Published on October 17, 2012, this case deals
with the duty of a plaintiff to take actions to mitigate losses
when seeking specific performance. The reasons for judgment were
written by Madame Justice Karakatsanis, a recent appointee who so
far has written only one other decision (in the criminal context).
Her background is in administrative law, so it is interesting to
see her venture into the realm of equitable remedies.
The facts of the case are simple. The Plaintiff Southcott is a
single purpose corporation, incorporated specifically for the
purpose of purchasing a parcel of land from the Defendant School
Board. A purchase agreement was made by the parties, under which
Southcott paid a 10 percent deposit. The agreement was conditional
on the School Board obtaining a severance of the land on or before
the closing date. The closing date was extended once, but the
School Board declined to accept a further extension when its
request for severance was denied by the Committee of Adjustments.
Southcott commenced an action for specific performance. It never
attempted to mitigate its losses, on the grounds that it had been
created solely for the purpose of purchasing the land in question.
At trial, the Superior Court of Justice declined to order specific
performance on the basis that the property was not unique and that
damages were adequate. The Court of Appeal found that Southcott had
failed to mitigate its damages, and reduced the damage award
accordingly to a nominal amount.
Karakatsanis J. found that the concepts of specific performance
and mitigation were not compatible, and so addressed the question
of when a plaintiff seeking specific performance can avoid the
requirement for mitigation. She found as follows:
A plaintiff deprived of an investment property does not have a
"fair, real, and substantial justification" or a
"substantial and legitimate" interest in specific
performance unless he can show that money is not a complete remedy
because the land has "a peculiar and special value" to
As to whether Southcott's status as a single purpose
company, created specifically for the purchase of the property in
question, Justice Karakatsanis wrote the following:
In addition, not requiring single-purpose corporations to
mitigate would expose defendants contracting with such corporations
to higher damage awards than those reasonably claimed by other
plaintiffs, based solely upon their limited assets.
In rejecting Southcott's arguments, Justice Karakatsanis
found that there was a requirement for single-purpose corporations
to mitigate their losses when seeking specific performance where
there is not a compelling reason why damages would not be
The Chief Justice filed a lone dissent, which points out the
inconsistency of requiring mitigation where a claim for specific
performance is validly pursued. She notes that, while the common
law presumption of uniqueness of real property is no longer
recognized, the land in question was sufficiently unique that a
substitute property of equivalent value was not readily
In my opinion, the decision of McLachlin C.J. better reflects
the nuanced nature of equitable remedies. She recognizes the
difficulties faced by a plaintiff who seeks to advance a specific
performance claim, noting that if such a claimant mitigates by
purchasing another property and then succeeds in their claim, they
will have two properties instead of one, and one of which they
didn't really want in the first place. The requirement to
mitigate in the case of a claim for specific performance should be
tempered to recognize that, even where the claim for such an
equitable remedy is fairly advanced, the party making the claim
cannot be sure it will succeed due to the discretionary nature of
equitable remedies. The incompatibility of the concepts of
mitigation and specific performance was rightly pointed out by
Justice Karakatsanis. However, her decision fails to balance the
competing issues, which may result in a chilling effect against
those who are entitled to specific performance, but are afraid of
the consequences of not mitigating if the courts decide not to
grant their request.
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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