DATE: 20220228
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Nam Dek Lee
Plaintiff
– and –
Jin Mo and Edge on Triangle Park Inc.
Defendants
David Wagner and Peter Askew, for the Plaintiff
Jin Mo, Self Represented Defendant
HEARD IN WRITING
ADDENDUM TO REASONS FOR DECISION
VELLA, J.
[1] On December 21, 2021 I released my Reasons for Judgment in relation to this matter (“Reasons”).
[2] I subsequently received a motion under r. 59.06(1) from the Plaintiff, Nam Dek Lee (“Lee”), to amend my Reasons by reason that the Defendant, Jin Mo (“Mo”), admitted during the course of trial that the market value of the subject Condominium Unit was $470,000 as at November 4, 2019, contrary to my finding.
[3] I had not yet signed a judgment in this matter.
[4] On January 31, 2022 I released my Endorsement and granted Lee’s Motion. Mo did indeed make this concession at the end of the second day of trial.
[5] Accordingly, this Addendum replaces and supersedes the findings reflected in paragraphs 162 – 164 of the Reasons, and addresses whether Mr. Lee is entitled to damages arising from loss of opportunity reflected by the increase in the market value of the Condominium Unit from the original purchase price of $250,400 to a market value $470,000. Mr. Lee claims the increase in the sum of $219,600 as damages arising from his loss of opportunity to buy the Condominium Unit.
ANALYSIS
I. Issue
[6] The issue to be resolved is whether damages arising from Mo’s negligence and breach of contract ought to be assessed at the date of the breach or at a date subsequent to the breach. This is very different from determining what the appropriate measure of damages are.
[7] Lee’s argument is that damages should be assessed at a date subsequent to the breach because special circumstances exist and fairness demands it. He was not able to purchase a new replacement property because he could not afford another unit as a result of having forfeited his deposit of $50,000 due to Mo’s negligence. He urges the court to draw an analogy to cases in which damages are assessed in lieu of specific performance as at the date of trial. His theory is that if he had been able to purchase the Condominium Unit on the final closing date, he would have an item that is worth more today than it was then. In order for him to be placed back in the position he would have been, but for Mo’s negligence, he must have the updated market value of the lost Condominium Unit so he can purchase a replacement property.
[8] For purposes of this analysis, Lee submitted that the court use November 4, 2019 as the appropriate assessment date, since there was no evidence of what the market value of the Condominium Unit was as at the date of trial.
[9] Mo’s submissions regarding this heading of damages at trial focussed on his position that Lee suffered no damages as a result of his negligence and breach of contract and not on the appropriate assessment date.
[10] For the reasons that follow, I reject Lee’s claim for damages arising from loss of opportunity.
II. Lawyer’s Negligence Damages Principles
[11] Lee submits that Mo’s damages arising from lawyer’s negligence should be assessed on contractual principles. I agree. Mo’s liability arises concurrently in tort and contract.
[12] In Folland v. Reardon (2005), 2005 CanLII 1403 (ON CA), 74 O.R. (3d) 688 (C.A.), at para. 76, Doherty J.A. stated:
The solicitor’s negligence cases set out above address liability in terms of the negligence of the solicitor’s conduct, but assess damages using contractual principles. In most solicitor’s negligence cases, liability rests in both contract and tort. Where, as in this case, the contractual and tort liability is concurrent, I see no reason to assess damages for what is essentially the same wrong in a different manner when considering contractual liability and liability in negligence: BG Checo International Ltd. v. British Columbia Hydro & Power Authority, [1993] 1. S.C.R. 12, at 37-8.
III. Date of Assessment of Damages
[13] The case most instructive to my analysis is the decision rendered in Rougemount Capital Inc. v. Computer Associates International Inc., 2016 ONCA 847, 410 D.L.R. (4th) 509. The Court of Appeal specifically addressed the appropriate date for the assessment of damages for breach of contract:
[44] It is well established that the general measure of damages for breach of contract is the amount of damages that will, so far as money can, place the aggrieved party in the same position as if the wrong had not been done [citation omitted]. The focus is on the injured party’s loss and on the measure of compensation required to restore it to the position that it would have been in had the contract been performed [citations omitted].
[45] With respect to the appropriate date for the assessment of damages, the presumption is that damages, including those for loss of a business or opportunity, should generally be assessed as of the date of breach [citation omitted].
[50] We agree that the general presumption that damages will be assessed as of the date of breach may be subject to exceptions where fairness requires it. However, this presumption should not be easily displaced; any deviation from it must be based on legal principle. As the British Columbia Court of Appeal recently noted in Dosanjh v. Liang, 2015 BCCA 18, 380 D.L.R. (4th) 137, at para. 55:
[T]he presumption that contract damages are to be assessed as of the date of the breach is not so easily displaced. It is important that the law in this area be predictable, and such predictability is not served by allowing judges unbounded discretion as to the date for assessment of damages.
[51] The rationale for this general presumption was articulated by Laskin J.A., concurring in Kinbauri, at para. 125:
As Cronk J.A. points out, damages for breach of contract are generally assessed at the date of breach. An early crystallization of the plaintiff’s damages promotes efficient behaviour: the litigants become as free as possible to conduct their affairs as they see fit. Early crystallization also avoids speculation: the plaintiff is precluded from speculating at the defendant’s expense by reaping the benefits of an increase in the value of the goods in question without bearing any risk of loss.
[52] Indeed, this general presumption should only be displaced in special circumstances, such as, for example, where no market exists to replace undelivered shares at the date of breach [citation omitted]; or in relation to “[s]ome classes of property, including shares, whose value is subject to sudden and constant fluctuations of unpredictable amplitude, and whose purchase is not lightly entered into” [citation omitted].
(See also Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at para. 13)
[14] The Court of Appeal makes a distinction between the appropriate measure of damages and the appropriate date for the assessment of those damages. The presumption is that damages arising from breach of contract in lawyer’s negligence cases are assessed as at the date of the breach and not at some subsequent date. This presumption will not be easily displaced. However, there are exceptions to this general principle where fairness requires a departure in a principled manner to achieve fair compensation.
[15] Therefore, in order to depart from the general rule that damages for breach of contract is assessed from the date of the breach, the plaintiff must demonstrate that this matter falls within one of the established exceptions.
[16] One such principled exception is where damages are assessed in lieu of specific performance of a contract. Lee urges this court to treat the date of assessment of damages arising from Mo’s negligence as if this were a claim for specific performance of a breached agreement of purchase and sale by analogy.
[17] In Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, the Supreme Court of Canada held that where the breached contract is capable of specific performance, the date of assessment of damages may well be beyond the date of the original breach of the contract:
[13] The rationale for assessing the damages at the date of breach in the case of breach of contract for the sale of goods is that if the innocent purchaser is compensated on the basis of the value of the goods as of the date of the breach, the purchaser can turn around and purchase identical or equivalent goods. The purchaser is therefore placed in the same financial situation as if the contract had been kept.
[14] Different considerations apply where the thing which is to be purchased is unique. Although some chattels such as rare paintings fall into this category, the concept of uniqueness has traditionally been peculiarly applicable to agreements for the purchase of real estate. Under the common law every piece of real estate was generally considered to be unique. Blackacre had no readily available equivalent. Accordingly, damages were an inadequate remedy and the innocent purchaser was generally entitled to specific performance. Given the flexibility of the rule at common law as to the date for the assessment of damages, it would not be appropriate to insist on applying the date of breach as the assessment date when the purchaser of a unique asset has a legitimate claim to specific performance and elects to take damages instead [citation omitted]. The rationale that the innocent purchaser is fully compensated, if provided with the amount of money that would purchase an asset of the same value on the date of the breach, no longer applies. This disposition would not be a substitute for an order of specific performance. The order for specific performance may issue many months or even years after the breach. The value of the asset may have changed.
[15] Moreover, the claim for specific performance revives the contract to the extent that the defendant who has failed to perform can avoid a breach if at any time up to the date of judgment, performance is tendered… Thus, the claim for specific performance can be seen as reviving the contract to the extent that the defendant who has failed to perform can avoid a breach if, at any time up to the date of judgment, performance is tendered. In this way, a claim for specific performance has the effect of postponing the date of breach.
[16] For all of these reasons, it is not inconsistent with the rules of the common law to assess damages as of the date of trial. It must be remembered that the rules of the common law did not contemplate awarding damages as a substitute for specific performance. (emphasis added)
[18] In Semelhago, the Supreme Court was clear that assessment of damages in lieu of specific performance is an exception to the general principle because the party in breach has the ability to rectify the breach by delivering the property at any time up to judgment. Critical to the analysis is the Court’s characterization of a specific performance claim as effectively reviving the contract and thus postponing the breach until the date of judgment.
[19] In the subject case, there is no claim for specific performance against the vendor of the Condominium Unit, nor could there have been. Accordingly, there was no opportunity for Mo to have delivered the Condominium Unit to Lee or revived the terminated agreement of purchase and sale. The breach of contract in issue is the lawyer-client contract, not the underlying agreement of purchase and sale. I reject Lee’s claim that the assessment of damages be postponed to November 4, 2019 by analogy to a claim for damages in lieu of specific performance.
[20] Lee also submitted that the principle from Messineo v. Beale (1978), 1978 CanLII 1570 (ON CA), 20 O.R. (2d) 49 (C.A.) (the “Messineo principle”) supports his position that the assessment should be postponed to a date beyond the breach.
[21] In Rankin v. Menzies (2002), 47 R.P.R. (3d) 265 (Ont. S.C.), at. para. 43, this Court explored the Messineo principle within the context of the assessment of damages in lawyer’s negligence cases:
The measure of damages is in serious dispute in this proceeding. Counsel for the defendants have relied on the discussion in Toronto Industrial Leaseholds Ltd. v. Posesorski (1994), 1994 CanLII 7199 (ON CA), 21 O.R. (3d) 1 (Ont. C.A.). The majority in that case discuss (p. 8) the correct measure of damages in a solicitor’s negligence case. After reviewing the earlier cases of Messineo v. Beale (1978), 1978 CanLII 1570 (ON CA), 20 O.R. (2d) 49 (Ont. CA), and Kienzle v. Stringer (1981), 1981 CanLII 1851 (ON CA), 35 O.R. (2d) 85 (Ont. C.A.), the Ontario Court of Appeal concluded that in solicitor’s negligence cases, the measure of damages is not restricted to the difference between the purchase price and the market value of the property. The Messineo principle is that the clients are entitled to recover the overpayment, if any, resulting from the solicitor’s failure to alert them to the “defect” in the property. The overpayment is the difference between the price actually paid for the property and the market value for the property.
[22] The Messineo principle applies to situations in which the purchaser overpaid for the property due to a lawyer’s negligence. Again, this is not the situation at bar.
[23] In Romanyszyn v. Baby, 2017 ONSC 6421, the court assessed damages arising from a failed real estate transaction in which the purchasers reneged on the agreement of purchase and sale, after the sale of their own house fell through. The vendor sold the house, but at a lower amount than the purchaser defendants had agreed to pay. In this case the court agreed that damages should be assessed once the vendor’s damages had crystallized by the resale of the house. The court observed, at paras. 79 – 82:
As stated in Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at para. 8:
“the object of an award of damages for breach of contract [is] to “put the injured party into the position in which he would have been had the contract been performed, in so far as that is possible by the payment of money.”
Damages for a breach of contract for the sale of goods are generally assessed as at the date of the breach. The rationale for this is that if the innocent purchaser is compensated on the basis of the value of the goods as of the date of the breach, the purchaser can turn around and purchase identical or equivalent goods. The purchaser is therefore placed in the same financial situation as if the contract had been kept.
The general rule that damages for breach of contract are assessed as at the date of the breach is not an absolute rule. It will not be followed when to do so would give rise to injustice. In such a case the court has the power to fix a date that might be appropriate in the circumstances. [Citations omitted]
The case at bar is not a sale of goods case and the breach was not committed by the vendor, but rather by the purchaser. In these circumstances it is reasonable to assess the damages as at a date subsequent to the date of the breach.
[24] Again, this scenario does not assist Lee since this is not a situation where the damages could not crystallize until the subject property was re-sold.
[25] There are other concerns with respect to Lee’s argument that the assessment of damages ought to be postponed beyond the date of the breach in this case to a date arbitrarily selected by him. For example, I have no evidence as to what the market value of the Condominium Unit was as at the date of trial (including whether it increased or decreased), and Lee’s calculation of damages did not take into account the cost of carrying the Condominium Unit which was to be largely financed by way of a mortgage.
CONCLUSION
[26] Lee has not persuaded me that I should depart from the general principle that damages for breach of contract, arising from a failed real estate transaction at the suit of the purchaser who was unable to close due to his own lawyer’s negligence, should be assessed at a date subsequent to the lawyer’s negligence and concurrent breach of contract. It is important that the law develop in a manner that is predictable so that parties know where they stand in these types of lawyer’s negligence/breach of contract real estate scenarios. I am not persuaded to exercise my discretion to create a new special circumstance that warrants displacing the general principle that damages for breach of contract are assessed as at the date of the breach in the circumstances of this case.
[27] Accordingly, Lee is entitled to damages assessed as at the date of the failed real estate transaction caused by Mo’s negligence and concurrent breach of contract as reflected in my Reasons. Damages are not awarded for loss of opportunity.
Justice Vella
Released: February 28, 2022
DATE: 20220228
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
LEE
Plaintiffs/Responding Party
– and –
MO, ET AL.
Defendants/Moving Parties
ADDENDUM TO REASONS FOR DECISION
Justice S. Vella
Released: February 28, 2022