Kawanami v. Bartram, 2013 ABQB 328

Court of Queen ’ s Bench of Alberta Citation: Kawanami v. Bartram, 2013 ABQB 328 Date: 20130604 Docket: 1203 17955 Registry: Edmonton Between: Kyle Kawanami and Emery Jamieson LLP Appellants - and - James Bartram Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice J. J. Gill _______________________________________________________ Introduction [ 1 ] This is an appeal from a decision of the Provincial Court.

At trial the Provincial Court judge found the Appellants (Defendants) liable for failing to follow instructions and awarded the Respondent (Plaintiff) damages of $14,010.32. The issue on appeal concerns the award of damages. The finding of liability is not appealed. Facts [ 2 ] The facts are not in dispute. The Appellant lawyers acted for the Respondent in a matter involving a debt claim by the Royal bank of Canada (RBC).

[ 3 ] RBC was owed $50,000 under a Guarantee signed by the Respondent. [ 4 ] RBC initially made a claim against the Plaintiff for $100,000 and obtained a Default Judgment in the sum of $99,700.00 plus interest of $5,916.79 and costs of $1,781.45 for a total of $107,398.24. [ 5 ] During negotiations to settle the claim, RBC apparently only pursued the Respondent for the limit of the personal guarantee (ie: $50,000 plus interest and costs). [ 6 ] On November 14, 2011 RBC sent the Respondent an offer to resolve the claim by payment of $15,000 payment on the then outstanding amount of approximately $30,000 (the Respondent had already paid $26,334.13). [ 7 ] The Respondent claims that he was unable to take advantage of this offer of $15,000 because RBC still had the original Judgment against him of $107,000.This judgement prevented a bank from lending him the necessary funds to effect settlement. [ 8 ] At the time of the trial in August 2012 the Respondent had still not resolved RBC's claim.

The amount then owing under a Consent judgement dated January 31, 2012, was $28,010.32. [ 9 ] The Provincial Court judge found that as a result of the Respondents ’ actions the Plaintiff “ lost the opportunity to negotiate a settlement more favourable than the resulting situation wherein the Royal bank ended up with a judgement full amount of its claim ” . [ 10 ] The Provincial Court judge awarded damages based on his estimate as “ to what the chances of the Royal Bank agreeing to settle for the drop check amount or some amount less than the full value of the Royal ’ s Bank claim and ....reflect those chances in the amount of damages to be awarded ” . [ 11 ] The Provincial Court judge concluded that it was a virtual certainty that RBC would have negotiated to the point of accepting payment of $15,000 to resolve what was owing. [ 12 ] The damages award of $14,010.32 was comprised of two components: (a) $13,010.32 representing the difference between the amount owed RBC at the time of Trial (ie:$28,010.32) and a payment of $15,000. (b) $1,000 to reflect the small chance that RBC would have been prepared to compromise even more at an earlier stage in the proceedings.

Grounds of Appeal [ 13 ] The stated grounds of appeal are:

a) the Provincial Court Judge erred in finding that the Plaintiff did not mitigate his damages

b) the Provincial Court Judge erred in awarding judgment beyond nominal damages.

The Standard of Review [14] The standard of review for errors of law is correctness and for errors of mixed fact and law is generally palpable andoverriding error. The deference owed a Trial Judge varies depending upon the extent of factual versus legal findings made. Housen v. Nikolaisen 2002 SCC 33. Grounds of Appeal.

a) Did the Provincial Court Judge err in finding that the Plaintiff did not mitigate his damages? Submissions [15] The Appellants note that the issue of mitigation was raised in their dispute note. At trial the Appellants argued that thePlaintiff’s failure to accept RBC’s November 14, 2011 offer to settle for $15,000.00 was a failure to mitigate. [16] The Appellants argue that the Provincial Court Judge should have found that the Plaintiff did not mitigate his damages.

Theysubmit that Respondent’s impecuniosity did not relieve the Respondent of his duty to mitigate as his impecuniosity was not caused bythe Appellants actions. [17] The Appellants submit that if the Plaintiff had accepted RBC’s November 14, 2011 offer, the $13,010.32 portion of thedamages award would have been completely avoided and therefore that portion of the judgment must be set aside. [18] The Respondent submits that Appellant's argument regarding mitigation fails to address the principle that an award ofdamages is intended to put the aggrieved party in the position he would have been in but for the breach.

Had the Appellants, tendered thefunds as instructed in 2009, settlement negotiations would have occurred at that time. Mitigation would not have been an issue as theRespondent could have raised additional settlement funds if required. Through the fault of the Appellants, the Respondent was deniedthat time-sensitive opportunity. [19] The Respondent also submits that the Appellants must first prove a failure to mitigate.

Having failed to do so there was noburden on the Respondent to address the issue of his impecuniosity. [20] In any event if the evidence established a failure to mitigate ,it arose from the Respondents’ impecuniosity which wasdirectly traceable to the Appellants wrongdoing and relieves the Respondent of any duty to mitigate. Analysis [21] The duty to mitigate was described in the Supreme Court of Canada case of Janiak v.

Ippolito (1985) (SCC), 1 S.C.R. 146.At page 163 Wilson J. states: “While a Plaintiff has a burden of proving both the fact that he has suffered damage and the quantum of that damage, the burden of proofmoves to the Defendant if he alleges that the Plaintiff could have and should have mitigated his loss. That this is the law in Canada hasbeen clearly stated by this Court in Red Deer College v. Michaels (SCC), 1976 2 S.C.R 324, and more recentlyreaffirmed by Etsey, J. in the Asamara Oil case, supra. In Red Deer Laskin CJ, said at page 331:

“ 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. ” [ 22 ] The decision of the trial judge does not address mitigation however the record shows that the Appellants raised it as an issue .The evidence at trial supports a finding that the Respondent had an opportunity to mitigate but failed to do. [ 23 ] The undisputed evidence is that in November,2011 the Respondent had an opportunity to pay the sum of $15,000.00 to resolve RBC ’ s claim against him.

If he had done so, it would have avoided RBC obtaining a judgment in January, 2012 for $28,010.32 and therefore avoided exposing himself to the additional liability of $13,010.52. [ 24 ] The Respondent ’ s evidence was that he did not take that opportunity in November, 2011 to settle the RBC claim by paying $15000 as he was not capable of raising the money. At trial (page 15 of the transcript) the Respondent ’ s evidence in relation to the November 14, 2011 offer was as follows: Q: ... And what was your position with respect to responding to that offer?

A: Well I – I didn ’ t – I wasn ’ t really able to – I couldn ’ t give them the $15,000 because I couldn ’ t get the $15,000 from the bank because they still at the time had the $105,000 judgment against me. We made other offers, one was $8,000, one was $2,000 and I couldn ’ t access $15,000 to resolve it at that time. [ 25 ] The Respondent submits that his impecuniosity was caused by the actions of the Appellants; it was not his fault.

Consequently the Appellants did not meet their burden of showing that the he could have mitigated. [ 26 ] The concept of impecuniosity as a possible excuse for failing to mitigate is summarised in Klar, Remedies in Tort ,Volume 2 at paragraph 169 on page 16.1-140.26: “ The defendant ,however will only be liable for the plaintiff ’ s impecuniosity if he caused it, otherwise the impecuniosity is seen as extrinsic to the negligence and is not compensable ” . [ 27 ] In Alberta Caterers Ltd. v. Vollan (Alta)Ltd

(1977) A.J. No. 777 at paragraph 35 Mr. Justice Cavanagh addressed the issue of a Plaintiff who acknowledged that it had a duty to mitigate but offered as an excuse that it could not do so due to its own impecuniosity. At paragraph 35 he applied the following principle: “ The leading case on this point is the well known case of the Liesbosch Dredger v. S.S.

Edison, [1933] A.C. 449 , in which Lord Wright said at page 460: The Appellant ’ s actual loss insofar as it was due to their own impecuniosity arose from that impecuniosity as a separate and concurrent cause, extraneous to and distinct in character from the tort; the impecuniosity was not traceable to the respondents ’ acts, and in my opinion was outside the legal purview of the consequences of these acts. ” [ 28 ] The same principle appears in Dawson v. Helicopter Exploration Co. Ltd. ,{1958 } S.C.J. No. 80 at para. 43 and Marigold Holdings Ltd. v. Norem Construction Ltd. {1988} A.J.

No. 612 at page 38. [ 29 ] There is no evidence to support the conclusion that the Respondent ’ s impecuniosity (and consequential failure to mitigate) was caused by or is traceable to the Appellants. It is apparent from the history of the dispute between RBC and the Respondent, that the Respondents ’ financial troubles predate his involvement with the Appellants.

[ 30 ] I am satisfied from a review of the record that at trial the Appellants established that the Respondent had an opportunity to mitigate and that his failure to mitigate was due to his impecuniosity which not traceable to the Appellants. [ 31 ] The Respondents ’ impecuniosity does not provide him with an excuse for not mitigating.

If he had taken that opportunity to pay the $15,000.00 in November 2011, he would have avoided having the additional judgement of $13,010.32 against him. [ 32 ] I find the trial judge erred in failing to address the issue of mitigation and in thereby concluding that the Appellants were responsible for this loss. [ 33 ] The damage award of $13,010.52 is overturned.

b) Did the Provincial Court Judge err in awarding judgment beyond nominal damages? [ 34 ] The Appellants submit that the Provincial Court Judge erred in awarding nominal damages of $1,000 for loss of chance. [ 35 ] They submit that the additional $1,000 award was not appropriate in the circumstances as the evidence in it ’ s totality suggests that RBC was not willing to negotiate a reduction at all while the Appellants were acting for the Respondent. Analysis [ 36 ] At paragraph 27 and 28 of the judgement the trial judge explained the damage award of $1,000 as follows: 27 ......

In my view, there is a small chance that the Royal Bank would have accepted the drop cheque in full settlement, or would have, prior to its obtaining the judgment which it now holds, agreed to a settlement more advantageous to the plaintiff. 28 I assess the Plaintiff ’ s damages at $14,010.32.

This amount being the $13,010.32 difference between the $15,000 which the Royal Bank stated it would accept in the amount of the judgment plus an additional $1,000.00 to reflect the small chance that the Royal Bank would have been prepared to compromise more at an earlier stage in the proceedings . ” ( Emphasis added ). [ 37 ] The evidence of the earlier negotiations between RBC and the Respondent was that the solicitor for RBC had stated that his client would not consider accepting a reduced amount as full and final settlement without first having reviewed a statutory declaration setting out the Respondents assets.

The Respondent was not willing to provide a statutory declaration. The Respondent accepted this as RBC ’ s final position [ 38 ] I agree with the Appellants that the evidence does not support the trial judges ’ finding that there was a “ small chance that RBC would have been prepared to compromise more at an earlier stage in the proceedings ” . It is clear that RBC had made disclosure of assets a precondition to a compromise of their debt claim. The Respondent was not willing to disclose his assets in the manner required by RBC.

[ 39 ] I find that the trail judge erred in finding that there was a basis for awarding nominal damages .The damages award of $1,000 is overturned.

Summary [ 40 ] The appeal is allowed with costs. If the parties are unable to agree on costs they may speak to them within 60 days. Heard on the 02 nd day of May, 2013 with additional written submissions on May 10 th and May 24 th 2013. Dated at the City of Edmonton, Alberta this 3 rd day of June, 2013. J. J. Gill J.C.Q.B.A. Appearances: Damian Shepherd Chatwin LLP for the Appellants Harvey Hait Cleall LLP for the Respondent