COURT OF APPEAL FOR BRITISH COLUMBIA
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Citation: |
Zaenker v. Kirk, |
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2008 BCCA 386 |
Date: 20081002
Docket: CA035485
Between:
Kurt Zaenker and Christine Zaenker
Appellants
(Plaintiffs)
And
Susan Catherine Kirk, also known as Susan Catherine Nordin, 421709 BC Ltd., Southwest Farms Inc., and Kelly Nordin
Respondents
(Defendants)
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Before: |
The Honourable Madam Justice Prowse |
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The Honourable Mr. Justice Chiasson |
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The Honourable Mr. Justice Tysoe |
| R. Burke |
Counsel for the Appellant |
| R.W. McDiarmid, Q.C. |
Counsel for the Respondent |
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Place and Date of Hearing: |
Vancouver, British Columbia |
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11 September 2008 |
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Place and Date of Judgment: |
Vancouver, British Columbia |
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2 October 2008 |
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Written Reasons by: |
| The Honourable Mr. Justice Chiasson |
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Concurred in by: |
| The Honourable Mr. Justice Tysoe |
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Concurring Reasons by: |
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The Honourable Madam Justice Prowse (p. 23, para. 59) |
Reasons for Judgment of the Honourable Mr. Justice Chiasson:
Background
[1] This is an appeal from a trial judge’s assessment of damages arising out of a dispute concerning a September 1996 real estate transaction, in which the appellants bought property described as Lots A, C, D, and Lot 1, also known as the Top 90, from the respondents. The Top 90 is directly east of Lots A and C.
[2] Lots A and C do not have their own source of potable water and were serviced from a well owned by Mr. and Mrs. Faridi, neighbours on the adjoining land, by way of an easement. The respondents also had constructed a back-up reservoir on the Top 90.
[3] In 1992, the respondents and the Faridis had a dispute concerning the well which ended up in court. The respondents were successful at trial, but the Faridis prevailed in the Court of Appeal (Nordin v. Faridi (1996), 17 B.C.L.R. (3d) 366). The result was that the respondents could not compel the supply of water via the easement using the Faridis’ piping and pumping systems. They only could obtain water directly from the well.
[4] Knowing that there was an issue concerning the supply of water from the Faridis’ well, the appellants and the respondents inserted relevant provisions into their purchase and sale agreement. The first was a warranty that the well water to each of Lots A and C was 600 gal. per day. The second stated:
In the event the water service from the existing system is terminated the vendors will be responsible for installation of a replacement water system and will ensure a continuous supply of water in the interim.
It is common ground that the warranted gallonage and the water system referred to the water from the Faridis’ well.
[5] After completion of the real estate transaction, the appellants negotiated with the Faridis, but to no avail, and the water supply was terminated in March 1997. Water then was trucked to supply Lots A and C.
[6] This action was commenced by the appellants on October 15, 1997. They alleged the respondents failed to provide “an alternative supply of water … in the interim or on a permanent basis” and asserted the respondents were in breach of contract as a result of their failure to provide water. The appellants alleged they suffered damages as a result of this breach.
[7] The trial was scheduled to begin February 6, 2001, but was adjourned after two days of hearing at the respondents’ request. They wanted to obtain clarification from the court concerning their rights under the easement with the Faridis. As an interim measure, Mr. Justice Williamson ordered the respondents to reimburse the appellants for the cost of trucked water from March 31, 1997, to June 6, 1999, and to provide 600 gallons of water daily to Lots A and C beginning March 1, 2001, until further order of the court, “agreement between the parties, or a replacement water system has been installed”.
[8] On December 9, 2002, the appellants’ action was dismissed. On September 25, 2003, this was overturned on appeal (Zaenker v. Kirk, 2003 BCCA 530). Mr. Justice Thackray had this to say in paras. 7 and 8:
The trial judge held that the refusal of the Zaenkers to meet those terms resulted in the water supply being cut off. He incorporated into the water clause obligations on the Zaenkers to negotiate with the Faridis. He further held that the water clause was ambiguous and thereby unenforceable.
I disagree. The clause, to my way of thinking, is straightforward. That is not to say that if the Zaenkers were totally responsible for the shutdown in the water supply that they could turn to the Nordins. However, that is not the factual situation. The Faridis imposed terms on the Zaenkers that were not imposed upon the Nordins, therefore when the Zaenkers bought the property from the Nordins they did not buy it subject to the conditions that were applicable to the Nordins. The Zaenkers were entitled, in my opinion, to look to the Nordins to fulfill their obligations under the clause in question, and that is to install and ensure a continuous supply of water. I am of the opinion that the water clause is enforceable by the Zaenkers against the Nordins.
[9] In April 1999, 532977 B.C. Ltd, a company wholly owned and controlled by the appellants, bought property known as the S.E. ¼. It is a lot north of the Top 90. A few months later a well was drilled on the S.E. ¼ and a connection made to the reservoir on the Top 90 from which water could be supplied to Lots A and C through existing piping. The volume of water from the S.E. ¼ well was considerably more than 1200 gallons per day.
[10] Shortly before the trial, the numbered company purchased property known as “new Lot C”. Water was located on it and the appellants contend it is the replacement system for the Faridis' well.
The trial court
[11] With this Court having determined liability in the appellants’ favour (Zaenker, supra), the trial was limited to the matter of damages. In para. 16, the judge stated the issues as follows:
1. Are the defendants’ [respondent's] damages in regard to a replacement water system limited to the holdback of $25,000?
2. What is the appropriate measure of damages in regard to the provision of a replacement water system for the Faridis' well?
3. To what extent have the plaintiffs [appellants] mitigated their loss?
4. If the plaintiffs have mitigated their loss, should their claim be reduced on the basis of betterment?
5. To what extent are the plaintiffs entitled to compensation for mitigation expenses?
No issue was taken on appeal concerning items one and four.
[12] In para. 19, the judge noted that the parties agreed “the appropriate test for measuring damages in this case is the cost of performing the contractual obligation rather than the diminished value of the property consequent upon the [respondents’] breach of contract.” She continued, stating, “the measure of damages is the cost of providing the missing amenities forming part of the bargain struck, subject to the [appellants’] duty to mitigate”.
[13] In para. 27, the judge listed a number of sub-issues that she determined arose out of the arguments of the parties:
1. Do the plaintiffs have an obligation to mitigate?
2. Is the issue of whether the S.E. ¼ well constitutes a water replacement system within the meaning of the contract res judicata?
3. Does the S.E. ¼ water system constitute a replacement for the Faridis’ water system within the meaning of the contract?
4. Are the defendants entitled to claim the benefit of the plaintiffs’ mitigation efforts?
[14] On the first of these sub-issues, the judge concluded that the appellants had taken steps to mitigate their loss and “any loss avoided, as well as any benefits reasonably accruing as a result of steps taken to mitigate, must be taken into account in quantifying the damages owing by the [respondents]” (para. 32).
[15] The judge concluded the question whether the S.E. ¼ supply was a replacement system was not res judicata because neither the Supreme Court nor the Court of Appeal directly addressed the issue in the previous proceedings.
[16] The judge then reviewed the evidence. She stated in para. 43, “the purpose of an award of damages is to restore the [appellants] to the position they would have been in had the breach of contract never occurred” and that the award of damages must be reasonable. She concluded the S.E. ¼ supply was a replacement water system stating, “[t]o find that the S.E. ¼ well water system was not the equivalent of the Faridis’ water system would be an unreasonable result based upon a common sense analysis of the evidence”.
[17] In the context of her consideration of collateral benefit, the judge concluded that the S.E. ¼ water supply was a long term alternative water supply (para. 59); that is, it was not a temporary supply as urged by the appellants.
[18] Based on her conclusion that the corporate veil should be pierced and on an analysis of collateral benefit in the law of mitigation, the judge held the respondents were entitled to benefit from the appellants' mitigation efforts.
[19] The judge summarized her conclusions in para. 59:
In summary, I have concluded that the plaintiffs successfully mitigated the loss arising out of the defendants’ breach of contract by securing a long term alternate water supply from the S.E. ¼ which is at least the equivalent of the Faridis’ water system. Further, I find the plaintiffs will not be required to substantially damage or diminish the market value of this property by securing a water easement in favour of Lots A and C to maintain the water supply should they choose to sell the S.E. ¼. Any loss of value can be the subject of a damage award as a cost of mitigation.
[20] After noting the respondents did not pursue betterment, the judge stated in para. 64:
The plaintiffs have not led evidence of any loss associated with the purchase of the S.E. ¼ in April 1999. Thus, I find the plaintiffs are not entitled to claim the entire purchase price of this property as a cost of mitigation. Instead, the plaintiffs are entitled to the actual cost of securing the replacement water system, including a sum representing the loss in market value occasioned by an easement, and the legal and administrative costs of securing an easement. These costs were either reasonably incurred to mitigate the loss caused by the defendants’ breach or ought to have been in the reasonable contemplation of the parties at the time of the contract.
[21] It was necessary for the judge to extrapolate costs from evidence led concerning the costs of the new Lot C water supply because such information was not provided by the appellants for the S.E. ¼. She summarized the damage award as it related to the costs of obtaining a replacement water system in para. 67:
1. Loss of market value due to the easement $1,894.20
2. The average cost of well drilling $12,339.60
3. Installation costs $10,138.09
4. BC Hydro costs $2,133.58
Total: $26,505.47
[22] The judge then addressed the costs of obtaining interim water from the date the Faridis’ water supply was terminated to June 1999 and concluded the respondents were entitled to a credit of $812.71. She held the appellants were entitled to recover the costs of failed attempts to find water and of an initiative to connect to the water system of the City of Kamloops. These matters are not directly in issue on this appeal.
Positions of the parties
[23] The appellants contend the judge erred in concluding the S.E. ¼ water supply was a replacement system. They also quarrel with the judge’s conclusion that the purchase of the S.E. ¼ was not a collateral benefit and with her decision to pierce the corporate veil.
[24] At the hearing of the appeal, the appellants advised the Court that at trial they claimed damages for the respondents’ failure to supply a replacement water system on the basis that the water supply from the new Lot C was the replacement system.
[25] During the course of the hearing, counsel was asked to and did produce a form of requested relief as follows:
1. Setting aside that portion of the order of September 28, 2007, which awards damages to the [appellants] based on the finding that the S.E. ¼ water system constitutes an adequate replacement system;
2. Directing that the assessment of the [appellants’] damages be remitted to the trial judge to assess the [appellants’] damages for the failure to install a replacement system by basing the assessment on the use of the new Lot C as the new source of water;
3. Assess[ing] the [appellants’] damages for the failure to provide an interim supply of water by basing the assessment on the purchase by the [appellants] of water from their numbered company;
4. Awarding the [appellants] their costs of the action from May 26, 2007, and
5. Awarding the appellants their costs of this appeal.
[26] The Court noted that paragraphs two and three appear to be a request to instruct the trial court how to assess the damages, which this Court would be reluctant to do.
[27] The respondents focus on whether the judge correctly concluded the appellants had mitigated their damages.
[28] It became apparent at the hearing that the core issue was whether the judge was correct in deciding the S.E. ¼ water supply was not temporary, which was the foundation for her conclusion it was a replacement water system under the contract.
Discussion
[29] The extensive background and history of this case is of assistance in understanding what took place at the hearing.
[30] The contract contained three distinct obligations: a warranty of water volume; an obligation to supply water on an interim basis; and an obligation to install a replacement should the existing water system be terminated.
[31] Although there was some reference by the trial judge and the respondents to a claim for breach of warranty, no such claim was advanced.
[32] Looking at the pleadings and the correspondence between counsel prior to the initiation of the action, at the outset the case concerned the interim supply of water and the appellants’ efforts to redress the respondents’ failure to supply water pending obtaining a replacement water system. The appellants did not plead or claim specifically for the costs of obtaining a replacement system for the supply of water and the respondents did not plead that the appellants had obtained such a system.
