise provided.

Fackle v Gray
The Court will enforce
specic performance of a
contract to purchase
personal possessions, if
damages will not be an
adequate compensation.
But where the contract,
although not actually
fraudulent, was one in which
the parties were not on an
equal footing, the Plainti
knowing, and the
purchaser being ignorant, of
the value of the thing sold,
and the price
appeared to be inadequate,
the Court refused relief.
Mrs Gray was selling her
home and her possessions.
The plainti ( Mr.
Brend) said he would buy
two of her vases for £40. The
dealer had done
this for 25 years and was
eminent in his trade, and well
acquainted with
the prices of articles of this
kind. Mrs. Gray doubted the
valuation and had
asked Mr. Watson to value
the vases; he was so
awestruck he oered her
£200.
Plainti now insisted that he
was entitled to a decree for
specic
performance. He said the
vases are extremely rare; they
are not like a
horse or any other thing that
you may go and buy in the
market.
Judgement:
Court of Equity will decree
specic performance,
because a mere
compensation in damages is
not a su1cient remedy and
satisfaction for
the loss of the performance of
the contract.
In the present case the
contract is for the purchase of
articles of unusual
beauty, rarity and distinction,
so that damages would not be
an adequate
compensation for non-
performance. The price
placed on the jars by Mr.
Brend was only one-fth of
their selling value. That this
was a hard
bargain in the sense of its
being for a very inadequate
price there can be
no doubt. The general rule
with regard to hard bargains
is that the Court
will not decree specic
performance Court was not
bound to decree a
specic execution of articles
where they appeared to be
unreasonable, or
founded on a fraud, or where
it would be unconscionable to
assist them.
Fackle v Gray
The Court will enforce
specic performance of a
contract to purchase
personal possessions, if
damages will not be an
adequate compensation.
But where the contract,
although not actually
fraudulent, was one in which
the parties were not on an
equal footing, the Plainti
knowing, and the
purchaser being ignorant, of
the value of the thing sold,
and the price
appeared to be inadequate,
the Court refused relief.
Mrs Gray was selling her
home and her possessions.
The plainti ( Mr.
Brend) said he would buy
two of her vases for £40. The
dealer had done
this for 25 years and was
eminent in his trade, and well
acquainted with
the prices of articles of this
kind. Mrs. Gray doubted the
valuation and had
asked Mr. Watson to value
the vases; he was so
awestruck he oered her
£200.
Plainti now insisted that he
was entitled to a decree for
specic
performance. He said the
vases are extremely rare; they
are not like a
horse or any other thing that
you may go and buy in the
market.
Judgement:
Court of Equity will decree
specic performance,
because a mere
compensation in damages is
not a su1cient remedy and
satisfaction for
the loss of the performance of
the contract.
In the present case the
contract is for the purchase of
articles of unusual
beauty, rarity and distinction,
so that damages would not be
an adequate
compensation for non-
performance. The price
placed on the jars by Mr.
Brend was only one-fth of
their selling value. That this
was a hard
bargain in the sense of its
being for a very inadequate
price there can be
no doubt. The general rule
with regard to hard bargains
is that the Court
will not decree specic
performance Court was not
bound to decree a
specic execution of articles
where they appeared to be
unreasonable, or
founded on a fraud, or where
it would be unconscionable to
assist them.
he Court will enforce
specic performance of a
contract to purchase
personal possessions, if dama
Falcke v Gray (1859, Ch) .......................................................................................... 906
The Court will enforce specific performance of a contract to purchase personal
possessions, if damages will not be an adequate compensation. But where the contract,
although not actually fraudulent, was one in which the parties were not on an equal
footing, the Plaintiff knowing, and the purchaser being ignorant, of the value of the
thing sold, and the price appeared to be inadequate, the Court refused relief.
Mrs. Gray was selling her home and her possessions. The plaintiff (Gray) said he would
buy two of her vases for £40. The dealer had done this for 25 years and was eminent in
his trade, and well acquainted with the prices of articles of this kind. Mrs. Gray doubted
the valuation and had asked Mr. Watson to value the vases; he was so awestruck he
offered her £200.
Plaintiff now insisted that he was entitled to a decree for specific performance. He said
the vases are extremely rare; they are not like a horse or any other thing that you may
go and buy in the market.
Judgement:
Court of Equity will decree specific performance, because a mere compensation in
damages is not a sufficient remedy and satisfaction for the loss of the performance of
the contract.
In the present case the contract is for the purchase of articles of unusual beauty, rarity
and distinction, so that damages would not be an adequate compensation for non-
performance. The price placed on the jars by Mr. Brend was only one-fifth of their
selling value. That this was a hard bargain in the sense of its being for a very inadequate
price there can be no doubt. The general rule with regard to hard bargains is that the
Court will not decree specific performance Court was not bound to decree a specific
execution of articles where they appeared to be unreasonable, or founded on a fraud,
or where it would be unconscionable to assist them.
Dominion Iron & Steel v Dominion Coal Co (1908, NSSC) ...................................... 924 
Long-term, requirement supply agreement (guaranteed supplies required by the
purchaser) for the purchase of coal.
Some deliveries over the years were sometimes insufficient in quantity or quality. The
buyer rejected some deliveries when he did not have the right to. Seller is suing for
specific performance of the contract.
Court says the buyer could not do that and orders specific performance, despite certain
precedents.
 Why? It was a long-term arrangement. The duration of the agreement factors in.
See quote in ppt.
Quote JCPC (Judicial Committee of Privy Council) = affirmation of the NSSC case.
Beswick v Beswick (1968, HL)................................................................................ 1104
Facts
PB was in poor health and agreed with the defendant, his nephew, that he would
transfer the trade and good will of his coal business to him on the basis that the nephew
employed him as a consultant for the rest of his life and paid him for this. The nephew
also agreed to pay PBs wife after PB died for the rest of her life. She was not a party to
the agreement. Upon the death of PB, the nephew paid PB’s wife once but then not
again. PBs widow brought an action as administrator of PB’s estate and also in her
personal capacity claiming for specific performance.
Issue
PB’s widow raised two interesting questions for the court to consider. The first was
whether the widow, as an administrator to PB’s estate, could claim for an order of
specific performance for PB’s nephew to honour his agreement. It was also important to
see how the court weighed this claim alongside her claim on a personal level, which that
she could claim as a party to the contract between her late husband and nephew.
Held
The court granted the widow an order of specific performance for the payment owed by
PB’s nephew as an administrator to her husband’s estate. The court held that the
damages would also not be limited due to the loss that had been caused to PB’s estate.
However, the court found that PB’s widow could not claim under her personal capacity
as she was a third party to the contract and was not a party to the original agreement.
INJUNCTIONS ARE IN AID OF RIGHTS

Day v Brownrigg (1878): ‘[A]n allegation of damage alone will not do. You must have in
our law injury [to a right] as well as damage. The act of the Defendant, if lawful, may
still cause a great deal of damage to the Plaintiff. If a man erects a wall on his own
property and thereby destroys the view from the house of the Plaintiff, he may damage
him to an enormous extent. He may destroy three-fourths of the value of the house, but
still, if he has the right to erect the wall, the mere fact of thereby causing damage to the
Plaintiff does not give the Plaintiff a right of action.’

INTERLOCUTORY INJUNCTIONS
Definition:
An interlocutory injunction is a court order to compel or prevent a party from doing
certain acts pending the final determination of the case. It is an order made at an
interim stage during the trial and is usually issued to maintain the status quo until
judgment can be made.
Dilemma:
Grant the relief and risk being wrong (or not right established) OR don’t grant the relief
and risk that the plaintiff’s injured worsen.
The Function of Interlocutory Injunctions:
Great Western Railway v Birmingham & Oxford Junction Railway (1848): ‘It is certain
that the Court will in many cases interfere and preserve property in state quo during the
pendency of a suit, in which the rights to it are to be decided, and that without
expressing, and often without having means of forming, any opinion as to such
rights....It is true that the Court will not so interfere, if it thinks that there is no real
question between the parties; but seeing that there is a substantial question to be
decided, it will preserve the property until such question can be regularly disposed of.’
The Function of Interlocutory Injunctions:
Attorney General v Punch Ltd [2001]: ‘The purpose for which the court grants an
interlocutory injunction can be stated quite simply…. Its purpose is to regulate, and
where possible to preserve, the rights of the parties pending the final determination of
the matter which is in issue by the court….It is no part of the court's function at [the
interlocutory] stage to resolve conflicts of evidence or questions of law that require
detailed argument. All it can do is preserve the status quo in the meantime until these
matters can be determined at the trial.’
2 Different Types
Prohibitory
A prohibitory injunction is an order that requires a party to refrain from doing a specific
act. (prohibits, precludes, stops)  
Mandatory
Mandatory injunction is an injunction which orders a party or requires them to do an
affirmative act or mandates a specified course of conduct (positive steps). It is an
extraordinary remedial process which is granted not as a matter of right, but in the
exercise of sound judicial discretion.
Ex: If your fence encroaches on your neighbor’s property, the later can force the
removal of the encroaching part through mandatory injunction.
Where’s the threshold?
The Accessibility Threshold:
Films Rover Ltd v Cannon Film Sales Ltd [1987]: ‘The principle dilemma about the grant
of interlocutory injunctions, whether prohibitory or mandatory, is that there is by
definition a risk that the Court may make the ‘wrong’ decision in the sense of granting
an injunction to a party who fails to establish his right at the trial (or would fail if there
was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or
would succeed) at trial. A fundamental principle is therefore that the Court should take
whichever course appears to carry the lower risk of injustice if it should turn out to have
been ‘wrong’ in the sense that I have described.’
The Cyanamid Threshold
American Cyanamid v Ethicon (1975, HL):
1. Was the claim frivolous or vexatious?
2. If not, then if the plaintiff were to succeed at the trial in establishing his right to a
permanent injunction would he be adequately compensated by an award of damages
for the loss he would have sustained as a result of the defendant’s continuing to do
what was sought to be enjoined between the time of the application and the time of the
trial?
3. If so (i.e. if the plaintiff could be adequately compensated), and if the defendant
would be in a position to pay these damages, then no interlocutory injunction should be
granted, however strong the plaintiff's claim appears to be at that stage.  
4. If, on the other hand, damages would not provide an adequate remedy for the
plaintiff in the event of his succeeding at the trial, then the court should consider
whether, if the plaintiff were not to succeed at trial, the defendant would be adequately
compensated by damages for the loss he would have sustained by the injunction.
5. If damages would be an adequate remedy for the defendant and the plaintiff would
be in a financial position to pay them then the plaintiff should be required to give an
undertaking as to damages, and the interlocutory injunction should be granted.
American Cyanamid v Ethicon (1975, HL) ..................................................................
721
Guidelines and the issues to be taken into account by the court for the grant of an
interim injunction
Facts
The appellant was a company that held a patent for artificial absorbable surgical
sutures. The respondent was a company that intended to launch a suture to the British
market which the appellant claimed was in breach of its patent. At first instance, the
appellant was granted an injunction preventing the respondent’s use of the type of
suture at issue until the trial of the patent infringement. On appeal, the Court of Appeal
discharged the injunction on the basis that the case for patent infringement was not
made out. The appellant appealed to the House of Lords.
Issue
The issue on these facts was primarily the extent of any substantive claim necessary for
the grant of an interim injunction. The House of Lords however, set out detailed
guidelines with regards to how the courts should deal with the grant of interim
injunctions in general.
Held
It was held that (a) it was not the courts’ role to consider conflicting evidence in respect
of an interim application. This was a matter for trial. (b) All that was necessary at this
stage was that the claimant should show that there was a real issue to be tried. (c) The
court should consider whether damages were an adequate remedy for a claimant if an
injunction was not granted. If so, an injunction would not be available. (d) If damages
were not an adequate remedy, the court should then ask whether the claimant would
be able to give an undertaking in damages to the defendant. (e) If it was considered that
there was any difficulty regarding the availability of damages on either side, the court
should consider the balance of convenience between the parties. (f) If these factors
were evenly balanced, the court should consider maintaining the status quo. On the
facts of this case, the balance of convenience lay with the appellant and the appeal was
allowed.
- Adopted in Canada in Atlantic Pizza and confirmed by SCC in RJR and Metropolitan
Stores.

Balance of Convenience (Lower than prima facie case standard/test)

- (pl trial success chance) + (irreparable harm suffered by pl) = x
- (def trial success chance) + (irreparable harm suffered by def if injunction granted) = y
- If x > y, awarded, if not, refused (balance of convenience)
Test
(1) Serious issue: the court must be satisfied that the claim is not frivolous or vexatious;
in other words, that there is a serious issue to be tried;
(2) Irreparable harm: the court should consider whether, if the plaintiff were to succeed
at the trial he would be adequately compensated by an award of damages for the loss
he would have sustained as a result of the defendant’s continuing to do what was
sought to be enjoined: if the plaintiff would not be adequately compensated, then the
court ought to consider whether the defendant, were he to succeed, would be
adequately compensated by damagers for the loss sustained if he had been enjoined
from doing that which he was allowed to do; and
(3) Balance of convenience: several factors must be taken into consideration; if the
extent of the uncompensable disadvantage to each party would not differ widely, it may
not be improper to take into account in tipping the balance the relative strength of each
party’s case as revealed by the affidavit evidence.
NOTE: In addition to meeting the above criteria, the plaintiff will usually have to give an
undertaking as to damages. Different considerations arise in the case where the plaintiff
is the government, where the undertaking will generally not be required.
The Cyanamid Threshold:
RJR-MacDonald Inc. v. Canada (A.G.) (1994, SCC): ‘What then are the indicators of “a
serious question to be tried”? There are no specific requirements which must be met in
order to satisfy this test. The threshold is a low one. The judge on the application must
make a preliminary assessment of the merits of the case. ... Once satisfied that the
application is neither vexatious nor frivolous, the motions judge should proceed to
consider the second and third tests, even if of the opinion that the plaintiff is unlikely to
succeed at trial. A prolonged examination of the merits is generally neither necessary
nor desirable.’

RJR-MacDonald Inc. v. Canada (AG)

- Applies American Cyanamide to Charter litigation
- Tobacco companies challenging constitutional validity of tobacco packaging legislation.

- Crown makes the argument that there is no irreparable harm to the tobacco corps b/c
they will only lose profits (easily quantified in damages). Corps respond that in Charter
litigation, even if the corps win at trial and law is struck down, that doesn’t mean that
the gov will pay for the lost profits. Thus, in Charter cases, Ps will have a stronger case
for irreparable harm against the gov because it’s unlikely that Ps will be able to collect
any damages.
- However, the public interest is also an important factor. Ps here have no claim to be
representing the public interest. Gov is representing the public interest, which trumps
the irreparable economic harm suffered by the tobacco corps.
- Distinction b/w exemption vs. suspension: In Charter cases, P could be asking that
only P be exempted from the application of the legislation, or P might be asking that the
legislation be completely suspended for all purposes before trial. Where it’s just a single
P getting an exemption, there is not as much harm to the public interest. Where P is
asking for the legislation to be suspended, the harm to the public interest is greater
because the law is put on hold for all purposes. Here, 2 of 3 tobacco corps are part of
the litigation, and 3rd will certainly join if the II is granted, so for all practical purposes
this is a suspension case, not an exemption case. For that reason, the public interest
outweighs the private interest of the Ps.
- Note: Court accepts that gov is not the always exclusive representative of the public
interest. Opposing party always represents only their private interest. But, the court
creates a presumption that the gov represents the public interest. A private party can
claim they represent the public interest but they have to prove it.

Yule v Atlantic Pizza Delight (1977, Ont HC) ............................................................ 732

Adopts American Cyanamide in Canada.
Facts:
Defendants appealed from an order granting an interlocutory injunction restraining
them from doing or refusing to do any act with a view to breach the contract between
the defendants and the plaintiff, which gave the plaintiff the sole and exclusive right to
sell franchises in Ontario.
Holding:
The interlocutory injunction remains in place. The plaintiff did not come to court with
unclean hands. This was not a contract for personal services, but rather an agreement
between two corporations and therefore injunctive relief is an appropriate remedy. The
court must ask itself “is it just in all the circumstances that the plaintiff should be
confined to a remedy in damages?” If the injunctive relief is not granted, the plaintiff
will be put out of business. Injunctionary relief is a discretionary remedy and economic
factors represent a necessary element for consideration. The court must determine
whether the plaintiff has demonstrated that his case is not frivolous and that there is a
substantial issue to be tried. Afterwards, the court can consider the requisite factors
referred to in American Cyanamid.
Irreparable Harm (IH)-RJR MacDonald:
Hoffman LaRoche & Co v Secretary of State for Trade and Industry (1975, HL): ‘The
object of [an interim injunction] is to prevent a litigant, who must necessarily suffer the
law’s delay, from losing by that delay the fruit of his litigation; this is called ‘irreparable
damage,’ meaning that money obtained at trial may not compensate him.’
RJR-MacDonald: ‘“Irreparable” refers to the nature of the harm suffered rather than its
magnitude. It is harm which either cannot be quantified in monetary terms or which
cannot be cured, usually because one party cannot collect damages from the other.
Examples of the former include instances where one party will be put out of business by
the court’s decision…where one party will suffer permanent market loss or irrevocable
damage to its business reputation…or where a permanent loss of natural resources will
be the result when a challenged activity is not enjoined.’
American Cyanamid places greater attention on the need for the applicant to show
“irreparable harm” before being granted an interlocutory injunction. Irreparable harm
to the applicant must be weighed against the potential for irreparable harm to the
defendant. Only when these are evenly balanced can the court look at the merits.

Exceptions to Cyanamid THRESHOLD (Prima facie case still required, looked at the
merits)
1. The Interlocutory Decision will in Effect Settle the Dispute
Ex: Picketing, strike, breaching of a confidentiality/non-compete agreement.
RJR-MacDonald Inc. v. Canada (A.G.) (1994, SCC): '[An exception to Cyanamid applies]
when the result of the interlocutory motion will in effect amount to a final determination
of the action. This will be the case either when the right which the applicant seeks to
protect can only be exercised immediately or not at all, or when the result of the
application will impose such hardship on one party as to remove any potential benefit
from proceeding to trial….The circumstances in which this exception will apply are rare.
When it does, a more extensive review of the merits of the case must be undertaken.’
Fellowes & Son v. Fisher (1976, CA): ‘[T]he court should assess the relative strength of
each party’s case before deciding whether to grant an injunction [because granting the
injunction would] virtually decide the whole action in favour of the plaintiffs: because the
defendants will be restrained until the trial (which may mean two years, or more) from
picketing the plaintiffs’ premises, by which time the campaign will be over.’
UA Local 740 v. Peter Kiewit Sons (2005 Nfld): ‘[T]he less onerous test of a serious issue
to be tried is inappropriate where the grant or refusal of an interlocutory injunction will
have the practical effect of putting an end to the action. It would then be correct to
observe that this is frequently the case in labour disputes, particularly where an
applicant seeks to restrain picketing. Such a circumstance can, however, arise in cases
not involving a labour dispute. It is not the general nature of the dispute, or the nature
of the parties, that makes the difference. It is the principle that the granting of the
interlocutory remedy will have the practical effect of putting an end to the action.’
2. Mandatory Injunctions
R v Canadian Broadcasting Corp (2018, SCC) ............................................................ SM
‘In my view, on an application for a mandatory interlocutory injunction, the appropriate
criterion for assessing the strength of the applicant’s case at the first stage of the RJR-
MacDonald test is not whether there is a serious issue to be tried, but rather whether
the applicant has shown a strong prima facie case. A mandatory injunction directs the
defendant to undertake a positive course of action … which is often costly or
burdensome for the defendant and which equity has long been reluctant to compel….
The potentially severe consequences for a defendant which can result from a mandatory
interlocutory injunction, including the effective final determination of the action in
favour of the plaintiff, further demand what the Court described in RJR-MacDonald as
“extensive review of the merits” at the interlocutory stage.

Facts:
An accused was charged with first degree murder of an individual under the age of 18.
The Crown requested — and a judge subsequently ordered — a mandatory ban under s.
486.4(2.2) of the Criminal Code to prohibit the publication, broadcast, or transmission in
any way of information that could identify the victim. The Canadian Broadcasting
Corporation (CBC) refused to remove from its website the victim's identifying
information published prior to the order granting the ban.
The Crown filed an Originating Notice seeking an order citing CBC for criminal contempt,
and an interlocutory injunction directing removal of the information from CBC's website.
First Instance:
The chambers judge of the Alberta Court of Queen's Bench applied a modified version of
the tripartite test for interlocutory injunctions as laid out in RJR-MacDonald. This
required the Crown to prove a strong prima facie case for finding CBC in criminal
contempt, that the Crown would suffer irreparable harm if the application was refused,
and that the balance of convenience favoured granting the injunction. The chambers
judge concluded that the Crown had not satisfied any of the requirements for a
mandatory injunction and dismissed the application.
Supreme Court (The test)
1. The applicant must demonstrate a strong prima facie case that it will succeed at trial.
This entails showing a strong likelihood on the law and the evidence presented that, at
trial, the applicant will be ultimately successful in proving the allegations set out in the
originating notice;
N.B. Liberty at stake is too great (here liberty of speech)
2. The applicant must demonstrate that irreparable harm will result if the relief is not
granted; and
3. The applicant must show that the balance of convenience favours granting the
injunction.

3. Miscellaneous Exceptions
Fellowes & Son v. Fisher (1976, CA) ‘By far the most serious difficulty [with Cyanamid]
lies in the requirement that the prospects of success in the action have apparently to be
disregarded except as a last resort when the balance of convenience is otherwise even.
In many classes of case, in particular those depending in whole or in great part upon the
construction of a written instrument, the prospect of success is a matter within the
competence of the judge who hears the interlocutory application and represents a factor
which can hardly be disregarded in determining whether or not it is just to give
interlocutory relief. Indeed many cases of this kind never get beyond the interlocutory
stage, the parties being content to accept the judge’s decision as a sufficient indication
of the probable upshot of the action. I venture to think that the House of Lords may not
have had this class of case in mind in the patent action before them.’

Both parties agree on the facts and law is relatively clear, court will look at the merits of
the case. Interpret the contract and require plaintiff to prove on a strong prima facie
threshold that their interpretation is the right one
Ex: Most patent actions, Federal Court of Canada has a high bar. Intellectual property,
Defamation actions

Mott-Trille v Steed (1996, Ont Gen Div) .................................................................. 747

Irreparable Harm: ‘based upon historical experience and a mathematical or statistical
analysis of the circumstances demonstrating that the loss is not reasonably calculable
which would give the Court some degree of confidence that the kind of loss being
alleged would indeed occur and cannot be calculated.’
Facts: MT was a lawyer who was also a Jehovah’s Witness. He had done some work for
Watch Tower and fellow Witnesses. He was under investigation by the law society for
theft. A judicial council of the Watch Tower society had disfellowshipped him, but that
order had been set aside and a second judicial committee created. MT sought an
interlocutory injunction to bar the Watch Tower committee to proceed with the hearing
and disfellowship until the LSUC proceedings were concluded. MT argued that allowing
the proceeding to go ahead would make it near impossible for him to build a defence to
the LSUC proceedings.
Holding: Interlocutory injunction granted until the LSUC proceedings were concluded, as
this was the least intrusive order upon the ability of the Watch Tower Society to conduct
its own affairs. There were substantial issues to be tried. The demonstrated difficulty in
communicating with potential witnesses would severely impede MT’s defence before
the LSUC. The applicant therefore risks suffering irreparable harm to his ability to earn a
livelihood if he is unable to fully and effectively present his case before the LSUC.

Jamieson Laboratories v Reckitt Benckiser (2015, FCA) ............................................ SM

Trademark
the plaintiff was in the process of launching its product (amino omega-3 product) under
the MEGARED mark, when the defendant launched an OMEGARED brand in Canada,
directed to similar end customers for similar products.
Center Ice precedent: we need a clear and not speculative evidence.
How Federal Court has issued an interlocutory injunction in an intellectual property
proceeding ?
Jamieson was in the market first. Asking for Reckitt to provide loss of sales calculations
to require clear and not speculative mathematical evidence is too much. Par. 29.
Reckitt’s losses would be incalculable, and therefore irreparable.
Of these three parts to the test, finding ‘irreparable harm’ is typically seen as the most
difficult. The moving party must show that the damage caused by not granting the
injunction “cannot be compensated by a monetary award.”
Court held that evidence on irreparable harm must be “clear and not speculative”.
The loss of goodwill and the resulting irreparable harm cannot be inferred, it must be
established by ‘clear evidence’.
The court appears to have endorsed the conclusions of the lower court that irreparable
harm will be found where “there is no methodology available to quantify the loss arising
from Jamieson’s misconduct and loss arising from normal market competition”.
For many parties in fast moving markets, obtaining a quick injunction against an alleged
infringer is important to stabilizing the market until a trial is scheduled, and providing
leverage for possible settlement earlier in the proceeding.
PERMANENT INJUNCTIONS
Definition: Permanent injunction is a type of injunction which is granted by a court at
the end of a lawsuit.
Three criteria
1. Cause of action
2. Jurisdiction of equity is triggered: CL damages are not adequate
3. No discretionary reason to deny the relief.
Nalcor Energy v. NunatuKavut Community Council Inc. (2014, NLCA) (Six Part Test):
(i) Has the claimant proven that all the elements of a cause of action have been
established or threatened? (If not, the claimant's suit should be dismissed);
(ii) Has the claimant established to the satisfaction of the court that the wrong(s) that
have been proven are sufficiently likely to occur or recur in the future that it is
appropriate for the court to exercise the equitable jurisdiction of the court to grant an
injunction? (If not, the injunction claim should be dismissed);
(iii) Is there an adequate alternate remedy, other than an injunction, that will provide
reasonably sufficient protection against the threat of the continued occurrence of the
wrong? (If yes, the claimant should be left to reliance on that alternate remedy);
(iv) If not, are there any applicable equitable discretionary considerations affecting the
claimant's prima facie entitlement to an injunction that would justify nevertheless
denying that remedy? (If yes, those considerations, if more than one, should be weighed
against one another to inform the court's discretion as to whether to deny the injunctive
remedy.);
(v) If not (or the identified discretionary considerations are not sufficient to justify denial
of the remedy), are there any terms that should be imposed on the claimant as a
condition of being granted the injunction?
(vi) In any event, where an injunction has been determined to be justified, what should
the scope of the terms of the injunction be so as to ensure that only actions or persons
are enjoined that are necessary to provide an adequate remedy for the wrong that has
been proven or threatened or to effect compliance with its intent?
Schooff v. British Columbia (Medical Services Commission) (2010, BCCA): ‘In order to
obtain final injunctive relief, a party is required to establish its legal rights. The court
must then determine whether an injunction is an appropriate remedy. Irreparable harm
and balance of convenience are not, per se, relevant to the granting of a final injunction,
though some of the evidence that a court would use to evaluate those issues on an
interlocutory injunction application might also be considered in evaluating whether the
court ought to exercise its discretion to grant final injunctive relief.’
Lewvest Ltd v Scotia Towers Ltd (1981, Nfld TD) ...................................................... SM
‘Under our system of law, property rights are sacrosanct. For that reason, the rules that
generally apply to injunctions do not always apply in cases such as this. The balance of
convenience and other matters may have to take second place to the sacrosanctity of
property rights in matters of trespass. What has happened here is that the third
defendant, by trespassing on property of Lewvest Limited, can save itself, according to
the evidence, close to half a million dollars. If it can save that money, so be it, but the
Court is not going to give it a right to use the plaintiff's property. That is a right that it
must negotiate with the plaintiff. If the plaintiff will not give it that right … there is
nothing the Court can do about it. The Court has no power to expropriate the property of
one party and give it to another, either in whole or in part. If I were to deny this
application for an injunction, I would in effect be doing just that — giving the third
defendant a licence to use the plaintiff's property.
Facts:
π sought an injunction to prevent ∆ from swinging a crane over his property in the
course of constructing a building.
Holding:
the injunction was granted on the basis that the over-swinging crane was a trespass.
Under our system of law, property rights are sacrosanct. For that reason, the rules that
generally apply to injunctions do not apply in cases such as this. The balance of
convenience and other matters may have to take second place to the sacrosanctity of
property rights in matters of trespass. The court is not going to give a right to use π’s
property. This is a right that ∆ must negotiate with π.
Mandatory Injunctions
Durell v Pritchard (1865): ‘The authorities upon this subject lead, I think, to [the
conclusion] that this Court will not interfere by way of mandatory injunction, except in
cases in which extreme, or at all events very serious, damage will ensue from its
interference being withheld.’
Luganda v Sevice Hotels (1969): ‘Mr. Luganda is prima facie entitled by statute to
security of tenure of this room. It was unlawful for the management to lock him out of
it…They were wrong to take the law into their own hands. If the management had not
changed the lock – and Mr. Luganda was still in occupation – I am sure that the court
would have granted an injunction to prevent the management from locking him out.
They should not be in a better position by wrongfully locking him out….“In a court of
equity, wrongful acts are no passport to favour.”’
General Facts: Court will be much more cautious granting such a relief after a trial of the
action (Redland). It’s not rare, but courts are slow to grant it because it requires
constant supervision (equity does not act in vain: an equity court renders a decree that
is likely to resolve the dispute). Courts wants to get it done with it and not having to rule
a second time on the same case.
N.B. The lack of care you have (wanton) is a factor in granting such a relief.
Redland Bricks v. Morris (1970) Eng HL …………………………………………………..
……………….590
1. A mandatory injunction can only be granted where the plaintiff shows a very strong
probability on the facts that grave damages will accrue to him in the future.
2. Damages will not be a sufficient or adequate remedy if such damages does happen.
3. Unlike the case where a negative injunction is granted to prevent the continuance or
recurrence of a wrongful act the question of the cost to the defendant to do works to
prevent or lessen the likelihood of a future apprehended wrong must be an element to
be taken into account:
(a) where the defendant has acted without regard to his neighbour’s rights…or has tried
to evade the jurisdiction of the court or, to sum it up, has acted wantonly and quite
unreasonably in relation to his neighbour he may be ordered to repair his wanton and
unreasonable acts by doing positive work to restore the status quo even if the expense
to him is out of all proportion to the advantage thereby accruing to the plaintiff
(b) but where the defendant has acted reasonably, although in the event wrongly, the
cost of remedying by positive action his earlier activities is most important…
4. If in the exercise of its discretion the court decides that it is a proper case to grant a
mandatory injunction, then the court must be careful to see that the defendant knows
exactly in fact what he has to do and this means not as a matter of law but as a matter
of fact, so that in carrying out an order he can give his contractors the proper
instructions.

