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.

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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.

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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.