Gallop v. Abdoulah et al.,

• Jurisdiction: Saskatchewan
• Judge: Cameron, Richards and Hunter, JJ.A.
• Neutral Citation: 2008 SKCA 29
• Court: Court of Appeal (Saskatchewan)
• Date: 23 October 2007
• Citation: (2008), 311 Sask.R. 123 (CA),2008 SKCA 29,[2008] 5 WWR 231,311 Sask R 123,311 SaskR 123,(2008), 311 SaskR 123 (CA),311 Sask.R. 123

Gallop v. Abdoulah (2008), 311 Sask.R. 123 (CA);

      428 W.A.C. 123

MLB headnote and full text

Temp. Cite: [2008] Sask.R. TBEd. MR.002

Joy Gallop (plaintiff/appellant) v. Mark Mulatz and Gerrand Rath Johnson (defendants/respondents) and Oscar Abdoulah (defendant)

Mark Mulatz and Gerrand Rath Johnson (defendants/appellants) v. Oscar Abdoulah (defendant/respondent) and Joy Gallop (plaintiff/respondent)

(No. 1379; 2008 SKCA 29)

Indexed As: Gallop v. Abdoulah et al.

Saskatchewan Court of Appeal

Cameron, Richards and Hunter, JJ.A.

March 4, 2008.

Summary:

Gallop acquired a commercial rental property in 1993. The acquisition proved ill advised and financially draining and the property was finally sold in 2005. Gallop sued Mulatz, the lawyer who acted for her in connection with the transaction, alleging that he failed to inform her of the legal and financial risks associated with the acquisition and that, but for that failure, she would not have undertaken the acquisition.

The Saskatchewan Court of Queen's Bench, in a decision reported at 255 Sask.R. 25, dismissed the action. Gallop appealed.

The Saskatchewan Court of Appeal, in a decision reported at 279 Sask.R. 223; 372 W.A.C. 223, allowed the appeal. The court held that Mulatz breached his duty to inform or advise Gallop with respect to the transaction and it ordered a new trial to determine Gallop's damages.

The Saskatchewan Court of Queen's Bench, in a decision reported at 290 Sask.R. 54 awarded Gallop damages of $116,075.02 for wasted expenditures. The award included $31,726.55 for the amount that Gallop expended in making mortgage payments less the amounts she received in rents, $48,994.47 for the amount that Gallop expended in operating and maintaining the property, and $35,354 for operational costs "tracked through the Corporate Financial Records" of Misty Mountain Holdings (a company through which Gallop and her husband had operated a restaurant business (Dino's) on the premises). Gallop appealed, arguing that the trial judge erred in excluding from the award the $90,000 paid on acquisition of the property, the $109,548 loss associated with the operation of Dino's, the $220,914.59 deficiency between the purchase price of the property and its market value, and the $4,177 in expenses incurred by Gallop in obtaining legal, accounting and appraisal services. Mulatz cross-appealed on the ground that the award covered losses for which Gallop was not entitled to be compensated because she failed in her duty to mitigate.

The Saskatchewan Court of Appeal allowed the appeal and the cross-appeal in part. The court reduced the award by $35,354, being the amount awarded for "operational costs 'tracked through the Corporate Financial Records' of Misty Mountain Holdings". The court increased the award by $4,177 for the expenses incurred by Gallop in obtaining legal, accounting, and appraisal services. In the result the award was reduced from $116,075.02 to $84,898.

Barristers and Solicitors - Topic 2663

Negligence - Damages - Measure of - Gallop acquired a commercial rental property in 1993 - The acquisition proved ill advised and financially draining and the property was eventually sold - Gallop sued Mulatz, the lawyer who acted for her in connection with the transaction, alleging that he failed to inform her of the legal and financial risks associated with the acquisition and that, but for that failure, she would not have undertaken the acquisition - Gallop's action was allowed and she was awarded damages of $116,075.02 for wasted expenditures - While Gallop had claimed $220,914.59 for the deficiency between the purchase price of the property on acquisition and its market value on sale, the trial judge excluded that amount from the damages awarded on the ground that Gallop could not claim for both wasted expenditures and anticipated gains - On appeal, Gallop argued that the trial judge misconceived her position with respect to this amount - She submitted that she was not seeking to recover the monetary equivalent of any benefit of which she was deprived - Rather, she was merely seeking to recover the purchase price of the property - The Saskatchewan Court of Appeal held that the trial judge was correct in excluding this claim from the damages awarded - The purchase price of the property consisted of a payment of $90,000 plus the amount then owed on the mortgage - Gallop's father had paid the $90,000 and the loss of the $90,000 was a loss suffered by him which could not be recovered by Gallop - With respect to the mortgage, the rents from the property had covered the mortgage payments, except for the sum of $31,726.55, which was included in the damages awarded - There was no evidence that Gallop did not recover any remaining amount owed on the mortgage from the sale of the property - See paragraphs 59 to 68.

Barristers and Solicitors - Topic 2663

Negligence - Damages - Measure of - Gallop acquired a commercial rental property in 1993 - The acquisition proved ill advised and financially draining and the property was finally sold in 2005 - Gallop sued Mulatz, the lawyer who acted for her in connection with the transaction, alleging that he failed to inform her of the legal and financial risks associated with the acquisition and that, but for that failure, she would not have undertaken the acquisition - Gallop's action was allowed and she was awarded damages of $116,075.02 for wasted expenditures - The trial judge excluded from the award the amount of $109,548 for the loss sustained by Gallop in relation to her operation of a restaurant business (Dino's) on the premises - The trial judge held, inter alia, that this venture did not amount to a reasonable attempt by Gallop to mitigate the losses attributable to the negligence of Mulatz - The Saskatchewan Court of Appeal held that there was ample support in the evidence for the trial judge's findings that the undertaking in relation to Dino's amounted to "an unreasonable misadventure", and that the losses associated with it were in fact born of "poor business management" and "poor judgment" on the part of Gallop - Gallop was therefore not entitled to recover the $109,548 in issue - See paragraphs 54 to 55.

Barristers and Solicitors - Topic 2677

Negligence - Damages - Re purchase of land - [See both Barristers and Solicitors - Topic 2663 ].

Barristers and Solicitors - Topic 2680

Negligence - Damages - Mitigation - [See second Barristers and Solicitors - Topic 2663 ].

Barristers and Solicitors - Topic 2680

Negligence - Damages - Mitigation - Gallop acquired a commercial rental property in a 1993 transaction - The property had belonged to her uncle - The uncle had undertaken to repurchase the property, but never did so - The acquisition proved ill advised and financially draining - The property was finally sold in 2005 - Gallop sued Mulatz, the lawyer who acted for her in connection with the transaction, alleging that he failed to inform her of the legal and financial risks associated with the acquisition and that, but for that failure, she would not have undertaken the acquisition - Gallop's action was allowed and she was awarded damages of $116,075.02 for wasted expenditures - On appeal, Mulatz argued that Gallop failed in her duty to mitigate - Mulatz submitted that upon the uncle's default on his undertaking to repurchase the property in 1995, Gallop could have sued him for reliance damages and sold the property, and thus avoided any loss, or at least any substantial loss - The Saskatchewan Court of Appeal rejected the argument - Gallop's duty to mitigate did not extend to bringing an action against her uncle for reliance damages - Bringing such an action would have been time consuming and expensive, with no assurance of successful recovery - Further, Gallop's duty to mitigate did not extend to taking the step of commencing legal action against a third party - Nor did Gallop fail in her duty to mitigate by not selling the property earlier - See paragraphs 35 to 46.

Damages - Topic 1002

Mitigation - General principles - Duty to mitigate - [See second Barristers and Solicitors - Topic 2680 ].

Damages - Topic 1004

Mitigation - General principles - What constitutes reasonable remedial measures - [See second Barristers and Solicitors - Topic 2663 ].

Damages - Topic 1023

Mitigation - In tort - Obligation to pursue claims against other tortfeasors - [See second Barristers and Solicitors - Topic 2680 ].

Cases Noticed:

H.L. v. Canada (Attorney General) et al., [2005] 1 S.C.R. 401; 333 N.R. 1; 262 Sask.R. 1; 347 W.A.C. 1; 2005 SCC 25, refd to. [para. 33].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 34].

St-Jean v. Mercier, [2002] 1 S.C.R. 491; 282 N.R. 310; 2002 SCC 15, refd to. [para. 34].

Domtar Inc. v. ABB Inc. et al. (2007), 369 N.R. 152; 2007 SCC 50, refd to. [para. 34].

Ellis-Don Ltd. v. Labour Relations Board (Ont.) et al., [2001] 1 S.C.R. 221; 265 N.R. 2; 140 O.A.C. 201; 2001 SCC 4, refd to. [para. 34].

Farm Credit Corp. v. Valley Beef Producers Co-operative Ltd. et al., [2002] 11 W.W.R. 587; 223 Sask.R. 236; 277 W.A.C. 236 (C.A.), refd to. [para. 34].

SEDCO et al. v. Kelly (William) Holdings Ltd. et al., [1990] 4 W.W.R. 134; 83 Sask.R. 33 (C.A.), refd to. [para. 36].

Esso Petroleum Co. v. Mardon, [1976] 2 All E.R. 5 (C.A.), refd to. [para. 49].

Jackson v. Horizon Holidays Ltd., [1975] 3 All E.R. 92 (C.A.), refd to. [para. 49].

Authors and Works Noticed:

Jackson, and Powell on Professional Liability (6th Ed. 2007), pp. 11-254 [para. 61]; 11-328 [para. 40].

McGregor, Harvey, Damages (16th Ed. 1997), pp. 285 to 287 [para. 36].

Rainaldi, Linda D., Remedies in Tort (Looseleaf Ed.), vol. 2, p. 16.III-79 [para. 39].

Waddams, Stephen M., The Law of Damages (Looseleaf Ed.), p. 15.150 [para. 39].

Counsel:

Diana K. Lee, for the appellant;

Richard Morris, Q.C., for the respondents/defendants.

This appeal and cross-appeal were heard on October 23, 2007, before Cameron, Richards and Hunter, JJ.A., of the Saskatchewan Court of Appeal. The following judgment of the Court of Appeal was delivered by Cameron, J.A., on March 4, 2008.