Facts Holding
 o Defendant is mining for its brickworks land o There comes a point in time where the
below the plaintiff’s property court will not order an injunction, the court
o The mining threatens to bring down his will consider the following factors:
property 1. The plaintiff must show a very strong
o The plaintiff seeks an injunction ordering probability that grave damage will accrue in
the defendant to do restoration work the future (Imminence/Inevitability of
o Defendant argues that such an order would Harm);
cost 35,000 pounds while the market value of 2. Damages would be an inadequate remedy
the building is 12,000 (Inadequacy of damages);
o The cost of compliance far exceeds the 3. Whereas the cost to the defendant is not a
benefit being obtained consideration when deciding to grant a
o Court say def did not act recklessly. Did prohibitive injunction it is important when
acted reasonably, though in any event granting a mandatory injunction (where the
wrongly. Court listens to expert witnesses defendant has acted wantonly, the cost of
and start their decree from there. repairs goes against the defendant and
where the defendant has acted reasonable,
the costs will be considered where (1) no
legal wrong has yet been committed; and, (2)
the plaintiff still has a remedy for damages at
common law (Cost-Benefit)
o This is a case where some expenditure
would be justified, but an injunction in
absolute terms would not be reasonable
Concern: you should always remember what it is that you are seeking. The Plaintiff has
the responsibility to show the court what an appropriate remedy would be.
Interestingly, if you ask too much you may end up with nothing even though it is in the
discretion of the Court to vary.
Quia Timet Injunctions
Definition: Injunction to restrain wrongful acts which are threatened or imminent but
have not yet commenced. Courts can grant a permanent injunction before the right has
actually been infringed.
N.B. The claim must be sufficiently ripe.
3 Elements to Prove:
Fletcher v Bealey (1885, ChD): ‘[T]here are at least two necessary ingredients for a quia
timet action. There must, if no actual damage is proved, be proof of imminent danger,
and there must also be proof that the apprehended damage will, if it comes, be very
substantial. I should almost say it must be proved that it will be irreparable, because, if
the danger is not proved to be so imminent that no one can doubt that, if the remedy is
delayed, the damage will be suffered, I think it must be shewn that, if the damage does
occur at any time, it will come in such a way and under such circumstances that it will be
impossible for the Plaintiff to protect himself against it if relief is denied to him in a quia
timet action.’
The 3 Elements That Must Be Proven:
1. Proof of imminent danger;
N.B. Virtually certain to occur, doesn’t mean it would occur in the next seconds
2. Proof of irreparable harm (the threatened injury will be practically irreparable)
3. High probable risk of harm (proof that whenever the injurious circumstances ensue, it

will be impossible to protect plaintiff’s interests, if relief is denied)

Hooper v Rogers (1975, HL) ..................................................................................... 587
Russell LJ said: ‘In different cases, differing phrases have been used in describing
circumstances in which mandatory injunctions and quia timet injunctions will be
granted. In truth, it seems to me that the degree of probability of future injury is not an
absolute standard: what is to be aimed at is justice between the parties, having regard
to all the relevant circumstances.’
What matters is the probability and likely gravity of damage rather than simply its
imminence.

Court said there was enough evidence that it is virtually certain the harm would occur in
not so distant future. Nothing is gained for waiting in that case. Ripe claim.
Palmer v Nova Scotia Forest Industries (1984, NSTD) ................................................
579
‘This matter thus reduces itself now to the single question. Have the plaintiffs offered
sufficient proof that there is a serious risk of health and that such serious risk of health
will occur if the spraying of the substances here is permitted to take place?’
‘[I]t hardly seems necessary to state that a court of law is no forum for the
determination of matters of science....If science itself is not certain, a court cannot
resolve the conflict and make the thing certain.’
Facts: π applied for an injunction to prevent the spraying of certain herbicides in the
vicinity of their homes and farms. They were concerned that the herbicides would drift
onto their lands and also contaminate their drinking water (risk for health). At trial,
there was extensive production of expert evidence.
Holding: injunction denied. The court stresses the consequences of spraying of
herbicides. This has far reaching social and political implications. It is questionable
whether an issue like whether herbicides should be used in agriculture is appropriate for
a judge in chambers to decide. In order to obtain a quia timet injunction, π must show a
strong case of probability that the apprehended mischief will arise; this is in addition to
the essential elements of a regular injunction (irreparable harm and that damages are
not an adequate remedy). It must be remembered that any injunction is a discretionary
remedy, and that sufficient grounds must be established to warrant the exercise by the
court of its discretion. π had failed to show there was a sufficiently strong probability of
risk to health to warrant the granting of the remedy sought.
Ratio: A quia timet injunction ought not to be used to stifle innovation and/or
development
GENERAL RULE: No Execution Before Judgment
Lister & Co v Stubbs (1890) 45 Ch D 1: ‘I know of no case where, because it was highly
probable that if the action were brought to a hearing the plaintiff could establish that a
debt was due to him from the defendant, the defendant has been ordered to give
security until that has been established by the judgment or decree.’
Barclay-Johnson v. Yuill, (1980): ‘[T]he 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. The Plaintiff, like other creditors of the Defendant, must obtain
his judgment and then enforce it. He cannot prevent the Defendant from disposing of his
assets pendente lite merely because he fears by the time he obtains judgment in his
favour the Defendant will have no assets against which the judgment can be enforced.
Were the law otherwise, the way would lie open to any claimant to paralyze the
activities of any person or firm against whom he makes his claim by obtaining an
injunction freezing their assets.’
Burdett v Fader (1903, Ont): ‘If the plaintiff is a judgment creditor, he can proceed by
execution to secure himself upon the debtor’s property. But if the litigation is merely
progressing and the status of creditor not established, it is not the course of the Court to
interfere quia timet and restrain the defendant from dealing with his property until the
rights of the litigants are ascertained.’
Attorney-General for Ontario v. Stranges (1984, Ont): Since Lister & Co. v. Stubbs it is
well- settled that the general rule is that a defendant is not required to provide security
before judgment. There are exceptions to that rule. One ancient exception to the rule…is
that equity will assist a person who has been defrauded so that assets are available to
pay the person defrauded if judgment is obtained.’
Great Western Railway v Birmingham & Oxford Junction Railway (1848): ‘It is certain
that the Court will in many cases interfere and preserve property in statu quo during the
pendency of a suit, in which the rights to it are to be decided, and that without
expressing, and often without having the means of forming, any opinion as to such
rights…It is true that the Court will not so interfere, if it thinks that there is no real
question between the parties; but seeing that there is a substantial question to be
decided, will preserve the property until such question can be regularly disposed of. In
order to support an injunction for such purpose, it is not necessary for the Court to
decide upon the merits in favour of the plaintiff.’
EXCEPTIONS
1. Fraudulent conveyances under legislation
2. Asset or fund in question is at the very matter in dispute
3. Mareva Orders (Freezing Injunction)
Definition: A temporary injunction that freezes the assets of a party pending further
order or final resolution by the Court, so named after the case which allowed the
remedy. 
Effect: Often used to prevent a defendant from secreting assets out of the Court's
jurisdiction as soon as the claim is served, to frustrate enforcement of the judgment.
N.B. You cannot freeze the defendants’ assets to force him into a settlement.
Target: Aimed usually at a specific defendant, and not attached to assets themselves.
The named defendant is so restrained in regards to specified assets. The injunction is
enforced by the contempt powers of a court. (Not related to a specific right)
Ex Parte: The mareva injunctions are typically obtained without notice to the other side
(ex parte) as to tip the defendant off would likely cause the prompt movement of the
relevant assets before the Court could issue its injunction, thereby insulating the
defendant from contempt.
Ontario Courts of Justice Act:
‘101.(1) In the Superior Court of Justice, an interlocutory injunction or mandatory order
may be granted or a receiver or receiver and manager may be appointed by an
interlocutory order, where it appears to a judge of the court to be just or convenient to
do so.’
Mareva Compania Naviera v International Bulkcarriers (1975, CA) ......................... 805
[T]hat principle [that the court has unlimited power to grant an injunction except where
a person has no legal right whatever] applies to a creditor who has a right to be paid the
debt owing to him, even before he has established his right by getting judgment for it. If
it appears that the debt is due and owing - and there is a danger that the debtor may
dispose of his assets so as to defeat it before judgment - the Court has jurisdiction in a
proper case to grant an interlocutory judgment so as to prevent him disposing of those
assets.’
The Court hereby orders that the Defendant be and is hereby restrained, enjoined and
prohibited directly or indirectly from disposing of, charging, encumbering or in any way
whatsoever dealing with any assets in which it has a legal or beneficial interest, or any
charges against such assets, and without limiting the generality of the foregoing, those
assets, equipment, furniture, leasehold interest, franchise rights, stock in trade and
goodwill of Sybra Food Services Ltd. located at 3990 Shelbourne Street, Victoria, British
Columbia and the proceeds from the sale or encumbrance thereof;…and any other
person or persons, known or unknown having knowledge of this order be restrained,
enjoined and prohibited directly or indirectly from dealing with any of the assets referred
to herein or from acting upon any requests from any of the persons referred to herein, to
deal in or with or take the benefit of any assets referred to herein.’
Facts: π are ship owners who own vessel Mareva – let it to the ∆ on a time charter to
the Far East and back. ∆ sub-chartered it, loaded at Bordeaux, and paid out part of the
monthly hire – did not pay third instalment even though they had the credit to do so –
but could not pay. Claimed they were not able to fulfil any part of their obligation under
the charter, and had no alternative but to stop trading. Couldn’t get any other financial
support. π treated this as repudiation, issued a writ for unpaid hire, and damages for the
repudiation. Applied for an injunction to restrain the disposal of those moneys that
were in the bank.
Holding: injunction granted. Both judicature acts and the common law give judges
“unlimited power to grant an injunction in any case where it would be right or just to do
so.” Basically anytime there is a legal or equitable right, the court can properly grant an
injunction to prevent it. Denning says this principle should be extended to a creditor
who has a right to be paid the debt owing to him, even before he has established his
right by getting judgment for it. Also requires some evidence of danger of the debtor
disposing his assets before judgment.
NOTE: This does NOT give π a proprietary interest in the frozen assets. To do this would
be to rewrite the laws of insolvency in favour of unsecured creditors. This view was
adopted by the SCC in Aetna.
Difference between Mareva order and 45.02 Ontario rule order.
Ontario Rules of Civil Procedure:
45.02…Where the right of a party to a specific fund is in question, the court may order
the fund to be paid into court or otherwise secured on such terms as are just.
N.B. The right is mirrored in the nature of the remedy
Stearns v. Scocchia (2002, Ont): ‘A rule 45.02 order is also an exception to the rule in
Lister although it cannot be classified as a Mareva injunction notwithstanding that it
freezes a fund before trial… (a) Subject matter - When seeking a Mareva injunction, the
moving party seeks to restrain a defendant from disposing of some or all of his assets
before trial. In a motion under rule 45.02, the moving party claims a right to a specific
fund and is seeking to have the fund preserved pending the determination of entitlement
to the fund at trial… (b) The purpose/objective - The purpose of a Mareva injunction is to
protect the claimant who is asserting a general claim. The assets that the claimant seeks
to freeze are only a means of satisfying a likely or probable judgment against the
defendant. In contrast, the purpose of a motion under rule 45.02 is to protect a claimant
who is asserting a specific a proprietary claim to assets prior to trial.
An Order In Personam Binding On Third Parties:
Trade Capital Finance v Cook (2017, Ont SC) ............................................................ SM
‘The Mareva injunction is not a remedy that operates as a charge or an instrument
granting security against the assets of the defendant. It is an order inhibiting the
defendant and any other party bound by the order from disposing of the assets by the
transfer or removal of those assets from the jurisdiction. The injunction is not something
that prefers the rights of the plaintiff as an otherwise unsecured creditor over the rights
of all other creditors in the debt collection process.’
The purpose of the Mareva injunction is a limited one. It is meant to restrain a defendant
from taking unusual steps to put his assets beyond the reach of the plaintiff in order to
thwart any judgment the plaintiff might eventually obtain. It is not meant to give the
plaintiff any priority over other creditors of the defendant, nor to prevent the defendant
from carrying on business in the usual course and paying other creditors.’
Trade Capital Finance Corp. (“Trade Capital”), was in the business of purchasing
accounts receivable. It alleged it was defrauded of approximately $6,500,000 in a
sophisticated scheme in which it unknowingly purchased fictitious accounts receivable.
It alleged the majority of its lost funds was eventually deposited in bank accounts
owned by the Applicant, The Cash House Inc. (“Cash House”). Cash House is owned by
2454904 Ontario Inc., which in turn is owned by Osman Khan. Trade Capital obtained an
ex parte Mareva Order freezing the assets of all defendants to its action, including Cash
House, and an order for financial disclosure. The Applicants’ motion to set aside or vary
the Mareva Order was dismissed. Trade Capital made numerous attempts to obtain
production of documents and to schedule Mr. Khan for examination but was
unsuccessful. Trade Capital then brought a motion, seeking to have the Applicants found
in contempt and to strike Cash House’s statement of defence and crossclaim. Ontario
Superior Court of Justice: Applicants found to be in contempt for court for breaching
Mareva Order.
Ontario Superior Court of Justice: Put in comtempt of the court. Order imprisoning Mr.
Khan 90 days and requiring him to provide a written inventory of documents; Order
striking Cash House’s statement of defence and cross-claim without prejudice for leave
to amend once contempt purged. C.A.: Applicants’ appeal dismissed. "The application
for leave to appeal...is dismissed with costs."
Maple Trust (third party) applied to the Court for a variation of the Mareva to exclude
BCU’s bank account. The court allowed. Why?
Z Ltd v AA-LL Ltd (1982, CA) .................................................................................... 830
‘What is the justification of the bank for freezing the bank account? The bank is not a
party to the action. No order has been made by the court upon the bank…No authority
was given by the customer for his account to be frozen. What right has the bank to
freeze it? On what principle is the bank justified in freezing their customer's bank
account?’

“ The juristic principle is therefore this: As soon as the bank is given notice of the Mareva
injunction, it must freeze the defendant’s bank account. It must not allow any drawings
to be made on it, neither by cheques drawn before the injunction nor by those drawn
after it. The reason is because, if it allowed any such drawings, it would be obstructing
the course of justice—as prescribed by the court which granted the injunction—and it
would be guilty of a contempt of court.”
N.B. Mareva can interfere with the ability of a 3rd party normal business activities.
Ex: Charterer of a vessel purchases cargo and loads it on the vessel. Mareva then
granted
 against the cargos of the shipowner. The cargo cannot leave port, charterer
seriously
affected.

The requirements for a Mareva

a) The Threshold
b) The Ordinary Interlocutory Relief Requirements
c) Additional Requirements
d) Discretionary Bars
a) The Threshold
CP Airlines v Hind (1981, Ont): ‘There must be a very strong case and a real danger of
disposition of the only assets which will satisfy the judgment.’ (Strong Prima Facie case, show
the action will succeed at trial on the merits)

Beca v Spork (2009, Ont SC) ..................................................................................... SM

‘In looking at the pleadings and the conflicting affidavits, I can not say that the plaintiff
has established a "strong prima facie" case within the meaning attributed to it by our
courts. I can not say that the plaintiff is clearly right and almost certain to be successful
at trial.’
Pl suing for negligent misrepresentations in the sale and purchase of a business, sought
a MI to prevent the disposal of assets offshore.
The Mareva request was dismissed, notwithstanding the fact that the defendants had
moved to Iceland together, apparently with the proceeds of the sale of their business to
the plaintiff. The plaintiff had not been able to show a strong prima facie case on the
basis of the transactional documentation, which indicated a whole agreement clause
against oral representations and arrangements for due diligence inspection of the
financial records.
NOTE: However, BC courts have been somewhat liberal, granting Mareva injunctions
based on a good arguable case (NuCare)
2092280 Ontario Inc v Voralto Group (2018, Ont SC) ............................................... SM
‘It is a reasonable inference from these circumstances that there is a real risk that a
defendant who has a history of fraudulently dumping waste who establishes a prima
facie case that the Remaining Defendants have done it again would attempt to dissipate
or hide their assets or remove them from the jurisdiction if given notice of the motion for
a Mareva injunction.’
‘The Mareva injunction is an important tool for Plaintiffs to try and recover their losses
due to fraud or theft. A requirement to notify the perpetrators of a fraud in advance of
an impending Mareva injunction would significantly waterdown an important remedy
for protecting innocent victims. Judgments for damages cannot reasonably be expected
to be affordable or collectable against fraudsters. If funds cannot be frozen in advance, a
vital arrow in the civil law’s quiver to address serious fraud will be lost. This is a narrow
exception to the general rule against prejudgment execution. It is therefore a remedy
that is not readily available. However, where evidence discloses a strong prima facie
case that Defendants perpetrated a premeditated, substantial fraudulent scheme
against innocent victims, the law’s reluctance to allow prejudgment execution must yield
to the more important goal of ensuring that the civil justice system provides a just and
enforceable remedy against such serious misconduct.’
Facts: In 2092280 Ontario Inc v. Voralto Group Inc, 2018 ONSC 2305, the Appellants
sought leave to appeal a decision of a motion judge, who refused to grant an ex
parte (without notice) Mareva injunction as against the Respondents, to restrain them
from disposing of or dissipating their assets. The Appellants were a landlord and
contractor who had allegedly been defrauded by the Respondents in a scam involving
the illegal dumping of waste. 
Requirements for succeeding on a motion for a Mareva Injunction:
(1) The plaintiff must make full and frank disclosure of all material matters within his or
her knowledge.
(2) The plaintiff must give particulars of the claim against the defendant, stating the
grounds of the claim thereof, and the points that could fairly be made against it by the
defendant.
(3) The plaintiff must give grounds for believing that the defendant has assets in the
jurisdiction. (Not a requirement anymore)
(4) The plaintiff must give grounds for believing that there is real risk of the assets being
removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt
with so that the plaintiff would be unable to satisfy a judgment awarded to him or her.
(Fraud or wrongful intent are not requirements)
(5) The plaintiff must give an undertaking as to damages.
Timeliness (Not a Factor):
In response to the apparent delay by the Appellants in advancing their claim for
injunctive relief as cited by the motion judge, the Court also confirmed that “timeliness”
is not one of the five requirements for a Mareva injunction. Though delay might be a
relevant factor in certain cases, especially when urgency is advanced as a reason for
moving without notice, it is not relevant when the basis for moving without notice is the
risk that assets will be dissipated. 
Importance of Protecting Victims of Fraud:
[28] … where evidence discloses a strong prima facie case that [d]efendants perpetrated
a premeditated, substantial fraudulent scheme against innocent victims, the law’s
reluctance to allow prejudgment execution must yield to the more important goal of
ensuring that the civil justice system provides a just and enforceable remedy against
such serious misconduct. 

Real Risk By Inference:

The Court also addressed a plaintiff’s evidentiary burden with respect to the dissipation
of assets (the fourth requirement). The Court confirmed that the requirement that there
be a “real risk” of the removal or dissipation of assets can be established by inference,
rather than direct evidence. 
Take-Away Points 
The Voralto Group decision is a nod by the Divisional Court to the importance of
providing adequate remedies to “unwitting victims” of fraud. The Court (i) confirmed
the lower evidentiary burden on a plaintiff seeking a Mareva injunction in fraud cases as
it relates to the risk of dissipation of assets, (ii) concluded that notice of a motion for
a Mareva injunction may not be required in fraud cases, and (iii) granted leave to
appeal, notwithstanding that the Respondents had not been given notice of the
Appellants’ motion for leave to appeal. 
The decision also provides helpful guidelines to parties seeking Mareva injunctions,
particularly on an ex parte basis. Though the Court identified the extraordinary burden
on a plaintiff to make full and frank disclosure when moving for a Mareva injunction
without notice, it did not discuss the Appellants’ disclosure in this case. It will be
interesting to see how the Appellants’ disclosure is dealt with by the Respondents (and
the Court) on any eventual appeal or motion to set aside.

b) The Ordinary Interlocutory Relief Requirements

Armada Lines Ltd. v. Chaleur Fertilizers Ltd. (1997, SCC): ‘[A] plaintiff who obtains a
Mareva injunction, like a plaintiff who obtains any type of interlocutory injunctive relief,
must give an undertaking to compensate the defendant for damages sustained by
reason of the injunction, should the action ultimately fail.’
The Three Ordinary Requirements
1) Serious Issue for Trial: low threshold -action mustn’t be frivolous/vexatious/impossible
2) Irreparable Harm: risk of irreparable to P or D if denied
3) Balance of Convenience: who risks the most harm
c) Additional requirements
Third Chandris Shipping v Unimarine (1979):
(i) The plaintiff should make full and frank disclosure of all matters in his knowledge
which
are material for the judge to know ... (Requirement for any ex parte request, Matters

of facts and law)

(ii) The plaintiff should give particulars of his claim against the defendant, stating the
ground of his claim and the amount thereof, and fairly stating the points made
against
it by the defendant. (Giving a Strong Prima Facie Case)
(iii) The plaintiff should give some grounds for believing that the defendant has assets
here
... (This is no longer a requisite in Canadian law See Chan)

(iv) The plaintiff should give some grounds for believing that there is a risk of the assets
being removed before the judgment or award is satisfied. The mere fact that the
defendant is abroad is not by itself sufficient (Real danger that asses would be
dissipated)
(v) The plaintiff must, of course, give an undertaking in damages …
Chitel v. Rothbart (1982, ONCA): ‘[The plaintiff must demonstrate that] there is a real
risk that ... the defendant is ... dissipating or disposing of his assets, in a manner clearly
distinct from his usual or ordinary course of business ... so as to render the possibility of
future tracing of the assets remote, if not impossible in fact or in law.’
Aetna v Feigelman (1985, SCC) ................................................................................ 809
‘The overriding consideration qualifying the plaintiff to receive such an order as an
exception to the Lister rule is that the defendant threatens to so arrange his assets as to
defeat his adversary, should that adversary ultimately prevail and obtain judgment, in
any attempt to recover from the defendant on that judgment.’
‘[D]o the principles, as developed in the United Kingdom courts, survive intact a
transplantation from that unitary state to the federal state of Canada? The question in
its simplest form arises in the principles enunciated in the earliest Mareva cases where
the wrong to be prevented was the removal from ‘the jurisdiction’ of assets of the
[defendant] with a view to defeating the claim of a creditor....An initial question,
therefore, must be answered, namely, what is meant by ‘jurisdiction’ in a federal
context? It at least means the jurisdiction of the Manitoba court. But is the bare removal
of assets from the Province of Manitoba sufficient?’
‘The Mareva consideration arising in this appeal is the effect of a rightful removal of
assets in the ordinary course of business by a resident defendant to another part of the
federal system. This by itself will not trigger such an exceptional remedy as it well might
do in the United Kingdom where the jurisdiction of the court and the boundaries of the
country coincide.’
Facts: The Manitoba Court of Appeal affirmed the trial judge’s order granting an
injunction which restrained ∆ from transferring certain identified assets out of Manitoba
to ∆’s offices in either Toronto or Montreal. The appeal raised the question of the
availability of interlocutory orders restraining a ∆ in a civil action from disposing of or
handling assets in any specific way prior to trial. ∆ was a federally incorporated
company. ∆ had wrongly (according to π) enforced a debenture, ∆ proposed the transfer
of assets to Quebec. On appeal, ∆ argued there was no prima facie case, that it was a
respectable company meeting its obligations, and that because it was a federally
incorporated corporation, it was entitled to move assets anywhere in Canada.
Holding: The injunction should not have been granted in this case, as the federally
incorporated corporation can transfer assets anywhere in the country. In addition, it is
relatively easy for π to enforce a Manitoba judgment anywhere else in the country
should that prove necessary. Otherwise, Mareva injunctions are legitimate, though an
exceptional remedy. Interlocutory injunctions are a matter of judicial discretion. Parties
should not be restrained by interlocutory injunctions unless some irreparable injury is
likely to accrue to π and the court should be particularly cautious where there is a
serious question as to whether π would ever succeed in the action. π seeking a Mareva
injunction also faces the rule in Lister v. Stubs, which is that execution cannot be
obtained prior to judgment and judgment cannot be recovered before trial. In this case,
there was no breach of law asserted, nor was there evidence of an improper purpose. ∆
did not seek to remove assets from the jurisdiction where it was incorporated.
SFC Litigation Trust (Trustee of) v Chan (2017, Ont SC) .............................................
SM
Only important since addresses Third Chandris Shipping (iii) requirement
SFC was a Canadian corporation and had an office in Ontario, a head office in Hong
Kong, and assets predominately located in China. It carried out a sale process through
the Companies’ Creditors Arrangement Act, R.S.C. 1985 c. C-36 (the “CCAA”), which
ultimately failed. SFC then applied under the CCAA for an order approving a plan of
compromise and reorganization, which was subsequently sanctioned. A Litigation Trust
was assigned the litigation rights of SFC.
The respondent, the Litigation Trustee, later brought an action against Mr. Chan alleging
that he perpetuated a significant fraud on SFC, its creditors and investors. The Litigation
Trustee brought an ex parte motion for a worldwide injunction against Mr. Chan.
In confirming the injunction, the motions judge found the legal test for the injunction
did not require the appellant to have assets in the jurisdiction. The appellant was
granted leave to appeal on several issues including whether the motions judge erred in
law in holding an Ontario court could grant a Mareva injunction when the appellant had
no assets in the jurisdiction.
The appellant relied on the 1982 Court of Appeal decision in Chitel v. Rothbart (1982) 39
O.R. (2d) 513 (ONCA)for the argument that there must be assets in the jurisdictions for a
Mareva injunction to be granted, but the Court of Appeal noted that the Chitel decision
is only a set guidelines, and a Mareva injunction was an equitable remedy that evolved
as the facts and circumstances merited. The Court’s in personam jurisdiction over the
appellant, justifying the issuance of a Mareva injunction, was not dependent, related or
tied to a requirement that the appellant had assets in the jurisdiction. As a result, the
appeal was dismissed.
The Court of Appeal noted that the risk of the removal of assets outside of Canada was,
in the ordinary course, more likely to lead to the granting of a Mareva injunction
because it was generally more difficult to enforce judgments outside the jurisdiction.
However, worldwide Mareva injunctions are now granted with increasing frequency due
to the global economy. The record before the motions judge included an affidavit from
the Litigation Trustee that, based on information obtained from Hong Kong lawyers,
granting a Mareva injunction would be an important step to obtaining a similar freezing
order there. It was also found to be relevant that the appellant had worked in Ontario,
had been sued in this jurisdiction, retained counsel and attorned to Ontario’s
jurisdiction.
This decision is a significant development regarding the law of Mareva injunctions. In
addition to the finding that the party at issue need not have assets within Canada for a
risk of dissipation to arise, this decision suggests that our courts will not necessarily be
constrained going forward by a rigid application of the “guidelines” set out in Chitel.
U.S.A. v Friedland (1998, Ont): ‘[A] party who seeks the extraordinary relief of an ex
parte injunction must make full and frank disclosure of the case. The rationale for this
rule is obvious. The Judge hearing an ex parte motion and the absent party are literally
at the mercy of the party seeking injunctive relief. The ordinary checks and balances of
the adversary system are not operative. The opposite party is deprived of the
opportunity to challenge the factual and legal contentions advanced by the moving
party in support of the injunction. The situation is rife with the danger that an injustice
will be done to the absent party...For that reason, the law imposes an exceptional duty
on the party who seeks ex parte relief. That party is not entitled to present only its side
of the case in the best possible light, as it would if the other side were present. Rather, it
is incumbent on the moving party to make a balanced presentation of the facts in law.
The moving party must state facts or law known to it which favour the other side.’
d) Discretionary Bars
Can apply to any injunctive reliefs and specific performance.
There’s a list of traditional discretionary reasons than a court can use to justify
decreeing such a relief. Open listed (court can come up with new reasons)
List of factors/reasons:
1. Laches: fairly ancient bar to relief. (Not a factor in CL)
Equitable maxim = equity aids the vigilant, not those who slumber on their rights.
Recognize that if the pl waits too long to bring his action after the infringed-right
event (notwithstanding statute of limitations), it may negatively affect the pl (jogging
 memory, etc.)
2. Severe hardship to the defendant: the cost that will be beared by the def as a result
of this coercive relief. (less frequent when interlocutory)
3. Effect on third parties
Ex: sale of land to a third party and pl seek specific performance…
4. Pl does not come with clean hands (see maxim)

Royal Bank v Boussoulas (2012, Ont Div Ct).............................................................. SM

'The RBC made a late in the day tactical decision not to rely on the allegations of fraud
for the purposes of the Mareva injunction but at the same time did not abandon those
allegations. In my opinion, in the circumstances of this case, without the concurrence of
the Defendants, this tactical decision had consequences. Metaphorically speaking, if a
litigant drops the gauntlet and insults another's integrity, then the litigant must
complete the duel or genuinely withdraw the insult and apologize.’
‘An injunction is not a common law remedy like damages, which is a non-discretionary
remedy; an injunction is an equitable remedy and it is discretionary and can be refused
on equitable grounds, including the clean hands doctrine.’

In the case of Royal Bank of Canada v. Boussoulas, the Ontario Superior Court declined

RBC’s request to appoint an interim receiver and grant a Mareva injunction against the
defendants, who, it was alleged, were continuing their business through a succession of
companies in order to avoid repaying RBC loans.

RBC met the first part of the test for a Mareva injunction, namely that it had a
strong prima facie case against the defendants. Stinson J. held that RBC’s security
documents were, on their face, enforceable and that the debt of one of the
corporations controlled by the defendants was not being seriously contested. He also
found that there was a real risk that the defendants were dissipating assets contrary to
the usual or ordinary course of business which, in turn, supported granting
a Mareva injunction.

Stinson J. then considered whether RBC’s conduct disentitled it to the relief it was
seeking. RBC had apparently overstated its case and made unsupportable allegations in
its notice of motion, factums and affidavits which, the Court held, was unacceptable at
any stage of a proceeding. Stinson J. held that because RBC overstated its case, the
Court was impeded in performing its function on the motion and that it would be
impossible for a judge to distinguish between fact and argument. He made note of
affidavits that contained “elaborations of parties’ positions and argumentative
statements disguised as fact.”

The judge took particular exception with RBC’s allegations of fraud on the part of the
defendants, allegations of which RBC failed to adduce evidence (or prove). Moreover,
the judge found that RBC’s representatives made assertions of fact that were simply
untrue, for example, by swearing in an affidavit that significant funds had been diverted
by the defendants but then admitting on cross-examination that there was no evidence
to support that assertion. In fact, RBC’s representatives were forced to concede that
they had no personal knowledge or evidence to support some of their beliefs and
conclusions that were stated as facts in their affidavits. RBC had also included
allegations regarding criminal proceedings against one of the defendants, which Stinson
J. held to be of “no moment” on the motion before him.

Telling was the judge’s opinion that it was no answer for a party to say: “this motion was
brought on notice – the defendant had every opportunity to respond with his side of the
story.” The judge held that every party, and their lawyers, has a duty to be fair, accurate
and candid with the court and to not overstate or misstate their case. As such, despite
the fact that it had met the test for a Mareva injunction, RBC was not entitled to that
relief by virtue of what the judge referred to as its own “conduct and shortcomings.”

3. COMPENSATORY DAMAGES
1. Compensation as equivalency
Livingstone v. Rawyards Coal (1880, HL): ‘I do not think there is any difference of
opinion as to its being a general rule that, where any injury is to be compensated by
damages, in settling the sum of money to be given for reparation of damages you should
as nearly as possible get at that sum of money which will put the party who has been
injured, or who has suffered, in the same position as he would have been in if he had not
sustained the wrong for which he is now getting his compensation or reparation.’
Robinson v Harmon (1848): ‘The rule of the common law is, that where a party sustains
a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in
the same situation, with respect to damages, as if the contract had been performed.’
The Albazero (1977, HL): ‘[T]he measure of damages recoverable for the invasion of a
legal right, whether by breach of a contract or by commission of a tort, is that damages
are compensatory. Their function is to put the person whose right has been invaded in
the same position as if it had been respected as far as the award of a sum of money can
do so.”
Mountain View Coach Lines v Hartnett, (1978, NY Sup Ct): ‘Damages are to restore
injured parties, not to reward them.’
b) The Counterfactual Inquiry
Most obviously, counterfactual considerations loom in the determination of factual
causation and remedy. The factual causation, or cause-in-fact, inquiry requires that the
factfinder determine whether the defendant's tortious conduct, or defective product,
causally contributed to the plaintiff's injury. Traditionally, courts have understood this
requirement in terms of causal necessity and have applied a but-for test to determine
causation.29 Under this test, the defendant's conduct or defective product will only be
described as a cause of the injury if, but for that conduct or pmduct, the injury would not
have occuHedl. The test instructs the facdinder to recreate an imaginative past, in which
the factfindler eliminates the tortious act and plays out an alternative (counterfactual)
history. (Robert N.Strassfeld, If: Counterfactuals in the Law)
Ex: If x had been so (antecedent), then y would follow (consequent)
If the ref didn’t call the penalty, we would have won. I could use my foot correctly
but
for the tort caused by the defendant (If the wrong would not have occurred, I could
still walk.)
c) Defining The But-For World
a) Expectation Damages vs. Reliance Damage
Expectation damages are forward-looking; reliance damages are generally backwards-
looking (*) and designed to restore the position the parties would have been in had they
never entered into the contract. In tort law, reliance damages are the standard remedy.
In K law, reliance damages are a secondary remedy, available:
Reliance damages protect P if P is in a bad bargain and D cannot rebut the presumption
that P would have broken even (Sunshine), but expectation may also act as a ceiling
where D can show that P would have incurred net losses (Bowlay). This means that a P
cannot hide behind reliance to be put in a better position than he would have been in
had the K been fully performed. P is limited to expectation (net loss) upon proof that P
would have suffered net loss absent D’s breach (Bowlay). This is based on fairness,
causation, and risk allocation. Thus, P cannot claim reliance damages where they are
greater than expectation damages (Bowlay) However, increased losses due to the
breach are recoverable (Pacific Playground), whereas normal expenditures in the
performance of K are not (Bowlay).
Canlin v Thiokol Fibres Canada (1983, Ont CA) ..........................................................
279
‘The figure of $100,000.00 is purely an estimate. It is the best I can do in the
circumstances. There is no doubt in my mind that there was a loss, and a substantial
loss. However, the plaintiff simply has not proved the full amount claimed.’
‘The court, I believe, would be shirking its duty if it were to say that no damages should
flow because of the difficulty of calculating and assessing such damages and that they
are therefore too remote. An assessment of future loss of profits must, of necessity, be
an estimate…The task [of assessing this loss] will always be difficult but not
insurmountable. It poses no greater obstacle to a court than the assessment of general
damages in a serious personal injury claim.’ (Court Protecting Expectation Interest,
despite arguments of remoteness and perhaps certainty of damage)
N.B. Lost profit will likely always be foreseeable in commercial transactions, since they
are presumptively intended for profit (Canlin). Contingencies might also affect P’s profits
and should be taken into account.

Facts:  bought product from ∆ to manufacture swimming pool covers. Material

defective, shreds into customers’ pools.
Issue/Arguments:
Defendant: 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.
Plaintiff: Claims for lost profits in addition, because their business suffered as a result of
the damage to their reputation.

Held: for . Entitled to lost profits as well as difference in value s. 56(3) of SoG Act
doesn’t apply here.
N.B. 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. Defendants 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 plaintiffs were shut out of the market for a few
years as a result of the fiasco.
This is sufficient “evidence to the contrary” as required to avoid the application of s.
56(3)  that provision wouldn’t give them what they lost.
Presumption: 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.
Double recovery: Because expectation damages are not supposed to give P a windfall,
double recovery must be avoided. P cannot claim gross revenue and reliance. Claims for
revenue need to be reduced by expenses – capital and operating - saved due to D’s
breach. Net profit can be claimed in addition to reliance, since wasted expenses have
not been included in the net figure. (Ticketnet)
Mitigation: The P has a duty to mitigate and cannot recover losses that could have been
avoided by mitigating. Recovery will depend on the P’s opportunity to mitigate (Canlin).
In some cases, it may be too late, may take time, or may be impossible. Considerations
include the nature of the goods and whether they are easily traded; availability of a
substitute; and whether the effects of the breach prevent effective mitigation, such as
through loss of reputation (Canlin). Lost profits are awarded for as long as mitigation is
impossible (which protects lost opportunities – Canlin)
Livingston Excavating & Trucking v Maple Engineering (2002, Ont SC) ..................... SM

‘[T]he assessment of damages in these circumstances must always be more or less a

matter of estimate’.
I find it is reasonable, even conservative, to find that the project, if undertaken by
Livingston, would have taken 1,000 hours, at an agreed rate of $140 per hour. This
would result in estimated gross revenues of $140,000.’ (Look at the time it took for the
3rd prty to finish the job)
N.B. Damages = gross revenue – expenses – actual profits
Damages = Net Expected Profits (NEP) – Net Actual Profits (NAP)
‘The Plaintiff did not lead evidence or make submissions about what percentage of its
gross revenues would comprise labour, fuel, repairs, overhead, insurance, interest and
depreciation and so I must estimate an appropriate percentage to be deducted.
Recognizing the Plaintiff had seventeen years' experience in this industry, I find it is
reasonable to assume he could generate fifty per cent (50%) profit from his gross
revenues.’
Mitigation: Company was doing other work on the side for 173 of the 234 days.
Livingston wasn’t limited in machinery and labour to work only on the project. The
breach of contract here caused a 40 days gain which should be subtracted from
damages awarded. (There is a duty to mitigate)
Ex: Wrongful termination of a law teacher at one law school and he obtains the same
job (and salary) at another school. The teacher has mitigated, thus can recover more
than the week he was unemployed.
Watson Laidlaw (1914): ‘The restoration by way of compensation is … accomplished to
a large extent by the exercise of a sound imagination and the practice of the broad axe.’
Bowlay Logging v Domtar (1982, BCCA) .................................................................. 332
‘The law of contract compensates a plaintiff for damages resulting from the defendant’s
breach; it does not compensate a plaintiff for damages resulting from his making a bad
bargain. Where it can be seen that the plaintiff would have incurred a loss on the
contract as a whole, the expenses he has incurred are losses flowing from entering into
the contract, not losses flowing from the defendant’s breach. In these circumstances, the
true consequence of the defendant’s breach is that the plaintiff is released from his
obligation to complete the contract - or in other words, he is saved from incurring
further losses.’
Facts: The parties contracted for the claimant to cut timber and the defendant to haul it.
The plaintiff said that the defendant breached the contract by supplying insufficient
trucks to haul the timber away, and claimed as damages his wasted expenditure.  
Held: Only nominal damages could be awarded. A plaintiff was not entitled to damages
on a basis which would leave him better off than he would have been in had the
contract been performed. The plaintiff would have made a loss on the contract as a
whole. Noting that the issue had not been raised in either Cullinane Anglia Television
said: ‘The law of contract compensates a plaintiff for damages resulting from the
defendant’s breach; it does not compensate a plaintiff for damages resulting from his
making a bad bargain. Where it can be seen that the plaintiff would have incurred a loss
on the contract as a whole, the expenses he has incurred are losses flowing from
entering into the contract, not losses flowing from the Defendant’s breach. In these
circumstances, the true consequence of the defendant’s breach is that the plaintiff is
released from his obligation to complete the contract- or, in other words, he is saved
from incurring further losses.’
NOTE: If the law of contract were to move from compensating for the consequences of
breach to compensating for the consequences of entering into contracts, the law would
run contrary to the normal expectations of the world of commerce. The burden of risk
would be shifted from the plaintiff to the defendant. The defendant would become the
insurer of the plaintiff’s enterprise.’

Crumbling Skulls
Athey v Leonati (1996, SCC) ..................................................................................... SM

‘The essential purpose and most basic principle of tort law is that the plaintiff must be
placed in the position he or she would have been in absent the defendant’s negligence
(the “original position”). However, the plaintiff is not to be placed in a position better
than his or her original one. It is therefore necessary not only to determine the plaintiff’s
position after the tort but also to assess what the “original position” would have been. It
is the difference between these positions, the “original position” and the “injured
position”, which is the plaintiff’s loss.’
‘Had the trial judge concluded (which she did not) that there was some realistic chance
that the disc herniation would have occurred at some point in the future without [the car
accidents], then a reduction of the overall damage award may have been considered.
This is because the plaintiff is to be returned to his "original position", which might have
included a risk of spontaneous disc herniation in the future.’
Facts:
The plaintiff suffered a back injury as a result of car accident that the defendant
negligently caused. Plaintiff had a pre-existing back problem (a herniated disc) which
was made worse by the accident. The combination of the pre-existing injury and the
accident rendered the plaintiff unable to work at his job and he thus lost income
Legal Issue :
Whether or not the plaintiff’s pre-existing back injury negatives the defendant’s fault as
a cause of his loss
Held :
Judgment for the plaintiff, entitled to recover 100% of his damages
Ratio :
It is not necessary for the plaintiff to establish that the defendant’s negligence was the
sole cause of the injury. As long as a defendant is part of the cause of an injury, the
defendant is liable, even though his act alone was not enough to create the injury. There
is no basis for a reduction of liability because of the existence of preconditions:
defendants remain liable for all injuries caused or contributed to by their negligence
Where multiple acts are necessary for an injury to occur, then causation is proven on
any of the negligent acts, since the loss would not have occurred but-for any one of the
negligent acts
Obiter :
Where there are multiple causes and either one could have been a sufficient cause then
it is unclear which was the cause-in-fact of the loss. The trial judge will have to
determine, on a balance or probabilities, whether the defendant’s negligence materially
contributed to the injury
Reasons For Judgment :
There is a single indivisible injury in this case, the disc herniation. The herniation and its
consequences are one injury, and any defendant found to have negligently caused or
contributed to the injury must be fully liable for it
Defendant argued that the plaintiff was predisposed to disc herniation and that this is
therefore a case where the ‘crumbling skull’ rule applies
The ‘crumbling skull’ rule simply recognizes that the pre-existing condition was inherent
in the plaintiff’s original position. The defendant need to put the plaintiff in a position
better than he was originally in
Defendant need not compensate for anything the plaintiff would have experienced
anyways
In this case however, there was no finding of any measurable risk that the disc
herniation would have occurred without the accident
Professional Negligence (Lawyers)
644036 Alberta Ltd v Kay McVey Smith & Carlstrom LLP (2018, ABCA) ..................... SM

