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Appeal Court Dicta

Damages - Mitigation

. Monterosso v. Metro Freightliner Hamilton Inc.

In Monterosso v. Metro Freightliner Hamilton Inc. (Ont CA, 2023) the Court of Appeal considers contractual mitigation, both in an employment and other contexts. Case law is cited for the proposition that an employment contract of fixed term does not attract a duty to mitigate:
[7] Next, the appellants submit that the trial judge erred in holding that the respondent was not required to mitigate his damages. We accept this submission.

[8] The trial judge erred by conflating the situation of independent contractors with that of employees working under fixed-term contracts. Although this court held in Howard v. Benson Group Inc., 2016 ONCA 256, 129 O.R. (3d) 677, leave to appeal refused, [2016] S.C.C.A. No. 240, that employees under fixed-term contracts are entitled to damages equal to the loss of remuneration for the balance of the fixed term, without a duty to mitigate, this court has never held that independent contractors do not have a duty to mitigate following breach of a fixed-term contract. Mohamed v. Information Systems Architects Inc., 2018 ONCA 428, 423 D.L.R. (4th) 174, at para. 26, expressly left open the question whether the Benson principle applies to fixed-term contracts of independent contractors. The Mohamed panel held only that there was no duty to mitigate in the specific circumstances of that case because the parties intended compensation for the fixed term to be the consequence for failing to terminate the contract in good faith – effectively, a liquidated damages agreement: Mohamed, at para. 29.

[9] A duty to mitigate arises when a contract is breached, including contracts with independent contractors. Of course, the terms of a contract may provide otherwise. However, nothing in this case takes it outside the normal circumstances in which mitigation is required. For example, the respondent was not in an exclusive, employee-like relationship with the appellants, nor was he dependent on the appellants; the terms of the contract permitted the respondent to perform services for other parties. The matter was not argued fully before us, but for purposes of this appeal it suffices to say there was no basis for the trial judge to conclude that the respondent was not required to mitigate.

[10] Although the trial judge made no findings on the mitigation issue, this court can determine the matter. The burden was on the appellants to establish that the respondent failed in his duty to mitigate and they did not meet that burden. The respondent filed extensive evidence detailing his unsuccessful job search efforts. The appellants acknowledge this evidence but assert that the respondent was looking for work that was beyond the scope of his experience and qualifications. There is no basis in the evidence on which to accept this assertion. The appellants led no evidence to establish that there were jobs the respondent could have taken. Thus, despite the trial judge’s error in failing to require mitigation, the result is the same, for the appellants have not met their burden of proving that the respondent failed to mitigate his damages.
. Rassouli-Rashti v. Tayefi

In Rassouli-Rashti v. Tayefi (Ont CA, 2023) the Court of Appeal considered the law of mitigation:
[15] The onus was on the appellant to prove on a balance of probabilities that the respondents’ inaction was unreasonable in the circumstances of this case and that they had failed to mitigate their damages: Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, at para. 45. While the respondents had an obligation to mitigate their losses caused by the appellant’s breaches of his fiduciary duties, the issue of mitigation, including the timing of the listing of the property, must be examined contextually, particularly in the circumstances found by the trial judge to have been created by the appellant’s own breaches: Hunt v. T.D. Securities Inc., 2003 CanLII 3649 (ON CA), 66 O.R. (3d) 481, at paras. 107-115; Canson Enterprises Ltd. v. Boughton & Co., 1991 CanLII 52 (SCC), [1991] 3 S.C.R. 534, at pp. 553-554, per McLachlin J. (concurring), and pp. 580-581, per La Forest J (for the majority). Based on the trial judge’s findings and the evidence in the record, the appellant has not discharged his burden of showing that the respondents’ conduct was unreasonable in the circumstances of this case and that they failed to mitigate their damages.
. Arista Homes (Richmond Hill) Inc. v. Rahnama

In Arista Homes (Richmond Hill) Inc. v. Rahnama (Ont CA, 2022) the Court of Appeal considered mitigation, here where a purchaser failed to close on an APS:
[9] Where a purchaser fails to close a real estate transaction and the vendor takes reasonable steps to sell the property in an arm’s length sale to a third party in mitigation of damages, and there is nothing improvident about the sale, the difference between the two sale prices will be used to calculate the damages: 642947 Ontario Ltd. v. Fleischer (2001), 2001 CanLII 8623 (ON CA), 56 O.R. (3d) 417 (C.A.) at para. 41; 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 1978 CanLII 1630 (ON CA), 20 O.R. (2d) 401 (C.A.), at para. 55. In such circumstances, there will be no need for expert evidence: Marshall v. Meirik, 2021 ONSC 1687, at para. 30, aff’d 2022 ONCA 275.
. Aylmer Meat Packers Inc. v. Ontario

In Aylmer Meat Packers Inc. v. Ontario (Ont CA, 2022) the Court of Appeal considered a lawsuit by an abattoir against the province:
[112] The plaintiff has a duty to mitigate its loss and cannot recover losses that it could have avoided. While the duty to mitigate is on the plaintiff, the onus is on the defendant to demonstrate the failure to mitigate: Bowman v. Martineau, 2020 ONCA 330, 447 D.L.R. (4th) 518, at para. 31, citing Janiak v. Ippolito, 1985 CanLII 62 (SCC), [1985] 1 S.C.R. 146, at p. 163. I note that the trial judge did not address mitigation, nor did Ontario raise it as an issue so that it need not detain this court.
. Tribute (Springwater) Limited v. Atif

In Tribute (Springwater) Limited v. Atif (Ont CA, 2021) the Court of Appeal considered mitigation as a damage issue:
[14] As a general rule, a plaintiff is not entitled to recover for losses which could have been avoided by taking reasonable steps. Where it is alleged that the plaintiff failed to mitigate damages, the onus is on the defendant to prove both that the plaintiff failed to make a reasonable efforts to mitigate, and that mitigation was possible: Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, at paras. 24, 45.
. Bowman v. Martineau

In Bowman v. Martineau (Ont CA, 2020) the Court of Appeal commented on mitigation:
[31] The respondents [plaintiffs] were required to make reasonable efforts to mitigate their damages. It is the appellants’ [defendants] onus to demonstrate they failed to do so: Janiak v. Ippolito, 1985 CanLII 62 (SCC), [1985] 1 S.C.R. 146, at p. 163. I see no error in the trial judge’s conclusion that the appellants did not meet that onus. The trial judge’s determination of the mitigation issue was reasonable in the circumstances of this case. His conclusion is therefore entitled to deference on appeal.
. Azzarello v. Shawqi

In Azzarello v. Shawqi (Ont CA, 2019) the Court of Appeal commented as follows on mitigation:
[39] The duty to mitigate is derived from the proposition that the wronged party cannot recover from the defaulting party for losses that could reasonably have been avoided: S.M. Waddams, The Law of Contracts, 7th ed. (Toronto: Thomson Reuters, 2017), at p. 529. It cannot be reasonable for a vendor to be obliged to reduce the loss it claims from the defaulting party by reselling the property to that party, then suing him or her for the difference. This would offer no financial advantage to the defaulting party as that party would be obliged to pay the same amount, either way. Yet the defaulting party would secure a significant tactical and procedural advantage over the innocent vendor.
. Curley v. Taafe

In Curley v. Taafe (Ont CA, 2019) the Court of Appeal stated as follows on mitigation:
[38] It is a basic tenet of contract law that a victim of a breach cannot recover losses that could have been avoided by taking reasonable steps post-breach; this principle against avoidable loss applies in all contractual settings: John D. McCamus, The Law of Contracts, 2nd ed. (Toronto: Ont.: Irwin Law, 2012), at p. 926. The burden of establishing that the plaintiff failed to take reasonable steps to mitigate damages is on the defendant: McCamus, at p. 928; Red Deer College v. Michaels, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324, at p. 331.


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