COURT OF APPEAL FOR ONTARIO

DATE: 2003-02-28

DOCKET: C34188

RE: LORNE SPARK (Plaintiff/Respondent) – and- GENEREX PHARMACEUTICALS INC. and E. MARK PERRI (Defendants/Appellants)

BEFORE: DOHERTY, AUSTIN and GILLESE JJ.A.

COUNSEL: Richard E. Anka, Q.C. for the defendants/appellants Ted Laan for the plaintiff/respondent

HEARD: February 26, 2003

On appeal from the judgment of Justice David G. Stinson of the Superior Court of Justice dated March 28, 2000.

E N D O R S E M E N T

[1] The appellant raised a number of grounds of appeal but pursued only two matters at the hearing of this appeal: quantum of damages and costs. We agree that of the various grounds, only those two are of merit.

QUANTUM OF DAMAGES

[2] The appellant argues that the trial judge erred in his assessment of the quantum of damages awarded to Mr. Spark. He says that damages are compensatory and the appropriate measure is that which will put Mr. Spark “in the position that would have been occupied if the wrong had not been done”. Hence, he argues, damages in this case ought to be the amount that Mr. Spark paid to Sandra Boulter over the relevant three-year period plus the loss of Mr. Spark’s consulting contract with Wylie Press.

[1] We reject this argument. This is a contract case, not a tort claim. The trial judge properly articulated and followed the principles for quantification of damages for breach of a fixed term employment contract. He found that Generex breached its employment contract with Mr. Sparks, that the contract was for a fixed term of three years and that over the three-year term of the contract, Mr. Spark was deprived of the opportunity to earn $300,000. He properly held that Mr. Spark had a duty to mitigate and gave credit to Generex for the income that Mr. Spark earned in the three-year period. The suggestion that the measure of damages is the amount that Mr. Spark paid to Ms. Boulter and the loss of income from the cancellation of the Wylie Press contract is simply untenable.

[2] Alternatively, the appellant argues that the trial judge erred in failing to attribute to Mr. Spark all of the salary which Mr. Spark received from his numbered company during the relevant time period. Again, we reject this submission. The trial judge deducted the $91,018.20 that Mr. Spark earned from Avanti from August of 1997 to the end of the three-year period. He recognized that some improvement in the finances of Mr. Spark’s printing company was attributable to Mr. Spark’s involvement and that the evidence on the point was “far from satisfactory”. He estimated a net improvement in the order of $15,000 and credited Generex with that sum.

[3] During the relevant time period, Mr. Spark’s involvement with his printing company was largely in the nine-month period from November of 1996, when he was told he did not have the position with Generex, until August of 1997 when he began working for Avanti. His annual salary from the printing company for the years ending July 31, 1996 and 1997 was $27,000 and $28,832 respectively. We cannot say that the trial judge fell into error in determining that Mr. Spark’s involvement resulted in a net improvement in the order of $15,000. This is particularly so given that the burden of proof is upon Generex to prove that Mr. Spark’s loss could have been avoided.

COSTS

[4] The appellant argues that the trial judge erred in ordering Generex to pay costs to Mr. Perri. In our view, the appellant has failed to appreciate the effect of the trial judge’s costs award. The effect of the costs award is NOT to make Generex pay costs that Mr. Spark is liable for to Mr. Perri, as the appellant contends. Rather, as is clear from paragraph 6 of the judgment dated 28 March 2000, Generex is to pay to Mr. Perri 10% of the amount that it would otherwise have had to pay to Mr. Spark.

[5] The appellant also argued that the trial judge was not entitled to make a Sanderson order directing that payment of costs was to go directly from the unsuccessful defendant (Generex) to the successful defendant (Mr. Perri). We disagree. As this court recently held in Rooney (Litigation Guardian of) v. Graham (2001), 144 O.A.C. 240 (Court of Appeal), a Sanderson order may be appropriate even where an independent cause of action is alleged against each defendant. The circumstances of each case will determine the appropriateness of such an order.

[6] The trial judge was clearly alive to the circumstances of the parties in this case, including the close relationship between Generex and Mr. Perri. Although it would have been preferable had the trial judge made explicit his reasons for making the Sanderson order, we are satisfied that the order was appropriate.

[7] For these reasons, the appeal is dismissed, leave to appeal the costs order is granted and the appeal is dismissed. We see no reason why the usual rule should not apply with costs of the appeal going to the successful party on a partial indemnity basis. However, if the parties are unable to agree on costs, the respondent shall file brief written submissions within seven days of the date of release of these reasons and the appellant shall have seven days thereafter in which to file responding submissions.

“D.H. Doherty J.A.”

“A.M. Austin J.A.”

“E.E. Gillese J.A.”```