‘[W]e prefer to decide this case on negligence first principles, and consider what amount
of money it would take to restore the appellant to the position it would have occupied
had there been no negligence. The trial judge was correct in finding that this was his
objective, but he erred in failing to apply the principle of remoteness in assessing
damages for negligence.’
‘[I]n assessing damages in either contract or tort … [the court must] realistically
determine what the plaintiff’s condition was before the tort or breach of contract. The
court then should realistically determine what condition resulted to the plaintiff from the
breach — applying the proper principles of legal causation. That means determining
what variation or difference to the loss side would not have happened but for the wrong
done. Overall, justice must be done to the plaintiff and the defendant.’
Facts: In July 2004 the Respondent, Sherry Heikel, was retained by the Appellant,
644036 Alberta Ltd., to complete a real estate transaction with a vendor, 625494
Alberta Ltd (“625”) with a purchase price of $1.5 million. Among the properties being
purchased were the Morgan Meadow Lands, which consisted of two separately titled
properties, 56 Title and 57 Title. Heikel failed to obtain 56 Title for the Appellant when
the transaction closed in November 2004. She only discovered her mistake in August
2005. She wrote a letter in September 2005 to 625’s solicitor, indicating that she
required a transfer of land for 56 Title. In November 2005 she wrote a demand letter to
625, stating that it was self-evident that 56 Title was to have been transferred as part of
the contract of purchase and sale, and was omitted in error. There were no other
evidence of efforts Heikel made to acquire 56 Title. The Appellant obtained subdivision
of the lands, even though it did not own 56 Title and so a portion of land was missing
from two of the newly created lots. The Appellant sold 11 of the lots in 2006, but not
the two incomplete lots. The same year, the Appellant retained new counsel and
commenced an action against Heikel, her firm, 625, and 625’s solicitors. Heikel and her
firm did not file a statement of defence until January 14, 2011. When the Appellant’s
attempts to secure alternative financing in early 2007 fell through, its bank
commenced foreclosure proceedings. The remaining lands were judicially sold pursuant
to a court order granted on September 19, 2008.
Trial Decision:
Heikel was negligent for failing to obtain full title as required. He also found that the
failure to transfer the two lots with the missing pieces was not what caused the failure
of the Appellant’s development of the land. That was caused by a number of reasons,
primarily the lack of financing. The judge calculated that slightly more than an acre was
not transferred, and that its value at the time was $129,500. In a subsequent decision,
the trial judge corrected a miscalculation in the damages award and reduced the
damages owed to $67,500. At no point in his decision did he discuss the consequential
losses associated with the Appellant’s inability to convey title to the two incomplete
lots.
Majority
The appeal was allowed. The Appellant argued that the trial judge erred in failing to
properly apply the principle that a party is entitled to recover all reasonably foreseeable
losses arising from the negligence of a solicitor and, as a result, applied the wrong
methodology to calculate damages. The majority noted that there was no explanation
as to why Heikel did not commence an action for specific performance in 2005 when her
letters to 625’s solicitor produced no results. Rather than assess the matter based on
loss of opportunity, the majority preferred to decide it on negligence first principles and
consider what amount of money it would take to restore the Appellant to the position it
would have occupied had there been no negligence. The trial judge was correct in
finding that this was his objective, but he erred in failing to apply the principle of
remoteness in assessing damages for negligence. The Appellant acquired the lands for
development and the evidence showed that Heikel knew about the subdivision plan
before the transaction closed. She appreciated the importance of all included titles
being conveyed. She ought to have known that if she failed to ensure that all the titles
were transferred to the Appellant, it would not receive the full value of the subdivision.
The parties agreed that the two incomplete lots were valued at $666,270 and $190,031.
Taking into account the $102,000 received in the foreclosure proceeding, the majority
found the Appellant entitled to damages in the amount of $755,207.
Dissenting
Mr. Justice Watson dissented. He did not challenge the majority’s conclusion that the
subdivision of the lands being transferred was foreseeable by Heikel. However, in his
view the trial judge did not err in finding the Appellant failed to prove the amount of
damages claimed. A claim in negligence causing economic loss should fix on actual
proven damages resulting from the negligence in the sense contemplated by the law of
causation in tort. The trial judge found that the negligence in this case had no proven
impact on the overall development’s failure, and there was no palpable and overriding
error in this. Mr. Justice Watson would have dismissed the appeal.

Messineo v Beale (1978, Ont CA) ............................................................................. SM

P buys property for $10,000 which he believes includes Murch’s Point. Solicitor failed to
notice that it did not. The total value of the property even without Murch’s Point is
$11,000. Cost of acquiring Murch’s Point - $5000.
Damages are $0 because if the lawyer had done what he was supposed to do, P would
have gone ahead with the purchase anyway at $10,000, because it was a good deal, or
would have tried to buy Murch’s Point as well but would have had to pay more. The
lawyer’s negligence did not cause the loss of Murch’s Point.
N.B. No damages because the price paid < value of land received (even excluding
Murch’s
Point).
NOTE: It would be different if the lawyer had guaranteed title of the property of
Murch’s Point. But he didn’t do that, and can’t do that, because he didn’t own Murch’s
Point.
Messineo appears, then, to stand for the propositions that:
(a) in order to succeed, the plaintiff must establish a financial loss that goes beyond a
merely disappointed expectation, where the loss is measured by what the plaintiff paid,
not by what the plaintiff hoped to gain;
(b) the lawyer’s error must have caused the loss, in the sense that the error caused the
plaintiff to lose something that he would otherwise have been able to obtain;
(c) in order to succeed, it is not sufficient for the plaintiff to establish that he would not
have completed the transaction had the lawyer advised him properly
N.B. In Messineo, the lawyer’s error caused the plaintiffs to be deprived of the
opportunity not to complete the transaction, in which case they would have suffered no
damage. The lawyer’s error did not cause the plaintiffs to lose Murch’s Point, which was
not available to be lost.
McIlroy v Stanton (1999, Ont SC) ............................................................................. SM

‘In … Messineo it was clear that the client wished to acquire the property and the market
value of the land which the client received, and which the client had retained, was at
least equal to the purchase price paid. However, in the present case … the McIlroys had
decided that they did not want to purchase the property…As a result of the closing, the
McIlroys acquired a property they did not want and, notwithstanding their efforts for
several years, commencing immediately after the closing, the property was subsequently
sold at a substantial loss. In these circumstances… the McIlroys did in fact suffer a loss,
which was a direct result of the breach by the Defendant.’

Distinguishing Messineo:
Pl sue purchasers for negligent misrepresentation, breach of contract and negligence.
Def’s solicitors failed to notice that there was a fraud of the date of approval of the
sceptic system.
Purchasers wanted a legal way out of the purchase agreement.
Damages awarded, including the value of real estate taxes paid.
Toronto Industrial Leaseholds v Posesorski (1994, Ont CA)........................................
362
‘’It seems to me that there were two ways by which the clients could have been put in
the position they would have been in had it not been for Mr. Solway's negligence. The
first was to allow them damages equivalent to the reduction in market value caused by
the option. This was the method chosen by the trial judge. The other was to remove the
option. The removal of the option would restore the value of the property to what it
would have been had there not been the option. In theory, either method would
accomplish the same thing. Where I part company with the trial judge is her conclusion
that in the circumstances of this case the law recognized only one way, the difference
between what they paid for it and its market value.’’
Facts:
In Toronto Industrial Leaseholds Ltd v Posesorski, the last decision in the Messineo
trilogy, the lawyer failed to advise a purchaser of an industrial property that a lease held
by a tenant contained a renewal option. The option, if exercised, would allow the tenant
to pay rent during the renewal period substantially below market. The plaintiff, unaware
of the option, paid more for the property than it was worth. After the purchase, the
plaintiff, in order to get rid of the troublesome option, had to pay the tenant an amount
by which the rent during the renewal period was less than market rent.
The Court found that:
(d) unlike the purchaser in Messineo, the plaintiffs had suffered a loss, because the
property was not worth as much as they had paid for it;
(e) “As in Messineo, the solicitor’s negligence caused the clients to complete a
transaction they would not have entered into had the solicitor done his job properly.”31
The plaintiffs, if properly advised, could have refused to complete the transaction or
attempted to negotiate a new purchase price, taking into account the existence of the
option;
(f) following Kienzle, the plaintiffs were entitled to the difference between what they
paid for the property and what the property was worth, as well as consequential
damages, including the amount of the decrease in value of the property between the
date of purchase and the date of discovery of the lawyer’s error, the loss of use of funds
represented by the overpayment of the purchase price, legal fees and the cost of
maintaining the vacant property.
TILCO is similar to Messineo in that the lawyer’s error did not cause the renewal option
to be present in the lease, just as the lawyer’s error in Messineo did not cause the prior
conveyance of Murch’s Point. However, unlike the lawyer’s error in Messineo
Measure Of Damages: K price – true market value + consequential losses = reliance (TILCO;
Messineo).

Time of Assessment: The general rule is that damages are assessed according to the
market value at the time of K. The exception is when there is a subsequent decline in
property value that is directly caused by D’s negligence (TILCO).
Dissent:
Proper remedy is $260 because the only way to put P in position it should have been in
is to reimburse P for the cost of eliminating the option. The problem with this argument
is that P would never have gotten the land in the first place without paying something to
have the option removed.
‘Had Mr. Solway alerted his clients to the option, they would have had two alternatives.
They could have refused to close, in which case they would have suffered no loss, or they
could have attempted to negotiate a new price taking the option into consideration. The
clients could not have purchased the property without the option for $325,000. The
approach taken by Galligan J.A. goes beyond restoration and puts the clients in a better
position than they would have been in had Mr. Solway properly performed his duties as
their solicitor.’
Sales of goods
In Goldthorpe v Logan [1943] 2 D.L.R. 519 the plaintiff claimed damages for breach of a contract
to remove facial hairs. After holding that the defendant was liable, Laidlaw JA, speaking for the
Ontario Court of Appeal, disposed of the case as follows:

“[T]he total sum paid [by the plaintiff] was $13.25. [The plaintiff] received no benefit
whatever from the treatments, and the defendant Logan must repay to her [this sum]. In
addition she sustained further loss and damage, and she is entitled to be put in the same
situation, so far as money can do so, as she would have been if the contract had been
fully performed. She does not now complain of scars on her face but only of the
continued existence of hairs...It is not easy to determine the amount of such damage
sustained under the particular circumstances, but I think $100 would be reasonable and
fair. The plaintiff, Pearl Elizabeth Goldthorpe, should, therefore, have judgment in the
action for $113.25, to be paid to her by the defendant Anne Graham Logan.”
N.B. Should have been: NEP (100-13.25) – NAP (-13.25) = 100$.

Double Recovery
The issue of double recovery means that a person is not entitled to receive twice on a
single item- you are entitled to your losses and no more. Double recovery typically arises
in cases of businesses where you have an asset that is used to generate profits. The
normal expectation is that all of a compagnies gross receipts are used to cover the costs
of the assets purchased. The other way to ask for the losses is to argue the seller is
entitled to his/her net profits, but to the extent that the asset is defective, and the seller
has suffered a decline of vlue in the asset, the seller is entitled to that as well.
RG McLean v Canadian Vickers (1971, Ont CA) ..........................................................
289
‘[T]he plaintiff is entitled to be compensated (subject to questions of mitigation) to the
extent that it will be in approximately the same position as it would have been in if the
contract had been performed according to its terms…If the contract had been
performed, and profits earned by use of the machine, the plaintiff would have had to pay
the purchase price. In any calculation of damages, on a basis as if the contract had been
performed, the purchase price must stand as a debit against the plaintiff; any damages
awarded in its favour can be used to extinguish the purchase price, but only the excess
can then be allowed to the plaintiff by way of further damages.’
Facts:
The plaintiff has purchased a printing press to print in four colors
The machinery is defective-does not reproduce as warranted
In 10 months the plaintiff tries to get the machine to work-has made expenditures to try
The seller agrees to take the machine back-without prejudice to take an action for
breach
Plaintiff had made first installments on capital cost of the machine (2/3 was left to be
paid)
2 years had lapsed and the machine still does not work properly
Holding:
Trial:
Damages were assessed under three heads: (1) Dismissed seller’s claim for outstanding
purchase price, (2) awarded 50’000$ special damages on list of costs in attempts to fix
(3) awarded $50’000 as lost business profits.
Appeal:
(1) The plaintiff is required to pay remainder of purchase price; (2) Allows special
damages subject to possible overlap with lost business profits (3) does not allow the lost
business profits figure to stand.
The assessment of lost business profits is on the assumption that there is business to be
conducted
The concern is whether the plaintiff had available contracts that would have made a
profit-master specifically requested to assure him/herself that work existed on which a
profit would be made
There was also a concern with overlap with losses specified as special damages which
are lost profits incurred prior to the offer to buy ban machine by the defendant.
Mitigate damages (Reasonable Purchaser’s Conduct Standard of Evaluation)
Here: Damages awarded by the C.A. = Wasted Expenses (To Solve Problem) + Loss
Profits For 2 Years – Unpaid Balance Price
N.B. Wrong, machine after two years was not worth anything (should compare with
functioning one) (They should have gotten the difference between the value of
two-year printing press -actual value of the printing press.)
Sunnyside Greenhouses v Golden West Seeds (1972, Alta CA) ................................. SM
Roof materials meant to last 7-10 years, but latent defect, sunlight caused panels to
become opaque, sun couldn’t get through, crops didn’t mature
Buyer claimed general damages (s. 56) and special damages (s. 57)
Buyer can’t recover the expense of replacing the panels, b/c would have had to replace
at future date anyway
Buyer’s duty to mitigate: do what can reasonably be done to reduce the loss
Formula
Value of the goods as promised – value of the goods as delivered = compensation
Here: Panel lasted 3 years out of 7 (7/7-3/7 = 4/7 proportion of the price should be
compensated)
N.B. Cost of installation was not awarded in this case, since should have installed other
panel
Betterment
Nan v Black Pine Manufacturing (1991, BCCA) ......................................................... SM
‘[I]n most cases involving the tortious loss of or damage to property, will be that
replacement costs will at least be the starting point for the assessment of damages.
Whether or not the damages based on such costs should then be adjusted, either for
pre-loss depreciation or post-reinstatement betterment, will depend on what is
reasonable in the circumstances. No rules can be fashioned by which it can invariably be
determined when such allowances should be made. It must, in all cases, turn on the facts
peculiar to the case being considered.’
“Deduction for betterment cannot be made by the court as a simple matter of
assumption in every case in which a new asset replaces an old asset… In the case at bar,
there is no expert nor any other evidence that the plaintiff's position has in any way been
improved or would be bettered as a result of an award of damages equal to the full
replacement cost of the home. There is no evidence to suggest that the rebuilding of the
home has increased its market value. Nor is there any evidence that the plaintiff now
receives any greater benefit or enjoyment from this home which is almost identical to
the original home. Accordingly, I find that there will be no deduction for betterment.”
Nan was concerned with the amount of recovery available subsequent to a fire. The fire,
negligently started by the defendant, destroyed the Nan’s thirteen year old home. The
cost of rebuilding the home was $69,809. The defendant argued that this figure should
be reduced to reflect the element of “betterment” inherent in replacing a thirteen year
old home with a new one. The defendant relied on the fact that Nan paid $4,000 for the
home, including land, and that the appraised value of the building, at the time of the
fire, was $37,500. The defendant argued that any award in excess of that number would
result in the plaintiff being in a better position than he would have been had the tort not
occurred.
The Precedents:
Prior to Nan the generally accepted level of recovery for damage to buildings was the
actual value of the property damaged. This was often referred to as the “depreciated”
value of the building. In Nan however, Mr. Justice Wood reaffirmed the general
principles and awarded the plaintiff the full cost of replacing his home. In discussing the
application of the then accepted level of recovery the Court stated: “To begin with the
notion that damages for the reinstatement of property destroyed by negligence should
automatically be reduced, either by pre-loss depreciation or post-reinstatement
betterment, was discarded as long ago as 1844.”
The Precedents:
Regarding the specific issue of betterment the Court drew on the English Court of
Appeal case known as Harbutt’s Plasticine in stating: “The same approach was taken by
the Court of Appeal 125 years later in the Harbutt's "Plasticine" Ltd. case. There the
plaintiff's factory was completely destroyed by fire as a consequence of the defendant's
negligence. The trial judge awarded as damages the full cost of reinstatement. On the
issue of betterment the majority (Lord Denning, M.R. and Widgery, L.J.) held that where
the injured party had no option but to replace the destroyed property, and had acted
reasonably in doing so, the wrongdoer was not entitled to any deduction on account of
the fact that the successful plaintiff got new for old.” The Court further addressed the
topic of betterment by referencing with approval the words of the Australian Court in
Evans v. Balog: “The question is whether it was reasonable for the plaintiffs to desire to
reinstate their property. In my opinion, there is only one answer. It undoubtedly was.
They had, in effect, lost their family home. That 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; and the only way in which that purpose can be
achieved is to award them the sum reasonably necessary to restore their property to
the condition in which it was before the defendants effectively destroyed it.
The Trial Judge:
This the learned judge did; and, in my opinion, he was right. It is not to the point that
the diminution in value basis might on one view produce no damages, while the
reinstatement basis produces a substantial sum. The disproportion in question in cases
of this kind are not always to be revealed by arithmetical comparison. The cost to a
defendant of competing measures is a significant factor. But it is but one ingredient in
the calculation of whether the plaintiffs' claim is reasonable or not. There are cases, and
this, in my opinion, is one, where the nature of the plaintiffs' loss is such that there is
only one mode of fairly repairing it. If that turns out to be more expensive than another,
the wrongdoer has no one but himself to blame.”
The Court then concluded: “As to the situation presented by the facts of this case, I can
do no better than to apply the words of Samuels, J.A. [above quote], to this case. In my
view the learned judge below was right when she held that it was appropriate to award
the respondent the full amount of the cost of replacing his home, without deduction for
either pre-loss depreciation or post-reinstatement betterment.” The result in Nan thus
entailed an award for the cost of reinstating or “replacing” the plaintiff’s home without
deduction for betterment or depreciation.
Refusal To Deduct Betterment:
The refusal to deduct betterment or depreciation from the award resulted from the
Court’s view that the plaintiff’s desire to reinstate his home was reasonable and that the
advantages of reinstatement outweighed the extra cost being borne by the defendant
for replacement cost as compared to the depreciated value of the home. Tortious loss
or damage to property

