Mitigating Losses

Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51 (CanLII)

[23] This Court in Asamera Oil Corp. v. Seal Oil & General Corp., 1978 CanLII 16 (SCC), [1979] 1 S.C.R. 633, cited (at pp. 660-61) with approval the statement of Viscount Haldane L.C. in British Westinghouse Electric and Manufacturing Co. v. Underground Electric Railways Company of London, Ltd., [1912] A.C. 673, at p. 689:

The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.

[24] In British Columbia v. Canadian Forest Products Ltd., 2004 SCC 38, [2004] 2 S.C.R. 74, at para. 176, this Court explained that “[l]osses that could reasonably have been avoided are, in effect, caused by the plaintiff’s inaction, rather than the defendant’s wrong.” As a general rule, a plaintiff will not be able to recover for those losses which he could have avoided by taking reasonable steps. Where it is alleged that the plaintiff has failed to mitigate, the burden of proof is on the defendant, who needs to prove both that the plaintiff has failed to make reasonable efforts to mitigate and that mitigation was possible (Red Deer College v. Michaels, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324; Asamera; Evans v. Teamsters Local Union No. 31, 2008 SCC 20, [2008] 1 S.C.R. 661, at para. 30).

[25] On the other hand, a plaintiff who does take reasonable steps to mitigate loss may recover, as damages, the costs and expenses incurred in taking those reasonable steps, provided that the costs and expenses are reasonable and were truly incurred in mitigation of damages (see P. Bates, “Mitigation of Damages: A Matter of Commercial Common Sense” (1992), 13 Advocates’ Q. 273). The valuation of damages is therefore a balancing process: as the Federal Court of Appeal stated in Redpath Industries Ltd. v. Cisco (The), 1993 CanLII 3025 (FCA), [1994] 2 F.C. 279, at p. 302: “The Court must make sure that the victim is compensated for his loss; but it must at the same time make sure that the wrongdoer is not abused.” Mitigation is a doctrine based on fairness and common sense, which seeks to do justice between the parties in the particular circumstances of the case.

TSL-92308-18 (Re), 2018 CanLII 42869 (ON LTB)

13. Further, with respect to remedy, a number of principles arise from the case law. First, a landlord cannot be held financially liable for disrepair that the landlord was not aware of or could not reasonably be expected to have been aware of. This principle is reflected in subsection 30(2) of the Act and in the obligation to mitigate found in section 16 of the Act. Also, if a landlord responds in a timely and effective manner to most disrepair problems no remedy will flow. I believe this is because when landlords and tenants enter into tenancy agreements both parties reasonably expect that some disrepair will occur during the course of the tenancy and is a normal occurrence within the expectation of both parties. So, if such anticipated normal and minor disrepair problems arise and are dealt with efficiently and quickly no remedy will usually flow to the tenant.

14. Lastly, based on s. 16 of the Act, a tenant is expected to mitigate loss by, for example, cooperating reasonably with a landlord’s efforts to do repairs. If a tenant does not mitigate loss, then that may reduce any remedy ordered or disentitle the tenant to any remedy at all.

15. Considering, as I must, all of the circumstances as required by Onyskiw, I find, on a balance of probabilities, the Landlords are in breach of section 20(1) of the Act in connection with the issue of the water leak in the unit’s washroom by failing to meet the Landlords’ obligations to repair and/or maintain the rental unit and to comply with housing and maintenance standards and, further, by taking reasonable and timely steps to address the issue.

SOT-71618-16 (Re), 2016 CanLII 88173 (ON LTB)

8. While I appreciate the Tenants’ distress over the infestation, I find that a reasonable person should have mitigated losses by treating possessions for infestation rather than disposing of them. Accordingly, I find it was unreasonable of the Tenants to take the extreme step of disposing of their possessions without first determining if it is the least costly route to resolve the pest infestation. For this reason, I am denying the claim for the mattresses and sofa.

Ossory Canada Inc. v. Wendy's Restaurants of Canada, 1997 CanLII 2212 (ON CA)

Analysis with respect to damages

By holding that there was no agreement to lease and therefore no breach of contract, I do not have to deal with the appeal and cross-appeal with respect to damages. However the issues were fully argued and because I am of the opinion that the trial judge made a fundamental error in adopting the approach put forward by the respondent on damages, I think that I must discuss the issue for fear that my silence might signal my concurrence with this approach.

This action was commenced on June 6, 1988. In its statement of claim, Ossory elected to seek damages for breach of what it alleged to be the agreement to lease of July 24, 1987. Ossory has not sought specific performance of the alleged agreement. The trial was held in September of 1994.

Having found that there was a binding agreement to lease, Chilcott J. awarded damages to Ossory for breach thereof under the following heads:

(a) $845,837 for loss of rental income from Wendy's calculated for the 20-year term of the agreement to lease; and

(b) $429,664 for loss on construction, calculated as Ossory's "cost" of constructing the office building, less the market value of the site as at August 31, 1994; and

(c) $47,682, by way of reduction for Ossory's "gain from operations", or net income, from the office building until August 31, 1994.

The amounts awarded represent 50 per cent of the amount calculated by Ossory's expert as the "high range" of Ossory's loss of rental and on construction.

[...]

Dealing with the second of these figures first, it is apparent to me that Ossory embarked upon a very different venture than that contemplated when the lease was agreed upon and was not attempting to mitigate losses flowing from the breach of the agreement to lease. Assuming that mitigation could reach this far, the numbers ultimately arrived at by the trial judge are little more than a guess. I think that this reflects the inapplicability of mitigation principles to this kind of situation and also to some degree reflects the absence of an evidentiary basis for the calculations put forward in the KPMG report. Simply stated, there is no support in law for the trial judge's conclusion that Ossory should be awarded the above figure reflecting the loss on construction of the Phase II project as a result of Wendy's alleged breach.

With respect to the first head of damages, lost revenue, it seems to me that the trial judge's error rests in following the KPMG blueprint. The blueprint took the wrong approach and also made several mistakes in its quantification of the loss of revenue.

[...]

The applicable remedies in the case of an anticipatory breach of a contract relating to land include payment of actual rents due for the unexpired period of the lease, or the payment of the present value of the future rental value, less the obligation to mitigate, as damages, depending on the type of breach involved. In fact, the assessment of damages in the real estate context parallels the determination of damages in the contractual setting such that the innocent party should be placed in the situation it would have been in had the contractual obligations been performed as required: see Hadley v. Baxendale (1854), 9 Ex. 341, [1843-60] All E.R. Rep. 461. However, the losses must be reasonably foreseeable and not too remote.

[...]

I have gone through the exercise of commenting in detail on this KPMG report to demonstrate how unrealistic is this entire approach to the damage issue. My specific analysis may be flawed as to detail, but I did not intend it to be corrective of the methodology adopted at trial: I intended it as a demonstration of the fallacy in law of the approach to damages itself. These damages are not in mitigation of loss but in aggravation. There is no authority for the proposition that the injured party must pay the innocent party the cost of putting his property to a completely different use. I can perceive that some damages would be chargeable to Wendy's for the delay to Ossory in the development of the property, but to add these monstrous costs to a calculation for loss of rentals is not supported by law.

Accordingly, if it were necessary to do so, I would allow the appellant's appeal on the issue of damages and return the matter to the trial court for a proper assessment. I would also dismiss the cross-appeal as to damages.

For the reasons stated above, I would allow the appeal on the issue of liability and enter a judgment dismissing the respondent's claim for breach of contract. I would award the appellant its costs here and below.

Appeal allowed.

TST-84062-17 (Re), 2017 CanLII 60075 (ON LTB)

3. It is also uncontested that on February 22, 2017 the Tenant contacted AV to say that he has changed his mind and he no longer wants to rent the rental unit. The Tenant requested a refund of the rent deposit. AV responded that the Landlords will refund the rent deposit if a new tenant is found to rent the unit for April 1, 2017.

4. The Tenant did not take possession of the rental unit and the Landlords have not refunded the rent deposit.

5. The rental unit was re-rented effective May 1, 2017.

6. Subsection 107 (1) of the Residential Tenancies Act, 2006 (the ‘Act’) states: “A landlord shall repay the amount received as a rent deposit in respect of a rental unit if vacant possession of the rental unit is not given to the prospective tenant.” I am of the view that this subsection was intended to address the situation where a landlord refuses or is unable to deliver vacant possession to a tenant on the date set for the commencement of the tenancy.

7. Subsection 13(2) of the Act states: “A tenancy agreement takes effect when the tenant is entitled to occupy the rental unit, whether or not the tenant actually occupies it.” This section means that if there is a binding agreement for a tenancy to begin on a set date, then the tenancy commences on that date regardless of whether or not the tenant goes into possession.

14. I am therefore satisfied that the Landlords met their duty to mitigate their losses as required by s.16 of the Act.

15. For these reasons, the Tenant’s application shall be dismissed.

Boardwalk General Partnership v Fraser, 2013 CanLII 95665 (ON SCSM)

3. On June 29, 2011, on application by the Plaintiff Landlord following Notice of Termination effective May 17, 2011, the Landlord and Tenant Board ordered the termination of the tenancy effective July 10, 2011 and ordered the Defendant Tenant to move out by that date. The L.T.B. ordered the Defendant Tenant to pay $277.23 in rent owing up to June 29, 2011, after crediting the tenant with a rent deposit and interest, and to pay $27.99 per day compensation for use of the unit from June 30, 2011 until the tenant vacated the unit.

13. I was not referred to, but have considered Yonge Pleasant Holdings Ltd. v. Dragonov (1995), 1995 CarswellOnt 2946 (O.C.G.D.). Mr. Justice Gibson in that case distinguished Lees and held that where the landlord gives notice to terminate a month to month tenancy the landlord cannot claim damages for loss of rent after the date of termination.

18. Section 15 of the Residential Tenancies Act, supra, on the other hand, abolishes acceleration clauses altogether. The right of a landlord to both terminate the tenancy for fundamental breach by the tenant and claim loss of future rent otherwise due under the contract is, in effect, an acceleration of the rent due over the life of the contract, since the landlord may give notice and bring the claim before the period of the tenancy has expired. Accelerated rent clauses are void under the new Act. This alone is a reason to find against the plaintiff on this issue.

19. I find that ss. 15, 86 and 88 when read with ss. 48 to 59 of the Residential Tenancies Act comprise a comprehensive scheme for termination of residential tenancies and exhaustively define the damages available to landlords in various termination scenarios. Where the tenancy is terminated by order, notice (including notice by the landlord) or agreement the landlord is limited to compensation for over-holding. Where the tenancy is terminated by abandonment and the landlord has not given notice to terminate the landlords damages for lost rent are capped at the rent for the period of notice which should have been given by the tenant. Where the tenancy is terminated by notice under ss. 48, 49 or 50 and the tenant vacates early, without proper notice, the landlords damages for lost rent are limited to 5 or 10 days. Where the tenant vacates after notice by the landlord no damages for lost rent are payable.