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Damages - Nominal Damages. Konstan v. Berkovits
In Konstan v. Berkovits (Ont CA, 2024) the Ontario Court of Appeal considers case doctrine where "the plaintiff’s evidence regarding damages is uncertain or unreliable" and where damages may be simply 'nominal':[84] As the trial judge correctly noted, a plaintiff claiming damages has the burden of proving them. He found that Jack, a trained accountant, inexplicably failed to maintain proper financial books and records for the two Omni stores affected by the nuisance perpetrated by Harold, and that the assumptions relied on by his expert, Mandel, were substantially based on what they understood from Jack, who was unreliable. The trial judge nonetheless concluded that Jack’s companies “likely suffered some form of economic damage”. He alluded to competing authority on the appropriate approach in a case where the plaintiff’s evidence regarding damages is uncertain or unreliable. Some courts award only nominal damages in such cases. In Murano v. Bank of Montreal (1995), 1995 CanLII 7410 (ON SC), 20 B.L.R. (2d) 61, 31 C.B.R. (3d) 1 (Ont. S.C.), rev’d (1998) 1998 CanLII 5633 (ON CA), 41 O.R. (3d) 222 (C.A.), at para. 163, however, Adams J. held that “an inherent difficulty in piecing together what might have happened had there been no breach or tort committed will not relieve a court of its duty to assess damages”.
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[88] Decisions such as Martin v. Goldfarb, (1998) 1998 CanLII 4150 (ON CA), 41 O.R. (3d) 161 (C.A.) and TMS Lighting v. KJS Transport, 2014 ONCA 1, 314 O.A.C. 133, have distinguished between cases in which it is difficult to assess a plaintiff’s damages and those where only nominal damages are appropriate. As stated in TMS Lighting, at para. 83, in which this court ordered a new trial on damages:It is well-established that where the absence of evidence renders it impossible to assess damages, a plaintiff may be entitled to only nominal damages. ... But this is not invariably the case. Where a plaintiff proves a substantial loss and the trial judge errs in the assessment of damages arising from that loss, the interests of justice may necessitate a new trial on damages. Although the quantification of damages flowing from the established loss may prove difficult, nonetheless the injured plaintiff is entitled to compensation. [89] The facts in TMS are instructive. A trucking operation was found liable in nuisance and trespass to a neighbouring lighting manufacturing business based on the disruptive airborne dust its operations caused over a five-year period. The trial judge in that case found that the disruption was “neither trivial nor transitory” and led to reduced business productivity. This was “a real wrong, which caused real loss”, for which the plaintiff deserved to be compensated: TMS, at para. 86. . Hoy v. Expedia Group, Inc.
In Hoy v. Expedia Group, Inc. (Div Court, 2024) the Divisional Court dismissed an appeal from a denial of a class action certification motion, here one grounded heavily in the Consumer Protection Act (CPA) 'misleading representations' provisions.
Here the court considers the plaintiff's case for nominal damages under the CPA:Did the motion judge err when he found that it was plain and obvious that nominal damages were not an available remedy in the circumstances of this case?
[75] Nominal damages may be available for certain causes of action. For instance, nominal damages may be awarded in a breach of contract case where a breach of contract has been established but damages from the breach have not (see: RINC Consulting Inc. (Rousta Capital) v. Grant Thornton LLP, 2020 ONCA 182, at para. 52). In such circumstances, nominal damages serve a symbolic rather than a compensatory purpose and may also serve to vindicate the rights of the party to whom they are awarded.
[76] In this case, the motion judge decided that it is plain and obvious that the nominal damages claimed by the Plaintiffs would not be available to them, based upon the allegations in their pleading and his interpretation of the applicable consumer protection statutes that seek to prohibit deceptive or unfair sales practices. As is the case with the Plaintiffs’ other claims for restitutionary or disgorgement remedies discussed above, the motion judge determined that the remedy of nominal damages cannot arise from the Plaintiffs’ pleading which exclusively alleges breaches of regulatory legislation.
[77] The motion judge also concluded that, in addition to this determination based upon an interpretation of the applicable statutes, nominal damages would not be available to the Plaintiffs pursuant to either common law or equity on the facts as pleaded even if other causes of action were advanced.
[78] The Plaintiffs assert on this appeal that the motion judge erred in holding that nominal damages are not available to them and take the position that it is not plain and obvious that their claim for nominal damages will not succeed. In support of their assertion, they rely principally upon the partially dissenting opinion of the minority in Atlantic Lottery that expressed the view that nominal damages may be awarded in some cases without proof of loss.
