Southcott Estates Inc v Toronto Catholic District School Board
Southcott Estates Inc v Toronto Catholic District School Board, , is a landmark case of the Supreme Court of Canada in the area of commercial law, with significant impact in the areas of: Background. Southcott Estates Inc sued the Toronto Catholic District School Board for specific enforcement of a contract to sell it of land. Southcott Estates Inc was a subsidiary of Ballantry Homes Inc, a developer, and special purpose entity created just for purchasing and developing the land. The deal was conditional upon Southcott paying a 10% deposit, and the Toronto  School Board getting severance permission from Toronto's Committee of Adjustment before a certain date. However, the Committee refused without reviewing a development plan for the land, which meant severance was not granted in time. Southcott sued for specific performance or damages. At trial, Southcott stated it never had any intention to mitigate its loss and had not tried, that it had no assets other than the deposit from Ballantry Inc for the deposit, and it was never going to purchase any other land. The courts below. At the Ontario Superior Court of Justice, Spiegel J held that: He rejected  the Board's submission that Southcott had mitigated damages through several purchases subsequent to the breach of the agreement, declaring: The Board appealed to the Ontario Court of Appeal, where Sharpe JA held that: As a result, nominal damages were awarded in the amount of $1. Leave to appeal and cross-appeal the decision were granted by the Supreme Court of Canada in November 2011: At the Supreme Court. In a 6-1 ruling, the appeal was dismissed with costs. As it was therefore unnecessary to consider the cross-appeal, it was dismissed without costs. Majority opinion. Karakatsanis J  began by summarizing the principles for mitigation previously adopted by the Court in "Asamera Oil Corporation Ltd. v. Sea Oil & General Corporation" where Lord Haldane's observation was endorsed: The principles have since been refined in further cases at the Court, as well as at the Federal Court of Appeal. Southcott had argued that, as a single-purpose company, it was impecunious and unable to mitigate without significant capital investment of the parent company or without the corporate mandate to do so. In addition, it would be reasonably foreseeable to those contracting with a single-purpose corporation that such an  entity would have finite resources and a confined corporate mandate. This was held to be insufficient: "Asamera", when read together with "Semelhago v. Paramadevan", holds that it "cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases," and specific performance will be available only where money cannot compensate fully for the loss, because of some “peculiar and special value” of the land to the plaintiff. Dissent. McLachlin CJ believed that the trial judge was correct in finding in fact that the Board had  not proved that Southcott had an opportunity to mitigate, which was sufficient to dispose of the appeal. She would have reversed the Court of Appeal's ruling and restored the original verdict. She saw no basis on which to conclude that Southcott acted unreasonably in maintaining its suit for specific performance instead of mitigating its loss: Impact. The decision has raised significant debate on many of the issues it discussed: