Particularly in employment cases 111

Primary distress suffered by an employee is caused by an employer exercising their contractual rights. The breach of K, if any, arises solely from the way the employer exercises those rights. Usually it’s because the employer fails to properly calculate the notice period. 111

The loss of notice is generally not the reason for the mental distress.  Have to establish a causal connection between a breach and the distress suffered. 111

Exceptions to the General Rule: Situations in Which Courts WILL Award Non-Pecuniary Damages 111

1. Where Breach of K Causes Significant Physical Inconvenience 111

To some extent, this is an expansion on the usual tort idea. If you’re physically injured, you can have damages. 111

For a long time, courts have allowed a slightly wider scope of stress and physical inconvenience. 111

Hobbs v. Southeastern Railway [1875] 112

Facts: Train stopped early,  had to get off and walk 10 miles in the rain. Significant physical discomfort as a result of the breach of K. 112

Held: court awarded monetary damages for the physical inconvenience. 112

Warton [BCCA] 112

Follows Hobbes 112

Facts:  bought a Cadillac, but it made a buzzing noise. Kept trying and failing to fix it. 112

Held: Compensated for the breach and the distressing buzzing, as well as for inconvenience of repeatedly taking the car in to the dealer to have it fixed. 112

Comments: probably the fancy nature of the car enhanced the foreseeability of the buzzing being a problem for . 112

2. Psychological Deliverables 112

Where the purpose of the K is to deliver a non-economic benefit, which is not delivered. 112

Brings the question back to a consumer surplus analysis. 112

Recall Wilson v. Sooter: central to the K for wedding photos was a promise to deliver an intangible benefit (wedding memories etc.) 112

Jarvis v. Swan Tours [1972, Eng. CA] 112

Lord Denning 112

Facts: disappointed vacationer sues for loss of enjoyment of vacation. ∆ offers to reimburse payment, but  claims above that. 112

Held: the compensation/expectation principle requires more than just reimbursement, because he expected the psychological benefit of a vacation. 112

Farley v. Skinner [2002, HL] 112

Facts:  argues house is worth less than it should be, due to airplane noise. Sues ∆ surveyor for damages. 112

Held: no compensation for economic difference in value, but psychological deliverable is compensable - $10k. 112

Reasons: 112

Airplane noise was there when he bought the house. 112

Note: in the market, even if  can prove he would have bargained for a lower price, the owner would have sold it to someone else at the market price. 112

No economic loss in this case. So, the only loss he can get would be disappointment/mental distress. 112

Psychological deliverable: specifically negotiated w/ surveyor for the information on airplane noise, which made it specifically deliverable as part of the K. 112

Goes beyond previous cases: object of K no longer has to be primarily a psychological deliverable  it can be a secondary aspect of the K. 113

Court gives $10k, and says that’s the top end of an award of this type. 113

Fidler v. Sun Life [2006, SCC] 113

Facts: Disability payments should have been made,  had to go to court to get them. Claimed damages for mental distress. 113

Held: $20k awarded. 113

Reasons: 113

Subtext/secondary purpose of insurance Ks is peace of mind. 113

Not just to protect against the financial risk, but so you don’t have to worry about that risk in the meantime. 113

Psychological benefit of having peace of mind while the K is in place. 113

Basically adopts Hadley v. Baxendale foreseeability requirements for determining whether psychological harm is compensable. 113

But, to apply the foreseeability rule, you look at the object of the K/what was promised.  so, it’s not really a huge step forward. 113

Comments: note that the award is roughly equivalent to that in Farley  still relatively modest. 113

And it was supported by medical evidence in this case. 113

It’s not just about missing the psychological security of having an insurance K, but getting more sick by having to live without disability benefits. 113

Aggravated Damages 113

Can mean ambiguously one of two things: 113

1. Damages over and above your pecuniary damages  aggravated in the sense that they are more than pecuniary. 113

2. Damages where the loss is greater than it otherwise would have been because of aggravating behaviour by the ∆ 113

Most common in wrongful dismissal cases, where damages are caused by aggravating behaviour. E.g. not only did employer fail to give notice, but abused employee on the way out. 113

Turczinski v. Dupont Heating and Air Conditioning [2004, ONCA] 113

Facts 113

Heating contractor didn’t do the job right. 113

All parties agreed that it cost $10k to fix the problem/clean up the mess. 113

But  also claimed loss of rent for three years, and mental distress. Argues special negotiations. 113

Had previously undiagnosed depression, bi-polar disorder, OCD  the experience w/ the heating contractor triggered an episode that lasted for three years. 113

Held: no mental distress award. Lost rent for 1 year awarded as reasonable mitigation period. 113

Reasons 114

Mental distress claim rejected: 114

∆ didn’t have special knowledge to the threshold necessary to put them on notice.  may not have fully known, as it was undiagnosed at the time. 114

Policy: fairness. Unfair to hold a heating contractor to that level of risk in entering into Ks with customers. 114

Policy: economic efficiency  people should be able to conduct business on the basis of some settled expectations of what their risk will be. 114

Policy: don’t want contractors to avoid dealing with people who have disabilities due to added risk 114

Lost rent: 114

Normally, would expect a person in this situation to mitigate within one year, so that’s the amount given. 114

She couldn’t mitigate, but the court says that risk shouldn’t be borne by ∆. 114

Having a psychological thin skull is not an excuse for failure to mitigate in a contract context. 114

Note: in tort, pre-existing thin skull condition will make ∆ responsible if  fails to mitigate. 114

Rationale: in tort,  hasn’t agreed to deal with ∆, and needs more protection as a result. 114

Wallace v. United Grain Growers [1997, SCC] 114

Unless there is an independently actionable wrong, we don’t award damages for mental distress. 114

Breach of an obligation of good faith allows court not to award damages for mental distress, but to “bump up” the notice period. 114

Since Wallace, courts have said: 114

1. No damages without IAW 114

2. Obligation of good faith in employment contracts. No damages for mental distress as a result of breach, but increased notice period available. 114

It really looks like they’re compensating mental distress under the cover of increased notice. 114

Honda v. Keays [2010, SCC] 114

Main effect: we no longer call Wallace damages an ‘extended notice period’. 114

Damages will be awarded not through an arbitrary extension of the notice period, but through an assessment of the actual damages arising from the wrongful act. 114

Bringing employment Ks into conformity with the Fidler model: where a component of the K clearly promises a benefit, can add to damages, measured in the ordinary way. 114

Fidler said IAW ≠ required; Honda reaffirmed this. 114

Hadley v. Baxendale principle: all recoverable where reasonably foreseeable. BUT, you still need something in the K that makes it foreseeable – e.g. peace of mind Ks, etc. 115

Reliance Damages 115

General 115

Conceptual basis: status quo ante 115

Designed to put you in the position you would have been in, had you never entered into the K in the first place. 115

Reliance is the standard measure in negligence law (misrepresentation), and an alternative measure in K law 115

Reliance damages ARE available: 115

Where there is no reasonable expectation  reliance is used as the maximum claim in contract [see e.g. Esso v. Marden] 115

When expectation damages are difficult to prove  reliance may be available as an alternative. [see e.g. McRae v. Commonwealth Disposals, Anglia v. Reed] 115

Reliance damages ARE NOT available: 115

When there are no expectation damages, or where reliance would give  a larger award than they would get with expectation damages  cannot put  in a better position than if the K had been performed [see Bowlay Logging] 115

Where expectation damages are calculable, they are the ceiling.  can’t put self in better position by claiming reliance instead of expectation damages. 115

To award reliance damages in excess of expectation would unsettle the allocation of risk b/w the parties 115

Where Expected Profits are Not Determinable: 115

Courts will assume at least a break-even scenario, and the onus is on ∆ to disprove this. [Sunshine Vacations v. Hudson’s Bay Company] 116

Where we don’t know what the outcome of a K would have been, we’ll at least assume that  venture would have broken even (i.e. earned enough gross revenue to cover the expenditures under the K.) 116

Then the onus shifts to ∆ to prove that  would have lost money on the K [so that Bowlay Logging applies] 116

Note: problem in Sunshine Vacations: 116

CA said you can’t have lost profits and wasted expenditures, because that’s double compensation. This is true only if lost profits means gross profits, because if it’s net then the expenses have already been factored in and thus would not be compensated twice. 116

HOWEVER: There was $120k in expenses, and trial judge said  would have made $100k in profit. 116

If the $100k profit is net profit, there’s no overlap and the  should get both. 116

If profit is gross profit, and therefore double compensation (as stated by the court), then wouldn’t the presumption of  breaking even be rebutted? 116

Misc Rules on Reliance Damages 116

Courts may award lost opportunity amounts in reliance damages [see e.g. Esso v. Marden] 116

Court characterized ’s lost profits as reliance damages: if he had not invested in the gas station, he would have gotten a different job/source of income. So, he was entitled to his opportunity costs  the amount he would have earned had he never entered into the K. 116

Note: reliance damages may also include amounts thrown away trying to make the K work. These attempts to mitigate are a legitimate inclusion in wasted expenditures, but they are capped by reasonableness. 116

Reliance Damages for Negligent Misrepresentation 116

Reliance is the standard measure in negligent misrepresentation cases 116

Negligent Misrepresentation Damages: Requirements (Hedley Byrne Principle) 116

1. Duty of care  must be an obligation in the relationship, or an undertaking of responsibility 116

2. Breach of that duty  statement made without taking due care 117

3. Statement is untrue 117

4.  relies on the statement to his/her detriment 117

5. Reliance is reasonable 117

In context – e.g. correlative expertise between parties. 117

Application 117

Applies in pure tort cases, and also in contract cases. 117

The basis of damages is the difference between a promise/guarantee and a negligent statement  reliance, rather than expectation 117

SCC in BG Checo: 117

“[T]he main reason to expect a difference between tort and contract damages is the exclusion of the bargain elements in standard tort compensation.” 117

This is why K law defaults to expectation damages and tort defaults to reliance. 117

Beaver Lumber v. McLenaghan 117

Facts: 117

 bought prefab house from ∆, who recommended a third party to construct it. 117

Turns out that guy had never assembled a prefab home before, and it was a disaster. 117

Had things worked out as  hoped, would have had a house worth $37,709; actual value: $17,000. 117

Expenses: $21,400 for land and materials; $3200 to ∆. 117

Projected position = $13,109 profit; actual position = $7600 shortfall. 117

So  sued for the expectation damages of $20,709. 117

Held: reliance damages are the appropriate measure. 117

Reasons 117

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. 117

∆ induced  to enter the K, didn’t breach a term of their K. So, court puts him in pos’n as if ≠ entered K. 117

VK Mason v. Bank of Nova Scotia [SCC] 117

Facts 117

Negligent misrepresentation re financing. Bank tells builder everything is fine and project is properly financed. 117

Builder doesn’t get paid. 117

 claimed for lost cost of doing the building, and the amount still owing on the K. 117

TJ awarded both the lost expenditures and lost NET profit (so no double compensation problem) 117

Issue: But can  only get reliance damages, per Beaver Lumber and other cases? 117

Held: Trial judge award upheld. 118

Court says they aren’t awarding lost profit on the K  awarding opportunity costs (following Esso v. Marden) 118

But...they gave actual profit for this job, not some other job. 118

It’s a -favourable assumption: if they could do this well in this situation, court assumes  would do equally well elsewhere in the market. 118

Note, though, that it’s only a presumption – can be rebutted, but onus is on ∆ to do so. 118

Rainbow Caterers v. CNR 118

Facts: 118

 caterer was given incorrect information about the number of meals to be provided. 118

Entered K on the incorrect information, and in carrying it out lost $1 million, which it claimed in damages. 118

Issue: everyone agreed that reliance damages applied, but the question is how to calculate them. 118

∆ argued there are two roots of reliance: 118

1. If ∆ hadn’t made statement/had made true statement,  wouldn’t have entered K, wouldn’t have lost money 118

2. If ∆ hadn’t made statement/had made true statement,  would still have entered K, but on different terms. 118

∆ says, therefore, that the question isn’t what ’s total losses are, but rather what the difference is between the loss actually suffered and the loss  would always have suffered on the alternative K it would have entered into. 118

Held: for . Typical reliance damages apply. 118

Reasons – Sopinka: 118

∆ argument is not invalid overall, it just doesn’t apply in this case. 118

Principle: where there has been a negligent misrepresentation inducing a K, a court will presume that had the negligent misrepresentation not been made,  wouldn’t have entered into the K. 118

It’s a presumption – onus on ∆ to disprove. ∆ bears the risk. 118

Note: in BG Checo v. BC Hydro, ∆ was able to prove that  still would have entered a contract. 118

In that case, damages are the net difference b/w loss actually suffered on the actual contract (contract A) and the loss that would have been suffered anyway, had  entered into contract B. 118

Note: in tort, reliance damages CAN exceed expectation   recovers all of its losses even if it might have suffered some anyway in a different situation. 118

Dissent – McLachlin 118

Even if we assume that  wouldn’t have entered into the K, that doesn’t mean they should be entitled to all of the losses suffered as a result of entering the K  have to consider principles of remoteness and causation. 118

McLachlin senses that  lost such a high amount not just because ∆ gave bad estimate, but because  was incompetent  work crews were eating too much,  wasn’t properly controlling the business. 119

McLachlin says some portion of the loss suffered is attributable to  bad mgmt/poor business practices. 119

Sopinka for the majority says it doesn’t matter, because  would never have had the chance to be incompetent if they hadn’t entered the K. 119

McLachlin says ∆ should only suffer the consequences of  reliance, as opposed to the damages that arise as a result of their own incompetence. 119

This argument has not yet been resolved in Canadian law. 119

Negligence and Reliance in Professional Services 119

Breach of K cases  e.g. K to hire a lawyer or surveyor to perform service, which is done negligently. 119

Issue: reliance vs. expectation 119

The answer is generally found by following causation: what did ∆ promise, and what loss is caused as a result of that promise? 119

Posesorski 119

Facts 119

Due to ∆ solicitor’s negligence,  entered into deal for a property w/ unperfected title (encumbrance). 119

Purchase price: $325k. Actual value w/ encumbrance: $225k. 119

 held the property for many years, then came to an agreement with the option-holder. Cost of eliminating: $260k. 119

Lost rents & expenses: $39,400 119

Legal expenses: ~$40k 119

Issue:  wanted expectation damages 119

Held: reliance only. Expenses, plus $80k for the lost use of the $100k (difference in value.) 119

Reasons:  could never have entered into the deal they wanted, so they couldn’t get expectation. 119

Messineo v. Beale [1978, ONCA] 119

Facts:  wanted to buy Murch’s Point property. Purchase price $400k, expected value $500k. Market value was actually $408k due to title defect. 119

Issue:  sought expectation – expected $100k profit 119

Held: Can’t have expectation damages. 119

Reasons: 119

There was no chance that  could have actually obtained a property worth $500k. 119

Promise is that lawyer would take care in identifying title defects  had promise been performed, title defect would have been found, but  still never would have obtained a property worth $500k. 120

Kienzle v. Stringer 120

The rule limiting  to out-of-pocket expenses is not invariable  may sometimes be expectation 120

Facts: 120

Three siblings. Parents owned a farm. Parents died and son wanted to stay on the farm and work it. Hired ∆ lawyer to help him buy the farm from his siblings. 120

Lawyer prepares a K to sell the farm from the estate, because he thought the estate still owned the farm. SO, K b/w estate and son, and cash from that goes into the estate to be distributed to the siblings. 120

The lawyer was the administrator, so he should have known, but the estate had been sitting for so long that by operation of a rule of law the property had passed to the sisters. 120

So,  goes through with K, estate is paid full price, but then it turns out the estate can’t give him the farm, because the sisters each have a third. 120

One sister just gives him her third, because she knows he paid the price and she’ll get her cut from the estate. 120

The other sister, though, makes him buy her third afresh, since the agreement with the estate was invalid. 120

So  sues solicitor. 120

Held: Damages = cost of perfecting title 120

Cost of buying the farm from the mean sister. 120

Reasons: 120

Causation   hired lawyer to arrange purchase of farm. Had ∆ not been negligent, he would have prepared a K with the sisters, not the estate. In this case, the amount of money to put  in the position he would have been in = his additional costs. The focus is on what was promised. 120

So, negligent performance of a service may or may not result in expectation damages, depending on an analysis of what was promised, what the K called for, and what loss the breach caused. 120

Basics 120

Restitution is both a remedy and a basis of liability. 120

Remedy: conceptualizing award to  based on wrongly-acquired benefit by ∆ 120

Restitution as a remedy can be ordered either in monetary form (damages, accounting), or through another type of court order (proprietary remedies, e.g. tracing, constructive trusts) 120

Remedial Advantages: 121

Focus on ∆ benefit as opposed to  loss. Can be very useful from an evidentiary perspective: 121

Overcomes problems of proof  e.g. where  can establish ∆ benefit but loss is speculative; onus on ∆ to show expenses to deduct from total benefit 121

Strategically, ∆ gain may be larger amount than  loss [Whitwham, Strand Electric, Blake] 121

May provide in rem relief (as opposed to in personam)  in rem may give  priority over other creditors, or a claim to specific property-security 121

But see Philips v. Homfray 121

May provide some procedural advantages 121

E.g. limitation periods – may expire for ordinary tort, but different for K. 121

Established Categories of Restitution Remedy: 121

Money/services paid by mistake (to ∆ or to 3rd party) 121

Waiver of tort (for trespass, conversion, etc.) [Whitwham, Strand] 121

Where ∆ derived a benefit from committing a tort, but hasn’t really caused  loss,  can “waive the tort” and sue as if they were partners. 121

Basically, asking court to treat it as a contract case, where  and ∆ were partners in an enterprise, and an implied term was that  would get the benefit - otherwise why would  have “approved” the act? (They didn’t, really, but that’s the waiver of tort) 121

It’s a fiction, used to give a higher level of award without actually changing the law. 121

This whole fiction has now been abolished, and courts just accept that sometimes there is a restitutionary remedy for torts. 122

Gains from intentional torts (sometimes disguised as punitive damages?) [Whitwham; Broome v. Cassell] 122

Requirements [per Broome v. Cassell] 122

1. Knowledge that it’s against the law 122

2. Conscious choice to continue because the prospects of advantage outweigh the prospects of loss/penalty 122

Gains from crime [Garland; Blake] 122

Breach of fiduciary duty 122

Intellectual property – patents, copyright 122

Breach of confidence [Peter Pan; Seager v. Copydex; Lac Minerals] 122

If courts were confined to compensatory (expectation) damages, would be encouraging breach of K by creating an incentive to try, since the worst that would happen is you’d have to keep the original bargain. 122

Courts want to encourage bargaining in good faith. 122

Courts are comfortable with restitutionary remedy where there was a special relationship of confidence – not just any breach of K case will merit these. 122

Necessitous intervention 122

To get compensation for benefits conferred in an emergency – i.e. if there had been time, ∆ would have agreed to pay  for the service of saving their life/property 122

Service per quantum meruit (spousal cases) 122

Total failure of consideration 123

Void/voidable Ks (fraud, unconscionability, mistake, frustration) 123

Advance payments/benefits under Ks that fail to materialize 123

Benefits conferred under an unenforceable K [Degleman (1954, SCC)] 123

Domestic property  constructive trust cases [Becker v. Pettkus] 123

Breach of K? Maybe. 123

Requirements for Restitution to be Granted 123

[per Garland] 123

1. ∆ must have acquired a benefit 123

The benefit can be positive (property, money, services) or negative (i.e. savings of some kind) 123

Does not have to be pecuniary, but must be quantifiable in monetary terms. 123

Onus on  to prove this component. 123

2. Detriment to  (causal connection) 123

Onus on  to prove. 123

3. Must be an absence of a juristic reason for the benefit (i.e. it must be unjust) 123

Most common juristic reasons: gifts, Ks. 123

Also, where required by operation of law. 123

Onus on  to prove 123

4. Other reasons to deny recovery 123

Onus on ∆ to prove this, once  has established benefit, detriment and absence of juristic reason. 123

Possible reasons: 123

Public policy 123

Reasonable expectations [see e.g. Garland] 123

Would it be unduly oppressive/surprising for ∆ to have to pay back? 123

5. Defences 123

∆ must prove 123

e.g. change of position; delay; estoppel; acquiescence 123

6. Choice of Remedy 123

Money 123

Constructive trust 123

7. Quantification 123

Restitution in Contract 123

Can restitution be a remedy for breach of K? General rule is no, so far. 123

Competing policies: efficient breach vs. unjust enrichment 123

Efficient breach theory: generally,  is entitled to compensation for loss, but ≠ for ∆ savings/benefits. [See Bank of America v. Mutual Trust (2002, SCC)] 124

But restitutionary motives are often at work in defining “compensation” [recall Groves] 124

Increasingly, in a narrow class of cases, restitution has been made an explicit contractual remedy [Wrotham Park; Blake] 124

Limitation: it’s not a general remedy  must be a special case for disgorgement 124

(a) as a substitute for equitable relief? 124

(b) as required by public policy? 124

So, basically, it’s a high threshold to get restitution. 124

Note: Wrotham Park is still considered a leading case, but it’s not certain. [see e.g. Surrey Council v. Bredero; Jaggard v. Sawyer] 124

Where a wrong has resulted in benefit for ∆ at  expense, courts conceptualize the transaction as ∆ having avoided a bargain with . 124

Quantum  Various Approaches 124

Compensatory: 124

1. Reasonable wayleave, rent [see e.g. Whitwham; Strand Electric; Wrotham Park] 124

Where the wrong consists of use of  property, court measures unjust enrichment by the amount ∆ should have paid had they bargained for the use in advance. 124

2. Opportunity costs 124

3. Royalty (capitalized) [see e.g. Seager] 124

Note: really, all three of the above categories are about opportunity costs, and are compensatory in nature. Courts just start the quantification by looking at ∆ benefit. 125

Accounting/Disgorgement: 125

4. Full value of wrongly acquired benefit (through constructive trust) [Lac Minerals] 125

5. Full gross revenue [see e.g. Blake] 125

Note, though, that courts will often apply a net revenue figure, recognizing that benefit to ∆ ≠ full amount received, but the full amount less expended $/effort. 125

But in Blake there was some serious moral outrage going on, and that impacts the remedy. 125

6. Account for full net profit [see e.g. Peter Pan; Lever v. Godwin; Phillips v. Homfray] 125

∆ has taken a benefit from . 125

7. Apportionment [argued unsuccessfully in Peter Pan; see Edwards v. Lees] 125

Punitive: 125

8. Punitive damages based on comparative profit/savings [see e.g. Townsview; Broome v. Cassell] 125

Quantum Meruit Awards: 125

9. Quantum meruit based on market value (e.g. value received measure often applied in domestic cases 125

Often where contribution from one side is non-monetary (i.e. one spouse/cohabitant bringing in salary, the other providing childcare or other work in the home) 125

Assess on quantum meruit basis and impose a constructive trust over the amount. 125

Labour cost of cooking, cleaning, childcare, but also mgmt aspect. How would the work be priced in the marketplace? 125

10. Quantum meruit based on joint enterprise (e.g. value survived in domestic cases) 125

In this measure, we don’t get too bogged down in the specific contributions. 125

Ongoing contributions into joint property, assess on the current value (hence “value survived”), and then impose a constructive trust on that current value. 126

Distinguishing Between Some Common Types of Damages 126

Non-Pecuniary  Compensatory 126

Damages for things that can’t be easily calculated in monetary terms. 126

Still awarded under the Hadley v. Baxendale principle of compensation for benefits promised under a contract. [see e.g. Wilson v. Sooter; Ruxley; Fidler v. Sun Life] 126

No especially malicious behaviour or wrongdoing by ∆ is required – just breach of K. 126

Commonly awarded in tort cases  where personal injury is severe enough to cause pain/suffering, lost amenities, loss of enjoyment of life, etc, it’s considered foreseeable, and included as part of compensatory damages. 126

Aggravated  Compensatory 126

Courts are still working this out. 126

Basically, aggravated damages are compensatory damages in situations where there is an element of malice or high-handedness in the way ∆ has breached the K or committed the tort. 126

Because of the particularly bad way in which the breach has happened, ’s damages are greater than they would have been otherwise  ∆’s conduct aggravated the harm to . 126

Will be awarded in tort, and sometimes in K, where courts want to provide increased compensation for additional harm suffered as a result of ∆ bad behaviour. 126

Punitive  Non-Compensatory 126

A step above aggravated damages  punishing bad behaviour regardless of  damage. 126

Can be cumulative with regular non-pecuniary and aggravated damages [see e.g. Hill v. Church of Scientology] 126

When are Punitive Damages Available? 126

Concerns 126

Punitive damages are a strange hybrid, and many judges are uncomfortable with the concept of punishment in a civil action. 126

Concerns against awarding punitive damages: 126

1. Windfall to   beyond compensation 127

2. Quasi-criminal mechanism, without the procedural protections of criminal law 127

Higher standard of proof (BRD vs. BOP) 127

Jury; guidelines in terms of sentencing 127

Not codified as in the Criminal Code  definition is just “offensive, high-handed, malicious, etc.”, something that offends the conscience of society/the court. 127

3. Award amounts are extremely varied 127

The UK Position 127

Broome v. Cassell [1972, HL] 127

Shows the English approach to punitive damages. 127

Two categories of wrongs that can merit punitive damages. 127

Facts 127

Defamation case (most punitive damages cases are defamation cases) 127

Follows a typical model: publisher/writer knows something is untrue but publishes anyway because they will get more sales. 127

Issue: compensatory damages would be less than the value ∆ gained. 127

Held: minimal punitive damages awarded ($5000) – didn’t strip ∆ of the full gain. 127

Reasons 127

Punitive damages act as a deterrent, but to allow pure punishment contravenes the principles that have evolved to protect offenders. 127

No definition except in terms too vague to be admitted to a criminal code; 127

No limit to punishment except that it can’t be unreasonable 127

No method for appeal aside from alleging a procedural mistake – can’t appeal the sentence itself. 127

If the court had felt it could go so far, it would have abolished punitive damages entirely. 127

But, that would be a legislative act, so instead, just gathered all precedents and fit them into two categories in which punitive damages can be awarded: 127

1. Oppressive, unconstitutional and malicious conduct by government agents; or 127

2. Civil wrongs (torts) committed consciously with the intent of earning a profit where the tortfeasor has calculated that the profit will exceed the amount of compensatory damages to  127

It’s important to read this decision in the context of the court trying to narrow the availability of punitive damages. 127

Canadian Jurisprudence 127

In Canada, punitive damages are much more widely available than in the UK since Broome v. Cassell. 127

It’s not controversial at all to use punitive damages in torts cases 128

Very common in intentional tort cases  assault, battery, esp. sexual assault cases. Also defamation. 128

Controversial issue, though: double penalty. 128

What about cases where there’s already a criminal sanction in place in relation to the same conduct – can a civil penalty be applied as well? Is this double jeopardy? 128

Canadian courts say this doesn’t bar a civil action, though the existence of a criminal charge will be an important consideration in the civil trial and any damages assessment. 128

Breaches of fiduciary duty, breaches committed consciously to earn profit  available. 128

Negligence cases  available [see e.g. Robitaille v. Vancouver] 128

Contract cases  almost impossible [see Vorvis v. ICBC]. Until recently, never available [but see Whiten v. Pilot]. 128

Doctrine of efficient breach tends to predominate. 128

But, where a secondary provision of the contract is breached, may recover punitive damages  available where the K is breached, and also something else actionable (i.e. other than the primary deliverable) is breached. 128

This is a narrow window [see e.g. Fidler v. Sun Life, in which the court declined to award punitive damages to an overly aggressive insurance company, because a robust and assertive defence by an insurance company of its position is not bad faith.] 128

In Whiten, ∆ exploited the bad financial position of s and attempted to delay and prolong proceedings to force  into dropping their claim. ∆’s own investigator said it wasn’t arson. 128

So, key factors are: vulnerability of  and intentional conduct of ∆ aimed at grinding down the customer with no intention of behaving honestly. 128

Counter-argument: punitive damages might also have been retrievable through an action for intentional infliction of mental distress, fraud, etc. 128

There must be an independently actionable wrong in order for punitive damages to be awarded [Whiten]. 129

US Jurisprudence 129

Some notorious US cases were referenced by the SCC in Whiten, showing the dangers of an out-of-control state of punitive damages. 129

However, in those cases, there is often a backstory to explain the high damages awards. [see e.g. Lebeck v. McDonalds; BMW v. Gore] 129

II. Limiting Factors 129

Intro to Limiting Factors: 129

Things in the law of damages that protect ∆s 129

Considerations of courts when determining and limiting damages: 129

Harm  what is the loss suffered by ? 129

Justice as proportionality  there should be balance b/w wrong and remedy 129

Self-help or individual reliance by s  Sometimes s are in best position to mitigate consequences of a civil wrong 129

Efficiency  not all wrongs are necessarily things we want to discourage. Courts are cautious in creating incentives/disincentives relating to particular activities/conduct 129

Judicial Administration  ease of administrating remedies. It’s impossible to achieve perfection in this, and very expensive. Sometimes courts will adopt seemingly-arbitrary rules to limit damages just because the quest for perfection isn’t worth the effort. 129

Hadley v. Baxendale 129

This case is always the starting point for policy and law on remoteness of damages. 129

Facts: crankshaft sent away to get fixed; delay resulted in loss of profit. 129

Held: court refused to award lost profits. 129

Reasons: 129

Profits will always be lost, but perfect compensation isn’t the only goal. 129

The court set out an approach that has been seen as very restrictive – The Foreseeability Rule: 129

“Now we think the proper rule in such a case as the present is this: Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated.” 130

“But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract. For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case, and of this advantage it would be very unjust to deprive them.“ 130

It’s a pretty strongly policy based rule: 130

People should be able to operate based on common sense assumptions. If this isn’t the case, it would be really bad for commerce, because everyone would have to spend time worrying about all the possible consequences of any action they take. 130

It makes sense to facilitate risk-planning  that’s what contract is all about. We want to encourage parties to privately plan risks. 130

Note: this case was decided before: 130

Limited liability  the case was b/w entrepreneurs personally instead of companies 130

Liability insurance  there were no insurers for this sort of thing. 130

The words of the case aren’t really as strict as they sound, anymore, in light of these developments. 130

Parsons (Livestock) Ltd. v. Uttle Ingham [1978, QBCA] 130

Facts: 130

Lack of ventilation in storage hopper resulted in pigs dying of ecoli when their food went toxic. 130

Issue: is vendor responsible for the pigs’ death? 130

Held: Not too remote. Vendor liable. 130

CA overruled TJ, who found that it was not reasonably foreseeable that mouldy pignuts would cause ecoli in pigs. 131

Reasons: 131

An unfit hopper, the point of which is to store food, could foreseeably cause illness in pigs. 131

Comments: 131

It’s all variable depending on how you ask the question  Hadley can be flexible, and courts manipulate it depending on how the question is framed. 131

Apparently, no expert in pig food or pigs would ever think that mouldy pignuts would result in ecoli – it’s extraordinary. But, the less you know about pigs, the easier it is to say that improper food storage could cause illness. 131

So, don’t get bogged down in statistical probabilities or the words  it all comes down to what the court thinks is a fair allocation of risk. 131

Firms that design, manufacture, sell and install food storage devices should be responsible for the risk of bad food caused by the device malfunctioning. 131

People who sell products to store food shouldn’t be surprised at being held responsible for food that has been negatively affected by their faulty product. 131

They probably won’t be unfairly surprised at that responsibility, even if a pig expert (i.e. the farmer) would have been completely surprised by what happened. 131

Kienzle v. Stringer [1981, ONCA] 131

Facts 131

Recall: family farm dispute among siblings – son wanted to buy but lawyer made deal with estate instead of with siblings. 131

As a result of the delay in acquiring the farm,  missed an opportunity to buy another farm (because the sale was predicated on the sale of the family farm) 131

Issue: 131

 action against lawyer for cost of perfecting title (which he got), but also for: 131

1. Lost profit of $20k (because he stopped farming for two years) 131

2. Lost secondary transaction 131

Lost profit on the acquisition of the second farm – increased in value by $44k by trial.  claimed $23k, the difference b/w appreciation on the farm lost and appreciation on the farm he had. 131

Held: $10k for one year lost farming profit, nothing on the secondary transaction. 131

Reasons: 131

Although the solicitor’s negligence did cause all the future losses, the court wouldn’t award  damages for all of them. 131

Lost farming profit: one year was reasonable amount of time to disentangle himself from the mess. 131

Lost secondary transaction profits: 131

Doesn’t even go to Hadley v. Baxendale, just goes to policy: floodgates concern if lost opportunity costs could be awarded for land sale transactions. 132

At the bottom line, it’s just kind of unfair to make a solicitor responsible for this risk, because a second transaction that a person was going to enter is entirely out of ∆’s control. 132

It would be disproportionate to the amount the solicitor was paid and the risk he agreed to take on to give this risk to him too  proportionality. Fee is calibrated to value of property and associated risks, not in wider context. 132

Basically, court says we draw an arbitrary line because we have to know to stop somewhere, and the policy is to stop at the second transaction. 132

Matheson v. Canada [2000, NSCA] 132

Facts:  construction company successful bidder on federal gov’t project, but gov’t wrongfully cancelled K midway through and called ’s completion bond (a guarantee of satisfactory performance).  sued for breach of K and won, recovering all losses on the project. 132

Issue:  also sued for loss of subsequent projects – damage to reputation b/c of cancelled bond. 132

Held: no recovery of subsequent losses 132

Reasons 132

Although government did technically cause the loss of subsequent transactions, it’s not fair to hold them responsible for something they couldn’t foresee at time of K. 132

Court doesn’t want to go into statistical probabilities and the likelihood of this happening – just goes with what seems generally fair. 132

It wouldn’t be just to find that ∆ had taken on the risk of subsequent transactions. In contract law, one party doesn’t normally become the insurer of the other party’s financial health. 132

Summary of Remoteness 132

Issue is fairness 132

Policy is to encourage certainty, dispute resolution, and allocation of risk 132

So, consider: 132