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At 01 March 2019, after just over one year's medical leave,
Simon's law practice will re-open. Whoo-hoo ....!
- 12 February 2019

THE LATEST WORD

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Damages

1. General

TYPES OF DAMAGE

2. General Damages
3. Mental Distress Damages
4. Damages for Loss of Earning Capacity
5. Pure Economic Loss
6. Loss of Chance

PUNITIVE AND AGGRAVATED DAMAGES

7. Punitive Damages
8. Aggravated Damages

MISCELLANEOUS

9. Similarity Between Liquidated Damages and Penalty Clauses
10. Prior Legal Costs as Damages
11. Effect of Impecunosity on Mitigation
12. Insurers Denial of Meritorious Claim
13. Damages Difficult to Prove

APPEALS

14. Standard of Review

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1. General

'Damages' is an interesting area of law, focussing as it does on the final (and most lucrative ;-) stage of trials. Most of the real 'work' in damages law deals with the logical nitty-gritty of summing things up over the various types of damages involved. Punitive damages, while getting most of the attention, are rarely awarded and not in the high values you might see in US news.


TYPES OF DAMAGE

2. General Damages

. Grand Financial Management Inc. v. Solemio Transportation Inc.

In Grand Financial Management Inc. v. Solemio Transportation Inc. (Ont CA, 2016) the Court of Appeal had to deal with an intriguing award of damages 'at large':
[82] Damages at large may be awarded in cases of intentional torts, and to corporations in such circumstances where there has been injury to the corporation’s reputation and associated economic loss: see Uni-Jet Industrial Pipe Ltd. v. Canada (A.G.) (2001), 2001 MBCA 40 (CanLII), 198 D.L.R. (4th) 577 (Man. C.A.), at paras. 66-72; Foschia v. Conseil des Écoles Catholique de Langue Française du Centre-Est, 2009 ONCA 499 (CanLII), 266 O.A.C. 17, at para. 37; PSC Industrial Canada Inc. v. Ontario (Ministry of the Environment) (2005), 2004 CanLII 15482 (ON SC), 48 B.L.R. (3d) 58 (Ont. S.C.), at paras. 60-62, rev’d in part on other grounds (2005), 2005 CanLII 27657 (ON CA), 258 D.L.R. (4th) 320 (Ont. C.A.); and Alleslev-Krofchak v. Valcom Ltd., 2009 CanLII 30446 (ON SC), at para. 361, aff’d 2010 ONCA 557 (CanLII), 322 D.L.R. (4th) 193.

[83] Unlike pecuniary damages, such damages are not capable of being precisely measured and are more a matter of impression: Uni-Jet, at para. 72; and Foschia, at para. 37. As Kroft J.A. explained in Uni-Jet, at para. 72:
[D]amages at large are a matter of impression; they must include the consideration of a host of circumstances involving both the particular plaintiff and the particular defendant, and they are likely to be unique in each case.
[84] In Howard v. Madill, 2010 BCSC 525 (CanLII), at para. 89, Bruce J. summarized the principles relating to the assessment of damages at large, as canvassed in Uni-Jet:
An accurate summary of the law with respect to the assessment of damages at large, and the circumstances in which such an award may be made, is contained in Uni-Jet at paras. 66 to 73. I summarize these principles as follows:
1. Damages other than for pecuniary loss are "damages at large" and generally include compensation for loss of reputation, injured feelings, bad or good conduct by either party, or punishment.

2. Damages at large are compensatory for loss that can be foreseen but cannot be readily quantified.

3. Damages at large are a matter of discretion for the trial judge and are more a "matter of impression and not addition."

4. Where damages at large are imposed for intentional torts, the assessment of damages provides an opportunity to condemn flagrant abuses of the legal process.
[85] I too would adopt this summary.

[86] Damages at large for intentional torts include damages for loss of reputation, but are not limited to that type of loss. As the authorities above demonstrate, they include as well damages reflecting the court’s condemnation of flagrant abuses of the legal process. Generally speaking, they are compensatory for loss that can be foreseen, but not readily quantified. The trial judge applied these factors.

[87] As a result of Grand Financial’s unlawful conduct, Solemio lost its major client; Arnold Bros., representing 60 per cent of its business, abruptly ended its dealings with Solemio. Solemio’s trucks were literally stopped in their tracks and their loads transferred to other trucks. Solemio lost the business of other customers as well. In addition, its bank account was emptied and frozen, thus creating obvious liquidity problems, including the inability to make payments for trucks, utilities, insurance, salaries, and other bills. These events amply supported the trial judge’s findings that Grand Financial’s conduct contributed to Solemio’s liquidity problems, as well as its loss of reputation, and engaged the court’s concern for abuse of the legal process.

[88] What of the amount of the damages at large award, then?

[89] It is not readily apparent how the trial judge arrived at the amount of $175,000, although at one point Mr. Ullah testified that he had received about $200,000 from Arnold Bros. minus an amount of $25,000 that he “left there”, perhaps referring to the same sum of money that Grand Financial later allowed Arnold Bros. to pay to Solemio. As noted above, however, damages at large are “a matter of impression” and are not something that can be precisely measured. It is difficult for an appellate court to say that the assessment is plainly erroneous in such circumstances: see Stephen M. Waddams, The Law of Damages, loose-leaf (2015-Rel. 24), 2nd ed. (Toronto: Canada Law Book, 2015), at para. 13.470. While I may not have arrived at the amount of $175,000, I cannot say that the trial judge erred in principle in doing so. He properly took into account all of the relevant factors in arriving at his conclusion.

[90] Before leaving this issue, I need to address, briefly, Grand Financial’s wrongful seizure of the $35,000 from Solemio’s RBC account. I am satisfied on the record that Solemio did not claim the seized amount as a separate head of damages.[1] That said, the trial judge’s award of damages at large appears to encompass some recognition of the improper seizure, and Grand Financial itself appears to have accepted the $35,000 as a component of that award, since its argument on appeal was that the damages at large award ought to be set aside or, at least, reduced to that amount. As well, one of the three foundations upon which the trial judge based his award of damages at large was that Grand Financial’s actions had constituted a serious abuse of the legal process, a reference to the unlawful resort to the PPSA Security. I conclude, on these bases, that the award of damages at large was intended to incorporate the factors that would give rise to the recovery of the $35,000 amount, and I see no error in that approach.

[91] On that basis, I would not interfere with the trial judge’s award of damages at large.

3. Mental Distress Damages

. Fernandes v. Penncorp Life Insurance Company

In Fernandes v. Penncorp Life Insurance Company (Ont CA, 2014), on the issue of mental distress damages, the court stated:
[88] In Fidler, at paras. 51-53, the Supreme Court observed that the jurisprudence speaks of two different types of aggravated damages. The court clarified that the term “aggravated damages” is misplaced in a case of mental distress damages arising out of a contractual breach. This was the nature of the damages claimed and awarded in the case under appeal.

[89] In Fidler, the Supreme Court held that damages for mental distress for breach of contract may be awarded “where they are established on the evidence and shown to have been within the reasonable contemplation of the parties at the time the contract was made”: para. 45.

[90] This does not obviate the need to prove the loss. The court stated at para. 47:
The court must be satisfied: (1) that an object of the contract was to secure a psychological benefit that brings mental distress upon breach within the reasonable contemplation of the parties; and (2) that the degree of mental suffering caused by the breach was of a degree sufficient to warrant compensation.
[91] In that case, the Supreme Court determined that the plaintiff’s distress and discomfort arising out of the loss of disability coverage was amply supported by the evidence, which included extensive medical evidence. The court did not disturb the award of $20,000.

4. Damages for Loss of Earning Capacity

. Boucher v Wal-Mart Canada Corp.

In Boucher v Wal-Mart Canada Corp. (Ont CA, 2014), the court suggests that, on the right facts, a claim for loss of earning capacity is conceivable in a wrongful dismissal context:
[102] .... In Canada, as the trial judge said in her ruling, an award for future loss of income compensates a plaintiff for loss of earning capacity – in other words, the loss of an asset, the capacity to earn: see M.B. v. British Columbia, 2003 SCC 53 (CanLII), [2003] 2 S.C.R. 477; Lazare v. Harvey, 2008 ONCA 171 (CanLII). Typically, in personal injury actions, plaintiffs have justifiable future loss of income claims because the accident has impaired their capacity to earn income.

[103] A claim for future loss of income can arise in an employment context where a plaintiff has not recovered from the effects of the wrongdoer’s action and the plaintiff has thus suffered a loss of any earning capacity because of the wrongdoer’s tortious conduct: see, for example, Piresferreira.

5. Pure Economic Loss

. Mandeville v. The Manufacturers Life Insurance Company

In Mandeville v. The Manufacturers Life Insurance Company (Ont CA, 2014) the Court of Appeal expounded on the nature of damages for "pure economic loss":
[146] Pure economic loss is loss suffered by an individual that is not accompanied by physical injury or property damage: Martel Building Ltd. v. Canada, 2000 SCC 60 (CanLII), 2000 SCC 60, [2000] 2 S.C.R. 860, at para. 34; D’Amato v. Badger, 1996 CanLII 166 (SCC), [1996] 2 S.C.R. 1071, at para. 13; and Design Services Ltd. v. Canada, 2008 SCC 22 (CanLII), 2008 SCC 22, 1 S.C.R. 737, at para. 30.

[147] In the present case, the appellants are claiming damages equivalent to the benefits the class members would have received had they been treated as eligible policyholders upon Manulife’s demutualization. The damages sought are “not causally connected to physical injury to their persons or physical damage to their property”: Design Services, at para. 30. The injury or damage complained of consists of alleged harm to the class members’ economic interests, rather than any physical harm or damage to their person or property. As such, the claim is seeking recovery for pure economic loss.

[148] What difference does it make to this action that the appellants’ claim is for pure economic loss? The Supreme Court answered these questions in Martel, at para. 35, saying that such claims require greater scrutiny when the court is deciding whether to recognize a duty of care:
As a cause of action, claims concerning the recovery of pure economic loss are identical to any other claim in negligence in that the plaintiff must establish a duty, a breach, damage and causation. Nevertheless, as a result of the common law’s historical treatment of economic loss, the threshold question of whether to recognize a duty of care receives added scrutiny relative to other claims in negligence. [Emphasis added.]
[149] At para. 37 of Martel, the Court set out the policy reasons underlying the common law’s traditional reluctance to permit recovery for pure economic loss:
First, economic interests are viewed as less compelling of protection than bodily security or proprietary interests. Second, an unbridled recognition of economic loss raises the spectre of indeterminate liability. Third, economic losses often arise in a commercial context, where they are often an inherent business risk best guarded against by the party on whom they fall through such means as insurance. Finally, allowing the recovery of economic loss through tort has been seen to encourage a multiplicity of inappropriate lawsuits.
[150] Nonetheless, the Canadian jurisprudence shows that there is no automatic bar to recovery for pure economic loss. Over time, recovery for pure economic loss has been permitted in five categories of negligence claims:
1. the independent liability of statutory public authorities;

2. negligent misrepresentation;

3. negligent performance of a service;

4. negligent supply of shoddy goods or structures; and

5. relational economic loss.

See Canadian National Railway Co. v. Norsk Pacific Steamship Co., 1992 CanLII 105 (SCC), [1992] 1 S.C.R. 1021, at p. 1049; and Martel, at para. 38.

6. Loss of Chance

. Berry v Pulley

In Berry v. Pulley (Ont CA, 2015) the court outlined the approach to be taken when assessing damages for 'loss of chance':
The loss of chance doctrine

[70] A two-step framework applies when a plaintiff alleges injury consisting of the loss of the chance to achieve a benefit or avoid a loss. Folland v. Reardon (2005), 2005 CanLII 1403 (ON CA), 74 O.R. (3d) 688 (C.A.), at para. 73, outlines the four criteria the plaintiff must meet at the first step:
First, the plaintiff must establish on the balance of probabilities that but for the defendant’s wrongful conduct, the plaintiff had a chance to obtain a benefit or avoid a loss. Second, the plaintiff must show that the chance lost was sufficiently real and significant to rise above mere speculation. Third, the plaintiff must demonstrate that the outcome, that is, whether the plaintiff would have avoided the loss or made the gain, depended on someone or something other than the plaintiff himself or herself. Fourth, the plaintiff must show that the lost chance had some practical value. [Citations omitted.]
[71] As Doherty J.A. noted in Folland, at para. 74, the second criterion is “somewhat nebulous. There is no bright line between a real chance and a speculative chance. An empirical review of the case law suggests that chances assessed at less than 15 percent are seldom viewed as real chances.” This de minimis threshold has also been described as requiring the plaintiff to prove she had “some reasonable probability” of realizing “an advantage of some real substantial monetary value”: Kinkel v. Hyman, 1939 CanLII 7 (SCC), [1939] S.C.R. 364, at p. 383; see also Eastwalsh Homes Ltd. v. Anatal Developments Ltd. (1993), 1993 CanLII 3431 (ON CA), 12 O.R. (3d) 675 (C.A.), at pp. 689-90, leave to appeal refused, [1993] S.C.C.A. No. 225.

[72] If these four criteria are met, the court proceeds to the second step and will award damages equal to the probability of securing the lost benefit (or avoiding the loss) multiplied by the value of the lost benefit (or the loss sustained): see Wong v. 407527 Ontario Ltd. (1999), 1999 CanLII 3788 (ON CA), 179 D.L.R. (4th) 38 (Ont. C.A.), at para. 27.
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