



COURT OF APPEAL FOR ONTARIO

CITATION: Aluma Systems Inc. v. Resolute FP
    Canada Inc., 2020 ONCA 792

DATE: 20201214

DOCKET: C67733

Strathy C.J.O., Rouleau and
    Coroza JJ.A.

BETWEEN

Aluma
    Systems Inc.

Plaintiff
(Appellant)

and

Resolute
    FP Canada Inc.

Defendant
(Respondent)

Catherine Willson, for the appellant

Roderick W. Johansen, for the respondent

Heard: November 27, 2020 by video conference

On appeal from the judgment of Justice
    Clayton Conlan of the Superior Court of Justice, dated October 30, 2019, with
    reasons reported at 2019 ONSC 6293, and from the costs order, dated December
    11, 2019, with reasons reported at 2019 ONSC 7184.

REASONS FOR DECISION

[1]

The appellant appeals the quantum of damages
    awarded in its action for breach of contract. If the appeal is allowed, it
    seeks a variation of the costs order.

[2]

The appellant carries on business as a seller
    and lessor of scaffolding equipment. The respondent operates a pulp and paper
    mill facility in Thunder Bay, Ontario.

[3]

For some 17 years, the appellant provided the
    respondent with the rental of scaffolding equipment and other services. In May
    2014, the respondent terminated the appellants services and hired a new
    supplier.

[4]

A dispute arose over the termination of the
    parties relationship. One of the issues concerned the appellants scaffolding
    that had been used in a part of the respondents operations called the blow
    tank. That scaffolding had become contaminated over the years by a black
    liquor. After the termination of the appellants services, the blow tank
    scaffolding was stored with other scaffolding in the respondents yard before
    the appellant arranged for its return.

[5]

The appellant brought an action against the
    respondent for damages, including: the costs of demobilizing and shipping the
    rented scaffolding; rental charges for some of the scaffolding between the time
    it was taken down and its return to the appellant; and damage to the
    contaminated blow tank scaffolding.

[6]

The trial judge heard evidence over seven days,
    including fact and expert witnesses on both sides. He conducted a detailed
    review of the evidence and made findings of fact based on his acceptance of
    some parts of the evidence of some witnesses, and his rejection of some parts
    of the evidence of other witnesses.

[7]

The trial judge dismissed the claim for
    demobilization and shipping costs, allowed the claim for the rental charges,
    and allowed only a portion of the claim for the contamination, which he
    calculated at $78,429.08. This was based on his conclusion that 40% of the
    scaffolding had to be scrapped. He applied that percentage to the overall value
    of the equipment, as provided by one of the appellants witnesses.

[8]

The appellant submits that the trial judge made
    a legal error in his assessment of damages for the contaminated blow tank
    scaffolding. It compares the facts of this case to a basket of apples, some of
    which contain poison and some of which do not. Because all apples are
    inherently suspect, the basket has no value. The appellant claims that since the
    contaminated portions of the scaffolding could not be separated from the
    uncontaminated portions, it should have been awarded damages based on 100% of
    the value of the scaffolding.

[9]

The trial judge found otherwise. He observed
    that the evidence was not very tight and that some rough justice was
    required.

[10]

We agree with these observations. The appellant
    bore the onus of proving its damages, and the evidence was conflicting. The
    trial judge was required to do the best he could to quantify the monetary
    damages so that the appellant could be put in the position it would have been
    in, but for the respondents breach of contract.

[11]

The trial judge accepted the evidence of the
    respondents scaffolding expert that the scaffolding was contaminated by as
    much as 20% at the time it was taken out of service. He found that there was a
    further deterioration of the equipment while it sat, unwashed and unprotected,
    in the respondents yard for another seven to eight months, mixed with the other
    scaffolding. He concluded that damages should be assessed on the basis that 40%
    of the blow tank scaffolding would have to be scrapped due to contamination.

[12]

There was evidence before the trial judge to
    establish that the scaffolding at issue had some value, rather than no value,
    as the appellant suggests. For instance:

·

the appellant incurred transportation costs of
    $27,758 to ship the scaffolding back to its premises, costs it would not likely
    have incurred if the equipment had no value;

·

the appellant offered to sell the equipment to
    the respondents new scaffolding supplier for $173,515;

·

the new scaffolding supplier valued the
    scaffolding at $70,000 and its wholesale value at $51,708; and

·

the appellant rejected the respondents offer to
    purchase the scaffolding for $25,000 and to pay any costs incurred to dispose
    of it.

[13]

In these circumstances, including the failure to
    the appellant to provide more compelling evidence of its damages, such as what
    efforts, if any, it had made to separate the contaminated portions of the
    scaffolding from uncontaminated portions, the trial judge was required to do
    the best he could with the evidence available.

[14]

The appellants submission on appeal is that the
    trial judge made a palpable and overriding error in failing to recognize that
    all of the blow tank scaffolding had to be scrapped as a result of
    contamination. The appellant submits that this was the uncontradicted evidence
    of its expert witness, Rosenthal.

[15]

We do not accept this submission. While the
    trial judge found that Rosenthal was an excellent witness, he discounted
    Rosenthals evidence because it was based solely on his examination of
    photographs. He never actually saw the scaffolding. The trial judge found that
    the photographs depicted not just the blow tank scaffolding, but other much
    more heavily contaminated scaffolding from another area of the respondents operation.

[16]

Instead, the trial judge accepted the evidence
    of the respondents expert, Leroux, who was the superintendent for the
    respondents new scaffolding supplier. Leroux had actually inspected the
    scaffolding both before and after it was dismantled. He testified that when he
    inspected the blow tank scaffolding before it was dismantled, most of it was
    fine, although it was dirty from being in the mill for many years. He
    testified that after it was dismantled, the materials were in good shape,
    although they were dirty. He estimated that 10 to 20% of the scaffolding had
    black liquor on it.

[17]

The trial judge accepted this evidence. He also
    accepted the evidence of another expert witness called by the respondent,
    Sissons, who had inspected the scaffolding before it was taken down and said
    that it was, overall, "clean" with "minor" black liquor in
    some places.

[18]

The trial judge's findings of fact and
    conclusion that damages should be assessed on the basis that 40% of the blow
    tank scaffolding would have to be scrapped are fully supported by the evidence.
    He indeed did the best he could, given the quality of the evidence. The
    appellant has demonstrated neither palpable nor overriding error.

[19]

For these reasons, the appeal is dismissed. It
    is therefore unnecessary to address the appellant's submissions concerning the
    costs of trial. In oral submissions, the appellant raised a concern about the
    omission of a provision in the formal judgment concerning prejudgment interest.
    If the parties are unable to resolve this issue (which should be a simple
    matter), it can be raised with the trial judge by way of a motion to amend the
    judgment.

[20]

The parties may make written submissions as to
    the costs of the appeal, to be served and filed with the Registrar. Those
    submissions shall not exceed three pages in length, exclusive of the costs
    outline. The respondent's submissions shall be filed within fifteen days of the
    release of these reasons, and the appellant shall have ten days thereafter to
    file a response.

G.R.
    Strathy C.J.O.

Paul
    Rouleau J.A.

S.
    Coroza J.A.