Harbutt’s Plasticine v Wayne Tank (1970, CA) .......................................................... SM

‘They replaced it in the only possible way, without adding any extras. I think they should
be allowed the cost of replacement. True it is they got new for old, but I do not think the
wrongdoer can diminish the claim on that account. If they had added extra
accommodation or made extra improvements, they would have to give credit. But that is
not this case.’
‘Nor do I accept that the plaintiffs must give credit under the heading of ‘betterment’ for
the fact that their new factory is modern in design and materials. To do so would be the
equivalent of forcing the plaintiffs to invest their money in the modernising of their plant
which might be highly inconvenient for them.’
The plaintiff company engaged the defendants to design and install in their factory, an
old mill, a pipe system to convey hot molten wax used in the production of Plasticine.
The defendants unwisely chose to use plastic piping. Once installed, the defendants
chose to initiate the new system at night, but without any supervision. The system had a
faulty thermostat and molten wax overheated. The plastic pipes melted and the molten
wax escaped and caught fire, causing a huge conflagration. By the morning, the entire
factory was destroyed. This led to one of the biggest-ever claims for damages in
England. The defendant sought to rely on a clause in the contract that purported to limit
their liability for breach of contract.
In the Suisse Atlantique,[4] the House of Lords had previously declared that whether or
not a fundamental breach extinguishes any protection of a limitation clause was
a question of construction and not a question of law.[5]
Following Karsales Ltd v Wallis (and ignoring Suisse Atlantique) the Court of
Appeal held that the breach was so gross as to be "fundamental breach", and that the
exemption clause thereby "automatically" became ineffective, so that the defendants
were liable in full.
Also, since the company had to build a new factory (because it was not feasible to repair
the old), Lord Denning said that (contrary to the usual rules of damages and
‘betterment’ in insurance claims), the defendant was liable to pay for a new
replacement.
North York v Kert Chemical Industries (1985, Ont HC) ..............................................
SM
’The plaintiff [in Kert Chemicals] was forced to make an expenditure of $25,428…
However, this is a payment that the plaintiff is making in advance of when originally
contemplated, which was the date of expiry of the original sewer, namely 2000. Unless
the plaintiff received some compensation for the cost of making this expenditure twenty-
six years prior to its contemplated occurrence the plaintiff will be under compensated….
[The] additional compensation should have been the cost of borrowing $25,428 for
twenty-six years’.
James St Hardware v Spizzirri (1987, Ont CA) .......................................................... 392
‘[I]t cannot be seriously argued that the appellant did not act reasonably in deciding to
continue its retail business on the location of the damaged premises. In this respect, it
was in virtually the same position as the plaintiff in Harbutt’s “Plasticine” Ltd. v. Wayne
Tank & Pump Co. The fact that it built a different and larger building, thereby obliging it
to establish its repair costs on the basis of estimates rather than actual costs, is not put
forward as a ground for depriving it of basing its claim on the replacement cost
approach, and we do not think that it reasonably could have this effect.’
’We appreciate the logic of the reasoning in Harbutt’s and of the statement of Dr.
Lushington in Re The Gazelle which is contained in one of the passages from McGregor
that we have quoted. Quite simply, if a plaintiff, who is entitled to be compensated on
the basis of the cost of replacement, is obliged to submit to a deduction from that
compensation for incidental and unavoidable enhancement, he or she will not be fully
compensated for the loss suffered. The plaintiff will be obliged, if the difference is paid
for out of his or her own pocket, whether borrowed or already possessed, to submit to
“some loss or burden”, to quote from Dr. Lushington. Widgery L.J. in Harbutt’s
“Plasticine” called it “forcing the plaintiffs to invest their money in the modernising of
their plant which might be highly inconvenient for them. These considerations, however,
do not necessarily mean that in cases of this kind the plaintiff is entitled to damages
which include the element of betterment.. [T]he answer lies in compensating the plaintiff
for the loss imposed upon him or her in being forced to spend money he or she would
not otherwise have spent — at least as early as was required by the damages
occasioned to him by the tort. In general terms, this loss would be the cost (if he has to
borrow) or value (if he already has the money) of the money equivalent of the
betterment over a particular period of time.’
(B) COMPENSATING BENEFITS
Was The Gain Part of a Continuing Transaction
British Westinghouse v Underground Electric Railways (1912, HL) ........................... SM

‘[A plaintiff must take] all reasonable steps to mitigate the loss consequent on the
breach, and [cannot claim] any part of the damage which is due to his neglect to take
such steps…[This] principle does not impose on the plaintiff an obligation to take any
step which a reasonable and prudent man would not ordinarily take in the course of his
business. But when in the course of his business he has taken action arising out of the
transaction, which action has diminished his loss, the effect in actual diminution of the
loss he has suffered may be taken into account even though there was no duty on him to
act.’
‘The transaction [i.e. the purchase of the new machines] was not res inter alios acta but
one in which the person whose contract was broken took a reasonable and prudent
course quite naturally arising out of the circumstances in which he was placed by the
breach...[I]t formed part of a continuous dealing with the situation in which they found
themselves, and was not an independent or disconnected transaction.’
Supply of defective turbines; relevance of profit accruing from acts done in mitigation
Facts: Underground Electric Railways (UER) purchased turbines from British
Westinghouse Electric Co (BWEC). The turbines were faulty in that they were deficient in
power. UER used the defective turbines for a time and then purchased new turbines
which were more efficient than the defective ones would have been even if they had
not been faulty. UER brought an action for breach of contract.
Issues: UER claimed the cost of the replacement turbines. They asserted the purchase
was reasonable and prudent and, therefore, the cost of purchasing them should be
recoverable as a direct consequence of the breach. Additional profits made from
purchasing the new turbines was not a matter for consideration when assessing
damages. BWEC contended that even if the turbines had not been defective, the more
efficient turbines would have been purchased in any event and, therefore, UER had not
suffered a material loss because of the defect. Damages awarded are to place the
innocent party in the position he would have been had there been no breach. Even if
the new turbines were purchased because of the breach, account should be taken of the
increased profits made with the installation of the more energy efficient turbines.
Held: UER could not claim for the cost of the new turbines. Damages for breach of
contract were to place the injured party so far as possible in the position they would
have been had the contract been performed. Any additional profits made because of
acts done in mitigation should be considered when quantifying damages. The savings
made by using the new turbines exceeded the cost of the old turbines and as damages
were a question of fact, the cost of the new turbines were not recoverable.

Associated Midland Corp v Bank of New South Wales (1983] 1 NSWLR 533):
“Collateral” and “res inter alios acta” are not descriptions which determine that the
event should be disregarded: they are descriptions to be applied as the result of a
decision that it should be so…There is no verbal formula the application of which will
determine what is or is not collateral for this purpose; each case is to be determined as it
arises and, in accordance with the ordinary working of the doctrine of precedent, by
reference to cases analogous to those in issue
Erie County Natural Gas & Fuel v Carroll (1911, PC) ...................................................
55
‘The action of the [plaintiff] in acquiring and disposing at a profit of a considerable part
of the manufactured stock of his former employers arose out of his relations with them.
It involved the employment by him of time, labour and ability which he had engaged to
give to them. For his loss of an opportunity to use these in earning a salary from those
employers he is now asking that the [defendant] shall be compelled to pay by way of
damages. It would seem to be manifestly unfair that, if the [plaintiff] is thus to be
remunerated on a contractual basis by way of damages, he should not be held
accountable in mitigation for money made by using for his own purposes the time,
labour and ability so to be paid for…The action which produced [the $11,000 profit]
arose out of his former employment in the sense in which the Lord Chancellor [in British
Westinghouse] uses the phrase ‘arising out of the transaction”.
Facts :
π manufacturer of quicklime. 8 year lease of gas rights on π property to ∆ gas co, with
requirement to supply π with gas.
∆ sold the lease to a third party, who didn’t supply gas.
π built their own structure to obtain gas on their remaining portion of the property, at a
cost of $60k.
At the end of the 8 year period, π sold the gas works for $75k.
π claimed the expenditure to get the gas, and also $125k for the cost of their own gas
used
Held:
No award to π.
Reasons :
π mitigated by selling the structure for $75k.
Also, court said it would be unfair to award the additional $125k value of the gas
consumed, because then π would profit from ∆’s breach. One Lord called this a
“grotesque” result.
Comments:
However, the question re mitigation is really supposed to be whether the breach
caused/permitted the earnings, and in this case it did not.
πs were tapping into their own gas, which was always there and which could have been
done regardless of ∆ behaviour.

Karas v Rowlett (1944, SCC): ‘[P]erformance in mitigation and that provided or

contemplated under the original contract must be mutually exclusive, and the
mitigation, in that sense, a substitute for the other. Stated from another point of view,
by the default or wrong there is released a capacity to work or to earn. That capacity
becomes an asset in the hands of the injured party, and he is held to a reasonable
employment of it in the course of events flowing from the breach.’

Cockburn v Trusts & Guarantee Co (1917, SCC) ......................................................... 58

Facts:
Company went into liquidation, ∆ wrongfully dismissed & sues for lost wages.
Salary at time of dismissal: $5000/year
 bought a bunch of stuff at the company’s liquidation sale, and sold it for $11k
Issue: did  mitigate out of any damages?
∆ argued  used his time to make profit, which he wouldn’t have been able to do if ≠
dismissed.
 argued ≠ mitigation because it goes beyond what an employee would be expected to
do. He became an entrepreneur/speculator. Didn’t have to do this.
Held:
 mitigated out of damages
Reasons :
Although didn’t 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.)
First, he got the inventory because the company went into liquidation.
Second, he had the time to buy/sell the inventory because the company dismissed him
as a result of the liquidation.
Nesi Energy Marketing Canada Ltd v NGL Supply Co. (2001, ABCA) .......................... SM
“[B]ut for the bankruptcy, the sell gains (like the buy losses) would not have occurred. At
first blush, this rationale is attractive, but one must be careful not to characterize a
bankruptcy as a single act entitling the insolvent party to net the consequences of all of
the resulting breaches…. The sell gains that the [plaintiffs] enjoyed cannot be
characterized as consequent upon steps taken in mitigation of the buy losses. Indeed,
the benefit would have resulted irrespective of whether the [plaintiffs] had taken
mitigating action in relation to NESI’s failure to sell gas.”
“To simply state that the bankruptcy was the cause of both the gains and losses, and
that they are therefore interconnected, does not address the larger obstacle presented
by the mitigation principles. Namely, gains cannot be set off from losses except when the
gains arise from conduct undertaken by the non-breaching party in consequence of the
breach in issue. The breach (not the reason for the breach) is critical.”
Facts:
Unsecured creditors filed proofs of claim with a trustee in bankruptcy relating to
contracts breached by a bankrupt natural gas broker as a result of the bankruptcy. A
dispute over valuation arose. The trustee applied for advice and direction as to whether
selling gains made by the creditors as a result of the bankruptcy were to be accounted
for in assessing the value of their claims.
First Instance:
The Alberta Court of Queen's Bench, In Bankruptcy, in a decision reported at 240 A.R.
28, directed the trustee to apply the selling gains against the losses suffered. The
creditors appealed.
Court Of Appeal:
The Alberta Court of Appeal allowed the appeal and directed the trustee not to reduce
the creditors' claims for buy losses by deducting their selling gains.

Lavarack v Woods of Colchester (1966, CA)

...............................................................SM
‘He might have invested his money in any other company and made similar profits. It is
sheer speculation whether he would do better in Ventilation than in others. I realise that
the plaintiff was only at liberty to invest in Ventilation because his employment was
terminated. But nevertheless the benefit from that investment was not a direct result of
his dismissal. It was an entirely collateral benefit, for which he need not account to his
employers.’

Damages for wrongful dismissal; whether increase in salary and bonuses included
Facts: Lavarack was employed by Woods of Colchester (WOC). Under the employment
contract, he was to earn £4,000 per year and such bonuses as the directors determined.
He was wrongfully dismissed in breach of contract. Lavarack was then employed by
another company on a lower salary. He purchased half the share capital in that company
and invested in another company which was in competition with WOC. Lavarack sought
damages for wrongful dismissal.
Issues: Lavarack contended his investment in the other companies should not be taken
into consideration when his damages were assessed because these were separate
investments which he could have made in WOC’s employment. Profits accruing to
employees may only be taken into account in mitigation when they stem from the
employer’s breach. He sought to claim for an increase in salary and the bonuses he
argued he would have been awarded. WOC argued the investments were benefits
accruing to Lavarack in consequence of breach, and as such should be taken into
consideration. WOC contended the award of the bonuses was discretionary and did not
amount to a contractual obligation and, were therefore, unrecoverable. Further, the
evidence showed his salary would have likely decreased had he remained in WOC’s
employment.
Held: Lavarack was not entitled to recover extra benefits which the contract did not
oblige the employer to confer. Lavarack was only contractually entitled to receive
£4,000 per annum. His release from the contract allowed him to increase his
shareholding in his new employer’s company and, therefore, the increase in value of the
shareholding was consequent upon the breach and could be off-set against his losses.
Lavarack’s investment in the other company, however, was not consequent upon the
breach and could not be so offset.

Jamal v Moolla Dawood & Sons (1916, PC) .................................................................

59
‘If the seller retains the shares after the breach, the speculation as to the way the
market will go is the speculation of the seller, not of the buyer; the seller cannot recover
from the buyer the loss below the market price at the date of the breach if the market
falls, nor is he liable to the purchaser for the profit if the market rises.’
Facts:
∆ backed out of share sale with π
K price was $184,000 rupees. As a result of breach, π only got $75,000 rs.
π held shares past breach date, then made a series of sales that cumulatively brought in
$200,000. (So, higher price than K would have brought in, even)
Held: π did not mitigate out of damages, ∆ still obligated to pay.
Damages are measured at time of breach.
Waiting is at π risk, and if π is found to have mitigated out of damages by waiting and
selling at a higher price, then ∆s should also be responsible if π waits and is forced to sell
at lower price.
π can do whatever he wants after breach, but it’s at his own risk.
Conceptually, π could have gone through with first K and then later bought and sold
shares again independently  shares are fungible.
Distinct from Cockburn, in which π could not have done what he did but for the breach.

Pagnan & Fratelli v Corbisa Industrial Agropacuaria [1970] 1 WLR 1306: ‘[In cases like
Jamal] the innocent party is not bound to go on the market and buy or sell at the date of
the breach. Nor is he bound to gamble on the market changing in his favour. He may
wait, if he chooses; and if the market turns against him this cannot increase the liability
of the party in default; similarly if the market turns in his favour, the liability of the party
in default is not diminished. [I]f the innocent party goes on to the market and buys or
sells after the date of the breach, this is res inter alios acta so far as the party in default
is concerned.’

NEGLIGENT MISREPRESENTATION

The Measure Of Damages For Misrepresentation

Payne v Eagle Ridge Pontiac GMC (2010, BCSC) ...................................................
SM
‘The plaintiff and other class members, if they establish reliance and loss, are entitled to
be restored to the position they would have been in if the defendant's misrepresentation
had not been made. They are not entitled to be put in the position they would have been
in if the misrepresentation had been true. The measure of their damages is their out-of-
pocket losses.’
Marcus Bolda acted for Ms. Payne, the representative for a class of plaintiffs, seeking
damages against the Eagle Ridge GM dealership for negligent misrepresentation. More
specifically, Ms. Payne was alleging negligent misrepresentation concerning a cashable
voucher program designed to persuade customers to buy cars. The program was
advertised in The Tri-City News, a local Coquitlam newspaper, and promoted by Eagle
Ridge sales representatives between October 6 and November 26, 2003.
Paraphrasing from the decision, the facts of Payne’s claim were that on October 9,
2003 she bought a 2002 Pontiac Sunfire from Eagle Ridge after being attracted by a
newspaper ad published in the Tri-City News. Among other things the ad included
phrases like “THIS IS NOT A MISPRINT”, “EAGLE RIDGE PONTIAC IS OFFERING AN
OPPORTUNITY TO CLAIM & RECEIVE UP TO $30,000 CASH BACK” and “If you think this
is too good to be true…well think again.”  The ad also referenced a cashable voucher in
the amount of $6,000 in relation to a 2002 Sunfire.  When Ms. Payne bought the
Sunfire she was offered the $6,000 voucher and she claimed the voucher persuaded
her to buy the car when she would not have otherwise.  When she signed the purchase
agreement the Eagle Ridge office manager prepared and gave her a voucher with a face
amount of $6000 and read her the terms and conditions on the reverse side of the
document.  She didn’t ask for a price reduction in lieu of the voucher but instead read
the terms and conditions when she got home and understood that she would have to
follow the instructions to get the money from a company called Consumers Trust who
she thought was part of General Motors.
In fact the cashable vouchers were issued by Eagle Ridge under an agreement with
Consumers Trust – a UK company unaffiliated with GM.  Under the agreement Eagle
Ridge could use the vouchers as a sales promotion tool for a fee of 15% of the written
value of the vouchers issued but the vouchers themselves were to be ultimately paid by
Consumers Trust.  The success of the program was based on the assumption that most
people would fail to meet the stringent terms and conditions for redemption.  Further,
the agreement specified that Eagle Ridge was not to help customers to meet the
conditions, for example, by reminding them to send in the documents required. 
Finally, even if the conditions were fulfilled a voucher holder was still only entitled to
receive a proportional share of whatever fund was in existence 60 days after the
3rd anniversary of the date the voucher was issued.  Unfortunately, Consumers Trust
went bankrupt well before the first possible date when any of the voucher holders
could have applied to redeem their vouchers and Eagle Ridge made no claim in the
bankruptcy proceedings nor did they advise voucher holders to do so.
One of the primary purposes of negligence law is to enforce reasonable standards of
conduct to prevent the creation of reasonably foreseeable risks.  In short, it’s a
disincentive to risk-creating behavior.  On behalf of Ms. Payne, Marcus Bolda
successfully argued that Eagle Ridge had special knowledge of the cashable voucher
program that gave rise to a special relationship between it and its customers that
resulted in a duty of care and further Eagle Ridge should have foreseen its customers
would rely on representations concerning the program to their detriment.   Bolda,
argued that the wording of the newspaper ad itself “Eagle Ridge Pontiac is offering an
opportunity to claim and receive…up to $30,000 CASH BACK” suggested that Eagle
Ridge was backing the vouchers and reasonably led the plaintiff to believe that
Consumers Trust was a part of General Motors.  By allowing customers to think it (and
not Consumers Trust) was offering the opportunity, Eagle Ridge failed to meet the
standard of care required of a reasonable person in this situation.
The Court reserved decisions on granting of relief to await further submissions from
the parties and determination of individual issues.  During the time frame the program
was in effect Eagle Ridge sold 256 vehicles and issued a total of 148 Cashable
Vouchers. If you bought a car from Eagle Ridge Pontiac GMC between October 6 and
November 26, 2003 contact Marcus Bolda at 604.939.8321 to find out if you are
eligible to participate in the proceedings.

Budai v Ontario Lottery Corporation (1982, Ont HC) .................................................

SM
“The plaintiff squandered $480.00 U.S. entertaining himself and five of his friends in the
belief he had won $835.40. It is not just that he spent the $480.00 U.S. If the plaintiff had
spent the money on expenses he would have had to meet in any event such as groceries
or rent then he would have suffered no damages. While I do not have to decide the point
in this case, I am inclined to the view that even if he had spent the $480.00 U.S. to
acquire some luxury item he would not otherwise have bought, such as a dishwasher or
a set of golf clubs, that so long as he retained such item he would not have suffered any
damage.”
Pl believe he won 835.40$ (in reality 5$). The OLC didn’t contractually promise this prize
because there was no consideration for the winnings.
Court says that evidence was clear that the computer printout was in error, but since he
relied on the printed statement to go out and spend 480 US $ on alcohol and
entertainment (which is not capital assets), he lost 480$ US and should be put back in
the situation he was before + the 5$ he actually won.
Bartlett v Squires (1990, Nfld SC) ............................................................................. SM

‘To decide this case I have to go no further than the case of Budai [which held] that if a
person expends moneys as a result of a negligent misstatement and purchases an item
he would not have ordinarily purchased, then his loss would be the difference between
the cost of that item and what he would realize when it was sold. If, however, the person
decided to keep the item, there would be no loss because the person would have that
asset. In this case, the plaintiff was in a position to either continue the course or to
abandon it. If he had abandoned it, then his losses would have been the loss of moneys
that he put into the course which were not refundable. Once he decided to keep the
asset, which is the learning that he acquired, he suffered no loss because he has the
benefit of that learning, that will be of assistance to him in the future. The plaintiff has,
therefore, suffered no damages.’
Facts: Fisherman was collecting EI and calls the government who was in charge of the EI
program, and asks if he is going to loose his EI coverage, the person said he could collect
EI and take a course. He doesn’t think he is going to lose it while he is in training. 
After 5 months, his EI benefit comes to an end.
RATIO: Court state the loss of the plaintiff to 0.  → There was no loss because what was
purchase was education, and it is something that he choose and it had a value in the
world, and it has a value to him. HE just converted his expenses into value. 

Beaver Lumber v McLenaghan (1982, Sask CA) ........................................................

346
Facts:
 bought prefab house from ∆, who recommended a third party to construct it.
Turns out that guy had never assembled a prefab home before, and it was a disaster.
Had things worked out as  hoped, would have had a house worth $37,709; actual
value: $17,000.
Expenses: $21,400 for land and materials; $3200 to ∆.
Projected position = $13,109 profit; actual position = $7600 shortfall.
So  sued for the expectation damages of $20,709.
Held: reliance damages are the appropriate measure.
Reasons : Shouldn’t treat the suggestion as a guarantee, just a careless statement. So, 
gets back the wasted money and is put in a break-even position. Status quo ante.
∆ induced  to enter the K, didn’t breach a term of their K. So, court puts him in pos’n as
if ≠ entered K.
Calcul: Price paid – value received for the contract with Nixon (3 235$ - (-4500)$) (Nixon
created no value) + consequential damages.
Recovering For Lost Opportunities
VK Mason v Bank of Nova Scotia (1985, SCC) .......................................................... 351

‘While I tend to the view that there is a conceptual difference between damages in
contract and in tort, I believe that in many instances the same quantum will be arrived
at, albeit by somewhat different routes. [T]he trial judge was wrong in subtracting
profit. [O]ne is entitled to assume that Mason would have found a profitable means of
employing itself had it not been induced to work on the Courtot project by the Bank’s
misrepresentation. This in my view is a reasonably foreseeable head of damage. In
equating Mason’s lost profit with the profit estimated on the Courtot project we are
simply saying that this is a reasonable estimate of what Mason would have been likely
to have made if it had decided to abandon the Courtot project and find other work. That
is to say, the lost profit on this contract represents the lost opportunity for profit on any
contract.’
Facts: Cournot Centre hired M to build a shopping mall. C’s project was financed by BNS.
M called BNS to ensure that C had enough financing for the deal. Trial judge found that
M would not have gone through with the deal if they thought C lacked the means to
pay. BNS assured M that C had enough money. However it became apparent that C’s
funds were not enough to meet construction costs. M sues BNS in tort for negligent
misstatement and asserts that BNS’s guarantees with respect to C’s finances were a
contract with M.
Issue: (1) Was there a contract between M and BNS? (2) Is the Bank liable for negligent
misstatement?
Holding: (1) No (2) Yes.
Reasoning: (1) Contract: M asks that the bank’s letter guaranteeing C’s finances be
interpreted as a unilateral contract. This requires the courts to imply too many terms in
order to create a valid contract. Further, there was no clear intent to create legal
relations.
(2) Torts: All the requirements for negligent misstatement are fulfilled. The bank had
special knowledge and induced M to enter in to a contract on the basis of negligent
statements about C’s financial viability. BNS is liable to M in torts for damages. The trial
judge did not award lost profits, yet clearly M would have found other business
opportunities if they did not contract with C. In this case it is fair to award them their
anticipated profits from C’s contract as their lost profits.
Ratio: (1) Negligent Misstatement requires (a) an untrue statement; (b) it must have
been made negligently; (c) there must have been a special relationship giving rise to a
duty of care; (d) there must be foreseeable reliance on the statement; (2) In some
commercial contexts, the measure of damages for contracts and torts will be identical,
because lost profits damages will be equivalent to the profits inherent in the contract.
Comment: The Bank’s special relationship with Mason seems to exist mainly because C
was one of their clients, so inducing him to enter a fixed-price construction deal with C
financially benefitted the bank.
Vita Health Co v TD Bank [1994] 9 WWR 360 ‘A company in the business of selling
goods does not lose the opportunity to sell to others because it has sold goods to a
particular party unless it is shown that the sale to the particular party so depleted its
supply of the goods in question that it was unable to effect other sales. That has not
been shown here.’
4. Misrepresentation, causation, and the burned of proof
(a) “Even if the Statement had been True the Same Loss would Have Occurred”
Factual vs falsity causation
Factual Causation: Was the loss L one that was caused by the fact that the (false) statement that
X is the case was made?

Falsity Causation: Was the loss L one that was caused by the fact that X is not the case?

(b) ‘’But for the Representation the Plaintiff would Have Made a Less Profitable Deal”
Rainbow Caterers v CNR (1991, SCC)........................................................................ 354

‘[I am taking it] as a fact that Rainbow would not have contracted had the estimate
been accurate. The conduct referred to in para.49 [CN taking too much food] would not
have occurred if there had been no contract, and therefore the loss caused thereby, like
all other losses in the proper execution of the contract by Rainbow, is directly related to
the negligent misrepresentation. The entering into of the contract is a link in the chain
with respect to the para. 49 losses. These losses are causally and directly connected to
the contract and the contract is causally connected to the negligent
misrepresentation....For these reasons, I conclude that the trial judge correctly assessed
the damages and the Court of Appeal was right to affirm his judgment.’
“The trial judge found a negligent misrepresentation likely to induce a representee to act
on it. This entitled him to infer that the plaintiffs relied on the misrepresentation leading
it to enter into the contract. This brings us to the next question: What portion of the
plaintiffs’ losses on the contract were caused by the negligent misrepresentation? …
[T]he plaintiffs’ losses may have been caused by: (a) the defendant’s negligent
misrepresentation; (b) other wrongful acts or omissions of the defendant, whether in
negligence or breach of contract; (c) the plaintiffs’ acts or omissions; (d) the acts of third
parties; and/or (e) factors unrelated to the fault of either the plaintiffs or the defendant.
The defendant is responsible for losses flowing from (a) or (b), but not for losses flowing
from (c), (d) and (e). The trial judge wrongly assumed that all the plaintiffs’ contract
losses must be attributed to (a) and made no findings with respect to the other
possibilities, notwithstanding the fact that the defendant C.N. led evidence on them.
These findings must be made if justice is to be done.” (Majority)
‘Once the loss occasioned by the transaction is established, the plaintiff has discharged
the burden of proof with respect to damages. A defendant who alleges that a plaintiff
would have entered into a transaction on different terms sets up a new issue. …. In the
absence of evidence to support a finding on this issue, should the plaintiff or defendant
bear the risk of non-persuasion? Must the plaintiff negative all speculative hypotheses
about his position if the defendant had not committed a tort or must the tortfeasor who
sets up this hypothetical situation establish it?’ (Dissent)
‘Although the legal burden generally rests with the plaintiff, it is not immutable. Valid
policy reasons will be sufficient to reverse the ordinary incidence of proof. In my opinion,
there is good reason for such reversal in this kind of case. The plaintiff is the innocent
victim of a misrepresentation which has induced a change of position. It is just that the
plaintiff should be entitled to say “but for the tortious conduct of the defendant, I would
not have changed my position”. A tortfeasor who says, “Yes, but you would have
assumed a position other than the status quo ante”, and thereby asks a court to find a
transaction whose terms are hypothetical and speculative, should bear the burden of
displacing the plaintiff's assertion of the status quo ante.’ (Majority)
P tendered a bid to supply meals to railway crews. Bid was based on a negligent forecast
by D as to the volume of meals that would be required and P lost money on the K before
terminating it.
Usually, where P enters into a transaction on the faith of a careless statement by D, P
is entitled to all the losses suffered on that transaction, on the assumption that “but
for” the negligent advice, P would have avoided the transaction altogether.
Where D can prove that P would still have entered into the transaction (though perhaps
on different terms) and would have suffered a loss, damages will be reduced. In these
situations, it cannot be said that all the losses suffered on the investment were caused
by D’s wrong because even in the absence of the wrong, P might still have made the
investment and might still have suffered a loss (though likely a smaller one)
In this case, court found that P would not have entered K but for D’s negligent
misrepresentation. P was entitled to recover all its losses from the K, including those
which may have not actually been caused by the negligent misrepresentations.