[33] The breach alleged in the amended statement of claim (approximately six weeks after the original was filed) was “the failure of the [respondents] to provide water” to lots A and C. The prayer for relief included the following:
A. A declaration that the Defendants [respondents], jointly and or severally are in breach of their covenant to supply water.
B. A declaration that the Defendants, jointly and or severally are liable to the Plaintiffs [appellants] for all reasonable costs incurred in the provision of water by the Plaintiffs.
C. An order granting leave to the Plaintiffs’ to have their water supply costs assessed before the Registrar at periodic intervals of no less than three months.
D. An order for payment forthwith of any amounts assessed by the Registrar to be owing the Defendants, jointly and or severally to the Plaintiffs with respect to the provision of water.
[Underlining in original.]
It is focused on the ongoing supply of water.
[34] On November 16, 2005, on the application of the respondents, the court ordered that the respondents could amend their statement of defence and the parties could conduct discovery “respecting damages and mitigation of damages, and all steps taken in furtherance of the clause in the Agreement … relating to a water system since the order of the Court of Appeal dated September 25, 2003”. The S.E. ¼ water supply was in place long before the decision of the Court of Appeal. Paragraphs 6 to 8 of the amended statement of defence state:
6. In response to the allegations of fact contained in paragraph 14 of the Statement of Claim, the Defendants deny that they have refused and/or failed to provide an alternative supply of water, and further say that they are actively pursuing enforcement of the Easement Agreement.
7. In the alternative, and in response to the whole of the Statement of Claim, the Defendants say that the Plaintiffs have failed to mitigate their damages, particulars of which include, but are not limited to the following:
(a) The Plaintiffs had the opportunity to continue to receive water pursuant to the Easement Agreement upon payment of a maintenance fee to the owners of Lot A. The Plaintiffs refused and/or neglected to pay the maintenance fee and thereby have contributed to their damages; and
(b) The Plaintiffs have received and continue to receive water from the City of Kamloops’ water supply as a result of amalgamation;
(c) The Plaintiffs failed to take action against the owners of Lot A to enforce the Easement Agreement when the owners of Lot A refused to comply with it
(d) The Plaintiffs failed to agree to various methods proposed by the Defendants to provide a water supply to the Plaintiffs’ property; and
8. In the further alternative, the Plaintiffs have received and continue to receive water from another property owned by them and have therefore partially or completely mitigated their damages.
[Underlining in original.]
[35] Until shortly before trial, the issues seem to have been joined as follows: the appellants sought the recovery of the cost of supplying water pending obtainment of a replacement system; the quantum pursued was the amount for which they had been invoiced by the numbered company; the respondents asserted the appellants had mitigated this loss by obtaining water from the S.E. ¼.
[36] Somewhat at the last minute, the appellants apparently added a claim to recover the cost of obtaining a replacement supply of water. The replacement the appellants identified was water from the new Lot C, which the numbered company bought in the month before trial. There is nothing in the record before this Court that specifically refers to this claim, but we were so advised by counsel. In addition, it is apparent that evidence was adduced to establish the costs of obtaining the new Lot C water supply. The appellants contended that the water from the S.E. ¼ was temporary, which was consistent with the basis on which the claim had been advanced initially and until close to trial; that is, the S.E. ¼ water supply was interim pending the provision of a replacement system.
[37] The trial judge analyzed the positions of the parties in the context of the law of mitigation because that had been their focus. In my view, that analysis was not helpful and drew the court unnecessarily into considerations of piercing the corporate veil and collateral benefit.
[38] There is nothing in the record to suggest that before trial the appellants claimed the costs of obtaining a replacement water system. The respondents did not plead that the appellants could not recover the costs of interim water because they had a replacement water system. These positions appear to have developed at trial.
[39] Insofar as the appellants sought declarations and damages arising out of the respondents’ failure to supply interim water, a contention the S.E. ¼ water supply was a replacement system would be a complete answer because it would end the respondents’ contractual obligation to provide an interim supply of water. There was no such pleading.
[40] In the absence of a claim for damages arising out of the respondents’ failure to supply a replacement water system, the costs of obtaining the S.E. ¼ supply could be characterized as the costs of mitigation, and potentially, in that context, an answer to the appellants’ claim for the costs of interim water. Once the appellants advanced their claim for damages for breach of the respondents’ obligation to provide a replacement system and once the respondents contended that the S.E. ¼ supply was a replacement system, the analysis shifted from a question of mitigation to a simple claim to recover the appellants’ costs of obtaining that for which they had bargained: a replacement water system, plus the costs of supplying water pending obtainment of a replacement water system and the costs of failed attempts to obtain a replacement system.
[41] The core issue apparently was whether the S.E. ¼ supply or the new Lot C supply was the replacement system. The judge concluded it was the former because she rejected the appellants’ contention the S.E. ¼ supply was temporary only. Once the appellants had a replacement water system, there no longer was a claim for failing to ensure the supply of water “in the interim”.
[42] The judge stated that the purpose of contract damages is to put a plaintiff into the position it would have been in had there been no breach of contract. It is difficult to know the extent to which this may have influenced the judge’s approach to the issues, but her statement reflects the purpose of damages in tort, not contract. In contract, the objective is to put a plaintiff into the position it would have been in had the contract been performed:
… the plaintiff is entitled to be compensated for the loss of his bargain, so that his expectations arising out of or created by the contract are protected. This protection of expectations is the distinguishing mark of an action for damages for breach of contract. In an action in tort … damages are awarded on a different principle. Their purpose is to put the plaintiff into the position in which he would been if the [tort] had not been [committed] … (G. H. Treitel, The Law of Contracts, 5th ed., London: Stevens & Sons, 1979, p. 692).
[43] A pithy summary of the principle of mitigation was stated in Red Deer College v. Michaels, [1976] 2 S.C.R. 324, 57 D.L.R. (3d) 386, followed by Estey J. in Asamara Oil Corp. v. Sea Oil and General Corp., [1979] 1 S.C.R. 633, 89 D.L.R. (3d) 1. In Red Deer College, Laskin C.J.C. stated the principle as follows (at 330-31 S.C.R.):
The primary rule in breach of contract cases, that a wronged plaintiff is entitled to be put in as good a position as he would have been in if there had been proper performance by the defendant, is subject to the qualification that the defendant cannot be called upon to pay for avoidable losses which would result in an increase in the quantum of damages payable to the plaintiff. The reference in the case law to a "duty" to mitigate should be understood in this sense.
In short, a wronged plaintiff is entitled to recover damages for the losses he has suffered but the extent of those losses may depend on whether he has taken reasonable steps to avoid their unreasonable accumulation.
…
If it is the defendant's position that the plaintiff could reasonably have avoided some part of the loss claimed, it is for the defendant to carry the burden of that issue, subject to the defendant being content to allow the matter to be disposed of on the trial judge's assessment of the plaintiff’s evidence on avoidable consequences.
[44] In this case, insofar as the issue concerned the costs of obtaining the S.E. ¼ water supply, the respondents did not assert that these costs were avoidable. They were the cost of obtaining the proper performance of the contract. This was not a case of a plaintiff claiming damages beyond the costs of obtaining the bargain – “pecuniary losses naturally flowing from a breach of contract” (Harvin D. Pitch & Ronald M. Snyder, Damages for Breach of Contract, 2nd ed., looseleaf (Toronto: Carswell, 1989) at 8-1). The claim began and ended with the cost of providing a replacement system.
