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Appeal Court Dicta

Damages - Date of Assessment

. Nguyen v. Hu

In Nguyen v. Hu (Div Court, 2023) the Divisional Court considers the contractual principle of 'repudiation' as it bears on the date of assessment of damages:
Did the motion judge err in principle by failing to properly apply the law concerning repudiation?

[27] According to Mr. Nguyen, the law concerning repudiation makes it clear that an agreement is not terminated until the repudiation has been accepted by the non-repudiating party. “If the non-repudiating or innocent party does not accept the repudiation, then the repudiation has no legal effect”: Ching v. Pier 27 Toronto Inc., 2021 ONCA 551. Mr. Nguyen argues that this means that when it comes to assessing damages, the date of repudiation cannot be used as the date when damages are assessed. Therefore, the motion judge erred in principle when he used that date.

[28] While we agree that a non-repudiating party is entitled to make an election as to whether to accept repudiation or affirm the contract and sue for specific performance, we do not agree that the decision in Ching means that damages can only be assessed when the non-repudiating party makes that election. To find otherwise would be to give non-repudiating parties an incentive to delay making their election as long as possible in order to maximize their return in a rising market. This would be unfair, especially in a case such as this one, where Mr. Nguyen admitted that he bought the property as a speculative investment and the motion judge found that there was nothing unique about the property from Mr. Nguyen’s perspective. He also found that there were other properties available for purchase in the same condominium building as of the date of the repudiation.

[29] This is not to preclude the possibility that in some cases, it may be fair to assess damages as of the date of acceptance of the repudiation, provided the non-repudiating party submits evidence as to why this is a fair date to choose.
. Maple Leaf Foods Inc. v. Ryanview Farms

In Maple Leaf Foods Inc. v. Ryanview Farms (Ont CA, 2022) the Court of Appeal considers the date for assessment of damages:
[35] The presumptive date for assessment of damages in contract law is the date of breach: Rougemount Capital Inc. v. Computer Associates International Inc., 2016 ONCA 847, 410 D.L.R. (4th) 509, at para. 45. This presumptive rule can be displaced in appropriate circumstances, where an assessment of damages at the date of breach would not fairly reflect a party’s loss: Rougemount, at paras. 46, 50; Kinbauri Gold Corp. v. Iamgold International African Mining Gold Corp. (2004), 2004 CanLII 36051 (ON CA), 246 D.L.R. (4th) 595 (Ont. C.A.), at paras. 65-68. As this court explained in Rougemount, at para. 52, only special circumstances will warrant a deviation from this presumption.

[36] In this case, regard must be had to s. 51(2) of the Sale of Goods Act, which explicitly prescribes how damages are to be assessed where there is a breach of warranty: “The measure of damages for breach of warranty is the estimated loss directly and naturally resulting in the ordinary course of events from the breach of warranty.” As further explained by the learned author G.H.L. Fridman in Sale of Goods in Canada, 6th ed. (Toronto: Carswell, 2013), at pp. 331 and 334:
In an action for breach of warranty it is necessary for recovery of damages for an alleged loss to establish that what happened was reasonably foreseeable as a likely consequence, that is, a serious possibility, even though the exact concatenation of events, the specific consequence, might not have been.


The general principle as to the measure of damages in actions for breach of warranty is that laid down in section 51(2) of the Ontario Act, which was the subject of discussion and elaboration in Parsons in which it was stated that the test of direct and natural consequences of a breach involved the determination of what the parties might reasonably contemplate as being a serious possibility of such breach….
[37] The interplay of the date of assessment of damages jurisprudence and s. 51(2) is such that a trial judge may look to post-breach events to determine whether they would have fallen within the reasonable contemplation of the parties and to fairly reflect a party’s loss.

[38] The appellants argued that there is jurisprudence for the proposition that post-breach events cannot be considered in assessing damages for breach of contract, relying on Filice v. Complex Services Inc., 2018 ONCA 625, 428 D.L.R. (4th) 548 and Kim v. Kim, 2019 BCSC 222. Neither case assists the appellants.

