the subcontract was the balance owing, which was $2.404 million. He awarded
damages for breach of the subcontract in the amount of $6,291,680. The defendant appealed the damages award.
Held, the appeal should be allowed in part.
The trial judge erred by failing to apply the minimum performance principle in
respect of the DC services portion of the subcontract. In cases where the defaulting party had alternative modes of performing the contract, damages are calculated on the basis of the mode of performance least burdensome to the defaulting
party and least profitable to the non-breaching party. The defendant was entitled
to have the damages for its termination of the DC services portion of the subcontract calculated using the less burdensome formula in the termination for convenience clause, even though it terminated the entire subcontract and not just
the DC services portion of the subcontract. While the trial judge found that the
defendant did not act in good faith when invoking the termination for cause provision to end the entire subcontract, the application of the minimum performance
principle does not depend upon good faith conduct by the breaching party.
The trial judge performed an alternative calculation of damages in accordance
with the formula set out in the subcontract’s termination for convenience clause.
That clause provided that the terminated plaintiff “shall receive payment for the
last milestone preceding the termination”, in addition to further payments as set
out in the clause. The trial judge reasonably interpreted the clause as entitling
the plaintiff to a payment for the last milestone preceding the termination,
even though it had already received payment for that milestone. The trial judge’s
reasons disclosed that he was attentive to the plain language of the clause,
the terms of the subcontract as a whole and the factual matrix from which the
The AMS portion of the subcontract contained limitation of liability provisions
which limited damages to direct damages only and then went on to provide
“for greater certainty” that neither party would be liable to the other for “
indirect, special, consequential or punitive damages or for loss of profits”. The trial
judge’s interpretation of these terms was reviewable on a deferential standard.
It is not the case that a correctness standard applies to contractual interpretation
when a non-standard form contract uses words found in other contracts. The trial
judge reasonably interpreted the clause as only excluding damages for consequential or indirect lost profits and as not excluding lost profits which directly
resulted from the termination of the agreement.
Agribrands Purina Canada Inc. v. Kasamekas (2011), 106 O.R. (3d) 427, 
O.J. No. 2786, 2011 ONCA 460, 334 D.L.R. (4th) 714, 278 O.A.C. 363, 86 C.C.L. T.
(3d) 179, 87 B.L.R. (4th) 1, 203 A.C.W.S. (3d) 753; Hamilton v. Open Window
Bakery Ltd.,  1 S.C.R. 303,  S.C.J. No. 72, 2004 SCC 9, 235 D.L.R.
(4th) 193, 316 N.R. 265, J.E. 2004-470, 184 O.A.C. 209, 40 B.L.R. (3d) 1, 
CLLC ¶210-025, 128 A.C.W.S. (3d) 1111, varg on other grounds (2002), 58 O.R.
(3d) 767,  O.J. No. 1228, 211 D.L.R. (4th) 443, 157 O.A.C. 222, 112 A.C. W.S.
(3d) 860 (C.A.); Sattva Capital Corp. v. Creston Moly Corp.,  2 S.C.R. 633,
 S.C.J. No. 53, 2014 SCC 53, 2014EXP-2369, J.E. 2014-1345, 373 D.L.R.
(4th) 393,  9 W. W.R. 427, 59 B.C.L.R. (5th) 1, 461 N.R. 335, 25 B.L.R. (5th)
1, 358 B.C.A.C. 1, 614 W.A.C. 1, 242 A.C. W.S. (3d) 266, apld
Bhasin v. Hrynew,  3 S.C.R. 494,  S.C.J. No. 71, 2014 SCC 71,
 11 W.W.R. 641, 27 B.L.R. (5th) 1, 379 D.L.R. (4th) 385, 4 Alta. L.R. (6th)
219, 464 N.R. 254, 20 C.C.E.L. (4th) 1, 2014EXP-3530, J.E. 2014-1992, EYB
2014-244256, 245 A.C. W.S. (3d) 832; Biancaniello v. DMCT LLP (2017), 138 O.R.