T-1004-87
Redpath Industries Limited (Plaintiff)
v.
The Ship Cisco and Kim-Crest SA. (Defendants)
INDEXED AS.' RP,DPATH INDUSTRIES LTD. Y. Cisco (TNI) (T.D.)
Trial Division, Rouleau J.—Montréal, January 7, 21,
22, 23; Ottawa, June 12, 1992.
Maritime law — Carriage of goods — Action for damages to
portion of shipment of raw sugar delivered in damaged state —
Contract providing no sugar with polarity under 93° to be
delivered — After contamination by seawater, polarity of sugar
below minimum — Plaintiff refusing to accept sugar — Only
alternative to sell to animal feed processors for 25% of value
— Deal negotiated with insurers whereby plaintiff purchasing
sugar for 50% of value and processing it by mixing small
amounts with sound sugar — Calculation of damages — Dam
ages assessed when loss occurs i.e. date of delivery of dam
aged cargo — That plaintiff eventually able to refine sugar
irrelevant — Arrived Sound Market Value less Arrived Dam
aged Market Value test applied — Subject to plaintiff s duty to
mitigate damages — Damages assessed at 50% of invoice
value plus additional expenses of discharging damaged cargo.
This was an action against a ship and her owner for damages
to a portion of a cargo of raw bulk sugar shipped from Guyana
to Toronto. Plaintiff, Redpath, was the purchaser of the goods.
Two other plaintiffs—the vendor and its agent—discontinued
their action prior to trial. Raw sugar is traded on the basis of its
polarity (percent of sucrose content), and 96° polarity is the
accepted standard. On October 21, 1986, the plaintiff pur
chased approximately 10,000 metric tons of raw sugar at
$246.29 per metric ton. The contract stipulated that the raw
sugar would have a guaranteed minimum polarization of 97.5°,
with deductions for each degree below that amount. It further
provided that "no sugar below 93° shall be delivered unless on
discount terms mutually agreed between Seller and Buyer."
The ship was damaged by ice encountered during the voyage
and some of the sugar was contaminated by seawater, reducing
its polarity below the guaranteed minimum. Under standard
C.I.F. terms, Redpath had assumed the risk of loss upon load
ing of the vessel. It was therefore required to pay the full
amount for the shipment as if it had been received in sound
condition. The plaintiff refused to accept the damaged sugar, as
it was entitled to do under the terms of the contract. There was
no market for the damaged sugar, except to animal feed
processors who were prepared to pay 25% of its value. Under
these circumstances, the plaintiff and the insurers negotiated
acceptance of the damaged cargo for 50% of the sound market
value. The plaintiff eventually processed all the damaged sugar
by mixing small amounts of the damaged sugar with sound
sugar.
The only issue was the calculation of damages. The plaintiff
submitted that the traditional method for measuring damages
in carriage of goods cases was "the fair market value of the
goods in sound condition at the port of destination less the fair
market value of the goods in their damaged condition" (the
"Arrived Sound Market Value or A.S.M.V." test). The defend
ants submitted that since the plaintiff was able to refine all the
damaged sugar it has not suffered economic loss, and that there
should be no award of damages, or alternatively a minimal
award. It was further argued that any damages should be
assessed on the principle of restitutio in integrum (the purpose
of any award should be to place the innocent party in the posi
tion that it would have occupied had the contract been success
fully carried out by both parties). If the fair market value test
was applied, the plaintiff would be placed in a better position
than it would have been in had the event giving rise to, the
action not occurred, thereby violating the restitutio in integrum
principle.
Held, plaintiff should have judgment for 50% of the invoice
value together with an amount representing the additional
expenses of discharging the damaged cargo and compound
interest at 9% per annum.
Damages are to be assessed at the moment the loss occurs.
