Brandon Englot Appellant (Defendant) v. Ritchie Bros. Auctioneers (Canada), 2023 SKCA 27

Court of Appeal for Saskatchewan Docket: CACV4022 Citation: Englot v Ritchie Bros. Auctioneers (Canada) Ltd. , 2023 SKCA 27 Date: 2023-02-23 Between: Brandon Englot Appellant (Defendant) And Ritchie Bros. Auctioneers (Canada) Ltd. Respondent (Plaintiff) Before: Schwann, Leurer and McCreary JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr.

Justice Leurer In concurrence: The Honourable Madam Justice Schwann The Honourable Madam Justice McCreary On appeal from: 2022 SKQB 122 , Saskatoon Appeal heard: January 18, 2023 Counsel: David Kreklewich for the Appellant Jared Epp for the Respondent Leurer J.A. I. INTRODUCTION [ 1 ] The issue in this appeal is whether an auctioneer can recover damages resulting from the misrepresentation of goods consigned to it for sale. [ 2 ] Brandon Englot retained Ritchie Bros. Auctioneers (Canada) Ltd. [RB Group] to act as his agent for the purposes of selling two tractors.

A Court of Queen’s Bench judge sitting in Chambers determined that, in the course of this, Mr. Englot intentionally misrepresented the state of the tractors. Based on this and other findings, the Chambers judge granted

summary judgment to RB Group for the damages flowing from this misrepresentation and associated breach of contract: Ritchie Bros. Auctioneers (Canada) Ltd. v Englot , 2022 SKQB 122 [ Chambers Decision ]. [ 3 ] Mr. Englot appeals to this Court from the Chambers Decision . I would dismiss Mr. Englot’s appeal. My reasons follow. II. BACKGROUND A. Facts [ 4 ] RB Group is an auction company involved in selling farm implements and other types of equipment. In the fall of 2018, Mr. Englot, under the name of Knight Farms, contracted with it to sell two tractors on his behalf by way of an unreserved public auction.

A written agreement between the parties established RB Group as Knight Farms’ agent for this purpose. At Mr. Englot’s request, this agreement was later replaced by another one between himself, personally, and RB Group. Since the material terms of the two agreements do not differ, in these reasons I will refer simply to the “Auction Agreement” and to Mr. Englot as the contracting party. [ 5 ] In the Auction Agreement, Mr.

Englot represented and warranted to RB Group that the description of the tractors “shall be accurately set forth on the applicable Schedule”, and that “all odometer and hour meters on the Equipment reflect actual mileage or usage unless otherwise disclosed to RB Group on the applicable Schedule”. A

schedule to the Auction Agreement also stated that the hours of use for the tractors was a number that was consistent with what was shown on the meters that recorded this information. However, as I will explain, it later came to light that the actual hours of operation of the tractors were much higher than what Mr. Englot had stated them to be in the Auction Agreement. The Chambers judge ultimately found that “Mr.

Englot intentionally misrepresented to RB Group (and by extension to prospective purchasers) the hours of usage for both Tractors” ( Chambers Decision at para 10). [ 6 ] The information about the hours of operation of the tractors, as provided by Mr. Englot to RB Group, was given to prospective purchasers. The tractors were sold by live unreserved auction on December 6, 2018, to two different purchasers for a total price of $410,000. After deduction for commission and other accepted adjustments, RB Group paid to Mr.

Englot the net sale proceeds of $363,222.14 on January 7, 2019. [ 7 ] In late January of 2019, RB Group was contacted by the purchaser of one of the tractors. That purchaser advised RB Group that a mechanical inspection revealed that the hours of the tractor’s operation had been grossly understated. Based on this information, RB Group reached out to Mr. Englot, who took the position that this was of no concern because the tractors had been sold “as is”. However, he did not deny that a misrepresentation had occurred. [ 8 ] RB Group personnel attempted, without success, to speak with Mr. Englot on other occasions.

Ultimately, Mr. Englot told RB

Group to communicate with him through his lawyer. As described by the Chambers judge, Mr. Englot “provided no cooperation with RB Group thereafter” (at para 9(i)). RB Group conducted further investigations, leading it to discover that Mr. Englot had originally purchased the tractors from a dealer who had listed them with much higher hours than Mr. Englot had represented to RB Group. It was later determined that Mr. Englot had changed out the meters that recorded the hours of operation of the tractors before he offered them for sale through RB Group. Mr. Englot did not deny any of this.

Based on all the evidence, the Chambers judge found that Mr. Englot “bought the Tractors and then flipped them in fairly short order after replacing the components that showed the hours ” (at para 38) . [ 9 ] The purchasers of the tractors took the position that the misstatement in the hours of operation affected the prices they had respectively bid for the tractors. The Chambers judge found that this, in fact, was the case, concluding that “the Purchasers paid what they did as a result of Mr. Englot’s deliberate scheme to deceive RB Group and any purchaser bidding at the auction” (at para 38).

The purchasers “demanded full refunds, stating in essence that they would never have bought the tractors if they had known the actual hours” (at para 9(k)). [ 10 ] In the end, “RB Group, feeling it had no choice in the circumstances, provided full refunds to both Purchasers and arranged at its cost to have the Tractors returned to it” (at para 9(k)). After acquiring the tractors from the first purchasers, RB Group wrote to Mr. Englot’s lawyer. Its letter drew Mr.

Englot’s attention to his breach of the representations and warranties he had given in the Auction Agreement and to a covenant to indemnify RB Group from any “breach of the representations, warranties or covenants set out in” the Auction Agreement. The letter also demanded that RB Group be reimbursed for the amount it had refunded to the buyers of the two tractors, as well as for the costs of their transportation back from those purchasers. [ 11 ] After unsuccessful efforts at reaching a consensual resolution of the problem, RB Group told Mr.

Englot that it intended to offer the two tractors at one of its auctions and that it “may accept a purchase price that [it] considers reasonable, in its sole discretion, for one or both of the Tractors”. It also advised that, once the final sales price of the tractors was known, it intended to commence an action against Mr. Englot to obtain recovery for its damages. [ 12 ] The tractors were sold a second time by auction. On this occasion, RB Group disclosed what information it had in hand about the replacement of the hour meters.

At this second sale, the tractors fetched a total price of $235,000. [ 13 ] Thereafter, RB Group commenced its action against Mr. Englot. In its amended statement of claim, it pleaded causes of action in breach of contract, the tort of fraudulent misrepresentation and unjust enrichment. It requested damages totalling $191,328.06.

It is common ground that this amount represents the difference between the $410,000 RB Group had refunded to the original purchasers of the tractors, less the $235,000 proceeds for their sale a second time ($175,000), together with the costs of transporting the tractors back from the first purchasers, the repair and refurbishing of the tractors for their second sale, and other sundry expenses totalling $16,328.06. [ 14 ] RB Group then applied for

summary judgment. Mr. Englot agreed that the dispute could be decided summarily. However, he argued that the appropriate outcome was a judgment dismissing the claim against him. B. Evidence [ 15 ] RB Group filed several affidavits in support of its application for

summary judgment. Mr. Englot filed his own affidavit and another sworn by an acquaintance. This individual witnessed part of a conversation between Mr. Englot and an employee of RB Group but, because he had not seen it all, the Chambers judge found that his evidence could not “be relied on as evidence that a thing did not occur or was not said during that meeting” ( Chambers Decision at para 8). [ 16 ] A judge of the Court of Queen’s Bench had granted RB Group leave to cross-examine Mr. Englot on his affidavit and also ordered that one of RB Group’s affiants make himself available for that purpose. However, Mr.

Englot refused to submit to cross- examination. This prompted RB Group to bring an application for an order citing Mr. Englot in contempt of court. In the end, Mr. Englot was given permission to withdraw his affidavit, and no cross-examination of any affiant was held. [ 17 ] In the result, the arguments on the

summary judgment application proceeded based on the largely uncontradicted evidence filed on behalf of RB Group. C. The Chambers Decision [ 18 ] After describing the background facts that led to RB Group’s application for

summary judgment and making findings of fact, which he described as being “derived from uncontroverted evidence”, the Chambers judge identified six issues requiring resolution (at para 9). [ 19 ] First, he considered whether the matter was one that was appropriate for

summary disposition. The Chambers judge concluded that it was. No appeal is taken by Mr. Englot from this determination. [ 20 ] The second issue was whether RB Group had proven that it had suffered the losses it claimed. On this point, the Chambers judge found that, “subject to [his] analysis of the defences raised by Mr. Englot, [he was] fully satisfied that RB Group would be entitled to judgment” in the full amount it claimed (at para 21). [ 21 ] Third, the Chambers judge considered an argument by Mr.

Englot that RB Group’s claim should be dismissed because it had not complied with the procedures set out in the Farm Debt Mediation Act , SC 1997, c 21 [ FDMA ] , and The Saskatchewan Farm Security Act , SS 1988-89, c S-17.1 [ SFSA ]. In this regard, he held that RB Group was “under no obligation to serve Mr. Englot with notices under the FDMA and SFSA ” (at para 22). [ 22 ] The fourth issue was whether RB Group was entitled to “cancel” the first sales of the tractors. Before the Chambers judge, Mr.

Englot had argued that, as his agent, RB Group only had the specific authority given to it under the Auction Agreement and therefore it had “ no right to unilaterally cancel” the sales of the tractors, or to “unilaterally re-sell” them without his consent (at para 11(b)). Many of

Mr. Englot’s arguments were made with reference to Fyk v Ritchie Bros. Auctioneers (Canada) Ltd. , 2004 MBQB 73 , 182 Man R (2d) 215, aff’d 2005 MBCA 62 , [2006] 4 WWR 46 [ Fyk ]. In that case, the Manitoba courts allowed a claim by a seller of equipment against RB Group after it had “collapsed” a sale of equipment because it believed the seller had misrepresented the goods. The Chambers judge agreed that there “are many similarities between Fyk and this case” (at para 28 ). However, he found it to be “distinguishable and need not be followed here” (at para 37).

As part of this, he concluded that, on the facts of this case, “RB Group would have had no defence to the claims of the Purchasers, as they were victims of fraudulent misrepresentation” (at para 47). [ 23 ] Ultimately, on the fourth issue, the Chambers judge agreed that an “auctioneer is an agent and the Auction Agreement expressly made RB Group the agent of Mr. Englot” (at para 50). However, he found that RB Group had the authority to do what it did, reasoning as follows: [51] Nonetheless, I am satisfied that RB Group had a legal right to collapse the First Sales, having discovered Mr.

Englot’s fraudulent misrepresentation. The Auction Agreement leaves no doubt that RB Group would have remedies upon misrepresentation by Mr. Englot, let alone fraudulent misrepresentation. As in Fyk , the Auction Agreement does not contain an express right to collapse a sale or accept rescission by a purchaser without Mr. Englot’s consent. Nonetheless, the Auction Agreement goes much further than in Fyk in providing remedies to RB Group. [52] I conclude that RB Group had at least an implied authority to collapse or accept rescission of the First Sales, having first contacted Mr.

Englot who then stonewalled them. [53] I also have little doubt that Mr. Englot benefitted from RB Group having promptly refunded the purchase prices on the First Sales. Because this was a fraudulent misrepresentation, the Purchasers could have claimed consequential and other damages, beyond simply a refund. There are other losses the Purchasers could have suffered for which Mr. Englot would have been responsible. RB Group’s actions saved Mr.

Englot from having to defend actions founded in fraud or fraudulent misrepresentation that likely would have been brought by the Purchasers with a high chance of success, along with greater damages being awarded against him than are sought here by RB Group. (Emphasis in original) [ 24 ] The fifth issue was whether RB Group was “entitled at law to re-sell the Tractors” (at para 12(5)).

The Chambers judge found that, while there “could be other grounds for determining that RB Group had a right [to] re-sell the Tractors (such as remedies for fraudulent misrepresentation)”, “Clause B.3.2 of the Auction Agreement expressly gave RB Group the right to re-sell” (at para 56). [ 25 ] In answer to the sixth question, the Chambers judge found that RB Group had “sold the Tractors in a commercially reasonable manner” (at para 58). He also rejected arguments by Mr.

Englot that RB Group had no right to incur commission, transportation and repair charges associated with the second sale of the tractors without his consent. [ 26 ] Based on all of this, the Chambers judge found the dispute to be “an appropriate case for

summary judgment” (at para 62), which he granted in favour of the RB Group in the amount of $191,328.06, along with pre-judgment interest and costs. III. ISSUES [ 27 ] Mr. Englot appeals from the grant of

summary judgment against him. His factum alleges that the Chambers judge committed four errors, which he converted into questions. I accept these questions as establishing the appropriate framework to decide Mr. Englot’s appeal, although the first two can be combined. I would restate them, without changing their substance, as follows: (

a) Did the Chambers judge err in law by holding that RB Group was entitled to “cancel” the sales of the tractors, and resell them, without Mr. Englot’s consent? (

b) Did the Chambers judge err in law in holding that RB Group acted in a commercially reasonable manner? (

c) Did the Chambers judge err in law by finding the FDMA and the SFSA to be inapplicable in the circumstances of this case? IV. ANALYSIS A. Did the Chambers judge err in law by holding that RB Group was entitled to “cancel” the sales of the tractors, and resell them, without Mr. Englot’s consent? [ 28 ] In this Court, Mr. Englot renews the arguments he made to the Chambers judge to the effect that RB Group had no right, acting as his agent, to “cancel” the first sales of the tractors and then to resell them. He submits that he did not expressly authorize RB Group to do this.

He also says that the Chambers judge erred in finding that RB Group had “at least an implied authority to collapse or accept rescission of the First Sales” (at para 52). Finally, Mr. Englot argues that, because RB Group did not have his authority to cancel the sales of the tractors or to resell them, his consent to do this was required and, since it was not given, RB Group cannot claim for the damages it now seeks. [ 29 ] As I will explain, I agree with Mr.

Englot that RB Group did not have a right to act on his behalf to rescind the contracts for the sale of the two tractors that were created between himself and the two original purchasers, or to accept their rescission, or to later resell the tractors. Here, I am using the term “rescind” in the sense of the setting aside of a contract, usually accompanied by giving back to the contracting party what each received under it. See, generally, Angela Swan, Jakub Adamski & Annie Y. Na, Canadian Contract Law , 4th ed (Toronto: LexisNexis, 2018) at §6.386.

However, as I will also explain, it is irrelevant to RB Group’s claim that it lacked Mr. Englot’s authority to take the steps that it did or that he did not consent to this occurring.

[ 30 ] I begin my explanation of these conclusions with the uncontroversial observation that, when RB Group first sold the tractors, it was doing so as Mr. Englot’s agent. This is clear from the Auction Agreement. In this regard, Mr. Englot is identified in that contract as the “Seller”. It “authorizes” RB Group “to offer and sell” the tractors by unreserved public auction. It also contains RB Group’s covenant that it would, “as agent of the Seller”, offer the tractors for sale at a live auction event. By its terms, Mr.

Englot “appoints RB Group as its attorney-in-fact with a limited power of attorney … to execute on the Seller’s behalf all documents necessary and required to transfer title” of the tractors to their eventual purchasers. From all this, I see the grant to RB Group of specific authority to act as Mr. Englot’s agent to sell the tractors. However, I see no language that can be reasonably interpreted as extending to it the right to act on behalf of Mr.

Englot to rescind the contracts that were created with the tractors’ first buyers when they were sold by auction. [ 31 ] The Chambers judge found that RB Group had the express right to take one specific step – that is, to resell the tractors – pursuant to clause B.3.2 of the Terms and Conditions that form part of the Auction Agreement, which states as follows: B.3.2 Default by Seller. If: (

a) you withdraw or fail to timely deliver the Equipment or any part thereof or any documents required hereunder, or if the Live Auction Event does not occur as a result of your actions or inaction, including without limitation the commencement of liquidation or bankruptcy proceedings of any sort by or against you; or (

b) you, directly or indirectly, bid or permit another to bid on your behalf or for your benefit, by agency or otherwise, on the Equipment or any part thereof at the Live Auction Event; or (

c) your representations and warranties set out in this Agreement are not true, complete and correct in all respects; then: (

i) commissions shall be payable to RB Group upon demand, based upon the fair market value (as determined by RB Group in its sole discretion) of any withdrawn or undelivered parts of the Equipment as if they had been sold; (ii) any advances made by RB Group together with accrued interest shall become due and repayable immediately; and (iii) you will, upon demand, reimburse RB Group for all out-of-pocket expenses incurred in preparation for the Live Auction Event. In the event you are in violation of paragraph 3.2(

b) above, in addition to any other rights or remedies RB Group may have under this Agreement, RB Group shall, at its sole discretion, have the right to sell or re-sell the Equipment by whichever means it deems appropriate and you shall pay to RB Group as liquidated damages in addition to all other amounts due hereunder, an amount equal to 25% of the proceeds realized from such sale or resale. If, pursuant to this Section, the Equipment or any part thereof is not sold at the Live Auction Event, such equipment shall be deemed to have been withdrawn by you and the provisions of paragraph 3.2(a), 3.2(

b) and 3.2(

c) above shall apply. (Emphasis added) [ 32 ] However, this provision gives RB Group the right to “sell or re-sell” equipment only if the seller is “in violation of paragraph 3.2(b)”. That paragraph speaks to a circumstance where the vendor enters the auction process as a bidder. The provision contemplates that, in this narrow circumstance – which I note is one that involves actions by the seller “at the Live Auction Event”, that is, at the auction itself – RB Group may effect a second sale.

However, none of this applies in the present case, where RB Group’s actions were taken well after the first sales were consummated. More specifically, the express right to sell or resell does not apply to paragraph 3.2(c), that is, the sub-paragraph dealing with a situation where the seller’s representations and warranties are not true. [ 33 ] It follows from all of this that I agree with Mr. Englot that RB Group did not have the express right under the Auction Agreement to act as his agent to rescind the first sales contracts.

I also cannot find any basis to interpret the Auction Agreement as conferring implied authority on RB Group to act on Mr. Englot’s behalf to unwind the sales after the misrepresentation came to light. [ 34 ] While the Chambers judge referred to RB Group having “implied authority to collapse or accept rescission” of the first sales contracts, he did not support this finding with reference to any case law (at para 52).

The idea that RB Group would be imbued with such a right is inconsistent with the specific grants of authority under the Auction Agreement, and at odds with express direction that its written text “contains the entire agreement of the parties”. I leave open the possibility that implied authority to take steps such as those taken by RB Group in this case might exist in the context of a differently worded agreement between an auctioneer and consignor. See, generally, Brian W.

Harvey & Franklin Meisel, Auctions Law and Practice , 3d ed (Oxford: Oxford University Press, 2006) at §3.70–3.71. [ 35 ] In any event, nothing turns on whether the Chambers judge erred in finding that RB Group could rescind the first sales. That is because RB Group did not purport to do this and because it was not acting on Mr. Englot’s behalf when it acquired the tractors from their first buyers and then sold them a second time.

Let me briefly explain these statements. [ 36 ] The RB Group employee most involved in these events explained in his affidavit that “RB Group arranged, at its cost, to have the Tractors returned”. Although the same affiant states that “RB Group also refunded the buyers their money”, this must be understood in a colloquial rather than literal sense, since the undisputed fact is that RB Group did not return Mr. Englot’s money to the first buyers, nor were the steps taken to unwind the first sales done in his name. By the time Mr.

Englot’s misrepresentation had come to light, RB Group had paid the proceeds from the first sales to him, less only the commissions it had earned. Thus, RB Group used its own funds to buy the tractors back from the first purchasers. In turn, the first buyers then transferred title to the tractors to RB Group – not back to Mr.

Englot. [ 37 ] The net effect of this was not to rescind the original contracts of sale; rather, new contracts of sale were created – this time between the original purchasers, who were now the sellers of the tractors, and RB Group, which was acting in its own right as the new buyer of both pieces of equipment. Pursuant to these new contracts of sale, title in the tractors passed from the original purchasers to RB Group in consideration for the payment of an amount equivalent to the price they had paid for the tractors.

Of course, from the perspectives of the first purchasers, it did not matter who provided the “refund” or to whom they passed title to the tractors, as long as they got their money back. [ 38 ] Not only did RB Group acquire title to the two tractors, nothing in the record suggests that, once RB Group had done so, it held the titles on Mr. Englot’s behalf. To the contrary, it consistently carried on as if it was the owner of both tractors – which, of course, it was.

In this regard, after RB Group paid the first buyers for the tractors, it spent money on them to ready them for resale and then proceeded to sell them a second time. These steps were all taken by RB Group in its own name. [ 39 ] All of this satisfies me that the contracts for the sale of the tractors to the first purchasers were not rescinded at all. Moreover, although RB Group was acting as Mr. Englot’s agent when it first sold the tractors, none of the steps it took after title had passed to the first group of purchasers and it learned of his misrepresentation were done on his behalf or as his agent.

Instead, RB Group acted entirely on its own account. Viewed in this way, I see merit to Mr. Englot’s argument that the Chambers judge erred in finding that RB Group had

the authority to act as his agent to rescind the first contracts of sale and then to sell the tractors a second time. However, this error has noimpact on the outcome of this appeal. This is because the absence of RB Group’s authority to act as Mr. Englot’s agent after the first saleswere consummated, and the absence of Mr. Englot’s consent to the repurchase and resale of the tractors, were irrelevant to RB Group’sability to recover damages against him.

I look no further than to RB Group’s claim based in breach of contract to reach this conclusion. [40] To make out a claim for a breach of contract, RB Group was required to establish the existence of a valid contract, a breach of itand damages flowing from that breach. RB Group has no difficulty in establishing the first two elements. [41] The parties agree on the existence of the Auction Agreement. Mr. Englot also offers no argument that this contract was notbreached.

He could hardly maintain otherwise, given his blatant non-compliance with his representations and warranties that thedescription of the tractors “shall be accurately set forth on the applicable Schedule”, and that “all odometer and hour meters on theEquipment reflect actual mileage or usage unless otherwise disclosed to RB Group on the Applicable Schedule”. [42] As for the third element, while Mr.

Englot takes issue with some details of RB Group’s damages claim – a point that I willreturn to – in the main at least, he does not contest that it incurred the expense of purchasing the tractors back from their first buyersbecause of his misrepresentation. In short, the amounts that RB Group claims are also self-evidently causally related to the breach since itonly repurchased the tractors because of Mr. Englot’s misrepresentations. The subsequent resale of the tractors served to mitigate thedamages that it suffered because of the purchase of them from the first buyers. [43] Mr.

Englot’s argument reduces to the proposition that, notwithstanding that RB Group’s damages are causally connected to hisbreach of contract, they should not be recoverable. Although Mr. Englot did not present his appeal in precisely this way, his fundamentalconcern is best understood as a submission that the damages RB Group claimed are too remote to be recoverable as damages that werecaused by his breach of the Auction Agreement.

This is the idea behind his response, when confronted by RB Group with the fact of hismisrepresentation, that the tractors had been sold “as is” and RB Group had no obligation to return the purchase price for the tractors tothe first buyers. [44] The immediate answer to Mr. Englot’s submission on this point is provided by the Chambers judge’s earlier-quoted conclusionthat “RB Group would have had no defence to the claims of the Purchasers, as they were victims of fraudulent misrepresentation” (at para47). In this appeal, Mr.

Englot made no serious effort to challenge this finding, other than to assert that the first buyers had no right ofaction against RB Group and could only have sued him. However, it is also appropriate to point out that the Chambers judge did notexplain why RB Group faced liability to the first buyers based on Mr. Englot’s misrepresentation about the tractors’ hours of operation,nor did RB Group seek to defend that conclusion.

In any event, I am satisfied that the damages are sufficiently proximate to berecoverable, regardless of whether RB Group would have had a successful defence if it had been sued by the first buyers of the tractors. [45] As explained by McLachlin C.J.C. and Abella J. in Fidler v Sun Life Assurance Co. of Canada, 2006 SCC 30 at para 54,[2006] 2 SCR 3, “there is only one rule by which compensatory damages for breach of contract should be assessed: the rule in Hadley v.Baxendale [(1854), 9 Exch 341, 156 ER 145]” (emphasis in original).

This rule is that “damages must be ‘such as may fairly andreasonably be considered either arising naturally ... from such breach of contract itself, or such as may reasonably be supposed to havebeen in the contemplation of both parties’” (at para 27, quoting from Hadley at 151). [46] I do not hesitate to conclude that it would have been in the reasonable contemplation of both Mr. Englot and RB Group that,even where, as here, goods are sold on an “as is, where is” basis, RB Group might well determine it to be necessary to offer a refund incircumstances where goods consigned to it are materially misrepresented.

I say this having regard to several factors. These include themany reasons that parties faced with a threatened lawsuit often settle the matter, such as the uncertainties as to the outcome of thelitigation, and the many direct and indirect expenses of responding to a claim if litigation is commenced. They also include the desirabilityof protecting market reputation.

In the latter regard, although the cases did not involve an auctioneer, the principle at stake here is similarto that in Canlin Ltd. v Thiokol Fibres Canada Ltd. (1983), (ON CA), 142 DLR (3d) 450 (WL) (Ont CA) [Canlin], and3Com Corporation v Zorin International Corporation (2006), (ON CA), 211 OAC 222 (CA) [3Com]. [47] In the first of these cases, Canlin Ltd. (operating as Canadian Tarpoly) had contracted with Thiokol Fibres to supply it withplastic fabrics to make mesh pool covers. Canadian Tarpoly was hoping to enter a potentially lucrative market for this product in theUnited States.

The contract contained certain warranties made by Thiokol Fibres regarding the durability of the fabrics. However, thefabrics quickly degraded. Canadian Tarpoly suffered a disastrous launch of its new product line which so harmed its reputation that it wasunable to conduct business in the United States for several years. Canadian Tarpoly sued for breach of contract, and the trial judgefactored this reputational harm into an award for loss of future profits.

On appeal, Cory J.A. (as he then was) rejected an argument that thetrial judge had erred in doing so, since this harm would have been within the contemplation of the parties when making the contract. Hewrote: [13] Let us consider the unlikely scenario wherein the executive or board of directors of Thiokol sat down and discussed what waslikely to happen if they supplied defective material to Tarpoly.

In my view, the result would be the same in this case and should be thesame in all cases whether the question the executives of Thiokol posed was framed as it would be for a tort case or one involving breach ofcontract. If these executives asked the “tort” question, what can we reasonably “foresee” as likely to befall Tarpoly if we supplyinadequate material, the answer of reasonable men of business would be to the effect that Tarpoly would lose the profits it might expect tomake on the sale of pool covers.

If the “contract” question was phrased, what can we reasonably “contemplate” as a result directly flowingfrom our breach of warranty, the answer would be to precisely the same effect. The Thiokol executives would have foreseen orcontemplated the very effects that befell Tarpoly. [14] Why shouldn’t damages be awarded for the loss of that contemplated future profit?

The Court, I believe, would be shirking its dutyif it were to say that no damages should flow because of the difficulty of calculating and assessing such damages and that they aretherefore too remote. … (Emphasis added) [48] The Ontario Court of Appeal returned to this question in 3Com. The complicated facts of that case involved the tiered selling of

computers. 3Com, the company at the top of the sales pyramid, offered rebates to distributors who sold the computers for educationalpurposes. One of the distributors, Tech Data, was induced to sell computers to another firm, Zorin, based on Zorin’s misrepresentationthat computers it was purchasing were destined for educational use. Zorin, in turn received a discounted price, but it sold the computers toother retailers and simply pocketed the savings.

Upon learning of the misrepresentation, 3Com sued Zorin for the tort of deceit, but stillprovided their distributors with the rebates they had promised based on Zorin’s misrepresentations. Zorin argued that, by continuing toprovide the rebates, 3Com had failed to mitigate its losses, essentially saying that once it knew of the deceit, 3Com should have simplyrefused to refund the distributor and have the distributor sue Zorin for recovery. Zorin asserted that these expenses, incurred to spare3Com’s reputation with its distributor, were not sufficiently related to its actions.

Zorin’s argument was rejected at trial, and this decisionwas upheld by the Ontario Court of Appeal. Justice Weiler wrote the following, in the decision upholding the trial judge’s finding: [60] On the findings made by the trial judge, it appears that, at the time 3Com assured Tech Data [the distributor] it would pay them arebate and asked them to ship the product, 3Com would not have known the appellants had deceived them. After shipping the goods, butprior to paying the rebate, 3Com had proof of the appellants’ deception.

The Australian [Special Price Quote] appears to have been back-dated and paid so as to honour the assurances made by 3Com to Tech Data because 3Com felt legally and morally obliged to pay therebate. Legally, 3Com was concerned that Tech Data would begin a lawsuit to enforce 3Com’s promise to pay the rebate. Morally, 3Comdid not want to take advantage of Tech Data and suffer the probability that an important commercial relationship with its distributor wouldbe ruptured.

The trial judge was of the opinion that 3Com acted reasonably in paying the rebates under apprehension of legal action and Iwould agree with him. [61] 3Com was not obliged to risk losing an important commercial relationship. In his text, The Law of Damages, Professor Waddamsstates that “in judging the reasonableness of the plaintiff’s conduct (with respect to avoiding or mitigating loss) a long view can be taken,and the plaintiff will not be bound to take a short-term gain at the cost of jeopardizing a long-term interest”: see S. M.

Waddams, The Lawof Damages, looseleaf (Toronto: Canada Law Book, 1991) at 15-9. … (Emphasis added) [49] Justice Weiler went on to conclude that Zorin’s misrepresentation was responsible for the expenses 3Com incurred to save itsreputation with its distributor. She also found that the “appellants are responsible for the rebates paid under the Australian [Special PriceQuote], not only because it appears that 3Com was obliged in law to pay them, but also because 3Com was not obliged to bear the risk ofrupturing the commercial relationship it had with its distributor” (at para 63).

As I read 3Com, the Court found liability both because3Com was contractually required to give its distributor the rebate, and because 3Com’s business interests and reputation would haverequired it to make this payment even if it was not so obliged. [50] Although 3Com involved the tort of deceit and not a claim for breach of contract, Weiler J.A. relied heavily on contract cases toground her analysis of whether losses incurred to save one’s reputation could be claimed as damages. She examined two English cases,James Finlay & Co., Ltd. v N. V.

Kwik Hoo Tong Handel Maatschappij, [1928] All ER 110 (CA), and Banco de Portugal v Waterlow &Sons, Ltd., [1932] AC 452 (HL), to make her point. A comment offered by Lord Macmillan in the latter of these two cases resonates withme in the context of the present appeal (at 506): … Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment themeasures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the partywhose breach of contract has occasioned the difficulty.

It is often easy after an emergency has passed to criticize the steps which havebeen taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfiedif the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedialmeasures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that othermeasures less burdensome to him might have been taken. … See also: Harvin D. Pitch & Ronald M.

Snyder, Damages for Breach of Contract, loose-leaf (Rel 2, 7/2022) 2d ed, vol 1 (Toronto:Thomson Reuters, 2022) at §10.12. [51] I would tend to agree with RB Group’s argument that the Chambers judge’s conclusion that Mr. Englot’s misrepresentation wasintentional renders it even clearer that RB Group’s damages are not too remote. In this regard, Lord Denning stated in Doyle v Olby(Ironmongers) Ltd., [1969] 2 QB 158 (CA) [Doyle] at 167: All such damages can be recovered: and it does not lie in the mouth of the fraudulent person to say that they could not reasonably havebeen foreseen.

For instance, in this very case Mr. Doyle has not only lost the money which he paid for the business, which he would neverhave done if there had been no fraud: he put all that money in and lost it; but also he has been put to expense and loss in trying to run abusiness which has turned out to be a disaster for him. He is entitled to damages for all his loss, subject, of course to giving credit for anybenefit that he has received. There is nothing to be taken off in mitigation: for there is nothing more that he could have done to reduce hisloss.

He did all that he could reasonably be expected to do. (Emphasis added) This statement was adopted by McLachlin J. (as she then was) in Canson Enterprises Ltd. v Boughton & Co., (SCC),[1991] 3 SCR 534 at 552–553. Although this case involved a breach of fiduciary duty, McLachlin J. cited Doyle for the idea that, wherefraud or deceit is involved, the fraudulent person cannot say that the losses could not have reasonably been foreseen. At very least, the factthat Mr.

Englot’s misrepresentation was found to be deliberate would be of assistance to RB Group, in the context of its claims based onthe tort of fraudulent misrepresentation or unjust enrichment. [52] Although Mr. Englot challenged the Chambers judge’s conclusion that his misrepresentation was deliberate, this is a finding offact that can only be set aside if it is the product of palpable and overriding error: Deren v SaskPower, 2017 SKCA 104 at para 41.

I cansee no basis for finding such error here, where, with one immaterial exception, none of the evidence was controverted and I do not see itany differently than the Chambers judge did. In any event, as I have explained, the conclusion that RB Group’s damages are sufficientlyproximate to be recoverable based on Mr. Englot’s breach of the Auction Agreement is strengthened, but ultimately not dependant upon,

the conclusion that Mr. Englot’s misrepresentation was deliberate. [ 53 ] Bringing all of this back into the facts of this case, RB Group’s right to claim for the damages based on Mr. Englot’s breach of contract is unaffected by whether it would have had a defence if it had been sued by the first purchasers. In this case, the evidence is that RB Group purchased the tractors back from those buyers to protect its market reputation and to avoid the risk of a claim being made against it by one or both of the first purchasers.

I agree with the Chambers judge when he said that he “cannot conceive that RB Group was required to wait until the Purchasers sued it before taking any steps to resolve the situation” it faced (at para 48). I can also see no merit in Mr. Englot’s argument that RB Group acted unreasonably in doing this or that the damages RB Group suffered because of Mr. Englot’s breach of the Auction Agreement were not within the reasonable contemplation of the parties. I conclude that, as in Canlin and 3Com , had RB Group and Mr. Englot sat down and discussed what would happen if Mr.

Englot was found to have misrepresented or materially misstated the hours of operation at the tractor, they would have conceived that the first purchasers who relied on the misrepresentation would be entitled to be made whole and, if this was done by RB Group, it would also in turn look to Mr. Englot for reimbursement for the cost of doing so. [ 54 ] I am satisfied from all the foregoing that, in the circumstances of this case at least, RB Group’s entitlement to pursue a claim for damages against Mr.

Englot based on his breach of the Auction Agreement did not depend on it securing his prior consent to its actions. It follows from this conclusion that I do not need to consider if RB Group also had the ability to claim its damages under the indemnity provision of the Auction Agreement that Mr. Englot gave to protect it against “claims, demands, suits, actions, causes of action, damages, costs or charges” arising from his breach of the Auction Agreement. It is also not necessary to decide if, in addition to being able to recover its damages based on Mr.

Englot’s breach of contract, RB Group can also do so based on the tort of fraudulent misrepresentation or unjust enrichment. [ 55 ] The only precedent that Mr. Englot referred to that might invite a different conclusion is Fyk . In that case, the owner of a tractor offered it for auction through RB Group. After the auction was held, the buyer discovered that the owner had misdescribed the tractor in a material way. This led to RB Group putting a stop payment on the cheque it had issued to the owner and to “collapsing” the sale.

RB Group subsequently resold the tractor for a lower price and then remitted this lower amount to the owner. The owner of the tractor was successful in his suit against RB Group for the difference between the original sale price and that obtained on the resale. [ 56 ] The Chambers judge found, among several other differences, that “Mr. Englot’s deliberate and fraudulent actions distinguish this case from Fyk ” (at para 39 ), as there “was no suggestion in Fyk that Mr. Fyk had acted in bad faith” (at para 38). I choose to focus on a simpler idea.

RB Group was found liable to the consignor in Fyk only because its agency relationship with Mr. Fyk was still active as the sale had not closed, and it was found to be acting as his agent when it stopped the first sale from proceeding. This is clear from the Manitoba Court of Appeal’s brief reasons, which state in the central paragraph as follows: [4] It may well be that the first buyer had a right to rescind the contract of sale on the ground of material misrepresentation. The defendant had no authority, however, to “collapse the sale.” Only the parties to the contract can rescind that previously agreed upon.

Nor can rescission be effected by the agent of one of the parties without the principal’s consent. The defendant here acted on its assumed authority which, in fact, it lacked. [ 57 ] There appears to have been no suggestion in Fyk that RB Group might have been acting on its own behalf when it stopped the first sale. Additionally, it would appear that there are material differences between the language of RB Group’s contracts in Fyk and those it is now using. That was certainly the idea behind one of the other distinctions that the Chambers judge offered between the present facts and those in Fyk .

Regardless, there is no analysis in Fyk about the consignor’s prospective liability to RB Group for breach of his contract with it. [ 58 ] In conclusion on the first issue, the damages that RB Group was awarded by the Chambers judge were caused by Mr. Englot’s breach of the Auction Agreement. It is irrelevant to RB Group’s right to judgment for those damages that it did not have his authority to repurchase and resell the tractors, or that he did not otherwise consent to this occurring.

Accordingly, RB Group is entitled to claim the expense of refunding the purchase price to the tractors’ first buyers, less the amounts it received from the second sale. The remaining expenses it claimed were incurred as part of its effort to mitigate its damages. I will discuss these individual items under the next heading in these reasons. B. Did the Chambers judge err in law in holding that RB Group acted in a commercially reasonable manner? [ 59 ] In addition to resisting RB Group’s claim for the loss it suffered when it purchased and resold the tractors, Mr.

Englot takes issue with some other aspects of its damages claim. He does so by challenging the method of its repurchase and resale of the tractors. He further objects to the details of some of the amounts claimed as damages. In the latter regard, he says that RB Group should not be entitled to recover its commission from the first sales of the tractors. RB Group has, in effect, included this in its damages claim by seeking reimbursement from Mr. Englot for the full purchase price of the tractors to the first buyers, less the proceeds from their second sale. Mr.

Englot also argues that he should not be responsible for the costs incurred in transporting the tractors back from the first buyers or readying them for a second sale. [ 60 ] The Chambers judge rejected Mr. Englot’s general argument that RB Group’s actions were commercially unreasonable, stating as follows: [58] I find that RB Group sold the Tractors in a commercially reasonable manner. It quite properly disclosed the hours issue in advertising the Tractors. The Tractors were sold in an open competitive online auction. The purchasers in the Second Sales were arm’s length.

There is no evidence that RB Group did not obtain reasonable prices on the Second Sales. Indeed, the Tractors sold for more in the Second Sales than Mr. Englot paid when he purchased them. [ 61 ] Mr. Englot does not identify any underlying error in principle in the Chambers judge’s reasoning on this issue. Accordingly, whether the conclusion that RB Group acted in a commercially reasonable manner is viewed as one of fact, or the application of a legal

principle to a set of facts, he can only succeed in his challenge to it if he can demonstrate palpable and overriding error, which I do not see. [ 62 ] Mr. Englot’s objection to RB Group, in effect, claiming the commission from the first sales of the tractors is based on the idea that it should have calculated its damages by claiming the commission on the second sales instead. I cannot accept this argument, since it fails to recognize that the first sales were concluded and the commission on them was therefore earned by RB Group.

Moreover, it was required to reimburse to the first buyers an amount equivalent to the price they each paid, without adjustment for the commission. RB Group did not claim against Mr. Englot for commission from the second sales. I therefore need not decide if it could have done so as a mitigation expense. [ 63 ] Finally, in relation to the cost of transporting the tractors from the first buyers to the location of their second auction and the expense of readying them for a second sale, Mr. Englot does not say that the charges themselves were unreasonable.

Rather, he simply argues that, because these expenses were incurred without his consent, they should not be recoverable. For the reasons I have given previously, Mr. Englot’s consent is not a precondition to RB Group claiming damages caused by his breach of the Auction Agreement. RB Group mitigated the damages caused by Mr. Englot’s misrepresentation when it sold the tractors a second time. The transportation and repair costs were reasonably and necessarily incurred to do this and are therefore recoverable on that basis. [ 64 ] To conclude under this head, I see no merit to Mr.

Englot’s various challenges to the individual items of expense that RB Group claims as damages. C. Did the Chambers judge err in law by finding the FDMA and the SFSA to be inapplicable in the circumstances of this case? [ 65 ] In his statement of defence, Mr. Englot pleads that he was a farmer, and that the FDMA or SFSA applies to bar the claim against him. In making this argument, he points out that RB Group did not give any notices to him under either of these statutes when it sold the tractors a second time. Mr.

Englot alleges that this deprived him of a “reasonable opportunity to redeem the Tractors” and therefore RB Group’s claim was “null and void”. In his explanation for why these two statutes applied, Mr. Englot invokes s. 21 of the FDMA , which requires the giving of notice when a secured party seeks to take certain enforcement steps against the “property of a farmer”. He also refers to s. 48 of the SFSA , which requires a secured party to give a notice in a prescribed form before taking possession of an “implement”. Mr.

Englot raises all of this as a basis for us to find that the Chambers judge erred by not dismissing RB Group’s claim against him. [ 66 ] The Chambers judge gave two reasons for rejecting Mr. Englot’s argument under this head. First, he found that Mr. Englot had failed to meet the onus of proving that he was a farmer. Second, he concluded that RB Group “was not a secured creditor of Mr. Englot and had no obligation to serve notices under the FDMA or the SFSA prior to dealing with the Tractors” (at para 26). Mr. Englot challenges both conclusions.

However, I see a simpler reason for why the FDMA and the SFSA are inapplicable. [ 67 ] The FDMA and the SFSA are both statutes that deal with the taking of farm equipment from a farmer. As noted, the notice requirement under the FDMA arises when the “property of a farmer” is involved. Under the SFSA , the term implement is defined to include equipment that is “used or intended for use by a producer on a farm for the purpose of farming” (s. 2(1)(i)(i), emphasis added).

The term “producer” is defined to mean an “individual who is engaged in the business of farming” (s. 2(1)(u)). [ 68 ] In practical effect, all of this means that, at least so far as this appeal is concerned, the FDMA and the SFSA could only apply if the second sales involved the taking of a farmer’s equipment. However, because the second sales involved the transfer of RB Group’s property, and not the taking of Mr. Englot’s equipment, the two statutes had no application when RB Group sold the tractors for a second time. For this reason, I see no need to consider the particulars of Mr.

Englot’s attack on the Chambers judge’s findings that he failed to meet the onus of proving that he was a farmer, and that RB Group was not his secured creditor. [ 69 ] Again, as a bottom line, the Chambers judge did not err in his conclusion that neither the FDMA nor the SFSA had any application to the second sales of the tractors. V. CONCLUSION [ 70 ] For the reasons I have given, I would dismiss Mr. Englot’s appeal, with costs to RB Group in the usual way. “Leurer J.A.” Leurer J.A. I concur. “Schwann J.A.” Schwann J.A. I concur. “McCreary J.A.” McCreary J.A.