Keneric Tractor Sales Ltd. v. Langille, (1987) 79 N.R. 241 (SCC)

• Judge: Dickson, C.J.C., Beetz, McIntyre, Wilson and La Forest, JJ.
• Court: Supreme Court (Canada)
• Case Date: October 15, 1987
• Jurisdiction: Canada (Federal)
• Citations: (1987), 79 N.R. 241 (SCC);207 APR 361;1987 CanLII 29 (SCC);79 NR 241;43 DLR (4th) 171;82 NSR (2d) 361;[1987] 2 SCR 440

Keneric Tractor Sales Ltd. v. Langille (1987), 79 N.R. 241 (SCC)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Eric Langille and Paul Langille v. Keneric Tractor Sales Limited

Indexed As: Keneric Tractor Sales Ltd. v. Langille

Supreme Court of Canada

Dickson, C.J.C., Beetz, McIntyre, Wilson and La Forest, JJ.

October 15, 1987.

Summary:

Two farmers leased farm equipment from a dealer under separate five year chattel leasing agreements, which were financed by the manufacturer. Each lease called for semi-annual payments. By a separate agreement, at the end of the lease term the farmers had the option of purchasing the equipment for 30% of the original price. The dealer was required to guarantee payment of the rents. The farmers defaulted under the leases. The dealer seized and sold the equipment and sued the farmers for damages resulting from the breach.

The Nova Scotia Supreme Court, Trial Division, allowed the action and awarded the dealer damages equal to the loss of the value of the purchase price plus an allowance for the expenses of repossession and sale, minus the rental payments made. The farmers appealed the assessment of damages.

The Nova Scotia Supreme Court, Appeal Division, in a judgment reported 67 N.S.R.(2d) 404; 155 A.P.R. 404, dismissed the appeal, affirming the trial judge's method of calculating damages.

Jones, J.A., dissenting, would have calculated damages as the present value of the unpaid rent over the remainder of the term less the actual rental value of the equipment for the same period, less the monies received from the sale of the equipment after deducting reasonable expenses. The farmers appealed.

The Supreme Court of Canada dismissed the appeal. The court affirmed that damages resulting from the breach of the chattel lease should be calculated in accordance with general contract principles. The court affirmed the formula adopted by the trial judge and affirmed by the majority of the Court of Appeal.

Contracts - Topic 3662

Performance or breach - Repudiation - Effect of - The Supreme Court of Canada stated that "when one party repudiates the contract and the other party accepts the repudiation the contract is at this point terminated or brought to an end. The contract is not, however, rescinded in the true legal sense i.e. in the sense of being voided ab initio by some vitiating element. The parties are discharged of their prospective obligations under the contract as from the date of termination but the prospective obligations embodied in the contract are relevant to the assessment of damages" - See paragraph 29.

Damages - Topic 1084

Mitigation - Evidence - Proof - Burden of proof - The Supreme Court of Canada stated that the burden was on the defendant to prove the plaintiff failed to mitigate its loss - See paragraph 36.

Damages - Topic 5946

Contracts - Lease of goods - Breach by lessee - Measure of damages on retaking by lessor - The Supreme Court of Canada held that the measure of damages for breach of a chattel lease was to be calculated in accordance with general contract principles - The court stated that it did not matter whether the termination of the lease contract was based on breach of a term or repudiation - See paragraphs 16 to 33.

Damages - Topic 5946

Contracts - Lease of goods - Breach by lessee - Measure of damages on retaking by lessor - The Langilles leased chattels from a dealer - The dealer assigned the lease to the manufacturer as security for its purchase price - The dealer guaranteed payment under the lease and was appointed the manufacturer's agent to collect payments - The Langilles defaulted - The dealer seized and sold the chattels and sued for damages - The Supreme Court of Canada held that where the Langilles knew of the assignment the measure of damages was the dealer's liability to the manufacturer (i.e. the loss of the value of the purchase price plus an allowance for the expenses of repossession and sale, minus the rental payments made) - The court stated that if the Langilles had no such knowledge, damages would be limited to the discounted value of the unpaid rentals under the lease plus repossession, repair and resale expenses, minus the sale proceeds - See paragraphs 16 to 33.

Cases Noticed:

Highway Properties Ltd. v. Kelly, Douglas and Co., [1971] S.C.R. 562; 17 D.L.R.(3d) 710, appld. [para. 1].

Hadley v. Baxendale (1854), 9 Ex. 341; 156 E.R. 145, appld. [para. 6].

Victoria Laundry (Windsor) Ltd. v. Newman Industry Ltd., [1949] 2 K.B. 528; [1949] 1 All E.R. 997 (C.A.), refd to. [para. 6].

Canadian Acceptance Corp. v. Regent Park Butcher Shop Ltd. (1969), 3 D.L.R.(3d) 304 (Man. C.A.), dist. [para. 7].

Humphrey Motors Ltd. v. Ells, [1935] S.C.R. 249, overruled. [para. 11].

Buchanan v. Byrnes (1906), 3 C.L.R. 704 (H.C. Aust.), refd to. [para. 21].

Hughes v. N.L.S. Pty. Ltd., [1966] W.A.R. 100, refd to. [para. 21].

Pigott Construction Co. v. W.J. Crowe Ltd. (1961), 27 D.L.R.(2d) 258 (Ont. C.A.), refd to. [para. 25].

Alkok v. Grymek, [1968] S.C.R. 452, refd to. [para. 25].

Hongkong Fir Shipping Co. v. Kawasaki Kisen Kaisha Ltd., [1962] 2 Q.B. 26 (C.A.), refd to. [para. 25].

Cehave N.V. v. Bremer Handelsgesellschaft m.b.H. The "Hansa Nord", [1976] Q.B. 44 (C.A.), refd to. [para. 25].

Johnson v. Agnew, [1980] A.C. 367; [1979] 1 All E.R. 883 (H.L.), refd to. [para. 29].

Moschi v. Lep Air Services Ltd., [1973] A.C. 331; [1972] 2 All E.R. 393 (H.L.), refd to. [para. 29].

Red Deer College v. Michaels, [1976] 2 S.C.R. 324; 5 N.R. 99, refd to. [para. 36].

Statutes Noticed:

Conditional Sales Act, R.S.N.S. 1967, c. 48, sect. 1(b)(ii) [para. 10].

Authors and Works Noticed:

Anson, W.R., Law of Contract (26th Ed.), pp. 470-484 [para. 25].

Chesire, Fifoot and Furmston, Law of Contract (11th Ed. 1986), pp. 521-533 [para. 25]; 598 [para. 36].

Halsbury's Laws of England (4th Ed.), vol. 12, para. 1193 [para. 36].

Counsel:

R.A. Cluney, Q.C., and M.E. Reid, for the appellants;

R. Malcolm Macleod and R.M. Purdu, for the respondent.

This appeal was heard on May 13, 1987, before Dickson, C.J.C., Beetz, McIntyre, Wilson and La Forest, JJ., of the Supreme Court of Canada.

On October 15, 1987, Wilson, J., delivered the following judgment for the Supreme Court of Canada: