



COURT OF APPEAL FOR ONTARIO

CITATION: Lopes Limited v. The Guarantee Company of North
    America, 2019 ONCA 853

DATE: 20191028

DOCKET: C66643

Feldman, Fairburn and Jamal JJ.A.

BETWEEN

Lopes Limited

Plaintiff (Respondent)

and

The Guarantee Company of
    North America
and Gorf
Manufacturing/Contracting Ltd.

Defendant (Appellant)

G.L. Sonny Ingram, for the appellant

Kenneth W. Movat and Maxwell Reedijk, for the respondent

Heard and released orally: October 23, 2019

On appeal from the
    judgment of Justice Peter J. Cavanagh of the Superior Court of Justice, dated January
    31, 2019, with reasons reported at 2019 ONSC 804, 89 B.L.R. (5th) 339.

REASONS FOR DECISION

[1]

This is an appeal from a decision granting the
    respondent summary judgment under a labour and materials payment bond issued by
    the appellant.

[2]

The respondent claimed against the appellant
    under a payment bond for unpaid invoices for work completed under a subcontract
    with Gorf Manufacturing/Contracting Limited (Gorf), the general contractor
    for a construction project. Gorf abandoned the project and a new general
    contractor was engaged. The respondent then successfully bid to complete work
    that remained under the original subcontract and was paid more for the
    completion subcontract than it would have received for that work under the
    original contract with Gorf. The respondent nevertheless claimed against the
    appellant under the payment bond for the unpaid invoices for the completed work
    for Gorf.

[3]

The appellant did not dispute that the claim
    fell within the terms of the payment bond, but argued that the respondent was
    not entitled to claim thereunder because it had not suffered any damages. It asserted
    that the respondent had fully mitigated its damages by concluding the
    completion subcontract for the remaining work on terms more favourable than
    under the original subcontract. The motion judge rejected this argument and
    granted summary judgment under the payment bond in the amount of $183,824.23.

[4]

The appellant says that the motion judge erred
    in his application of the principles of mitigation of damages to the facts of
    this case. It asserts that the amounts received under the completion subcontract
    should be considered as mitigation of any damages incurred for the unpaid work,
    and that a trial was needed to determine the damages actually incurred by the
    respondent. We do not agree.

[5]

The case law is clear: the plaintiff [has] the duty
    of taking all reasonable steps to mitigate the loss consequent on the breach,
    and [this] debars him from claiming any part of the damage which is due to his
    neglect to take such steps

:
Cockburn v. Trusts and Guarantee Co
.
(1917), 55 S.C.R. 264, at p. 267, citing
British
    Westinghouse Electric Co. v. Underground Electric Railways Co
.
, [1912] A.C. 673 (H.L.), at p. 689.
    The motion judge both stated and applied this test correctly.

[6]

Here, the respondents decision to bid on and
    enter into a new completion subcontract was not an action taken to mitigate the
    loss consequent on the breach that was Gorfs failure to pay for the completed
    work. The respondent would have secured the benefits flowing from the
    completion subcontract regardless of Gorfs failure to pay for the completed
    work. It was Gorfs abandonment of the subcontract, not its failure to pay for
    completed work, that created the necessity for the completion subcontract. In
    short, as the motion judge correctly held, the respondents successful bid for
    the completion subcontract was not consequent on Gorfs failure to pay its
    invoices.

[7]

The appeal is therefore dismissed, with costs to
    the respondent in the agreed-upon amount of $12,500 inclusive of taxes and
    disbursements.

K.
    Feldman J.A.
Fairburn J.A.
M. Jamal J.A.


