I'm with Rob on the view that mitigation isn't relevant to White & Carter
because, as he says, the case was about performance followed by a claim for
payment, so the question of mitigation is irrelevant - there was no loss to
be mitigated, only a choice, allowed in law, to perform rather than accept
the repudiation of the defender. Give this, I found the statement of the SCC
that "Specific performance is an equitable remedy that is difficult to
reconcile with the principle of mitigation" puzzling, to say the least -
there is no need to reconcile a principle about an entitlement to damages
with a remedy seeking performance.

Like Stephen I have also pondered on what basis one might object to the
result in W&C. Abuse of rights might be one avenue. A perhaps related idea
would be that the entitlement to render a performance which is now unwanted
could be said to be contrary to good faith: so, if one had a principle that
performance had to be tendered in a way consistent with good faith, then the
result in W&C would be inconsistent with that. Of course, there is no such
principle.

Martin


--
The University of Edinburgh is a charitable body, registered in
Scotland, with registration number SC005336.


-----Original Message-----
From: Stephen Smith, Prof. [mailto:stephen.smith@mcgill.ca]
Sent: 18 October 2012 13:27
To: Robert Stevens; David Campbell; obligations@uwo.ca
Subject: RE: Supreme Court of Canada on Specific Performance and Mitigation

Robert & Andrew's analysis of the law seems to me spot on, except, I think,
Robert's suggestion that the mitigation issues raised in Southcott Estates
have nothing to do with White & Carter. Those who think that White & Carter
is wrong (or at least those who think Lord Reid's dicta should be applied in
some cases) are at bottom arguing that in White & Carter circumstances
contracting parties should not be permitted refuse to 'accept' a repudiatory
breach. In law, the only basis on which to refuse the claim for debt in
White & Carter is to say that the contract was terminated by the breach, and
so performing the condition on which payment turned was no longer possible.
Similarly, the only legal basis on which the SCC's decision in Southcott
could be justified is to say that the buyer was obliged to accept the
vendor's repudiatory breach, i.e., the buyer was obliged to treat the
contract as terminated. Once the contract is terminated, then the law
rightly expects or at least assumes that the buyer will mitigate, and
calculates damages accordingly. This analysis also explains why Robert
thinks, rightly, that White & Carter is correct, and Southcott wrong, as a
matter of orthodox legal principle--it is a long-established principle, and
part of the very notion of freedom of contract, that contracting parties are
free to 'reject' a repudiatory breach and so to keep the contract alive. If
the contract is alive, there can be no duty to mitigate (contra southcott)
and performance is still possible (per White).

All that said (and I say this as someone who has long felt slightly uneasy
with the actual result in White & Carter) the above analysis also suggests
one way that critics of White and fans of Southcott might try to frame their
argument: abuse of right. The only basis that I can see for arguing that the
contracts in these cases should be treated as terminated is to say that the
plaintiffs were abusing their rights by refusing to 'accept' the repudiatory
breaches. I say this notwithstanding that I am not a great fan of the idea
of abuse of right. Nor am I confident that even fans of abuse of right
should want the concept applied to the acceptance of repudiatory breaches,
particularly in Southcott type cases (in civil law systems with which I am
familiar, where abuse of right plays a major role, it has never been
suggested that the concept could be applied to questions of termination and
it is pretty clear that such a suggestion would be rejected). A particular
problem with applying abuse of right in sale of land (or goods) cases is
that the consequence, in cases where it is concluded that plaintiffs abused
their rights, is not merely to deny a right but, in effect, to penalize the
plaintiff by reducing damages. Given the uncertainty of application of abuse
of right, this is a major practical issues. (As an aside, my understanding
is that even in cases where the land appears 'unique', Canadian lawyers now
normally recommend that disappointed purchasers accept repudiations and
mitigate, because if they don't, and a court subsequently concludes that the
land is not unique, they will effectively be penalised for not mitigating.)
Nonetheless, I think it helps to clarify the issues to see that what critics
of White and supporters of Southcott are effectively arguing for, in legal
terms, is applying a notion of abuse of right to the matter of contracting
parties' rights to refuse to accept repudiatory breaches.

cheers

Stephen A. Smith
James McGill Professor
Faculty of Law, McGill University
3674 Peel St.
Montreal, Quebec H3A 1W9
1-514-398-6633
fax: 1-514-398-3233


-----Original Message-----
From: Robert Stevens [mailto:robert.stevens@law.ox.ac.uk]
Sent: October-18-12 6:34 AM
To: David Campbell; obligations@uwo.ca
Subject: RE: Supreme Court of Canada on Specific Performance and Mitigation

We come here of course to a basic difference between David and myself. I
think that if you enter into a contract that you are legally obliged to
perform it (which is the same as saying that the counter-party has a right
to performance). One party cannot unilaterally determine this duty. David
does not agree, and very sadly it looks like the SCC may agree with him.

