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Damages - Expectation Damages

. Bank of America Canada v. Mutual Trust Co.

In Bank of America Canada v. Mutual Trust Co. (SCC, 2023) the Supreme Court of Canada set out the basic principle that damages for breach of contract are normally calculated on an 'expectation' basis:
(2) Contract Damages

25 Contract damages are determined in one of two ways. Expectation damages, the usual measure of contract damages, focus on the value which the plaintiff would have received if the contract had been performed. Restitution damages, which are infrequently employed, focus on the advantage gained by the defendant as a result of his or her breach of contract.

(a) Expectation Damages

26 Generally, courts employ expectation damages where, if breach is proved, the plaintiff will be entitled to the value of the promised performance (S. M. Waddams, The Law of Damages (3rd ed. 1997), at p. 267).

27 See Haack v. Martin, 1927 CanLII 57 (SCC), [1927] S.C.R. 413, per Rinfret J., at p. 416:
The case is governed by the general rule applicable to all breaches of contract, and laid down as follows by Parke B. in Robinson v. Harman (1848) [1 Ex. 850, at p. 855].
 The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.
. Tim Ludwig Professional Corporation v. BDO Canada LLP

In Tim Ludwig Professional Corporation v. BDO Canada LLP (Ont CA, 2017) the court awarded 'expectation damages', which occur sometimes in wrongful dismissal when the plaintiff is hired away from a good job on promises of a better, and the new job falls through. Commonly it is awarded for claims of negligent misrepresentation:
(3) Damages


(a) Expectation damages

[50] The motion judge noted that although damages are generally not available to a partner who has been wrongfully expelled, in this case reinstatement was “unrealistic”. He therefore awarded damages on an expectation basis.

[51] BDO submits that the motion judge erred in awarding damages that reflect the profits that Ludwig would have received had the contract not been breached. The motion judge acknowledged that Ludwig could have been expelled without cause had BDO properly followed the directives of Article 17.4. In other words, the Policy Board could have forced Ludwig out if it acted in good faith and relied on sufficient evidence in making an independent determination that it was in the best interest of the partnership for Ludwig to retire. BDO argues that, in terms of damages, Ludwig was only entitled to be put in the position he would have been in had the contract been performed. That is, if the Policy Board had properly executed its power to expel him from the partnership.

[52] BDO also alleges that the motion judge erred by failing to reduce Ludwig’s damages for failing to mitigate. Although Article 19.1 is a non-competition clause, BDO submits that the clause was limited to a 40 kilometre radius from the Edmonton office and expired two years from the date of Ludwig’s expulsion. In any event, BDO argues, there were other options available to Ludwig to mitigate his losses.

[53] These submissions by BDO were made for the first time on appeal without supporting evidence. Before the motion judge, BDO did not contest Ludwig’s analysis with respect to damages, and there was no evidence before the motion judge to contradict any element of Ludwig’s claim for damages. Neither party raised the issue of mitigation in the proceedings below.

[54] The evidentiary obligation on a summary judgment motion is well established. Each side must “put its best foot forward”: see Transamerica Life Insurance Co. v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423, at p. 434, aff’d [1997] O.J. No. 3754 (Ont. C.A.). The motion judge is entitled to presume that the evidentiary record is complete and there will be nothing further if the issue were to go to trial: see Dawson et al. v. Rexcraft Storage and Warehouse Inc. et al. (1998), 1998 CanLII 4831 (ON CA), 111 O.A.C. 201 (C.A.), at para. 17.

[55] In these particular circumstances, it was open to the motion judge to accept Ludwig’s uncontradicted evidence, and I would not interfere with his conclusion.

[56] I note that the availability of damages arises from the particular facts of this case and the motion judge’s finding that Ludwig cannot feasibly return to the firm. The general principle – articulated in Lindley & Banks – that a wrongful expulsion does not affect the status of the expellee, still governs.

[57] Likewise, although in this case the motion judge found that the Partnership Agreement’s non-compete clause effectively prevented Ludwig from mitigating his losses, this will depend upon the particulars of the case.


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