Calculation of the loss occurs on the date the cargo should
have arrived, whether lost or delivered late, and in cases where
the cargo is delivered in a damaged condition, on the date of
actual delivery. Once it has been established that a loss has
occurred, circumstances peculiar to the plaintiff, not communi
cated to the defendant, are excluded in assessing the quantum
of damages. That the plaintiff was eventually able to refine the
damaged cargo was irrelevant to the question of the quantum
of damages. The A.S.M.V. test was applicable.
That test is subject to exceptions, including the duty on a
wronged plaintiff to mitigate his damages. The damaged sugar
was not in fact sold to an animal feed processor for 25% of its
value, but to Redpath for 50% of its sound market value. In so
doing, the plaintiff was fulfilling a duty to mitigate potential
losses. The defendants cannot be called upon to pay for losses
which were avoidable and were not incurred.
CASES JUDICIALLY CONSIDERED
APPLIED:
Rodocanachi, Sons, and Co. v. Milburn Brothers (1886),
6 Asp. M.L.C. 100 (C.A.); Czarnikow (C.) Ltd. v. Koufos,
[1969] 1 A.C. 350 (H.L.); The "Arpad" (1934), 49 L1.L.
Rep. 313 (C.A.); Obestain Inc. v. National Mineral Devel
opment Corporation Ltd. (The Sanix Ace), [1987] 1
Lloyd's Rep. 465 (Q.B.); Jamal v. Moolla Dawood, Sons
& Co., [1916] 1 A.C. 175 (P.C.); Red Deer College v.
Michaels, [1976] 2 S.C.R. 324; (1975), 57 D.L.R. (3d)
386; [1975] 5 W.W.R. 575; 75 CLLC 14,280; 5 N.R. 99.
CONSIDERED:
Amstar Corporation v. MN Alexandros T, [ 1979] A.M.C.
1975 (U.S. Dist. Ct.).
REFERRED TO:
Wertheim v. Chicoutimi Pulp Company, [1911] A.C. 301
(P.C.).
AUTHORS CITED
Carver's Carriage by Sea, Vol. 2, 13th ed., London:
Stevens & Sons, 1982.
Tetley, William Marine Cargo Claims, 3rd ed., Montréal:
Editions Yvon Blais, 1988.
ACTION for damages for loss of a portion of a
shipment of raw bulk sugar. Action allowed and
value of damaged cargo assessed at 50% of invoice
value.
COUNSEL:
Vincent M. Prager and Mireille A. Tabib for
plaintiff.
Victor DeMarco and David G. Colford for
defendants.
SOLICITORS:
Stikeman, Elliott, Montréal, for plaintiff.
Brisset Bishop, Montréal, for defendants.
The following are the reasons for judgment ren
dered in English by
ROULEAU J.: The plaintiff, Redpath Industries Lim
ited (hereinafter referred to as "Redpath"), seeks to
recover from -the defendant, Kim-Crest S.A., dam
ages for the loss of a portion of a cargo of raw bulk
sugar shipped from Guyana to Toronto aboard Kim-
Crest's vessel the Cisco. By notice dated Decem-
ber 20, 1991, the plaintiffs, Guyana Sugar Corpora-
tion Ltd. and Bookers Sugar Co. Ltd., discontinued
their action herein.
At the opening of trial, counsel for the plaintiff
moved to amend the statement of claim by adding a
demand for compound interest if it was to be success
ful. There were no objections from the defendants;
the amendment is granted.
For reasons that will be apparent later, some dis
cussion or explanation of raw sugar and its properties
is necessary. In this regard, I refer to the remarks of
Harvey D.J. in Amstar Corporation v. MN Alexan-
dros T, [ 1979] A.M.C. 1975 (U.S. Dist. Ct.), at
page 1982:
In its raw state, sugar consists of sucrose, invert sugars and
non-sugar solids. When a refinery like Amstar purchases raw
sugar, it is interested in the sucrose it is buying and not in any
of the other elements. The refining process separates the
sucrose from the non-sucrose elements of raw sugar and then
uses the sucrose to turn out refined sugar products. Accord
ingly, the price of raw sugar is determined by the percentage of
sucrose it contains. The term "polarity" refers to the percent of
sucrose present in raw sugar. The higher the polarity, the
greater the percent of sucrose.
The experts who gave evidence before me are in
agreement that raw sugar is traded on the basis of its
polarity and 96° polarity (96% sucrose content) is the
accepted standard. It is to be noted however, that raw
sugar may vary up or down from a polarity of 96°.
Most standard form contracts contain a clause which
allows for an adjustment in the agreed price, either up
or down, depending on the sucrose content and
weight on delivery. Accordingly, each shipment of
raw sugar, as it is unloaded at a refinery, is weighed
and samples are taken at regular intervals for labora
tory analysis with regards to polarity.
On October 21, 1986, Redpath purchased from the
plaintiff Bookers Sugar Co. Ltd. (acting as agents for
the plaintiff Guyana Sugar Corporation Ltd.), approx
imately 10,000 metric tons of raw sugar to be shipped
during April and May of 1987. Under the terms of
the contract, Redpath was to pay $246.29 C.I.F.F.O.
per metric ton on a free out basis, which amount
included cost, insurance, and freight. The contract
stipulated that the raw sugar would have a guaranteed
minimum polarization of 97.5° at the time of ship
ment. The following clause dealt with polarity and
final invoiced price:
For each full degree above 96° add 1.4%
For each full degree below 96° down to and including 95°
deduct 1.5%
For each full degree below 95° down to and including 93°
deduct an additional 2%
Fractions of degrees to be calculated in the same proportions.
No sugar below 93° shall be delivered unless on discount
terms mutually agreed between Seller and Buyer. [Emphasis
added.]
On April 12, 1987, 5,444.56 metric tons of raw
sugar were loaded into two holds on board the vessel
Cisco at Georgetown, Guyana, and the ship sailed for
Toronto. Under standard C.I.F. terms, Redpath
assumed the risk of loss upon loading of the vessel in
Guyana. There is no dispute that the cargo was in
good condition on loading. The ship encountered
floating ice en route to Toronto and it was later dis
covered that damage had occurred to number 1 hold
and seawater had been admitted to a depth of approx
imately 2.4 meters. This fact was radioed immedi
ately to all interested parties and their insurers.,
The Cisco, arrived at Toronto on April 27, 1987 at
approximately 00:47 hours and moored at Redpath's
discharging berth. Shortly thereafter, representatives
of the parties boarded the vessel: Mr. Tsang, a marine
surveyor engaged by Lloyd's of London, the insurers
of the cargo and Mr. J. Digby, a surveyor represent
ing Shipowners Assurance Management Ltd. Their
job was to investigate the nature, extent and cause of
damages.
Since there was no damage to the cargo in number
2 hold, discharge commenced. Damage to the cargo
in number one hold was immediately apparent on vis
ual inspection. Several photographs of the damaged
cargo were submitted as evidence.
In the end result, 4,219.135 tons of sound sugar
were unloaded from the Cisco and received by
Redpath. Laboratory tests revealed that this sugar had
an average polarization factor of 97.980°. Approxi
mately 1,214.485 metric tons of damaged cargo were
unloaded from number l hold. This sugar had an
average polarity of 92.563°. Analysis confirmed that
the sugar had been contaminated by seawater. Not
withstanding this damage, Redpath was required to
pay Bookers Sugar Corporation on the basis of hav
ing received 5,433.791 metric tons of sugar in sound
condition. The final invoice dated June 19,1987, indi
cates that Redpath paid the sum of $1,371,776.48.
There is no doubt that the carrier is responsible for
the damage. The defendants do not dispute the evi
dence which was supported by photographs and
reports submitted by the two marine surveyors.
There appears to be no disagreement that the plain
tiff is entitled to be reimbursed for the extra expenses
incurred in unloading the damaged cargo. As Mr.
Digby wrote at page 5 of his report:
Thereafter the stevedores were engaged in discharging the
damaged quantity of sugar from the vessel's no. 1 hold, which
became a slow and laborious process due to the fact that a con
siderable quantity of water had obviously come in contact with
this sugar. During the course of discharging it became neces
sary to stop work from time to time to clean up the conveyor
belts as well as the adjacent areas, because the sugar in its wet
condition was tending to overload the electrical motors and
other equipment.
Together with the damage to the cargo, Redpath
claims the amount of $25,990.89 for extra unloading
expenses as follows:
Cost for clean up of scales and conveyors $ 6,162.72
Additional costs from Empire Stevedores and
Seaway Terminals for discharging
damaged product $ 18,675.51
Additional costs for weigh scale personnel 693.66
Additional costs from Burns Security 459.00
TOTAL EXPENSES $ 25,990.89
The dispute arises in the calculation of damages to
be awarded for the sugar which arrived in a damaged
state.
From the outset Redpath had taken the position
that they would not accept the damaged sugar which
they were entitled to do under the terms of the con
tract reproduced earlier in these reasons which said
no sugar below 93° shall be delivered. They advised
Mr. Tsang, representing the cargo insurers, to look
for other buyers. This right to refuse was confirmed
by the surveyor to his principals by telex as well as in
a letter dated May 6, 1987. Mr. Makin, who was then
the Vice-President of Redpath in charge of buying
raw sugar, testified that at the time, the refinery was
operating at 120% capacity and they had sufficient
inventory of raw sugar on hand to meet their needs
and therefore they were not interested in accepting
the damaged cargo.
In support of Mr. Makin's testimony, Mr. Hughes,
Vice President for Corporate Purchasing of raw sugar
for Lantic Sugar Ltd., a competitor, testified on
behalf of Redpath that he was aware that the Redpath
refinery was operating at 120% capacity and it would
not have been wise to add damaged sugar to the pro
cess. This could cause the "melt rate" to go down, the
output could conceivably diminish and undoubtedly
production costs would increase. He also pointed out
that this saturated sugar could create a danger of fer
mentation and could bring about an unwarranted risk
to Redpath.
As a result, Lloyd's of London, the cargo under
writers were then effectively in possession of the
sugar and were entitled to dispose of it as they saw
fit. Several options were open to them. As explained
at page 2 of his affidavit, the defendants' expert wit
ness, Mr. Calder, a U.S. commodity dealer with over
40 years' experience:
... if, as in this instance i.e. damage by seawater, the foreign
material (impurity) is not harmful or dangerous, the insurance
company and the refiner may negotiate acceptance of the dam
aged sugar at an agreed, commercially reasonable discount.
Failing this and/or alternatively, the insurance company may
try to negotiate re-sale/delivery to a nearby refiner, if one
exists, at a mutually agreed similarly discounted price. The
insurer also has an option of locating other buyers, such as an
alternative user, eg: animal feed processors/producers and/or
commercial salvers.
Mr. Hughes further testified that while Lantic
Sugar Ltd. had a refinery in Oshawa, this refinery
was not capable of handling sugar with a polarization
factor of less than 99°. Their Montréal refinery,
which could have processed the sugar in its damaged
state, was running at 100% capacity; a 6 1/2 week
strike had just ended and inventories were very high.
Mr. Digby, a surveyor representing Shipowners
Assurance Management Ltd., indicated in his report
to his principals that the depreciation could very well
reach 75% of value. Though he was not authorized to
negotiate a settlement, he felt that 50% was reasona
ble since the claim had reached the vicinity of
$300,000.
The uncontested evidence reveals that there was no
market for the damaged sugar except to animal feed
processors who were prepared to pay 25% of its
value. Given these circumstances, Redpath and the
insurers were able to negotiate acceptance of the
damaged cargo which had been unloaded and stored
in a separate warehouse. By facsimile dated May 8,
1987, they notified the insurer's agents that they were
prepared to pay $125.52 per metric ton, which sum
represented 50% of the sound market value
C.I.F.F.O.B. Toronto price listed on April 27, 1987,
less expenses incurred in discharging this sugar. This
offer was formally accepted by the insurers on May
15, 1987. Redpath was eventually able to process all
the damaged sugar by mixing small amounts of the
damaged sugar with sound sugar.
The plaintiff now seeks to be indemnified for the
losses it sustained by virtue of the carrier's fault.
Counsel for the plaintiff submits that the traditional
method for measuring damages in carriage of goods
cases is "the fair market value of the goods in sound
condition at the port of destination less the fair mar
ket value of the goods in their damaged condition":
Carver's Carriage by Sea, 13th ed., Stevens & Sons,
London, 1982, Vol. 2, at pages 1501-1502. To quote
from Tetley W., Marine Cargo Claims, 3rd ed., at
pages 323 and 324:
The parties to a contract of carriage know and are expected
to know that, if the cargo is damaged or lost, the claimant
should be recompensed for the value of the damaged or lost
cargo at the time and place of the delivery or when it should
have been delivered. The above rule is known as Arrived
Sound Market Value (A.S.M.V.) less Arrived Damaged Market
Value (A.D.M.V.) and such restitutio in integrum requires no
"special circumstances" being obviously in the reasonable con
templation of the parties at the time of contracting.
Furthermore, it was submitted that this test is par
ticularly appropriate when a commodity such as raw
sugar is involved, since it is traded daily on an open
exchange and the daily spot price for the commodity
can be readily ascertained: Amstar Corporation v.
M/V Alexandros T, supra.
In response, the defendants submit that the plaintiff
has suffered no economic loss, that they were able to
refine all the damaged sugar and that therefore there
should be no award of damages, or alternatively, if
damages are to be assessed, they should be minimal.
Counsel for the defendants also argued that the fair
market value test should not be followed in this par
ticular case and that any damages that may be
assessed, should be based on the principle of restitu-
tio in integrum. This principle stands for the proposi
tion that the purpose of any award should be to place
the innocent party in the position that it would have
occupied had the contract been successfully carried
out by both parties: Wertheim v. Chicoutimi Pulp
Company, [1911] A.C. 301 (P.C.). In support of this
submission, counsel for the defendants referred me to
the following passage from Tetley W., Marine Cargo
Claims, supra, at page 324:
A.S.M.V. less A.D.M.V. is only a rule of thumb and is subject
to many exceptions in order to bring it within the basic princi
ple of restitutio in integrum.
It was submitted that if the fair market value test
was applied in the present instance, the plaintiff
would be placed in a better position than it would
have been had the event giving rise to the action not
occurred thereby violating the restitutio in integrum
principle.
With all due respect, counsel for the defendants
seems to be overlooking the overriding principle that
damages are to be assessed at the moment the loss
occurs.
In Rodocanachi, Sons, and Co. v. Milburn Brothers
(1886), 6 Asp. M.L.C. 100 (C.A.), the shipowner
failed to deliver the cargo. The Court concluded that
the proper measure of damages was the market value
of the goods at the place where, and the time at which
they ought to have been delivered, less what the
plaintiff would have had to pay in order to get them.
In Czarnikow (C.) Ltd. v. Koufos, [1969] 1 A.C.
350 (H.L.), a cargo was delivered, albeit late. In
breach of the charterparty, the ship deviated from its
voyage and as result, the ship arrived at its final desti
nation on December 2 instead of its scheduled date of
arrival, November 22. The spot price for sugar had
fallen during the months of October and November,
reaching its low point in December. The House of
Lords held, that by virtue of the deviations, the ship
was in breach of its contract and that the charterers
were entitled to recover, as damages, the difference
between the price of the sugar when it should have
been delivered and the price when it actually was
delivered.