[45] In my view, the judge erred by beginning her analysis with a consideration of whether the appellants had an obligation to mitigate. She dealt with a contention of the defence before addressing the appellants’ claims. The first question always is whether a party has suffered damage and, if so, in what amount. If mitigation is to be addressed, it is necessary to know what is being mitigated. In this case, in the context of the replacement water system, there was nothing to mitigate; the measure of damages was the reasonable cost of obtaining the replacement system. The appellants were entitled to that. In the circumstance of this case, had they claimed an amount that exceeded their actual costs of obtaining the replacement system – which arguably they did in claiming for the supply from the new Lot C, which included the costs of acquiring the land – their recovery would have been limited to their actual reasonable costs.
[46] The agreement of the parties that the measure of damages was the cost of performing the contractual obligations was accurate. It contrasted with damages being the diminution in value of the purchased property, to which the court would have had to resort if the costs of performance were unreasonable (514953 B.C. Ltd. (c.o.b. Gold Key Construction) v. Leung, 2007 BCCA 114, 64 B.C.L.R. (4th) 76). This dichotomy illustrates the nature of the claim in this case and the absence of the need to engage considerations of mitigation.
[47] In summary:
· the appellants sued to recover the cost of supplying water;
· at that time the respondents were attempting to resolve matters with the Faridis and they subsequently undertook efforts to find a replacement system;
· in this context, the respondents pleaded mitigation; that is, the appellants had taken steps to avoid or reduce their loss occasioned by the respondents’ failure to provide interim water;
· at trial the appellants advanced a claim for the costs of obtaining a replacement system – new Lot C;
· the issue apparently became whether the appellants previously had obtained a replacement system – the S.E. ¼ water supply;
· this was denied by the appellants with the contention that supply was temporary only; this position was the foundation of their claims to recover the cost of interim water and to recover the costs of the new Lot C replacement system;
· the first issue should have been whether the appellants had obtained a replacement system; likely it was apparent that either the S.E. ¼ or the new Lot C supply would qualify and the real issue became whether the S.E. ¼ supply was temporary;
· on the judge’s finding that the S.E. ¼ supply was not temporary, the claim for new Lot C, which is not referred to in her reasons, became moot;
· also moot was the claim for the interim supply of water after the S.E. ¼ system was in place;
· the cost of providing the replacement system was the measure of damages for the respondents’ failure to do so; it had nothing to do with mitigation;
· the claim for the cost of interim water having become moot, mitigation no longer was relevant other than for the claim to recover the costs of failed attempts to obtain replacement water.
[48] Although the judge’s conclusions were reached through an analysis based on the law of mitigation, in my view, being based on findings of fact for which there was support in the evidence, her ultimate conclusions are sustainable whether that route is followed or the inquiry is focused on the more correct route of ascertaining the costs of obtaining the appellants’ bargain: a replacement water system.
[49] The judge made a number of findings of fact:
· the infrastructure that supplies the water from the well on the S.E. ¼ to the reservoir and from the reservoir to Lots A and C is identical to the Faridis’ system (para. 39);
· the quantity of water is far greater than that provided by the Faridis’ well (para. 40);
· the fact the appellants now use the reservoir and its pipelines for all of their water supply does not render the S.E. ¼ system any less effective as a replacement for the Faridis’ water supply system (para. 41);
· there is no evidence that the water supplied by the well on the S.E. ¼ is incapable of providing a permanent solution to the appellants’ water supply problem (para. 42);
· except for the period between February 2001 and January 2003, the appellants used this system exclusively without any interruption in supply (para. 42).
[50] Based on these findings, the judge concluded the S.E. ¼ water supply was equivalent to the Faridis’ water system.
[51] The judge then examined the issue of whether the S.E. ¼ was a replacement of the Faridis’ system. That is, whether it was temporary. This inquiry was undertaken in the context of considering collateral benefit.
[52] The appellants contend the judge incorrectly stated Mrs. Zaenker testified that the sole reason for the purchase of the S.E. ¼ was development, whereas she said another purpose was the acquisition of water. An examination of the transcript shows that Mrs. Zaenker testified in-chief that the property “was bought … for the development of the land”. She added, “we might [have] thought about it that we have a temporary source of water …”. I do not think the judge misstated the thrust of Mrs. Zaenker’s testimony, but, in any event, she continued to examine the facts concerning the acquisition. These included:
· in prior proceedings, Mrs. Zaenker testified that a secondary reason for purchasing the property was to find a water supply for Lots A and C;
· in cross-examination she agreed that the known existence of water on the S.E. ¼ was one of the reasons for purchasing the land;
· the appellants immediately drilled for water after they bought the S.E. ¼;
· no steps have been taken to develop the land;
· there was no evidence the appellants investigated the feasibility of developing the land which is in the Agricultural Land Reserve;
· the appellants immediately connected Lots A and C to the water supply regardless of any impact this might have had on the value of the land for development purposes;
· the land has been listed for sale with no reference to its value for development purposes.
[53] These factual findings support the judge’s conclusion that the S.E. ¼ water supply was a long term alternative to the Faridis’ system; that is, it was not temporary.
[54] The appellants’ substantive position on the S.E. ¼ and new Lot C is the same. The only difference is their contention that the water supplied from the S.E. ¼ was intended to be temporary only. On the evidence, this was rejected by the trial judge.
[55] Both the S.E. ¼ and new Lot C were purchased by the appellants’ numbered company. It is obvious the appellants caused this to happen. They claimed the costs of the purchase of new Lot C and the costs of developing water on that lot. It is hardly open to them to distance themselves from the numbered company’s purchase of the S.E. ¼ by relying on the corporate veil. The sole reason for purchasing new Lot C very shortly before the trial may have been to secure water, but it is clear on the evidence that one of the purposes of the purchase of the S.E. ¼ ten years previously was to obtain water and water from that lot was used for most of those ten years.
[56] The trial judge found that the S.E. ¼ water was a replacement system. As noted, the only distinction between it and the water on new Lot C was an allegation of temporary intention which she rejected. Having found that the appellants acquired a replacement system in 1999, there was no need to consider whether the acquisition of new Lot C in 2007 served the same purpose.
[57] Having determined that the S.E. ¼ water was a replacement system, the measure of damages was the costs of obtaining that system. The invoices of the numbered company were irrelevant. Because of the approach taken to the case by the appellants, which was rejected by the trial judge, they led little evidence to establish the costs of obtaining the S.E. ¼ water. The judge was left to do the best she could with the evidence at hand. In my view, she made no error doing so.
Conclusion
[58] Although the judge did not need to analyze the issue of the replacement system based on the law of mitigation, her findings of fact support her conclusions and the appellants have not demonstrated any overriding or palpable error in those findings of fact. I would dismiss this appeal.
“The Honourable Mr. Justice Chiasson”
I agree:
“The Honourable Mr. Justice Tysoe”
Reasons for Judgment of the Honourable Madam Justice Prowse:
[59] I have had the privilege of reading, in draft form, the reasons for judgment of Mr. Justice Chiasson. As is evident from his reasons, the pleadings and underlying facts relating to the issue of damages changed markedly between the time the statement of claim was issued in October 1997 and the trial in September 2007.
[60] I have little doubt that the trial judge’s analysis of the issues reflected the manner in which the case was argued before her. As I understand it, there was no question that the appellants had suffered damage as a result of the respondents’ breach of contract; the question was the extent of those damages. That being so, I am not persuaded that the trial judge erred in analyzing the appellants’ purchase of the SE ¼ through their numbered company as an action which could properly be construed as one which avoided or mitigated the damages which would otherwise have flowed from the respondents’ breach.
[61] I agree with Mr. Justice Chiasson, however, that the trial judge misstated the test for damages for breach of contract at para. 43 of her reasons for judgment. I also agree with him that, based on her findings of fact, and, in particular, her finding that the water system on the S.E. ¼ was a replacement system which was not temporary in nature, the only damages suffered by the appellants were those assessed by the trial judge.
[62] In coming to the conclusion that the trial judge’s assessment of damages is sustainable based on the evidence before her, I would adopt paras. 49-56 of Mr. Justice Chiasson’s reasons for judgment. I, too, would dismiss the appeal.
“The Honourable Madam Justice Prowse”