Asamera Oil Corp v Sea Oil & General Corp [1971] SCC Facts: Facts: Baud Corp (a subsidiary of Asamera) loaned 125,00 shares of Asamera to Brook, president of Asamera; he sold them in 1958 but was supposed to return them to Baud in 1960. Alta SC granted injunction against Brook forcing him to hold 125,000 shares. Action taken in 1960 was eventually dismissed but another began in 1966 where Baud sued for damages for breach of contract- he held that Brook breached contract to return the 125,000 shares; price of the shares fluctuated wildly over the period since the loan was made, but eventually their prices went up and Baud lost out on big earnings from not having the 125,000 shares.
Issues: what damages are Baud Corp (subsidiary of Asamera) entitled? Did they have a duty to mitigate?
Holding: Damages! SCC held that the plaintiff needed to show “some fair, real, and substantial justification” before a claim for specific performance could be insulated from the obligation to mitigate. If the plaintiff could show some “substantial and legitimate interest” in seeking specific performance as opposed to damages, then the plaintiff might justify its inaction in failing to mitigate.
Reasons: SCC held that where “circumstances reveal a substantial and legitimate interest in seeking specific performance as opposed to damages, then a plaintiff will be able to justify his inaction and on failing in his plea for specific performance might then [be able to] recover losses, which in other circumstances might be classified as avoidable and thus unrecoverable.” As Karakatsanis J. would later recognize when delivering the majority judgment in Southcott, “This does not mean that a plaintiff with such a claim should not attempt to mitigate; rather it recognizes that such a claim for specific performance informs what is reasonable behaviour for the plaintiff in mitigation.” (see below)
Asamera tells us that, as a general rule, a plaintiff will not be able to recover losses that could have been reasonably avoided.