In Amstar Corporation v. MN Alexandros T,
supra, a cargo of sugar was delivered on time but in a
damaged condition. Damages were assessed on the
basis of the fair market value of the goods in sound
condition ie. the spot price on arrival, less the fair
market value of the goods in their damaged condi
tion. The plaintiff was also compensated for the addi
tional expenses incurred in discharging the damaged
cargo.
These authorities stand for the proposition that the
calculation of the loss occurs on the date the cargo
should have arrived whether lost or delivered late;
and in cases where the cargo is delivered in a dam
aged condition, on the date of actual delivery.
Furthermore, once it has been established that a
loss has occurred, circumstances peculiar to the
plaintiff, not communicated to the defendant, are
excluded in assessing the quantum of damages: The
"Arpad" (1934), 49 Ll.L. Rep. 313 (C.A.). This prin
ciple was followed in Rodocanachi, supra. The own
ers of the shipment had pre-sold the cargo for a price
which was less than the market price on arrival at the
port of discharge. Lord Esher, M.R. in his reasons
states, at page 103:
The general rule is now that any intermediate sale or purchase
of the goods is not to be taken into account, but is to be
regarded as an accidental circumstance not affecting the origi
nal contract. Mr. Bigham's contention is, that the market price
is to be taken if the plaintiff has sold the goods at a higher
price than that; but that, if he has sold the goods at a price
below the market price, then he cannot recover more than the
contract price. That would be a very unequal rule. The mode of
estimating the value of the goods is to take the market price,
independently of any circumstances peculiar to the plaintiff.
That gives the value of the goods; not the damages. Then the
damages have to be estimated. The plaintiff would get the
goods of a certain value, but, in order to get them, he would
have to pay the accruing freight, for which there is a lien upon
the goods. The damages, therefore, would be, not the price at
which he had contracted to sell the goods, less the accruing
freight, but the market price, less the accruing freight. [Empha-
sis added.]
In Obestain Inc. v. National Mineral Development
Corporation Ltd. (The Sanix Ace), [1987] 1 Lloyd's
Rep. 465 (Q.B.), the charterers were carrying a cargo
of 7,558 tonnes of DIR pellets. These pellets were
highly reactive to water and if wetted, they would re-
oxidate producing heat which could lead to spontane
ous combustion. The charterers had sold the cargo to
11 end users. Under these contracts, while property
did not pass, the risk in the goods sold passed on
loading. Cargo in two holds was damaged, water hav
ing entered the holds through corroded hatches. In
the end only 2,000 tonnes was salvageable. The ship-
owners contended that the charterers were only enti
tled to recover nominal damages because they had
suffered no recoverable loss since they had been able
to collect the price for the goods from the end users.
The Court held that the fact that the claimant had
been paid by the end users did not disentitle him from
recovering full damages based on the sound value on
arrival. If the claimants had released the end users
from their contracts and had instead chosen to deal
directly with the cargo insurers, the carriers could not
have complained.
Counsel for the plaintiff submitted that, once the
shipment of damaged sugar arrived, the fact that they
were eventually able to refine the damaged cargo, is
irrelevant to the question of the quantum of damages.
I agree. In Jamal v. Moolla Dawood, Sons & Co.,
[ 1916] 1 A.C. 175 (P.C.), Lord Wrenbury states, at
page 180:
The seller's loss at the date of the breach was and remained the
difference between contract price and market price at that date.
When the buyer committed this breach the seller remained
entitled to the shares, and became entitled to damages such as
the law allows. The first of these two properties, namely, the
shares, he kept for a time and subsequently sold them in a ris
ing market. His pocket received benefit, but his loss at the date
of the breach remained unaffected.
I am satisfied that A.S.M.V. [Arrived Sound Market
Value] is the proper test to be applied. The question
then becomes what was the fair market value of the
damaged cargo?
