Baud Corp., N.V. v. Brook, (1978) 23 N.R. 181 (SCC)

• Judge: Laskin, C.J.C., Martland, Spence, Pigeon, Dickson, Estey and and Pratte, JJ.
• Court: Supreme Court (Canada)
• Case Date: October 03, 1978
• Jurisdiction: Canada (Federal)
• Citations: (1978), 23 N.R. 181 (SCC);[1979] 1 SCR 633;[1978] CarswellAlta 268;[1978] ACS no 66;[1978] SCJ No 106 (QL);5 BLR 225;89 DLR (3d) 1;23 NR 181;[1978] 6 WWR 301;1978 CanLII 16 (SCC);12 AR 271

Baud Corp., N.V. v. Brook (1978), 23 N.R. 181 (SCC)

MLB headnote and full text

Asamera Oil Corp. Ltd. v. Sea Oil and General Corp. and Baud Corp., N.V.

Indexed As: Baud Corp., N.V. v. Brook

Supreme Court of Canada

Laskin, C.J.C., Martland, Spence, Pigeon, Dickson, Estey and and Pratte, JJ.

October 3, 1978.

Summary:

This case arose out of an agreement by the defendant to return to the plaintiff 125,000 corporate shares on December 31, 1960. The defendant failed to return the shares on December 31, 1960. In 1960, the plaintiff obtained an injunction which restrained the defendant from selling the 125,000 shares. The shares were traded on a public stock exchange. At an examination for discovery in 1968, the plaintiff learned that the defendant sold the 125,000 shares to third parties in 1958. At the trial of the plaintiff's action in 1969 and 1970 the plaintiff claimed the return of the shares in specie or, in the alternative, damages for breach of the agreement to return the shares. The parties agreed that the value of the shares in December, 1960 was $2.00 per share. The market value of the shares in 1969 and 1970 was $21.00 per share. The high market value of the shares between 1960 and 1970 was $46.50 per share. The Trial Division of the Alberta Supreme Court, dismissed the plaintiff's claim for specific performance but awarded the plaintiff damages of $250,000.00 based on the valuation of $2.00 per share (which was the option price agreed upon by the parties when the shares were lent to the defendant). Both parties appealed to the Alberta Court of Appeal.

The Alberta Court of Appeal dismissed the appeal of the plaintiff and affirmed the trial judge's damage award of $250,000.00 in favour of the plaintiff. The judgment of the Alberta Court of Appeal is set out below at paragraphs 76 to 101. Both parties appealed to the Supreme Court of Canada.

The Supreme Court of Canada affirmed the dismissal of the plaintiff's claim for specific performance. However, the Supreme Court of Canada increased the plaintiff's damages for the failure of the defendant to return the shares from $250,000.00 to $812,500.00. The Supreme Court of Canada held that the defendant was liable to the plaintiff for the plaintiff's loss of opportunity to sell the shares at a profit. The Supreme Court of Canada stated that the loss of opportunity to sell at the highest market price was too remote. The Supreme Court of Canada stated that the plaintiff had a duty to mitigate its damages and held that in the circumstances the plaintiff should have crystallized its damages by purchasing replacement shares in 1966 and 1967. The Supreme Court of Canada fixed the cost of replacing the 125,000 shares in 1966 and 1967 at $6.50 per share ($6.50 x 125,000.00 = $812,500.00).

Damages - Topic 6348

Contracts - Loan of shares - Mitigation, where shares are not returned - The plaintiff gave 125,000 corporate shares to the defendant who agreed to return the shares on December 31, 1960 - The shares were traded on a public exchange - The defendant failed to return the shares on December 31, 1960 - In 1960, the plaintiff obtained an injunction which restrained the defendant from selling the 125,000 shares - By mutual agreement the plaintiff's claim laid dormant until 1966 - At an examination for discovery in 1968, the plaintiff learned that the defendant sold the 125,000 shares to third parties in 1958 - At the trial of the plaintiff's action in 1969 and 1970, the plaintiff claimed the return of the shares in specie or damages for breach of the agreement to return the shares - The parties agreed that the value of the shares in December, 1960 was $2.00 per share - The market value of the shares in 1969 and 1970 was $21.00 per share - The high market value of the shares between 1960 and 1970 was $46.50 per share - The Supreme Court of Canada dismissed the plaintiff's claim for specific performance - The Supreme Court of Canada awarded the plaintiff damages of $812,500.00 for loss of opportunity to sell the shares at a profit - The Supreme Court of Canada held that in the circumstances the plaintiff's duty to mitigate required the plaintiff to purchase replacement shares in 1966 and 1967.

