Midterm - Intro, Expectation, Reliance

Question 1

Remedial Choice: Introduction

Why are remedies important? Cite the case.

Answer 1

Ashby v White - “if the plaintiff has a right, [s]he must of necessity have a means to vindicate and maintain it”

issue in the courts is: how to vindicate and maintain?

Question 2

Remedial Choice: Introduction

What is the objective of a damages award?

Answer 2

Tort: restore plaintiff to pre-tort position

Contract: restore plaintiff to position if contract performed as promised

Question 3

Remedial Choice: Introduction

What factors affect a court’s assessment of damages?

Answer 3

Outcome determined by: - judicial discretion - balancing interests - social and economic factors - public policy

Question 4

Remedial Choice: Introduction

What interests can be protected by a damages award? Briefly describe each.

Answer 4

1. Restitution Interest - prevents unjust enrichment; restore status quo; quantum is value of D’s gain
2. Reliance Interest - usual measure of damages in torts; purpose is to restore; secondary remedy for K
3. Expectation Damages - usual for K breach; restore
4. Punitive Damages: punish def and deter

Question 5

Remedial Choice: Introduction

Describe the Restitutionary Interest (Purpose, Quantum)

Answer 5

1. Restitution Interest
   - prevents unjust enrichment
   - restore status quo (i.e restorative justice)
   - quantum is value of D’s gain (disgorge unjust profits)
   - remedy for wrongful gain

Question 6

Remedial Choice: Introduction

Describe the Reliance Interest (Purpose, Quantum)

Answer 6

2. Reliance Interest
   - purpose is to restore to pre-breach
   - usual measure of damages in torts
   - secondary remedy for K breach (reliance loss/wasted expense)

Question 7

Remedial Choice: Introduction

Describe Expectation Damages (Purpose, Quantum)

Answer 7

3. Expectation Damages
   - purpose: restore plaintiff to pre-breach position
   - primary measure of damages for breach of K
   - based on expectation value or expectancy

Question 8

Remedial Choice: Introduction

Describe Punitive Damages (Purpose, Quantum)

Answer 8

4. Punitive Damages
   - purpose: punish defendant and deter wrongful conduct
   - no correlation w/ P’s loss - focus is on D’s conduct
   - awarded for intentional/reprehensible conduct (rarely for contractual breach)

Question 9

Remedies: Introduction

What two types of relief are available?

Answer 9

Substitutionary/Monetary - substitute money for loss; not direct relief, but suitable; MOST COMMON

Specific Relief - much rarer; specific performance or injunctions –> used where monetary remedy inadequate to protect the interest at stake

Question 10

Expectation Damages

What is included under expectation damages?

Answer 10

• Pecuniary and non-pecuniary losses
• wasted expenses
• lost profits
• consequential losses (only recoverable if reasonable) (Ticketnet Corp)

Question 11

Expectation Damages

How are expectation damages assessed? What evidence is relevant? Cite the case

Answer 11

• difference between P’s expected financial position absent breach and actual position due to breach
• profit P would have made, if any
• Relevant evidence: P’s past sales, what is reasonable in circumstances (i.e. expert evidence) –> Case: Agribrands Purina

Question 12

Expectation Damages

What justifies the category of expectation damages? (since they are only hypothetical)

Answer 12

Note: This slide is less important (not in new lesson plan)

• distributive justice/legal construct (Fuller and Purdue)
• relatively new –> in response to capitalism and need to protect profit
• moral argument, psychological, will, economic, social policy, economic efficiency

Question 13

Expectation Damages - Lost Profits

What are lost profits? Cite the cases

Answer 13

Canlin; Magnussen - Lost profits = past and FUTURE losses DIRECTLY CAUSED by the breach; includes lost opportunity

Question 14

Expectation Damages - Lost Profits

What is the TEST for lost profits?

Answer 14

Test: establish 1) causation (must be direct consequence) (Magnussen) and 2) reasonably foreseeable AT TIME K was made (usually foreseeable in commercial transactions (Canlin))

Question 15

Expectation Damages - Lost Profits

What factors reduce damages for lost profits?

Answer 15

• Contingencies: contingencies that would have affected P’s profits will be facotred in (Magnussen)
• Award will be reduced for expenses saved due to breach (Ticketnet)
• Losses must be reasonably foreseeable (e.g. Baxendale)

Question 16

Expectation Damages - Lost Profits

Describe how opportunity to mitigate affects recovery of lost profits.

Answer 16

• OPPORTUNITY to mitigate is key; if P could have mitigated but failed to, loss not recoverable (Canli)
• Lost profits compensable UNTIL reasonable mitigation becomes effective (Sunnyside Greenhouse)

Question 17

Expectation Damages - Lost Profits

What will the Court consider in determining reasonable mitigation?

Answer 17

court will consider:

1) nature of goods,
2) timing of breach, and
3) nature/effect of breach (i.e. if the D has caused loss of reputation and goodwill, that will impair ability of P to mitigate)

Question 18

Expectation Damages - Lost Profits

Can the P claim for both gross profits and reliance/wasted expenses? What about net profits and wasted expense?

Answer 18

NO, because would amount to double recovery and unjustifiable windfall.

BUT CAN claim for both NET profits and wasted expense (i.e. expectation and reliance) (Ticketnet), including wasted expenses BEFORE the breach.

Question 19

Expectation Damages - for Breach of K w/ Alt Mode of Performance

Summarize how damages will be assessed where there IS a minimum level of performance specified

Answer 19

When MINIMUM level of performance specified

• if D has discretion: P is awarded for lost profit based on MINIMUM level D was obliged to perform (Hamilton v Open Window)
• Rationale: freedom of contract
• no factual inquiry needed; unaffected by D’s behavior

Question 20

Expectation Damages - for Breach of K w/ Alt Mode of Performance

Summarize how damages will be assessed where there is NOT a minimum level of performance specified

Answer 20

• damages assessed in manner MOST FAVORABLE to D (Paula Lee)
• Factual inquiry NECESSARY
• Will consider: past performance (Durham Trees), commercial reasonableness (Durham Trees), assumption of good faith w/ contractual terms

Question 21

Expectation Damages - for discretionary benefits

What is the general rule for compensability of discretionary benefits?

Answer 21

When benefits are discretionary (i.e. employer paid them voluntarily), there is generally NO LEGAL ENTITLEMENT contemplated at time of K –> therefore not recoverable (Globe and Mail)

Question 22

Expectation Damages - for discretionary benefits

What about where the discretionary benefits that form part of the normal relationship?

Answer 22

Even if not in K or contemplation…CAN be compensable where there is a REASONABLE EXPECTATION it will continue in the future (Dittmars v Ross).

Question 23

Expectation Damages - for discretionary benefits

What factors will the court consider where discretionary benefits were a normal part of the relationship? Cite the case

Answer 23

Zeidel v Metro-Goldwyn - Court will consider:
1) NECESSITY of the benefits to make salary competitive, 2) REGULARITY, 3) PAST exercise of discretion (i.e. whether exercised against P in the past), 4) PROPORTION of benefit to overall salary

Question 24

Expectation Damages - for Conditional Benefits

What is the general rule for compensability of CONDITIONAL benefits?

Answer 24

NO entitlement where (Zeidel):
1) dependent on PERFORMANCE/CONDITIONS–> i.e. not integral to compensation, 2) based on pre-discussed TARGETS and target not met or no criteria agreed upon, 3) renumeration absent bonus is COMPETITIVE, 4) bonus not expected to be automatic (Zeidel; Lewis v Northwest)

Question 25

Reliance Damages - for Breach of Contract What is the purpose of Reliance damages? Describe it.

Answer 25

Purpose: to restore P to same position absent breach Often used as SECONDARY measure in Contracts; primary in Torts In contracts: compensates WASTED expenses and opportunity cost

Question 26

Reliance Damages - for Breach of Contract When are Reliance Damages available in the contract context?

Answer 26

1. As a compliment to expectation claim for NET profit 2. As an ALTERNATIVE to expectation damages: a) where expectation damages are uncertain/speculative (Sunshine Vacation) or b) where P's claim is in tort (Rainbow Caterers)

Question 27

Reliance Damages - for Breach of Contract What can be claimed under Reliance damages for breach of K?

Answer 27

1. Expenses WASTED in reliance or in performance 2. INCIDENTAL expenses within contemplation of parties 3. POST-breach expenses necessary for MITIGATION (Ticketnet) 4. PRE-contract expenses in parties' reasonable expectations (eg Angila Tv)

Question 28

Reliance Damages - for Breach of Contract What limitations are there on Reliance damages for breach of K? Why do they exist?

Answer 28

CAN'T claim: 1) expenses that WOULD have been incurred absent breach (PreMD), 2) expenses that were NOT wasted (McRae) Rationale: P shouldn't benefit/be overcompensated

Question 29

Reliance Damages - for Breach of Contract What is the break-even presumption? Is it rebuttable? How?

Answer 29

PRESUMPTION that Plaintiff would have at least recovered expenses in a transaction/endeavour. Presumption REBUTTABLE by D (D to show contract unprofitable) (Sunshine Vacation)

Question 30

Reliance Damages - for Breach of Contract How can the P's damages be limited to expecation?

Answer 30

If P would have suffered NET LOSS absent breach --> can't claim reliance (because D didn't really worsen anything) Onus on D to prove

Question 31

Reliance Damages - for Breach of Contract Can consequential losses be recovered under reliance where P would have lost money anyway? Cite the case.

Answer 31

Bowlay - Yes; where P would have lost money but the breach exacerbated the loss, INCREASED losses DUE TO BREACH are recoverable (but not expenses).

Question 32

Reliance damages - concurrent liability What damages are available for negligent misrepresentation?

Answer 32

Negligent misrep = a tort | Damages are limited to: RELIANCE and CONSEQUENTIAL loss (if any) (Beaver Lumbar)

Question 33

Reliance damages - concurrent liability | What is the presumption for losses from negligent misrepresentation? Cite the case

Answer 33

Beaver Lumbar - PRESUMPTION for consequential loss is that P would have avoided losses without the misrep (if causation found and not too remote) BUT D can rebut the presumption

Question 34

Reliance Damages - Concurrent Liability | When can P also claim LOST PROFITS (ie expectation damages) for negligent misrep? Cite the case

Answer 34

Goldstar Management v Varvis - can claim where representation constituted CONTRACTUAL GUARANTEE BUT ONLY possible where misrep induced P to enter into K (Tort claim stronger than Contract for Expectation damages)

Question 35

``` Concurrent Liability (Reliance and Expectation) - Negligent Misrep What is the rationale for awarding the Plaintiff both lost profits and wasted expenses (Expectation & Reliance damages) ```

Answer 35

Mason v Bank of Nova Scotia - P can be awarded damages for opportunity costs b/c we can PRESUME and account for lost profits P could have earned ELSEWHERE but for the misrepresentation.

Question 36

Concurrent Liability | Why would a plaintiff sue under tort (therefore reliance damages) rather than contract (expectation)?

Answer 36

1) Causation - plaintiff-favourable presumption from RAINBOW CATERERS -> Presumed neglig misrep induced P to enter into K and P would not have suffered same loss otherwise 2) Remoteness - reasonable foreseeability

Question 37

Negligent Performance of Contractual Services What is the basis for a claim under negligent performance of contractual services? Give an example

Answer 37

Basis of claim: detrimental reliance on professional advice/service E.g. engineer failing to discover structural defect; solicitor fails to notice defect in title -> examples only re PROPERTY

Question 38

Negligent Performance of Contractual Services Identify the two different types of issues that can be found under this head of damages. Give example for each

Answer 38

1) Defendant's negligence CAUSED defect or was RETAINED to REMOVE the defect - eg Kienzle v Stringer 2) Defendant FAILED to NOTICE defect or gave bad ADVICE - eg TILCO

Question 39

Negligent Performance of Contractual Services What is the measure of damages where the defendant's negligence CAUSED defect or FAILS to cure defect

Answer 39

Measure of damages 1) Value P would have received BUT FOR the D's negligence (expectation) and 2) CONSEQUENTIAL loss (reasonable and foreseeable --> from D's negligence)

Question 40

Negligent Performance of Contractual Services What is the measure of damages where the defendant failed to NOTICE the defect or gave BAD ADVICE. What is the rationale?

Answer 40

Measure of damages: DIFFERENCE between purchase price and fair market value of property @ time of purchase (overpayment) plus CONSEQUENTIAL loss, CAN'T claim expected gain Rationale - D only failed to inform of problems, didn't CAUSE them

Question 41

Negligent Performance of Contractual Services When are P's damages ASSESSED under this type of claim? What's the rationale? Are there exceptions?

Answer 41

General rule: Market value at TIME OF K (b/c market fluctuates) Exception: subsequent decline in property value CAUSED by D's negligence (TILCO) --> damages include CONSEQUENTIAL decline in value