The decision in Cassidy v. Smith 2008 BCSC
1778 provides useful guidelines regarding the proper date for
assessing damages for breach of contract in a falling market.
The plaintiff seller agreed to sell her home to the defendant
buyers. The buyers paid a deposit of $80,000, and the closing date
was set for April 29, 2008. The buyers were unable to arrange
financing and gave notice that they would not complete. The seller
accepted the buyers' repudiation of the contract, commenced an
action for the deposit to be forfeited and for damages and relisted
the property at the same price the defendant buyers had originally
agreed to pay. In August 2008, the seller obtained a favourable
judgment, the $80,000 deposit was forfeited to her and she was
awarded damages, but the amount was to be determined in a later
hearing. It was not until September, three weeks after the seller
obtained property value evaluations from two realtors indicating
that the property's value had dropped by 10 per cent to 20 per
cent, that she reduced her asking price to an amount above the
range suggested by one realtor and near the top of the range
suggested by the second realtor. The hearing to determine the
amount of her damages occurred in December 2008. The seller's
property had still not sold and she argued that her damages should
be assessed as at the date of the hearing, rather than the April
29, 2008 completion date when her damages would have been less.
In coming to its decision, the court set out the following
Although the usual rule is that damages for breach of contract
are measured as of the date of breach, the rule is not absolute and
a court may, in exceptional circumstances, assess damages as of a
different date to ensure fair compensation to the seller.
The court may take into account the seller's efforts to
mitigate (i.e., to minimize loss), as well as the nature of both
the property and the market.
In a falling market, the court should generally award damages
equal to the difference between the contract price and the highest
price obtainable within a reasonable time after the completion date
following the making of reasonable efforts to sell.
In this case, the seller knew the market was falling but failed
to account for the downturn by reducing her asking price to a
reasonable level in a timely manner. The court concluded that
damages were to be assessed as of three months after the breach of
contract occurred, and not when she lowered the price (six months
after the breach) or at the date of the hearing to assess the
damages (nine months after the breach).
The Cassidy decision makes it clear that, in order to
fairly compensate a seller in a falling market, the court may
deviate from the usual rule and assess damages at a date other than
the date of the breach, but that the court will also scrutinize the
seller's sales efforts and penalize a seller that fails to
account for a market downturn by lowering the sale price to a
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).