Damages - Topic 6348

Contracts - Loan of shares - Mitigation, where the shares are not returned - The Supreme Court of Canada referred to the principles of mitigation to be applied in the case of a breach of contract for the return of shares - See paragraphs 47 to 56.

Damages - Topic 1912

Torts affecting goods - Detinue - The Supreme Court of Canada referred to the normal measure of damages for the wrongful detention of goods (detinue) - See paragraph 32.

Contracts - Topic 4021

Remedies for breach - Damages - General principles - The Supreme Court of Canada stated that damages for breach of a contractual obligation are limited to those losses which will put the injured party in the same position as he would have been in had the wrongdoer performed as promised (see paragraph 18) - The Supreme Court of Canada also referred to limitations on the damages recoverable for breach of contract (see paragraphs 19 to 21).

Damages - Topic 5831

Contracts - Sale of goods - Breach by seller - The Supreme Court of Canada referred to the measure of damages for non-delivery of goods sold under a contract of sale - See paragraph 23.

Damages - Topic 1810

Torts affecting goods - Conversion - The Supreme Court of Canada referred to the normal measure of damages for the conversion of goods - See paragraph 31.

Damages - Topic 5702

Contracts - Breach of contract - The Supreme Court of Canada stated that damages for breach of contract are based on the loss to the plaintiff - The Supreme Court of Canada stated that the motives or unjust enrichment of the defendant are irrelevant - See paragraph 70.

Specific Performance - Topic 510

When available - General principles - The Supreme Court of Canada stated that an action for specific performance must be started and carried on with due diligence - See paragraph 62.

Specific Performance - Topic 508

When available - General principles - Where mitigative replacement of property available - The plaintiff claimed the return of corporate shares lent to the defendant - The defendant agreed to return the shares on December 31, 1960 - On July 27, 1960, the plaintiff obtained an injunction which restrained the defendant from selling the shares - In 1968, at an examination for discovery the plaintiff learned that the defendant sold the shares in 1958 - The shares were traded on a public stock exchange - The Supreme Court of Canada dismissed the plaintiff's claim for specific performance - The Supreme Court of Canada stated that the plaintiff cannot claim specific performance where it would have been reasonable for the plaintiff to procure mitigative replacement of the property - See paragraphs 59 to 61.

Specific Performance - Topic 561

When available - Stocks and bonds - The Supreme Court of Canada stated that specific performance of an agreement to deliver corporate shares was not available where the shares were listed on a public stock exchange because in such circumstances damages are an adequate remedy - See paragraph 17.

Specific Performance - Topic 506

When available - General principles - Contractual obligations - The Supreme Court of Canada stated that specific performance of contractual obligations is ordinarily only available where damages are inadequate to compensate a plaintiff for his losses - See paragraph 17.

Cases Noticed:

Solloway v. Blumberger, [1933] S.C.R. 163; 3 D.L.R. 86, refd to. [para. 15 and 88].

Victoria Laundry (Windsor) LD. v. Newman Industries LD., [1949] 2 K.B. 528, refd to. [para. 19].

Koufos v. C. Czarnikow (The Heron II), [1969] 1 A.C. 350, refd to. [para. 20].

Brown & Root Ltd. v. Chimo Shipping Ltd., [1967] S.C.R. 642, refd to. [para. 20].

Parsons (Livestock) Ltd. v. Uttley Ingham & Co. Ltd., [1977] 2 Lloyd's Rep. 522; [1978] 1 All E.R. 525, refd to. [para. 21].

Barrow v. Arnaud (1846), 8 Q.B. 595, refd to. [para. 23].

Red Deer College v. Michaels and Finn, 5 N.R. 99; [1976] 2 S.C.R. 324, refd to. [para. 23].

Crown Reserve Consolidated Mines Ltd. v. Mackay, [1941] O.W.N. 269, refd to. [para. 24].

Lester, Leather and Skin Co. v. Home and Overseas Brokers (1948), 64 T.L.R. 569 (C.A.), refd to. [para. 25].

Jewelowski v. Propp, [1944] K.B. 510, refd to. [para. 25].

Pilkington v. Wood, [1953] Ch. 770, refd to. [para. 25].

Harrison v. Harrison (1824), 1 C. & P. 412, not folld. [para. 29].

Shepherd v. Johnson (1802), 2 East 211, not folld. [para. 29].

McArthur v. Seaforth (1810), 2 Taunt. 257, not folld. [para. 29].

Sanders v. Kentish (1799), 8 T.R. 162, not folld. [para. 29].

Vicary v. Foley, [1891] V.L.R. 407 (Aust.), not folld. [para. 29].

Galigher v. Jones (1899), 129 U.S. 193, not folld. [para. 29]; refd to. [para. 51].

McNeil v. Fultz et al. (1906), 38 S.C.R. 198, refd to. [para. 31].

Alberta v. Arnold (1971), 14 D.L.R.(3d) 574; [1971] S.C.R. 209; 75 W.W.R. 201, refd to. [para. 31]; folld. [99].

Metropolitan Trust Co. of Canada et al. v. Pressure Concrete Services Ltd. et al., [1973] 3 O.R. 629, affirmed (1976), 60 D.L.R.(3d) 431 (Ont. C.A.), refd to. [para. 33].

Archer v. Williams (1846), 2 Car. & K. 26; 175 E.R. 11, refd to. [para. 34].

Simmons v. London Joint Stock Bank, [1891] 1 Ch. 270, affirmed [1891] 1 Ch. 287, reversed on other grounds sub. nom. London Joint Stock Bank v. Simmons, [1892] A.C. 201, refd to. [para. 34].

Wroth v. Tyler, [1974] Ch. 30, refd to. [para. 34].

Fales et al. v. Canada Permanent Trust Company, 11 N.R. 487; [1977] 2 S.C.R. 302, refd to. [para. 36].

Dawson v. Helicopter Exploration Co. Ltd. (1957), 8 D.L.R.(2d) 97; (1958), 12 D.L.R.(2d) 1, refd to. [para. 37].

Karas et al. v. Rowlett, [1944] S.C.R. 1, refd to. [para. 39].

Liesbosch Dredger v. S.S. "Edison", [1933] A.C. 449, refd to. [para. 40].

W.C. Pitfield & Co. Ltd. v. Jomac Gold Syndicate Ltd. et al., [1938] 3 D.L.R. 158 (Ont. C.A.), refd to. [para. 41].

Williams and Cameron v. Keyes and Pyramid Mining Co. Ltd., [1971] 5 W.W.R. 561 (B.C.S.C.), refd to. [para. 41].

Shaw v. Holland (1846), 15 M. & W., refd to. [para. 41].

Gainsford v. Carroll et al. (1824), 2 B. & C. 624, refd to. [para. 42].

Startup et al. v. Cortazzi (1835), 2 Cr.M. & R 165, refd to. [para. 42].

Aronson v. Mologa Holz - Industrie A/G Leningrad (1927), 32 Com. Cas. 276, refd to. [para. 42].

Peebles v. Pfeifer, [1918] 2 W.W.R. 877 (Sask. K.B.), refd to. [para. 42].

Robertson v. Dumaresq (1846), 11 Moore (N.S.) 66, refd to. [para. 42].

Horsnail v. Shute (1922), 62 D.L.R. 199, (B.C.C.A.), refd to. [para. 42].

Hoefle v. Bongard & Company, [1945] S.C.R. 360, refd to. [para. 43].

British Westinghouse Electric and Manufacturing Company, Limited v. Underground Electric Railways Company of London, Limited, [1912] A.C. 673, folld. [para. 48].

Mitchell v. Texas Gulf Sulphur Company (1970), 446 F.2d 90, refd to. [para. 51].

Sachs v. Miklos, [1948] 2 K.B. 23 (C.A.), refd to. [para. 53].

Hooper v. Herts, [1906] 1 Ch. D. 549, refd to. [para. 55].

C. Sharpe & Co. Ltd., [1917] 2 K.B. 814, refd to. [para. 55].

Stewart v. Cauty (1841), 8 M. & W. 160, refd to. [para. 55].

Calgary Hardwood & Veneer Ltd. and Foreign and Domestic Wood Ltd. v. Canadian National Railway Company, 5 A.R. 582; [1977] 4 W.W.R. 18, refd to. [para. 60].

Kaunas v. Smyth et al. (1977), 75 D.L.R.(3d) 368, refd to. [para. 60].

White and Carter (Councils) Ltd. v. McGregor, [1962] A.C. 413, refd to. [para. 62].

Macleod v. Scramlen (1910), 14 W.L.R. 262, refd to. [para. 84].

Clayton v. Le Roy, [1911] 2 K.B. 1031, refd to. [para. 84].

London Jewellers, Ltd. v. Sutton (1934), 50 T.L.R. 193, refd to. [para. 85].

Petey Manufacturing Co. v. Morris (1912), 84 A. 238, refd to. [para. 85].

Studebaker Bros. v. Witcher et al. (1921), 199 P. 477, refd to. [para. 85].

Butler v. Wolf Sussman, Inc. (1943), 46 N.E. 2d 243, refd to. [para. 85].

Denver Live Stock Com'n v. Parks (1907), 91 P. 1110, refd to. [para. 85].

Jordan v. Jordan (1922), 136 N.E. 866, refd to. [para. 85].

Harris v. Robinson (1892), 21 S.C.R. 390, rolld. [para. 92].

Milward v. Earl of Thanet (1801), 5 Ves. Jun. 720n; 31 E.R. 824, refd to. [para. 93].

Eads v. Williams (1854), 4 DeG.M. & G. 674; 43 E.R. 671, refd to. [para. 93].

Watson v. Reid (1830), 1 Russ. & M. 236; 39 E.R. 91, refd to. [para. 93].

Southcomb v. Bishop of Exeter (1847), 6 Hare, 213; 67 E.R. 1145, refd to. [para. 93].

Edgar v. Caskey (1912), 7 D.L.R. 45; 2 W.W.R. 1036, refd to. [para. 93].

Bark Fong v. Cooper (1913), 16 D.L.R. 299; 49 S.C.R. 14; 5 W.W.R. 633, folld. [para. 94].

Lamshed v. Lamshed (1963), 109 C.L.R. 440, refd to. [para. 95].

McKenna v. Richey (1950), V.L.R. 360, refd to. [para. 95].

Canadian Fina Oil Ltd. v. Paschke (1957), 7 D.L.R.(2d) 473; 21 W.W.R. 260, refd to. [para. 96].

Vieweger Construction Co. Ltd. v. Rush & Tompkins Construction Ltd., [1965] S.C.R. 195, folld. [para. 101].

Authors and Works Noticed:

Law Quarterly Review, vol. 94, (1978), page 171 [para. 21].

McGregor on Damages, 13th Ed., (1972), page 671 [para. 31], 699 [para. 32].

Halsbury's Laws of England, 4th Ed., vol. 12, page 467 [para. 34].

Chesire & Fifoot's Law of Contract, 9th Ed., page 593 [para. 34].

Halsbury's Laws of England, 3rd Ed., vol. 34, page 155 [para. 46], vol. 36, page 323 [para. 96], vol. 38, page 781 [para. 84].

American Law Reports Annotated (3rd), vol. 31, page 1286 [para. 51].

Atiyah, Sale of Goods, 4th Ed., p. 294 [para. 55].

Treitel, Law of Contract, 4th Ed., p. 618 [para. 70].

Salmond on Torts, 15th Ed., p. 146 [para. 84], p. 147 [para. 90].

Fleming on Torts, 3rd Ed., p. 56 [para. 84].

Winfield and Jolowicz on Torts, 9th Ed., p. 418 [para. 84].

Vaines, Personal Property, 4th Ed., p. 153 [para. 84].

Paton, Bailment in the Common Law, (1952), p. 379 [para. 85].

Corpus Juris Secundum, vol. 26A, p. 898 [para. 85], vol. 26A, p. 891 [para. 88].

Holdsworth, History of English Law, vol. 7, p. 438 [para. 88].

Spry, Equitable Remedies (1971), p. 209 [para. 95], p. 210 [para. 96], p. 211 [para. 93].

Fry, Specific Performance, 6th ed., p. 514 [para. 95].

Counsel:

P.B.C. Pepper, Q.C., and J.L. McDougall, for the appellants;

R.A. MacKimmie, Q.C., for the appellants.

This appeal was heard by LASKIN, C.J.C., MARTLAND, SPENCE, PIGEON, DICKSON, ESTEY and PRATTE, JJ., of the Supreme Court of Canada at Ottawa, Ontario on November 23 and 24, 1977.

The judgment of the Supreme Court of Canada was delivered by ESTEY, J., on October 3, 1978.