[39] In Filice, the principle of fairness, as stated in Rougemount, was the court’s justification for declining to consider the loss of the respondent’s mandatory gaming registration following a wrongful dismissal. On the facts of that case, it was contrary to fairness to limit the claim of damages. In Kim, while a property fire subsequent to a breach by the landlord was irrelevant in assessing the plaintiff’s initial loss, it was considered in determining whether the plaintiff had mitigated her losses. Neither case puts forward a general proposition that post-breach events should not be considered in assessing damages.

[40] In order to determine which of the appellants’ losses were direct and natural consequences based on what the parties would have reasonably contemplated as a serious possibility of a breach, it would be necessary to consider the events that followed the date of breach. Stated otherwise, the trial judge was required to consider whether the post-breach events were within the reasonable contemplation of the parties as a serious possibility of a breach.

[41] There was sufficient evidence before the trial judge on which to justify deviation from the presumptive assessment date, particularly in light of s. 51(2) of the Sale of Goods Act. The presence of significant intervening events, which the trial judge found made the loss suffered more uncertain, must be considered in determining what measure of damages fairly reflects the appellants’ loss as a direct and natural consequence of the breach. To do otherwise would not be just in all the circumstances and risks burdening the respondent with more than its fair share of liability. Setting the date of the trial as the date of assessment of damages permitted the trial judge to properly consider the direct and naturally resulting loss in the circumstances of this case, particularly in light of ancillary factors such as the PRRSV outbreak and the crashing market for SEWs.
. Akelius Canada Ltd. v. 2436196 Ontario Inc.

In Akelius Canada Ltd. v. 2436196 Ontario Inc. (Ont CA, 2022) the Court of Appeal considered an interesting date of breach damages case (ie. at which date should damages be assessed), involving failure to close a real estate transaction:
[22] It has long been the case in the real estate context that the starting point for the assessment of damages for breach of contract is the date of breach. This principle was set out in 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 1978 CanLII 1630 (ON CA), 20 O.R. (2d) 401 (Ont. CA) and reaffirmed in Fleischer. In Fleischer, at para. 41, Laskin J.A. summarized the six propositions articulated by Morden J.A. in Main Street as follows:
(1) The basic principle for assessing damages for breach of contract applies: the award of damages should put the injured party as nearly as possible in the position it would have been in had the contract been performed.

(2) Ordinarily courts give effect to this principle by assessing damages at the date the contract was to be performed, the date of closing.

(3) The court, however, may choose a date different from the date of closing depending on the context. Three important contextual considerations are the plaintiff's duty to take reasonable steps to avoid its loss, the nature of the property and the nature of the market.

(4) Assessing damages at the date of closing may not fairly compensate an innocent vendor who makes reasonable efforts to resell in a falling market. In some cases, the nature of the property -- for example an apartment building-- hampers the vendor's ability to resell quickly. Thus, if the vendor takes reasonable steps to sell from the date of breach and resells the property in some reasonable time after the breach, the court may award the vendor damages equal to the difference between the contract price and the resale price, instead of the difference between the contract price and the fair market value on the date of closing.

(5) Therefore, as a general rule, in a falling market the court should award the vendor damages equal to the difference between the contract price and the “highest price obtainable within a reasonable time after the contractual date for completion following the making of reasonable efforts to sell the property commencing on that date”

(6) Where, however, the vendor retains the property in order to speculate on the market, damages will be assessed at the date of closing.
[23] As Laskin J.A. explains in Fleischer, at para. 42, “underlying these propositions is the simple notion of fairness.” In determining the appropriate date for the assessment of damages, the court must have regard to what is fair in the circumstances.

[24] In Fleischer, the innocent vendors claimed damages arising from the purchaser who refused to close when they realized that the market was falling. The trial judge found that the closing date in November 1990, the date of breach, was the appropriate date for the assessment of the vendors’ damages, at which point the property in issue was worth $1,130,000. On appeal to this court, the vendors argued that their damages should be assessed as at the date of trial some four years later, by which point the property in question had decreased in value to $410,000. This court disagreed. In finding that the date of breach was the correct date, Laskin J.A. stated, at para. 44, that the innocent vendors
…cannot pick a date at random, nearly four years after the closing date, when the market was likely at its lowest, and reasonably expect the court to choose that date to measure their loss.
[25] There are cases that support the view that, in some instances, it might be appropriate to move the date somewhat later; however, this has been done in cases where the plaintiff established that it was not in a position to re-enter the market as at the date of breach. In Asamera Oil Corporation Ltd. v. Sea Oil & General Corporation et al., 1978 CanLII 16 (SCC), [1979] 1 S.C.R. 633, the defendant was in breach of an agreement between the parties which required the return of Asamera shares that had been loaned to the defendant. The value of the shares fluctuated considerably from the date of the breach and the trial. The innocent plaintiff argued that the date of the assessment of damages should have been the dates those shares were at their highest prices. This view was rejected by the Supreme Court. Rather, the starting point continued to be the date of breach, and the damages were found to have crystallized at the earliest date upon which the plaintiffs could reasonably have re-entered the market.

[26] In Domowicz v. Orsa Investments Ltd. (1994), 1994 CanLII 7329 (ON SC), 20 O.R. (3d) 722 (S.C.), varied on other grounds, (1998) 1998 CanLII 17748 (ON CA), 40 O.R. (3d) 256 (C.A.), a case cited by the appellant, the innocent vendor plaintiff sought specific performance of an agreement to purchase an apartment building. The plaintiff filed detailed evidence as to its damages in light of its planned use for the property, including its loss of revenue. The trial judge noted that the plaintiff must prove its loss. He recognized that it may have taken some time to find a replacement property but rejected the argument that it could reasonably have taken the time the plaintiff was claiming, which was the date of trial some three years later. At the end of the day, the appropriate date for the assessment of damages was found to have been only three months later than the date of breach.

[27] In all these cases, the date of breach remains a starting point for the assessment of loss, modified only to the extent that the innocent party satisfies the court that a later date is appropriate on the grounds that it is the first date upon which the party could reasonably have been expected to re-enter the market and mitigate its damages.

[28] The appellant argues that the motion judge misapplied Fleischer because, in that case, the vendor was innocent. It further argues that when a vendor defaults on a real estate transaction in a rising market, the date of assessment of damages should be varied from the date of breach because an innocent purchaser such as the appellant may have difficulty attempting to purchase a comparable portfolio of properties in a rising real estate market. It relies on the case of Domowicz as authority for the proposition that assessing damages as at the date of breach would not satisfy the general principle that the non-breaching party should be put in a position in which he or she would have been in had the contract been performed.

[29] I do not agree with the appellant’s interpretation of these cases. First, in Fleischer, the innocent vendors had retained the property and re-leased it, speculating that the market would eventually go back up. Laskin J.A. rejected the argument that because the vendors were innocent, they were entitled to deviate from the usual measure of damages as of the date of breach. He found that the appropriate date was the date of breach. I see no principled reason for the suggestion that the date should be different when the purchaser is the innocent party. Put another way, the fact that a party is innocent does not displace the date of breach as the presumptive date for the measure of damages in a real estate case.

[30] Second, Domowicz does not assist the appellant. Unlike the plaintiff in Domowicz, the appellant did not provide evidence of its loss of revenue, claiming that it was not necessary because it was choosing not to claim its loss of revenue. However, in order to prove what it had actually lost, the appellant would have had to show not only what it lost in capital appreciation but also, as in Domowicz, what it would have made in capital appreciation had it sold in April 2018 when the respondents did.

[31] Even if the appellant could have shown that it could not have bought other buildings that would have appreciated as much over the next two and a half years, the appellant has not established why it could not have re-entered the market over that period or why, for the purpose of mere capital speculation, it was necessary to purchase six buildings close to one another in Parkdale.

[32] Moreover, the appellant argues that it is entitled to the loss of capital appreciation, but it has not explained why the loss of capital profit has to be assessed where all the “synergies” of the lost properties related to the long-term investment purpose. The evidence suggested that the desire to acquire the properties had to do with the synergies in having close buildings, with a view to maximizing the rental returns. No doubt, the ultimate return on the properties is part of the long-term planning, but the capital appreciation in and of itself some two and a half years later does not, in these circumstances, prove the appellant’s loss or the earliest date it could have re-entered the market. The capital appreciation of the properties would be relevant to the extent that it was in the reasonable contemplation of the parties at the time of the agreement: see for example Kipfinch Developments Ltd. v. Westwood Mall (Mississauga) Limited, 2010 ONCA 45, at paras. 14-15. However, all the evidence indicates that, based on its business model, the appellant was not a property speculator but a long-term investor, and this would have informed the parties’ reasonable contemplation at the time of the agreement.

[33] In effect, the appellant here is seeking to do what was rejected by the court in Asamera: begin with the amount that would represent the high point in the assessment of damages between the date of breach and the date of trial (or, as here, when the respondents sold the property). Such an approach would undermine the advantages of certainty and predictability arising from a long line of established and stable case law that presumes the date of breach for the assessment of damages for breach of contract.

[34] Moreover, and as was also the case in Asamera, the appellant’s position presumes it would have sold at the high point. In Asamera, that made sense because in a fluctuating market for shares bought at different times, it would be assumed that the innocent party would have the perspicacity to sell at the high point for the shares. Here, it makes no sense because all the appellant’s own business plans reflected a pattern of keeping buildings as rentals for much longer periods of time.

[35] For all the above reasons, it would not be fair in the circumstances to shift the date of the assessment of damages beyond the date of the breach. In short, the trial judge correctly found that there was no genuine issue requiring a trial on the date upon which the damages should be assessed. On that date, the market value and the contract price were the same; there was no loss. The appellant has not proven its loss, and the date it has chosen as the “crystallization” of its loss is not sufficiently connected to the date of breach or to the objectively understood purpose of the contract.
. Tribute (Springwater) Limited v. Atif

In Tribute (Springwater) Limited v. Atif (Ont CA, 2021) the Court of Appeal considered the date of assessment of damages in a failure to close real estate case:
[17] Typically damages in respect of a failed real estate transaction are determined based on the difference between the agreed sale price under the parties’ agreement of purchase and sale and the market value of the property at the date set for closing. The court may choose a date for the assessment of damages other than the date set for closing, depending on the context, including the plaintiff’s duty to take reasonable steps to avoid its loss, the nature of the property and the nature of the market: 100 Main Street East Ltd. v. W.B. Sullivan Construction Ltd. (1978), 1978 CanLII 1630 (ON CA), 20 O.R. (2d) 401 (C.A.), at p. 421; 642947 Ontario Ltd. v. Fleischer (2001), 2001 CanLII 8623 (ON CA), 56 O.R. (3d) 417 (C.A.), at para. 41. ....
. Datta v. Eze

In Datta v. Eze (Ont CA, 2021) the Court of Appeal considered the date that damages should be assessed on:
[13] The appellants submit the motion judge should have used the July 2020 appraisals as these are the closest to the date of judgment. In Semelhago, Sopinka J. said, in speaking of damages in lieu of specific performance, that “[t]echnically speaking, the date of assessment should be the date of judgment”: at para. 18. However, he went on to explain that it is not usually possible to predict the date of judgment when the evidence is given, and so for “practical purposes” damages will usually be assessed as of the date of trial.


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