Again the parties are in dispute. Counsel for the
defendants submitted that the value of the sugar
could be readily ascertained according to a sliding
scale formula. In this regard, they introduced expert
evidence in the form of an affidavit and testimony by
Mr. Calder. At page 3 of his affidavit, Mr. Calder
states:
The damaged sugar polarization having been ascertained as
92.5 degrees a fair and reasonable settlement based on the con
tract as amended, would appear to start as per the above scale,
i.e. 1.5% (of the 96 degrees contract basic price of
$246.298833 per M/T) for the degree between 96 degrees and
95 degrees, an additional 4% for the 2 degrees from 95 degrees
to 93 degrees and an additional discount for the .5 degrees
from 93 degrees to 92.5 degrees (.5% of the previous 2% per
degree for degrees from 95 degrees to 93 degrees to possibly .5
of 5% which is the U.S. Refiner scale at this level). Accord
ingly, I believe that the maximum allowable discount should
be equivalent to Can. $35,895.15 as per the attached calcula
tion.
In reaching this conclusion, Mr. Calder admitted
that he summarized the standard U.S. formula
employed for purchasing sugar. This U.S. formula
was not incorporated as a term of the contract entered
into for the purchase of this particular shipment of
sugar. In fact, the formula to be employed as repro
duced earlier in these reasons, was quite specific and
on cross-examination, Mr. Calder admitted that the
formula specified in the contract precluded the appli
cation of any formula for sugar below 93° polarity.
As stated earlier in these reasons, efforts were
made to find a buyer for the damaged sugar. The only
market found was for animal feed. The parties agree
that the value of the sugar for use as animal feed
would have been $43.93 per metric ton. The plaintiff
now submits that the value of the damaged cargo be
calculated as follows:
Sound Market Value less Damaged Market Value:
(a) Sound:
$225/mt (at 96°) x 1,214.04 mt $273,159.00
plus
1.7° polarity x 0.014 (premium)
x $225. x 1,214.04 mt = $ 6,501.18
$279,660.18
minus
(b) Damaged:
$43.93/mt x 1,214.04 mt = $ 53,332.78
$226,327.40
I am not satisfied that Redpath is entitled to dam
ages in the amount of $226,327.40. As stated earlier
in these reasons, the A.S.M.V. less A.D.M.V.
[Arrived Damaged Market Value] rule is subject to
exceptions. One of those exceptions is the duty
imposed by law on a wronged plaintiff to mitigate his
damages. As the Supreme Court of Canada noted in
Red Deer College v. Michaels, [1976] 2 S.C.R. 324,
at page 330:
The primary rule in breach of contract cases, that a wronged
plaintiff is entitled to be put in as good a position as he would
have been in if there had been proper performance by the
defendant, is subject to the qualification that the defendant can
not be called upon to pay for avoidable losses which would
result in an increase in the quantum of damages payable to the
plaintiff. The reference in the case law to a "duty" to mitigate
should be understood in this sense.
In the case at bar, the damaged sugar was not in
fact sold for $43.93 per metric ton to an animal feed
processor. The insurers were able to negotiate a deal
with Redpath whereby it purchased the sugar for 50%
of its sound market value. I am satisfied that, in so
doing, the plaintiff was mitigating potential losses,
which it has a duty to do. The defendants cannot now
be subsequently called upon to pay for losses which
were avoidable and, in fact, were not incurred.
Accordingly, I find that the value of the damaged
cargo should be calculated as follows:
50% of Invoice Value, As Agreed Between Underwriters and
Redpath:
invoice value (Exhibit P-1, para 9)
$304,927.24 x 50% = $152,463.00
Additionally, the plaintiff is entitled to the sum of
$25,990.89 which represents the additional expenses
incurred in discharging the damaged cargo.
The plaintiff also claimed increased expenses for
"bleeding" or blending the damaged sugar into the
refinery system. I have no specific evidence to indi
cate that there were any extra expenses involved and
accordingly none shall be awarded. At the opening of
trial, counsel for the plaintiff moved to amend the
statement of claim seeking interest; interest is hereby
awarded at the rate of 9% per annum compounded
from the date of the loss to the date of payment of
this judgment. Costs to the plaintiff.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.