[79] In particular, the partially dissenting opinion in Atlantic Lottery held that the claim before it in that case for breach of contract should not be struck, as several remedies for breach of contract were open to the plaintiffs, including nominal damages. This observation was elaborated upon by it, as follows:[104] Unlike a claim in negligence, loss is not an essential element of a cause of action for breach of contract. In my view, there is a basis for an action for breach of contract and a basis to obtain remedies against ALC even in the absence of pleadings of specific personal loss. For example, a court finding breach of contract may make binding declarations of right, whether or not any consequential relief is or could be claimed, and whether or not a declaration was pleaded as relief sought (Rules of the Supreme Court, 1986, r. 7.16; see also L. Sarna, The Law of Declaratory Judgments (4th ed. 2016), at pp. 5‑6; Native Women’s Assn. of Canada v. Canada, 1994 CanLII 27 (SCC), [1994] 3 S.C.R. 627, at pp. 647‑48).
[105] In addition, nominal damages may be given in all cases of breach of contract as a manner of ‘affirming . . . that there is an infraction of a legal right’ (Owners of the Steamship ‘Mediana’ v. Owners, Master and Crew of the Lightship ‘Comet’, [1900] A.C. 113 (H.L.), at p. 116, per Lord Halsbury L.C.). Nominal damages are thus always available for causes of action, like breach of contract, that do not require proof of loss, even if they are not pleaded (see, e.g., Place Concorde East Ltd. Partnership v. Shelter Corp. of Canada Ltd. (2006), 2006 CanLII 16346 (ON CA), 211 O.A.C. 141, at paras. 56 and 75‑78; Saskatchewan Government Insurance v. Wilson, 2012 SKCA 106, 405 Sask. R. 8, at para. 13; J. Edelman, McGregor on Damages (20th ed. 2018), at pp. 406‑7; M. Gannage, “Nominal Damages for Breach of Contract in Canada” (2011), 69 Advocate 833, at p. 834; J. Cassels and E. Adjin‑Tettey, Remedies: The Law of Damages (3rd ed. 2014), at p. 355). Assuming that the plaintiffs can ultimately prove the existence of a contract and its breach by ALC, they may be entitled to an award of nominal damages.
[106] Litigants have the right to pursue reasonable causes of action to vindicate their rights. In my view, the plaintiffs’ breach of contract claim is a reasonable cause of action. As it is actionable without proof of loss, it always necessarily implies nominal damages. This alone precludes striking the claim. [80] No such claim for breach of contract is advanced by the Plaintiffs in the action before us. Further, no other cause of action was pleaded by them that could arguably succeed without adequate proof of actual damages.
[81] In their affidavit material filed on the certification motion, neither Plaintiff provided any evidence of actual damages having been sustained by either of them for which compensation was sought. There was no indication that they had paid more for any hotel or travel services than they should have due to the alleged breach by the Defendants, or any one of them, of the statutes upon which the Plaintiffs rely. No assertion or proof of any out-of-pocket expenses incurred by the Plaintiffs as a result of the conduct of the Defendants was advanced. Had it been that actual damages were sustained; it would have been a relatively simple matter to set out the nature and cause of such damages suffered by the Plaintiffs and to quantify them.
[82] The motion judge considered the issue of nominal damages within the framework of his assessment of the cause of action criterion for certification as a class action. His conclusion is firmly supported by the majority decision in Atlantic Lottery. Indeed, the majority of the Supreme Court of Canada in its decision overturned the certification of the class action that claimed, among other things, breach of contract without asserting proof of any actual damages or a plausible methodology for calculating them. In doing so, the Court considered that to permit a claim to be certified as a class action in such circumstances would not reflect a proportionate procedure for the adjudication of disputes. The majority of the Court stated as follows (at para. 67):[67] The remaining question on breach of contract is whether the plaintiffs’ claim should survive as a hollow cause of action that does not support any of the remedies they seek. In my view, it should not. While I agree with my colleague Karakatsanis J. that declaratory relief and nominal damages are available in theory as remedies for breach of contract, a reasonable claim is one that has a reasonable chance of achieving the outcome that the plaintiff seeks. That is not this claim. To be sure, the circumstances here are unusual. Not only did the plaintiffs plead only gain‑based relief and punitive damages, both of which I have concluded are unavailable in the circumstances, the plaintiffs also expressly disclaimed remedies quantified on the basis of individual loss. At no point did the plaintiffs argue that their claim should survive because nominal damages are available. In my view, the plaintiffs’ breach of contract claim should be assessed on the basis of the questions put before the Court ⸺ namely, whether a gain‑based remedy or punitive damages are available in the circumstances. And on that basis, it is obvious that the plaintiffs’ breach of contract claim does not disclose a reasonable cause of action. To allow this claim to proceed to trial would simply be to delay the inevitable, and would not reflect a ‘proportionate procedur[e] for adjudication’. [Cites omitted] [83] To the extent that the Plaintiffs rely upon the opinion expressed by the minority in Atlantic Lottery, that opinion is not binding upon us nor was it binding upon the motion judge. Moreover, even accepting that certain causes of action other than breach of contract (such as battery) may not require proof of actual damages, the nature of the claim advanced in this proceeding is not among them.
