Can a plaintiff recover damages for mental distress arising out of circumstances that aggravate the breach of contract?

Ontario, Canada


The following excerpt is from Tim Ludwig Professional Corporation v. BDO Canada LLP, 2017 ONCA 292 (CanLII):

In Fidler, at para. 52, the court distinguished contract damages for intangible harm from damages for intangible harm arising out of circumstances that aggravate the breach of contract, referring to the latter as “true aggravated damages”: [These damages] are not awarded under the general principle of Hadley v. Baxendale, but rest on a separate cause of action — usually in tort — like defamation, oppression or fraud. The idea that damages for mental distress for breach of contract may be awarded where an object of a contract was to secure a particular psychological benefit has no effect on the availability of such damages. If a plaintiff can establish mental distress as a result of the breach of an independent cause of action, then he or she may be able to recover accordingly. The award of damages in such a case arises from the separate cause of action. It does not arise out of the contractual breach itself, and it has nothing to do with contractual damages under the rule in Hadley v. Baxendale.

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