Southcott Estates Inc v Toronto Catholic District School Board | |
---|---|
Hearing: 2012-03-20 Judgment: 2012-10-17 | |
Citations | 2012 SCC 51, [2012] 2 SCR 675 |
Docket No. | 33778 [1] |
Prior history | APPEAL and CROSS‑APPEAL from Southcott Estates Inc. v. Toronto Catholic School Board, 2010 ONCA 310, 104 OR (3d) 784 (3 May 2010), setting aside Southcott Estates Inc. v. Toronto Catholic District School Board, 2009 CanLII 3567, 78 R.P.R. (4th) 285 (30 January 2009), Superior Court of Justice (Ontario, Canada) |
Ruling | Appeal and cross‑appeal dismissed |
Court membership | |
Chief Justice:
Beverley McLachlin Puisne Justices: Louis LeBel, Marie Deschamps, Morris Fish, Rosalie Abella, Marshall Rothstein, Thomas Cromwell, Michael Moldaver, Andromache Karakatsanis | |
Reasons given | |
Majority | Karakatsanis J, joined by LeBel, Deschamps, Abella, Rothstein, and Cromwell JJ |
Dissent | McLachlin CJ |
Fish and Rothstein JJ took no part in the consideration or decision of the case. |
Southcott Estates Inc v Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 SCR 675, is a landmark case of the Supreme Court of Canada in the area of commercial law, with significant impact in the areas of:
Southcott Estates Inc sued the Toronto Catholic District School Board for specific enforcement of a contract to sell it 4.78 acres (1.93 ha) of land. Southcott Estates Inc was a subsidiary of Ballantry Homes Inc, a developer, [2] and special purpose entity created just for purchasing and developing the land. The deal was conditional upon Southcott paying a 10% deposit, and the Toronto School Board getting severance permission from Toronto's Committee of Adjustment before a certain date. However, the Committee refused without reviewing a development plan for the land, which meant severance was not granted in time. Southcott sued for specific performance or damages.
At trial, Southcott stated it never had any intention to mitigate its loss and had not tried, that it had no assets other than the deposit from Ballantry Inc for the deposit, and it was never going to purchase any other land.
At the Ontario Superior Court of Justice, Spiegel J held that:
He rejected the Board's submission that Southcott had mitigated damages through several purchases subsequent to the breach of the agreement, declaring:
I find that these subsequent purchases were collateral, independent transactions that did not arise out of the consequences of the breach. In all the circumstances, I do not consider these transactions as mitigatory. [6]
The Board appealed to the Ontario Court of Appeal, where Sharpe JA held that:
As a result, nominal damages were awarded in the amount of $1.
Leave to appeal and cross-appeal the decision were granted by the Supreme Court of Canada in November 2011: [10]
In a 6-1 ruling, the appeal was dismissed with costs. As it was therefore unnecessary to consider the cross-appeal, it was dismissed without costs.
Karakatsanis J began by summarizing the principles for mitigation previously adopted by the Court in Asamera Oil Corporation Ltd. v. Sea Oil & General Corporation [11] where Lord Haldane's observation was endorsed:
The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps. [12]
The principles have since been refined in further cases at the Court, as well as at the Federal Court of Appeal. [13]
Southcott had argued that, as a single-purpose company, it was impecunious and unable to mitigate without significant capital investment of the parent company or without the corporate mandate to do so. In addition, it would be reasonably foreseeable to those contracting with a single-purpose corporation that such an entity would have finite resources and a confined corporate mandate. [14] This was held to be insufficient:
Asamera, when read together with Semelhago v. Paramadevan, holds that it "cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases," [18] and specific performance will be available only where money cannot compensate fully for the loss, because of some “peculiar and special value” of the land to the plaintiff. [19]
McLachlin CJ believed that the trial judge was correct in finding in fact that the Board had not proved that Southcott had an opportunity to mitigate, which was sufficient to dispose of the appeal. She would have reversed the Court of Appeal's ruling and restored the original verdict. She saw no basis on which to conclude that Southcott acted unreasonably in maintaining its suit for specific performance instead of mitigating its loss: [20]
The decision has raised significant debate on many of the issues it discussed:
Southcott Estates Inc v Toronto Catholic District School Board | |
---|---|
Hearing: 2012-03-20 Judgment: 2012-10-17 | |
Citations | 2012 SCC 51, [2012] 2 SCR 675 |
Docket No. | 33778 [1] |
Prior history | APPEAL and CROSS‑APPEAL from Southcott Estates Inc. v. Toronto Catholic School Board, 2010 ONCA 310, 104 OR (3d) 784 (3 May 2010), setting aside Southcott Estates Inc. v. Toronto Catholic District School Board, 2009 CanLII 3567, 78 R.P.R. (4th) 285 (30 January 2009), Superior Court of Justice (Ontario, Canada) |
Ruling | Appeal and cross‑appeal dismissed |
Court membership | |
Chief Justice:
Beverley McLachlin Puisne Justices: Louis LeBel, Marie Deschamps, Morris Fish, Rosalie Abella, Marshall Rothstein, Thomas Cromwell, Michael Moldaver, Andromache Karakatsanis | |
Reasons given | |
Majority | Karakatsanis J, joined by LeBel, Deschamps, Abella, Rothstein, and Cromwell JJ |
Dissent | McLachlin CJ |
Fish and Rothstein JJ took no part in the consideration or decision of the case. |
Southcott Estates Inc v Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 SCR 675, is a landmark case of the Supreme Court of Canada in the area of commercial law, with significant impact in the areas of:
Southcott Estates Inc sued the Toronto Catholic District School Board for specific enforcement of a contract to sell it 4.78 acres (1.93 ha) of land. Southcott Estates Inc was a subsidiary of Ballantry Homes Inc, a developer, [2] and special purpose entity created just for purchasing and developing the land. The deal was conditional upon Southcott paying a 10% deposit, and the Toronto School Board getting severance permission from Toronto's Committee of Adjustment before a certain date. However, the Committee refused without reviewing a development plan for the land, which meant severance was not granted in time. Southcott sued for specific performance or damages.
At trial, Southcott stated it never had any intention to mitigate its loss and had not tried, that it had no assets other than the deposit from Ballantry Inc for the deposit, and it was never going to purchase any other land.
At the Ontario Superior Court of Justice, Spiegel J held that:
He rejected the Board's submission that Southcott had mitigated damages through several purchases subsequent to the breach of the agreement, declaring:
I find that these subsequent purchases were collateral, independent transactions that did not arise out of the consequences of the breach. In all the circumstances, I do not consider these transactions as mitigatory. [6]
The Board appealed to the Ontario Court of Appeal, where Sharpe JA held that:
As a result, nominal damages were awarded in the amount of $1.
Leave to appeal and cross-appeal the decision were granted by the Supreme Court of Canada in November 2011: [10]
In a 6-1 ruling, the appeal was dismissed with costs. As it was therefore unnecessary to consider the cross-appeal, it was dismissed without costs.
Karakatsanis J began by summarizing the principles for mitigation previously adopted by the Court in Asamera Oil Corporation Ltd. v. Sea Oil & General Corporation [11] where Lord Haldane's observation was endorsed:
The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps. [12]
The principles have since been refined in further cases at the Court, as well as at the Federal Court of Appeal. [13]
Southcott had argued that, as a single-purpose company, it was impecunious and unable to mitigate without significant capital investment of the parent company or without the corporate mandate to do so. In addition, it would be reasonably foreseeable to those contracting with a single-purpose corporation that such an entity would have finite resources and a confined corporate mandate. [14] This was held to be insufficient:
Asamera, when read together with Semelhago v. Paramadevan, holds that it "cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases," [18] and specific performance will be available only where money cannot compensate fully for the loss, because of some “peculiar and special value” of the land to the plaintiff. [19]
McLachlin CJ believed that the trial judge was correct in finding in fact that the Board had not proved that Southcott had an opportunity to mitigate, which was sufficient to dispose of the appeal. She would have reversed the Court of Appeal's ruling and restored the original verdict. She saw no basis on which to conclude that Southcott acted unreasonably in maintaining its suit for specific performance instead of mitigating its loss: [20]
The decision has raised significant debate on many of the issues it discussed: