What are the consequences of a breach of contract resulting in a plaintiff's interest on a first mortgage?

British Columbia, Canada


The following excerpt is from Elliott v. Simms, 1982 CanLII 614 (BC SC):

The plaintiff claims other consequential damages itemized in Ex. 4. Some of them are too remote. Damages for breach of contract must be such as were foreseeable as the result of the breach at the time the contract was made. To return to first principles, the rule was expressed in Hadley v. Baxendale (1854), 9 Exch. 341, 156 E.R. 145, as being damages which were fairly and reasonably considered as arising naturally from the breach of the contract or such as may reasonably be supposed to have been in the contemplation of both parties as the probable result of its breach. In the case at bar, it must be considered as natural that if the defendant breached this contract, the plaintiff would be faced with the continued costs of carrying the property. The defendant must be taken to have known that that would include taxes and the monthly assessment levied on the condominium unit for operating and maintenance of the development as a whole. The defendant knew she was buying a unit in a complex. I think she must also be taken to have known that in the event of her breach, the premises would be offered for sale again and that to keep them open for that purpose, continued hydro bills would be incurred. With respect to the plaintiff's claim for interest paid on the loan from her father-in-law which in turn was used to retire the existing first mortgage when it matured in July, I think that head of damages too remote. The interim agreement shows that the property was to be bought on the basis of cash for clear title. There is no evidence to show that the defendant knew the plaintiff had a mortgage which was falling due. Similarly, there is no evidence to show that the defendant knew that the plaintiff planned to purchase a new home and thus that failure on the defendant's part to pay for this property should mean that the plaintiff would have to raise funds by way of another mortgage to pay for her new home. The plaintiffs need for money to buy her new home and the interest she incurred when she was unable to pay off others of her ordinary bills stems from her lack of alternate funds and is remote from the defendant's breach of contract. Since I am of the view that the payments on the new mortgages placed by the plaintiff after the defendant's breach are not recoverable from the defendant, it follows also that the plaintiff's solicitors and appraisal costs of obtaining those mortgages are likewise not recoverable.

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