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Damages - Apportionment. Arcamm Electrical Services Ltd. v. Avison Young Real Estate Management Services LP [contract]
In Arcamm Electrical Services Ltd. v. Avison Young Real Estate Management Services LP (Ont CA, 2024) the Ontario Court of Appeal supports the contract defence of 'contributory fault', aka damage apportionment in contract:[4] Queen opposed the Motion on two grounds. It submitted that: (1) Arcamm had caused, or contributed to, some of the contract damages for which it is claiming (the “Contributory Fault Defence”) which raised genuine issues for trial; and (2) granting the Motion would risk inconsistent and contradictory findings in another action arising from the Incident involving the same parties and others. I pause to note that contributory negligence and contributory fault are related concepts, a matter to which I return below. To keep the tort and contract concepts analytically separate, the apportionment of damages in a tort claim is termed “contributory negligence” whereas apportionment in contract is termed “contributory fault”.
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[40] I conclude on this matter by addressing Arcamm’s submission that Queen could raise the Contributory Fault Defence only by way of counterclaim as against Arcamm or by seeking set-off for any amounts due to Arcamm’s alleged negligence and/or poor workmanship. I understand this submission to rest on the assumption that contributory fault cannot be raised as a defence to a claim in contract.
[41] I reject this submission and the assumption which underlies it. There has been a long-standing debate about whether the courts can apportion damages in a breach of contract case based on a consideration of the “contributory negligence” of the parties. While recognizing that the Negligence Act, R. S.O. 1990, c. N.1 does not apply to actions in contract, a number of first instance decisions in Ontario, beginning with Tompkins Hardware Ltd. v. North Western Flying Services Ltd. (1982), 1982 CanLII 3160 (ON SC), 139 D.L.R. (3d) 329, 22 C.C.L.T. 1 (Ont. H.C.J.), have applied the principle that damages in contract can be apportioned based on the degree of fault of the plaintiff and defendant. See, for example, Ribic v. Weinstein (1982), 1982 CanLII 3170 (ON SC), 140 D.L.R. (3d) 258 (Ont. H.C.), aff’d (1984), 1984 CanLII 1869 (ON CA), 47 O.R. (2d) 126 (C.A.); Treaty Group Inc. v. Drake International Inc. (2005), 2005 CanLII 45406 (ON SC), 36 C.C.L.T. (3d) 265, 15 B.L.R. (4th) 83 (Ont. S.C.), aff’d on other grounds, 2007 ONCA 450[2]; K-Line Maintenance & Construction Ltd. v. Scepter Corp., 2009 CarswellOnt 7398, 91 C.L.R. (3d) 73 (Ont. S.C.), at para. 161; Atos v. Sapient, 2016 ONSC 6852, at para. 389; and Parkhill Excavating Limited v. Robert E. Young Construction Limited, 2017 ONSC 6903, at para. 212. Appellate courts elsewhere in Canada have similarly held that damages in contract cases can be apportioned based on fault. See, for example, Coopers & Lybrand v. H.E. Kane Agencies Ltd. (1985), 1985 CanLII 125 (NB CA), 62 N.B.R. (2d) 1, (N.B. C.A.), at pp. 707-708; and Doiron v. Caisse populaire d'Inkerman Ltée (1985), 1985 CanLII 95 (NB CA), 17 D.L.R. (4th) 660, 61 N.B.R. (2d) 123 (N.B. C.A.), at p. 273.
[42] In Tompkins, Saunders J. gave compelling reasons for holding that the courts should allow for the apportionment of contract damages. He said that negligence on the part of a plaintiff should have the same effect in reducing damages regardless of whether the claim is brought in tort or contract. In his view, the principle in tort cases that where a person is part author of their own injury, the person cannot call upon the other party to compensate them in full, applies equally in contract cases: at para. 34.
[43] In Treaty Group, Ducharme J. thoroughly canvassed the caselaw and academic writing on the subject and applied the reasoning in Tompkins. At para. 70 of Treaty Group, Ducharme J. concluded that not only could he apportion damages in a contract action to recognize conduct on the part of the plaintiff that had increased their damages but, in appropriate cases, apportionment was “required by fairness, equity and justice”. I agree.
[44] Finally, I note that in Cosyns v. Smith (1983), 1983 CanLII 1750 (ON CA), 146 D.L.R. (3d) 622, 25 C.C.L.T. 54 (Ont. C.A.) Lacourciere J.A., writing for this court, considered the contributory fault defence, describing it as “analogous to contributory negligence” but where the Court holds the basis of recovery against the defendants to be contract, not tort: at para. 1. He reviewed the reasoning of Saunders J. in Tompkins, but concluded that it was not necessary to pronounce on the “attractive conclusion” that Saunders J. had reached because the plaintiff’s conduct did not amount to contributory negligence.
[45] I agree with the Ontario first instance courts that damages in contract cases can be apportioned based on fault. Accordingly, in my view, Queen was entitled to defend the Arcamm Action on the basis of contributory fault, and to seek to have the contractual damages Arcamm claimed reduced to recognize Arcamm’s alleged conduct in increasing those damages.
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