Generally, a victim is bound to take appropriate measures to avoid or mitigate any prejudice suffered and resulting from the acts or behaviour of a faulty person. [cite: 1]
The principle behind this rule is enacted at article 1479 of the Quebec Civil Code: [cite: 2]
1479. A person who is bound to make reparation for an injury is not liable for any aggravation of the injury that the victim could have avoided. [cite: 2]
This being said, a recent unanimous decision from the Quebec Court of Appeal, issued on April 16th, 2021, with the reasoning which reminded us of the application of this rule in a context where the plaintiff is claiming damages for lost of profits quantum evaluation for the damages that can be awarded. [cite: 3]
The claim was in the context of a long term partnership project regarding the operation of a sugar shack which aborted after only a few months despite an agreement which was supposed to last for a much longer time. [cite: 4]
At first instance, in January 2019, judge Claude Dallaire had condemned the defendant who was owner of the sugar shack, to pay over $320 000 to the plaintiff to cover the profits of which he had been deprived because of the defendant’s decision not to proceed with their agreement concluded a few months beforehand. [cite: 5]
Following the trial judgment, the defendant brought an appeal based on many aspects of the judgment from Judge Dallaire, but amongst others, based on the conclusion granting the defendant with damages for the profits that they would have made from the agreement ( i.e. , a lease of 15 years), because this conclusion did not adequately apply the rule deriving from Article 1479 Q.C.C. [cite: 6]
In his reasoning, he used the words of Justice Dutil in her decision of 2014 in Lebel c. [cite: 7]
9067-1959 Québec inc . to summarize the « ins and outs » of this rule: [cite: 7, 8]
« Des enseignements de la jurisprudence et de la doctrine, on peut conclure que l’obligation de minimiser les dommages, édictée à l’article 1479 C.c.Q., possède les caractéristiques suivantes :
- Il s’agit d’une obligation de moyen; [cite: 8, 9]
- Elle s’évalue selon un test objectif : celui de la personne diligente et raisonnable placée dans les mêmes circonstances; [cite: 9]
- Elle s’applique tant en matière contractuelle qu’extracontractuelle; [cite: 10]
- Son non-respect constitue une faute (distincte d’une faute menant à un partage de responsabilité); [cite: 11]
- Cette faute empêche de qualifier les dommages qui en découlent (aggravation du préjudice) de « directs » ou de « prévisibles », faisant ainsi écran à la responsabilité du débiteur à cet égard. [cite: 12]
» [cite: 13]
Justice Bachand kept going by summarizing another decision from 2008 from the Court of Appeal, which illustrated well the impact of the rule in a context of a claim for loss of profit as part of call for tenders, in the decision of 3051226 Canada inc. [cite: 13]
c. Aéroports de Montréal. [cite: 14]
In this decision the Appellate Court decided that the appellant was only allowed to received an amount for damages corresponding to one third of the profits that would have allegedly been made if the contract had been attributed to the them, representing about $400 000. [cite: 14]
Initially, the parties had agreed to set to $1 200 000 the amount in profit that they would have made in the three months if the contract would have last. [cite: 14]
However, considering that the trial judge had realised that the appellant did not take appropriate measures to mitigate its prejudice suffered, he granted only one third of the set damages, and this decision was maintained on appeal. [cite: 15]
Justice Bachand was of the opinion that damages for the profits which would have materialized during the fifteen years that the lease was supposed to last was way too high, so the trial judge had committed an error on that level: [cite: 16]
[16] Le problème tient essentiellement au fait que la juge a concentré son analyse de la capacité de l’intimée à trouver une occasion d’affaires comparable sur le court terme. [cite: 16]
Bien qu’elle ait conclu que l’on ne pouvait reprocher à l’intimée de ne pas avoir trouvé — « dans les quelques années suivant la fin de sa relation avec [l’appelante], et avant l’audition de sa cause »[7] — une occasion d’affaires comparable, son jugement est muet sur les motifs pour lesquels l’intimée n’aurait pas été en mesure d’éviter l’aggravation de son préjudice à moyen et à long terme. [cite: 17]
Puisque, sur ce point, « la décision [de la] juge de première instance ne suffit pas à expliquer le résultat aux parties »[8], et puisque notre Cour « [ne] s’estime [pas] en mesure de l’expliquer »[9], cette omission constitue une erreur de droit. [cite: 18]
[17] Il s’agit de surcroît d’une erreur qui, à la réflexion, s’avère déterminante. [cite: 19]
[18] Certes, l’intimée a raison de souligner qu’il revient généralement à la personne fautive de démontrer non seulement que la victime a omis de prendre des mesures raisonnables en vue de minimiser son préjudice, mais aussi que cette dernière avait la possibilité de le minimiser[10]. [cite: 20]
Il est également vrai que l’appelante n’a pas administré une preuve détaillée quant aux occasions d’affaires qui étaient susceptibles de s’offrir à l’intimée durant les années suivant l’échec du projet de partenariat. [cite: 21]
[19] Toutefois, même si l’absence d’une telle preuve pourra jouer en défaveur de la personne fautive, elle ne lui sera pas nécessairement fatale. [cite: 22]
La raison tient au fait qu’il est parfois possible d’inférer du contexte d’une affaire donnée et des autres éléments de preuve au dossier que la personne fautive cessera de répondre de l’aggravation du préjudice subi par la victime à partir d’une certaine date[11]. [cite: 23]
This last paragraph of Justice Bachand’s reasoning is important as it highlights that the context surrounding the affair is important for the parties when quantifying the damages. [cite: 24]
Understanding and considering the context of the case and the facts surrounding the parties allows the court to decide, by exercising its discretion, when exactly did the victim of the case start being responsible or liable of a portion of the prejudice suffered and claimed. [cite: 25]
There is sometime a lack of evidence by the defendant of all the things that the plaintiff did not do and could have done to mitigate or avoid a part of the prejudice suffered and claimed. [cite: 26]
But it is important to understand that a lack of evidence is not fatal in such a case, because the Court can then exercise its discretion to reduce the amount that should be awarded in damages to a more reasonable level. [cite: 27]
As Justice Bachand said in his reasoning, the trial judge Dallaire had decided that the impossibility from the victim to reduce the prejudice suffered was a relative question, so simply limited by time. [cite: 28]
Justice Bachand therefore set at three and a half years the period after which the victim became liable for the aggravation of the prejudice. [cite: 29]
This therefore brough the amount of damage granted at trial for a period of 15 years down to a proportional amount for the period set at trial. [cite: 30]
On this subject, let us note the authors Jobin and Vézina who opine that the obligation to mitigate damages is applicable on both contractual and civil liability cases, and it is based on the principles that debtors shall only compensate what is a direct and immediate result of the fault and that each party has an obligation of good faith in the performance of their obligations. [cite: 31]
The Court will therefore use its discretion for a situation where a plaintiff is claiming a lost of profits as damages but stayed still while suffering the said damages claimed, and without making the slightest effort to find an alternative source of revenues when needed. [cite: 32]
The burden of proof that the victim could have done something reasonable to avoid and mitigate damages lies on the defendant, but the Court has a discretionary power based on the context and the facts of the case to adjust the quantum of damages to award as a result. [cite: 33]
The court’s discretion to adjust damages claimed based on the plaintiff/victim’s actions is therefore very important to consider when analysing a file and advising a client. [cite: 34]
For more information, please do not hesitate to contact me or one of my colleagues at Gascon & Associates. [cite: 35]
By Frederic Savoie