So, for me, the ultimate justification for awarding specific performance in
contracts for the sale of land is that that is what has been agreed to. It
seems very doubtful to me whether one piece of land is always just as good
as any other, even for commercial parties. In a standard contract for the
sale of generic goods 1,000 widgets from A is not just as good as but in
fact indistinguishable from 1,000 widgets from B. Where the contract is for
the sale of specific goods the same position is usually reached as in
relation to land because property passes when intended to pass: ie title
passes without any further act of conveyance by the seller so that no claim
for specific performance is required.

White and Carter does not seem to me to be in point. White and Carter
concerned an action for the agreed sum (as did Finelli v Dee). So where my
right to be paid a sum of money under the deal is conditional upon my
performing my duty under the bargain, if I cannot perform my duty without
your co-operation, which you withhold, I cannot claim it. As the pursuer in
W&C could perform without the other side's co-operation he was awarded the
agreed sum. The rules on mitigation were neither here nor there as the claim
was not one for loss suffered.

Lord Reid did, in an obiter dictum, say that the action for the agreed sum
might in some circumstances be withheld where the claimant had no legitimate
interest in seeking it, but what he meant by that is obscure to me (there
are a number of different possible interpretations). It is a very radical
argument to suggest that it now means that one party has the unilateral
power to determine a contract.

But perhaps that is the law in Canada.

________________________________________
From: David Campbell [I.D.Campbell@leeds.ac.uk]
Sent: 18 October 2012 10:42
To: obligations@uwo.ca
Subject: RE: Supreme Court of Canada on Specific Performance and Mitigation

Dear Obligations colleagues

If this case represents the further acceptance of the idea that mitigation
should play a wider role in the claimant's choice between specific
performance and damages, then it is, I suggest, ultimately welcome. (I do
not deny the existence of a lot of current difficulties). In England, of
course, if there is a breach of a conveyance of land, the default remedy is
specific performance. But there is no ultimate justification for this. If
the claimant's interest is commercial and a substitute property is
available, the argument for confining the claimant to market damages applies
just as much as it would to a standard sale of goods. It is different, of
course, if there is a non-commercial interest or a substitute is not
available, just as it would be in a sale of goods, and there may be, as it
were, procedural reasons for making specific performance the default remedy
for breach of a conveyance of land, though I do not see them myself.

I cannot agree with Rob about an unaccepted repudiatory breach being a thing
writ in water. White and Carter Councils has not been overruled (and one
cannot see how it ever will be), but it does not actually state the law, and
a number of Canadian cases, such as Finelli v Dee, have led the way in
making this clear. The point is that, in effect, mitigation considerations
do rightly influence the claimant's election between affirmation and
termination after repudiatory breach, albeit under the guise of the
legitimate interest and defendant's co-operation arguments, and it is good
that they do, though the law would be better if the influence of mitigation
was made explicit.

And, in principle, it would be better if mitigation considerations
explicitly played a role in the decision to award specific performance, for
this would bring a superior coherence to the equitable defences that, in
effect, if obliquely, do this now.

Best wishes

David Campbell

David Campbell, BSC(Econ), LLM, PhD, FCI(Arb) Professor of International
Business Law

School of Law
Liberty Building
University of Leeds
LEEDS
LS2 9JT
UK

tel: [+44] (0) 113 343 7041
fax: [+44] (0) 113 343 5056
email: i.d.campbell@leeds.ac.uk

http://www.law.leeds.ac.uk/about/staff/d-campbell.php
________________________________________
From: Robert Stevens [robert.stevens@law.ox.ac.uk]
Sent: 18 October 2012 10:02
To: James Lee; obligations@uwo.ca
Subject: RE: Supreme Court of Canada on Specific Performance and Mitigation

"Specific performance is an equitable remedy that is difficult to reconcile
with the principle of mitigation. "

Oh dear, that is a sentence that makes one's heart sink.

The SCC has long been away with the fairies when it comes to whether to
award specific performance of contracts for the sale of land. Now however it
seems to have got itself confused about the relationship between mitigation
and specific performance.

Simplified, this is a standard contract for the sale of land on a specific
date. The seller fails to complete by that date, and then says it won't be
completing and returns the deposit. The buyer refuses to accept this and
presses for specific performance (or failing that damages).

Was the buyer under any duty to mitigate its loss at this point?

No, because a repudiatory breach that is not accepted is a thing writ in
water. Although the obligation to sell by a particular date had been
rendered impossible, the seller remained under a duty to convey the land to
the buyer.

If the buyer had accepted the repudiation then the obligation to sell would
have been brought to an end, replaced by an obligation to pay damages for
breach, with a consequent "duty" on the buyer to mitigate his loss from that
point. That did not happen.

Now in a country other than Canada, specific performance would have been
awarded, but when it is refused the time for assessing damages should be the
date of trial. There can be no 'duty' to mitigate for loss caused by the
failure to sell before that time (see, in England unfortunately, Johnson v
Agnew).

The rules relating to mitigation concern the quantification of loss. If a
breach occurs, losses which are not suffered cannot be recovered, and
consequential losses caused by the innocent party's own fecklessness in
failing to avoid them are his own look out. There is not, and could not be,
any tension between these rules and the availability of specific
performance.

I have only read the SCC decision, and so may not have the full facts, but
on its face this is not very good.

Rob