[84] Further, we consider that the facts as pleaded by the Plaintiffs do not give rise to any viable tort per se, as has been asserted in argument before us. Rather, the common law cause of action that most closely arises from the conduct of the Defendants as alleged by the Plaintiffs in this case would be one for misrepresentation. An action for misrepresentation would require both reliance upon the alleged misrepresentation and proof of damage as a result in order to be sustained, in our view. If there were neither reliance upon the alleged misrepresentation nor any actual damages flowing from it, any action based upon such a claim would be viewed as unreasonable and considered doomed to fail.
[85] More importantly, we agree with the motion judge for the reasons articulated by him that nominal damages are not available pursuant to either the consumer protection or the competition legislation, breaches of which form the basis of the Plaintiffs’ claims for damages in this proceeding. While we recognize that such legislation is to be interpreted generously in favour of consumers (see: Seidel v. TELUS Communications Inc., 2011 SCC 15, [2011] 1 SCR 531), we do not consider that a generous interpretation necessarily would or should permit compensation to be ordered in the absence of proof of any actual harm. To do so would violate what the motion judge correctly described as the compensatory injury principle, a fundamental principle that underlies the determination of suitability of an action for certification as a class proceeding.
[86] We are therefore of the opinion that the motion judge did not err in holding that nominal damages are not available in this case. As he observed, nominal damages are not designed to be a means of avoiding the making of a claim for compensatory damages that, in this case, the Plaintiffs submit actually occurred but for which, for tactical purposes, they do not seek to recover.
[87] If the intention of the Plaintiffs is to seek vindication of their consumer rights through an award of nominal damages, and not seek compensation for any actual damages suffered by them and other members of the proposed class, that vindication could be obtained through the processes available under the regulatory legislation they rely upon.
[88] Accordingly, we would not give effect to this ground of appeal. . RINC Consulting Inc. (Roustan Capital) v. Grant Thornton LLP
In RINC Consulting Inc. (Roustan Capital) v. Grant Thornton LLP (Ont CA, 2020) the Court of Appeal commented on the awarding of nominal damages:Nominal damages
[51] Finally, the appellants argue that the trial judge erred in refusing to award nominal damages. The appellants say that, having established a valid contract and a breach, they were entitled to nominal damages, as such damages are “always available”: Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239, 140 O.R. (3d) 81, at para. 33; see also Place Concorde East Ltd. Partnership v. Shelter Corp. of Canada Ltd. (2006), 2006 CanLII 16346 (ON CA), 270 D.L.R. (4th) 181 (Ont. C.A.), at para. 76.
[52] It is well established that nominal damages may be awarded where a breach of contract has been established but damages flowing from that breach have not. Nominal damages are a trivial amount – typically one dollar – and serve a symbolic rather than a compensatory purpose: they mark a breach of contract in the same way that a declaration would. See, generally, S.M. Waddams, The Law of Damages, 5th ed. (Toronto: Thomson Reuters, 2012), at c. 10.10-10.30; James Edelman, McGregor on Damages, 20th ed. (London: Thomson Reuters (Professional) UK Limited, 2018), at c. 12-001-12-013.
[53] The award of nominal damages might be important in some cases. For example, in the context of an ongoing contract in order to clarify future performance obligations, or to vindicate a party’s rights. But there are no such special circumstances in this case. The appellants did not bring their action merely to seek a judicial statement or declaration that the respondent had breached the contract; they brought their action with the intention of claiming over $9 million in damages as compensation for losses they claim to have suffered as a result of the respondent’s breach of contract.
[54] The trial judge declined to exercise his discretion to award nominal damages on the basis that the appellants failed to prove that the respondent’s breach of contract caused their losses. The trial judge appears to have thought that the court’s discretion to award nominal damages depends on the existence of unquantified damages. It does not.
[55] But the trial judge’s error is of no moment, for the award of nominal damages would have served no purpose in this case. The appellants appear to assume that an award of nominal damages would have turned their substantive lack of success into a basis for awarding them costs. It would not. Even if the trial judge had awarded the appellants nominal damages, it would still be within the discretion of the trial judge to make no award of costs to the appellants, or to make the award of costs to the respondent that he did on the basis of the extreme disparity between “the amount claimed and the amount recovered in the proceeding”: r. 57.01(1)(a).
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