From: Matthew Hoyle <MHoyle@oeclaw.co.uk>

Sent: Thursday 17 July 2025 17:44

To: Tim Liau; Robert Stevens; Jason W Neyers; obligations

Subject: Re: Contributory Fault in Contract Law at the SCC

How does a claim against a bank work under Canadian law? Is it a defence for the bank to show that I would just gamble the money away so I am actually counterfactual better off then not having honoured my balance?

And how does legal set off work? Or does it no longer exist in US/Canadian law?

Matthew Hoyle

Barrister

One Essex Court

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From: Tim Liau <T.H.Liau@lse.ac.uk>
Sent: Thursday, July 17, 2025 5:35:14 PM
To: Robert Stevens <robert.stevens@law.ox.ac.uk>; Jason W Neyers <jneyers@uwo.ca>; obligations <obligations@uwo.ca>
Subject: RE: Contributory Fault in Contract Law at the SCC

Similarly proof of debt in corporate insolvency, though subject to stay/moratorium, would be really different than an action for damages.

Surely the relevant statutes (Ch 11 etc?) would make the distinction

From: Robert Stevens <robert.stevens@law.ox.ac.uk>
Sent: 17 July 2025 17:23
To: Jason W Neyers <jneyers@uwo.ca>; obligations <obligations@uwo.ca>
Subject: Re: Contributory Fault in Contract Law at the SCC

I don't understand how receivables financing could work in a world where the only action available is damages, requiring a full trial to determine quantum.

Do US practitioners (not academics) really not think in terms of an action for the price if a seller isn't paid? What is the action if I borrow money and don't pay it back? Just damages?!?

From: Jason W Neyers <jneyers@uwo.ca>
Sent: Thursday, July 17, 2025 3:55:53 PM
To: obligations <obligations@uwo.ca>
Subject: ODG: Contributory Fault in Contract Law at the SCC

Dear Colleagues:

I just saw that the SCC has given leave in Arcamm Electrical Services Ltd. v. Avison Young Real Estate Management Services LP, 2024 ONCA 925 (41673) (https://www.canlii.org/en/on/onca/doc/2024/2024onca925/2024onca925.html?resultId=c952bd55b59b422f9511629b4d3cbdf1&searchId=2025-02-14T15:35:58:945/58a67fd92fcd4a88be658926cab6eeba) to address the issue of whether damages in breach of contract actions can be apportioned based on a defence of contributory fault in general and more specifically in the context of a summary judgment motion. Hold on to your hat!

Here are the facts as prepared by the court:

4342 Queen St. Niagara Holdings Inc. owns commercial property and Avison Young Real Estate Management Services LP is its property manager. Following a power outage at the property, Arcamm Electrical Services Ltd. provided emergency services to temporarily restore power and then further services to permanently restore power. 4342 Queen St. Niagara Holdings Inc. paid Arcamm Electrical Services Ltd. s invoices for the emergency services but refused to pay any further invoices. Arcamm Electrical Services Ltd. commenced a claim for breach of contract. 4342 Queen St. Niagara Holdings Inc. claimed contributory fault and sought an apportionment of damages. Arcamm Electrical Services Ltd. was awarded summary judgment without any apportionment. The Court of Appeal allowed an appeal and set aside the summary judgment in part. It held the claim against Queen St. Niagara Holdings Inc. should proceed to trial and Arcamm Electrical Services Ltd. can seek apportionment based on the alleged contributory fault.

Here is what the ONCA said on this issue:

I understand this submission to rest on the assumption that contributory fault cannot be raised as a defence to a claim in contract.

[41] I reject this submission and the assumption which underlies it. There has been a long-standing debate about whether the courts can apportion damages in a breach of contract case based on a consideration of the contributory negligence of the parties. While recognizing that the Negligence Act, R. S.O. 1990, c. N.1 does not apply to actions in contract, a number of first instance decisions in Ontario, beginning with Tompkins Hardware Ltd. v. North Western Flying Services Ltd. (1982), 1982 CanLII 3160 (ON SC), 139 D.L.R. (3d) 329, 22 C.C.L.T. 1 (Ont. H.C.J.), have applied the principle that damages in contract can be apportioned based on the degree of fault of the plaintiff and defendant. See, for example, Ribic v. Weinstein (1982), 1982 CanLII 3170 (ON SC), 140 D.L.R. (3d) 258 (Ont. H.C.), aff d (1984), 1984 CanLII 1869 (ON CA), 47 O.R. (2d) 126 (C.A.); Treaty Group Inc. v. Drake International Inc. (2005), 2005 CanLII 45406 (ON SC), 36 C.C.L.T. (3d) 265, 15 B.L.R. (4th) 83 (Ont. S.C.), aff d on other grounds, 2007 ONCA 450 [2]; K-Line Maintenance & Construction Ltd. v. Scepter Corp., 2009 CarswellOnt 7398, 91 C.L.R. (3d) 73 (Ont. S.C.), at para. 161; Atos v. Sapient, 2016 ONSC 6852, at para. 389; and Parkhill Excavating Limited v. Robert E. Young Construction Limited, 2017 ONSC 6903, at para. 212. Appellate courts elsewhere in Canada have similarly held that damages in contract cases can be apportioned based on fault. See, for example, Coopers & Lybrand v. H.E. Kane Agencies Ltd. (1985), 1985 CanLII 125 (NB CA), 62 N.B.R. (2d) 1, (N.B. C.A.), at pp. 707-708; and Doiron v. Caisse populaire d'Inkerman Lt e (1985), 1985 CanLII 95 (NB CA), 17 D.L.R. (4th) 660, 61 N.B.R. (2d) 123 (N.B. C.A.), at p. 273.

[42] In Tompkins, Saunders J. gave compelling reasons for holding that the courts should allow for the apportionment of contract damages. He said that negligence on the part of a plaintiff should have the same effect in reducing damages regardless of whether the claim is brought in tort or contract. In his view, the principle in tort cases that where a person is part author of their own injury, the person cannot call upon the other party to compensate them in full, applies equally in contract cases: at para. 34.

[43] In Treaty Group, Ducharme J. thoroughly canvassed the caselaw and academic writing on the subject and applied the reasoning in Tompkins. At para. 70 of Treaty Group, Ducharme J. concluded that not only could he apportion damages in a contract action to recognize conduct on the part of the plaintiff that had increased their damages but, in appropriate cases, apportionment was required by fairness, equity and justice . I agree.

[44] Finally, I note that in Cosyns v. Smith (1983), 1983 CanLII 1750 (ON CA), 146 D.L.R. (3d) 622, 25 C.C.L.T. 54 (Ont. C.A.) Lacourciere J.A., writing for this court, considered the contributory fault defence, describing it as analogous to contributory negligence but where the Court holds the basis of recovery against the defendants to be contract, not tort: at para. 1. He reviewed the reasoning of Saunders J. in Tompkins, but concluded that it was not necessary to pronounce on the attractive conclusion that Saunders J. had reached because the plaintiff s conduct did not amount to contributory negligence.

[45] I agree with the Ontario first instance courts that damages in contract cases can be apportioned based on fault. Accordingly, in my view, Queen was entitled to defend the Arcamm Action on the basis of contributory fault, and to seek to have the contractual damages Arcamm claimed reduced to recognize Arcamm s alleged conduct in increasing those damages.

Sincerely,

Jason Neyers
Professor of Law
Faculty of Law
Western University
Law Building Rm 26
e. jneyers@uwo.ca
t. 519.661.2111 (x88435)

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