IMPECUNIOSITY AND THE DUTY TO MITIGATE

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<p>DATE DOWNLOADED: Mon Sep 19 10:52:32 2022</p><p>SOURCE: Content Downloaded from HeinOnline</p><p>Citations:</p><p>Bluebook 21st ed.</p><p>Hillel David , Jason Balgopal, Leah Bowness & David Levy, Impecuniosity and the Duty</p><p>to Mitigate: Dredger Liesbosch (Owners) v. the Edison (Owners), 20 ADVOC. Q. 366</p><p>(1998).</p><p>ALWD 7th ed.</p><p>Hillel David , Jason Balgopal, Leah Bowness & David Levy, Impecuniosity and the Duty</p><p>to Mitigate: Dredger Liesbosch (Owners) v. the Edison (Owners), 20 Advoc. Q. 366</p><p>(1998).</p><p>APA 7th ed.</p><p>David, H., Balgopal, J., Bowness, L., & Levy, D. (1998). Impecuniosity and the duty</p><p>to mitigate: dredger liesbosch (owners) v. the edison (owners). Advocates' Quarterly,</p><p>20(3), 366-386.</p><p>Chicago 17th ed.</p><p>Hillel David; Jason Balgopal; Leah Bowness; David Levy, "Impecuniosity and the Duty</p><p>to Mitigate: Dredger Liesbosch (Owners) v. the Edison (Owners)," Advocates' Quarterly</p><p>20, no. 3 (May 1998): 366-386</p><p>McGill Guide 9th ed.</p><p>Hillel David et al., "Impecuniosity and the Duty to Mitigate: Dredger Liesbosch</p><p>(Owners) v. the Edison (Owners)" (1998) 20:3 Advoc Q 366.</p><p>AGLC 4th ed.</p><p>Hillel David et al., 'Impecuniosity and the Duty to Mitigate: Dredger Liesbosch</p><p>(Owners) v. the Edison (Owners)' (1998) 20(3) Advocates' Quarterly 366</p><p>MLA 9th ed.</p><p>David, Hillel, et al. "Impecuniosity and the Duty to Mitigate: Dredger Liesbosch</p><p>(Owners) v. the Edison (Owners)." Advocates' Quarterly, vol. 20, no. 3, May 1998, pp.</p><p>366-386. HeinOnline.</p><p>OSCOLA 4th ed.</p><p>Hillel David , Jason Balgopal, Leah Bowness & David Levy, 'Impecuniosity and the Duty</p><p>to Mitigate: Dredger Liesbosch (Owners) v. the Edison (Owners)' (1998) 20 Advoc Q 366</p><p>-- Your use of this HeinOnline PDF indicates your acceptance of HeinOnline's Terms and</p><p>Conditions of the license agreement available at</p><p>https://heinonline.org/HOL/License</p><p>-- The search text of this PDF is generated from uncorrected OCR text.</p><p>-- To obtain permission to use this article beyond the scope of your license, please use:</p><p>Copyright Information</p><p>https://heinonline.org/HOL/Page?handle=hein.journals/aqrty20&collection=journals&id=398&startid=&endid=418</p><p>https://heinonline.org/HOL/License</p><p>https://www.copyright.com/ccc/basicSearch.do?operation=go&searchType=0&lastSearch=simple&all=on&titleOrStdNo=0704-0288</p><p>CASE COMMENTS</p><p>IMPECUNIOSITY AND THE DUTY TO MITIGATE: DREDGER</p><p>LIESBOSCH (OWNERS) v. THE EDISON (OWNERS)1</p><p>The decision of the House of Lords in Dredger Liesbosch</p><p>(Owners) v. The Edison (Owners) has spawned much controversy</p><p>over the intervening years. Whether or not the decision created a set-</p><p>tled rule of general application remains very much in doubt, as does</p><p>the underlying rationale of the decision itself. The purpose of this</p><p>article is to collect for the reader the more recent Canadian and</p><p>English decisions on the matter, provide an explanation of the basis</p><p>for the Liesbosch decision, set the issue within the context of the</p><p>modem approach to causation and remoteness, and outline our</p><p>views on how the matter ought to be treated.</p><p>To summarize the Liesbosch decision briefly, a dredger was sunk</p><p>due to the negligence of the operators of another ship. The dredger</p><p>was being used in a contractual undertaking which was to be com-</p><p>pleted within a specified time period. Lacking the funds to do so, the</p><p>owners of the dredger were unable to replace it quickly, and, even-</p><p>tually, hired another dredger, one which was more expensive to</p><p>operate, to do the work. The inability to replace the sunken dredger</p><p>promptly resulted in a claim that was substantially greater than it</p><p>would otherwise have been. The House of Lords disallowed that</p><p>portion of the claim which could have been avoided had the plain-</p><p>tiffs not been unable, because of their impecuniosity, to replace the</p><p>dredger speedily.</p><p>The "Duty" To Mitigate</p><p>The title of this article contains a misnomer. Despite the common</p><p>reference to a "duty" to mitigate, there is in fact no such duty. A</p><p>plaintiff owes no duty in law to the defendant to minimize his loss</p><p>or damage; he is entitled to let his damages run up to his heart's con-</p><p>tent and commits no wrong in doing so, but he will not be entitled</p><p>to look to the defendant for recovery of any loss or damage that was</p><p>1. [1933] A.C. 449.</p><p>Case Comments 367</p><p>reasonably avoidable.2 Another approach is to say that reasonably</p><p>avoidable loss or damage is voluntarily incurred and the plaintiff has</p><p>not truly sustained that damage as a consequence of the defendant's</p><p>wrongdoing; it is more accurately a consequence of his own pur-</p><p>poseful conduct.3</p><p>Liesbosch Applied as a Rule Of General Application</p><p>There are numerous decisions in which Liesbosch (whether</p><p>specifically referred to or not) has been applied on the basis that it</p><p>is a rule of general application, i.e., the plaintiff is not entitled to</p><p>recover that part of his loss or damage which he could have avoided,</p><p>despite the fact that he was unable to do so because of impecunios-</p><p>ity, either pre-existing or not arising from the defendant's wrong-</p><p>doing. These cases include the failure, due to impecuniosity, to</p><p>minimize damages by not: remedying construction defects;" repair-</p><p>ing fire damage;5 purchasing replacement equipmen or a replace-</p><p>ment vehicle7 or a mobile home;8 purchasing a parcel of land;9</p><p>waiting for the market to rebound before selling real property; 10</p><p>acquiring new business premises;" purchasing replacement com-</p><p>mon stock;'2 paying a tax debt; 3 keeping a mortgage in good stand-</p><p>2. Janiak v. Ippolito (1985), 16 D.L.R. (4th) 1 at p. 17, [1985] 1 S.C.R. 146, 9 O.A.C.</p><p>1; Duchene v. Veniot (1989), 90 N.S.R. (2d) 74, 2 R.P.R. (2d) 157 at p. 159 (S.C.),</p><p>citing Waddams, The Law of Damages (Toronto: Carswell, 1983).</p><p>3. This appears to have been the rationale in Scobie v. Wing, [1992] 2 W.W.R. 514, 63</p><p>B.C.L.R. (2d) 76, [1992] B.C.J. No. 35 (C.A.).</p><p>4. Alberta Caterers Ltd. v. R. Vollan Alberta Ltd. (1977), 81 D.L.R. (3d) 672 at pp.</p><p>681-4, 5 C.P.C. 135 (Alta. S.C.); Hartnett v. Wailea Construction Ltd. (1989), 33</p><p>C.L.R. 244, 43 M.P.L.R. 298 at pp. 309-10, 3 R.P.R. (2d) 311 (B.C.S.C.); Marigold</p><p>Hldgs Ltd. v. Norem Construction Ltd., [1988] 5 W.W.R. 710, 89 A.R. 81, 31</p><p>C.L.R. 51 at p. 765 (Q.B.).</p><p>5. Hogan's Inn Ltd. v. Burtt Electrical Co., [1983] O.J. No. 1197 (H.C.J.) at para. 20,</p><p>affd [1985] O.J. No. 118 (C.A.). Note that R.E. Holland J. considered the rule to be</p><p>"somewhat unfortunate".</p><p>6. R.G. McLean Ltd. v. Canadian Vickers Ltd. (1970), 15 D.L.R. (3d) 15, [1971] 1</p><p>O..R 207 at pp. 215-16 (C.A.).</p><p>7. Okafor v. Ron Starr Ltd., [1990] O.J. No. 1430 (Dist. Ct.).</p><p>8. Ramos v. Bendix Home Systems Ltd., [1983] B.C.J. No. 510 (S.C.), at para. 22.</p><p>9. Seaside Holdings Ltd. v. Newfoundland (1989), 77 Nfld. & P.E.I.R. 27, [1989] N.J.</p><p>No. 210 (S.C.).</p><p>10. Verleg v. Angeloni (1993), 33 R.P.R. (2d) 74 (B.C.S.C.) at paras. 22-26, supp. rea-</p><p>sons 20 C.P.C. (3d) 132.</p><p>11. M & M Fashions Ltd. v. Blackbeard's Restaurant Ltd. (1986), 68 A.R. 37 (Q.B.)</p><p>at paras. 86-92.</p><p>12. Dawson v. Helicopter Exploration Co. Ltd. (1958), 12 D.L.R. (2d) 1, S.C.C. at</p><p>p. 11.</p><p>1998]</p><p>368 Advocates Quarterly</p><p>ing;4 taking work training courses.'5 It has also been applied</p><p>as a</p><p>general rule in the context of claims made on insurance policies.' 6</p><p>Also noteworthy is the application of the principle when determin-</p><p>ing a defendant's liability, rather than the assessment of a plaintiff's</p><p>damages. 7</p><p>Circumstances in Which Liesbosch is not Applicable</p><p>There is no reduction in the assessment of damages for loss that</p><p>would have been avoidable had the plaintiff not been impecunious</p><p>when that impecuniosity was itself the result of the defendant's</p><p>wrongdoing, rather than a pre-existing or otherwise unrelated con-</p><p>dition. That point is made clear in the Liesbosch decision, where</p><p>Lord Wright specifically made reference to the plaintiff's impecu-</p><p>niosity not having been traceable to the defendant's acts.' 8</p><p>Subsequent decisions have adopted the same view. 9 It has also been</p><p>13. 285614 Alberta Ltd. v. Burnet, Duckworth & Palmer, [1993] 4 W.W.R. 374, 139</p><p>A.R. 31, 8 B.L.R. (2d) 280 at para. 48 (Q.B.).</p><p>14. Freedhoff v. Pomalift Industries Ltd. (1971), 19 D.L.R. (3d) 153, [1971] 2 O.R.</p><p>773 at pp. 777-8 (C.A.); McGrath v. MacLean (1979), 95 D.L.R. (3d) 144, 22 O.R.</p><p>(2d) 784 at pp. 802-3 (C.A.) (dissenting judgment of Weatherston J.A.).</p><p>15. Fletcher v. Fletcher, [1995] O.J. No. 1928 at paras. 4-5 (Gen. Div.)</p><p>16. Omega Inn Ltd. v. Continental Insurance Co. (1988), 55 D.L.R. (4th) 766, [1989]</p><p>I.L.R. 11-2426, 36 C.C.L.I. 258 (B.C.C.A.); Bastien v. Smith & RidoutLtd. (1988),</p><p>33 C.C.L.I. 114 (Ont. H.C.J.) at pp. 122-3 and 156; Kayvon Construction Ltd. v.</p><p>Commercial Union Assurance Co. of Canada (1985), 16 C.C.L.I. 106 at pp. 111-</p><p>12, [1986] I.L.R. 1-2051 (B.C.S.C.). In Whelan v. Beothic General Insurance Co.</p><p>(1992), 103 Nfld. & P.E.I.R. 230, 16 C.C.L.I. (2d) 277 at p. 285, [1993] I.L.R. 1-</p><p>2935 (Nfld. S.C.), it was said that although there has been some softening, the</p><p>established principle should be applied. In 702535 Ontario v. Lloyd's London,</p><p>Non-Marine Underwriters, [1996] I.L.R. 1-3291 (Ont. Ct. (Gen. Div.)), there was</p><p>reference at p. 3895 to "some authority" for the proposition that the insured's</p><p>impecuniosity should not fall on the insurer.</p><p>17. Raineri v. Miles, [1980] 2 All E.R. 145 (H.L.) at pp. 158-9; Graham v. Wagman</p><p>(1976), 73 D.L.R. (3d) 667, 14 O.R. (2d) 349 at p. 352 (H.C.J.), yard on other</p><p>grounds 89 D.L.R. (3d) 282, 21 O.R. (2d) 1 (C.A.).</p><p>18. Dredger Liesbosch (Owners) v. The Edison (Owners), [1933] A.C. 449 at p. 460.</p><p>19. Dodd Properties (Kent) Ltd. v. Canterbury City Council, [1980] 1 All E.R. 928</p><p>(C.A.) at p. 935; Archer v. Brown, [1984] 2 All E.R. 267 (Q.B.D.) at p. 276; Cash</p><p>v. Georgia Pacific Securities Corp., [1990] B.C.J. No. 1315 (S.C.); Duchene v.</p><p>Veniot (1989), 90 N.S.R. (2d) 74, 2 R.P.R. (2d) 157 at p. 159 (S.C.); Alton Artisans</p><p>Guild In The Carriage Works Inc. v. Clearway Construction Ltd., unreported</p><p>(January 16, 1998, Ont. Ct. (Gen. Div.)), summarized 77 A.C.W.S. (3d) 315. See</p><p>also Kienzle v. Stringer (1981), 130 D.L.R. (3d) 272, 35 O.R. (2d) 85 at p. 91, 21</p><p>R.P.R. 44 (C.A.); Marigold Hldgs Ltd. v. Norem Construction Ltd., [19881 5</p><p>W.W.R. 710 at pp. 765-6, 89 A.R. 81, 31 C.L.R. 1 (Q.B.); Alberta Caterers Ltd.</p><p>v. R. Vollan Alberta Ltd. (1977), 81 D.L.R. (3d) 672 at pp. 683-4, 5 C.P.C. 135</p><p>[Vol. 20</p><p>Case Comments 369</p><p>held that no reduction will be made when the plaintiff's impecu-</p><p>niosity was known or foreseeable to the defendant at the time of the</p><p>wrongdoing, or when the loss or damage in question was otherwise</p><p>reasonably foreseeable to the defendant at that time.' Conversely,</p><p>the assessment of damages has been reduced when there was no</p><p>such knowledge or foresight."</p><p>Another situation in which no reduction will be made is when the</p><p>plaintiff's impecuniosity constitutes only one of two or more factors</p><p>underlying the non-minimization of damages, and when it is deter-</p><p>mined that the plaintiff's failure to mitigate was reasonable in all the</p><p>circumstances.2 The principle, after all, applies to the failure to take</p><p>reasonable steps to mitigate, and what is a reasonable course of con-</p><p>duct is a question of fact depending on the circumstances of the</p><p>case.' Speedy litigation, for example, may be a reasonable alterna-</p><p>tive to the purchase of replacement common stock.24 On the other</p><p>hand, impecuniosity as one of several possible factors was held in</p><p>one decision to indicate that the loss was not a direct and foresee-</p><p>able result of the wrongdoing.15</p><p>The General Securities Decision</p><p>The decision of the Supreme Court of Canada in General</p><p>Securities Ltd. v. Don Ingram Ltd.' has been relied upon in several</p><p>cases apparently for the proposition that loss or damage caused by</p><p>(Alta. S.C.); Verleg v. Angeloni (1993), 33 R.P.R. (2d) 74 (B.C.S.C.) at p. 79, supp.</p><p>reasons at 20 C.P.C. (3d) 132.</p><p>20. Perry v. Sidney Phillips & Son, [1982] 3 All E.R. 705 (C.A.) at pp. 712-13; Archer</p><p>v. Brown, [1984] 2 All E.R. 267 (Q.B.D.) at p. 277; Lahti v. Giovenco Leather</p><p>Manufacturer Ltd., [1997] O.J. No. 2828 (Gen. Div.) at para. 8; Cash v. Georgia</p><p>Pacific Securities Corp., [1990] B.C.J. No. 1315 (S.C.); Marigold Hldgs Ltd. v.</p><p>Norem Const. Ltd., ibid, at p. 765 W.W.R.; Amar Cloth House Ltd. v. La Van &</p><p>Co., [1997] 6 W.W.R. 382, 33 B.C.L.R. (3d) 312, [1997] B.C.J. No. 1048 at paras.</p><p>6, 23, 46 and 48 (S.C.).</p><p>21. Hogan's Inn Ltd. v. Burtt Electrical Co., [1983] O.J. No. 1197 (H.C.J.) at para. 20,</p><p>affd [1985] O.J. No. 118 (C.A.); Bloor Italian Gifts Ltd. v. Dixon, [1997] O.J. No.</p><p>3088 (Gen. Div.) at paras. 18-20. See also Seaside Holdings Ltd. v. Newfoundland,</p><p>supra, footnote 9.</p><p>22. Perry v. Sidney Phillips & Son, [1982] 3 All E.R. 705 (C.A.) at pp. 711 and 712;</p><p>Dodd Properties (Kent) Ltd. v. Canterbury City Counci supra, footnote 19, at pp.</p><p>935 and 941. See also Martindale v. Duncan, [1973] 2 All E.R. 355 (C.A.) at p. 358.</p><p>23. Seaside Holdings Ltd. v. Newfoundland, supra, footnote 9, where it was held rea-</p><p>sonable not to purchase land in an atmosphere of uncertainty and high risk.</p><p>24. Cash v. Georgia Pacific Securities Corp., supra, footnote 20.</p><p>25. Bishop v. Brown, [1993] B.C.J. No. 2493 (S.C.) at para. 18.</p><p>26. [1940] 3 D.L.R. 641, [1940] S.C.R. 670.</p><p>1998]</p><p>370 Advocates Quarterly</p><p>the plaintiff's impecuniosity is recoverable so long as that loss or</p><p>damage, as opposed to the impecuniosity from which it arises, was</p><p>foreseeable to the wrongdoer." The word "apparently" is used</p><p>because it is not entirely clear that that is what was intended. In any</p><p>event, in most of these cases the finding was made that the increased</p><p>extent of the loss in question either was' or was not29 known or fore-</p><p>seeable to the defendant. The General Securities decision itself can</p><p>be explained both on that basis and on the basis that the inability of</p><p>the plaintiff there to minimize its loss was created by the defen-</p><p>dant's wrongdoing, as may be gathered from the following remarks</p><p>by Duff C.J.C.:3</p><p>The appellants were fully aware of the material circumstances.., they must</p><p>have realized ... that in consequence of such a severance it was highly proba-</p><p>ble that the respondents would be forced out of business and would suffer the</p><p>pecuniary loss naturally resulting therefrom.</p><p>Liesbosch Diminished Or Rejected</p><p>Apart from the circumstances referred to above in which</p><p>Liesbosch has been held not to be applicable, there is a very real</p><p>question whether Liesbosch even stands for the principle with which</p><p>it has generally been associated. The leading English decision on the</p><p>interpretation and application of Liesbosch is Dodd Properties</p><p>(Kent) Ltd. v. Canterbury City Council.31 While the basis of that</p><p>decision was the finding that the plaintiffs had acted reasonably in</p><p>27. Matthews v. Grand Bank (Town) (1994), 119 Nfld. & P.E.I.R. 16 (Nfld. S.C.) at</p><p>paras. 6-7; Kozak v. Gruza (1989), 63 D.L.R. (4th) 129 at p. 135, 80 Sask. R. 197,</p><p>9 P.P.S.A.C. 221 (C.A.); Supreme Auto Body Ltd. v. British Columbia, [1986]</p><p>B.C.J. No. 1276 (S.C.), at paras. 17-18; Bastien v. Smith and Ridout Ltd. (1988),</p><p>33 C.C.L.I. 114, Ont. H.C.J. at p. 123; Amar Cloth House Ltd. v. La Van & Co.,</p><p>supra, footnote 20, at paras. 27-30; Alton Artisans Guild In</p><p>The Carriage Works</p><p>Inc. v. Clearway Construction Ltd., supra, footnote 19.</p><p>28. Kozak v. Gruza, ibid., at p. 136; Supreme Auto Body Ltd. v. B.C., ibid., at paras.</p><p>17-18; Amar Cloth House Ltd., ibid., at paras. 6, 46 and 48.</p><p>29. Bastien v. Smith & Ridout Ltd., supra, footnote 27, at p. 156.</p><p>30. General Securities Ltd. v. Don Ingram Ltd., supra, footnote 26, at p. 673 S.C.R.</p><p>Also noteworthy is the following extract from the trial judge's reasons for judg-</p><p>ment, quoted at p. 672:</p><p>"The defendant kept in close touch with the plaintiff's business and had actual</p><p>knowledge of the probable consequences of the breach. In my opinion loss of</p><p>profits on the automobiles and loss of the plaintiff's franchise with the conse-</p><p>quent loss of its business and loss on realization of its assets were under the</p><p>circumstances natural and probable results which must have been and were</p><p>within the contemplation of the defendant".</p><p>31. [1980] 1 All E.R. 928 (C.A.).</p><p>[Vol. 20</p><p>Case Comments 371</p><p>delaying the repair of their business premises, reference was made32</p><p>to the following statement by Lord Collins in a House of Lords deci-</p><p>sion that pre-dated Liesbosch:33</p><p>... for in my opinion the wrong-doer must take his victim talem qualem, and if</p><p>the position of the latter is aggravated because he is without the means of mit-</p><p>igating it, so much the worse for the wrong-doer, who has got to be answerable</p><p>for the consequences flowing from his tortious act.</p><p>That statement was in fact quoted in Liesbosch, Lord Wright saying</p><p>however that it was meant to deal "not with measure of damage, but</p><p>with the victim's duty to minimize damage, which is quite a differ-</p><p>ent matter". 3</p><p>At first glance at least, it is difficult to understand what Lord</p><p>Wright had in mind in making what appears to be a distinction with-</p><p>out a difference. The plaintiff's "duty" to minimize his loss or dam-</p><p>age is a matter that is inextricably bound together with the overall</p><p>issue of the assessment or measure of his damages - it is one of the</p><p>factors involved, at a particular stage of the assessment, in making</p><p>the latter determination. Why should impecuniosity be a relevant</p><p>factor for consideration in the measurement of the plaintiff's dam-</p><p>ages, but not in regard to the issue of mitigation which is an integral</p><p>part of that measurement?35 The explanation given in one decision</p><p>was that the court is concerned in the first instance with determin-</p><p>ing what damages are allowable and that only after that initial deter-</p><p>mination has been made is consideration given to whether those</p><p>allowable damages could or should have been mitigated by the</p><p>plaintiff.36 This explanation, however, confuses the issue of remote-</p><p>ness of damages with the question whether the plaintiff's inability</p><p>to mitigate due to impecuniosity should or should not be taken into</p><p>consideration in determining whether or not to reduce the initial</p><p>assessment of damages. That initial assessment of damages will</p><p>have already filtered out those damages that are remote in law. The</p><p>remaining damages are recoverable, subject to the determination</p><p>whether some or all were reasonably avoidable, that being a matter</p><p>32. Ibid., at pp. 935 and 941.</p><p>33. Clippens Oil Co. Ltd. v. Edinburgh and District Water Trustees, [19071 A.C. 291</p><p>at p. 303.</p><p>34. Dredger Liesbosch (Owners) v. The Edison (Owners), [1933] A.C. 449 at p. 461.</p><p>35. See S.M. Wexler, "The Impecunious Plaintiff: Liesbosch Reconsidered" (1987),</p><p>66 Can. Bar Rev. 129 at p. 140; Amar Cloth House Ltd. v. La Van & Co., supra,</p><p>footnote 20, at para. 22.</p><p>36. Cash v. Georgia Pacific Securities Corp., [1990] B.C.J. No. 1315 (S.C.); see also</p><p>Supreme Auto Body Ltd. v. B.C., supra, footnote 27, at para. 18.</p><p>1998]</p><p>372 Advocates Quarterly</p><p>which, although a part of the process of assessing damages, does not</p><p>involve the issue of remoteness. 37 It is during that latter determina-</p><p>tion that any issue relating to the plaintiff's impecuniosity will arise.</p><p>No matter how one looks at it, however, it appears to be illogical to</p><p>say that impecuniosity may be considered in the initial assessment</p><p>of what constitutes allowable (in the sense of non-remote) damages,</p><p>but may not be considered at the subsequent stage of determining</p><p>which of those allowable damages should be rejected because they</p><p>were avoidable. That tells the plaintiff "We would have let you</p><p>recover these damages had we not taken them away at an earlier</p><p>stage of our considerations."</p><p>The statement in Dodd that "A plaintiff who is under a duty to</p><p>mitigate is not obliged, in order to reduce the damages, to do that</p><p>which he cannot afford to do"3 has been reflected, albeit in more</p><p>ambiguous terms, in several Canadian decisions39 which seem to</p><p>adopt a position similar to that view and to the comment by Lord</p><p>Collins quoted above.'</p><p>Was Liesbosch Based on Causation or Remoteness?</p><p>Before dealing with this difficult, and in the final analysis not</p><p>very relevant, question, it is appropriate to set down some basic</p><p>principles relating to causation and remoteness. These are two</p><p>issues that are intertwined but, as a learned author admonishes,</p><p>should not be intermingled.41 Causation refers to cause-in-fact and</p><p>generally is determined by the "but for" test. It is fundamentally a</p><p>question of fact, asking the straightforward question "Would the</p><p>plaintiff have sustained the loss or damage claimed had the wrong-</p><p>37. Janiak v. Ippolito (1985), 16 D.L.R. (4th) 1 at p. 18, [1985] 1 S.C.R. 146, 9O.A.C. 1.</p><p>38. Dodd Properties (Kent) Ltd. v. Canterbury City Council, [1980] 1 All E.R. 928</p><p>(C.A.) at p. 935, per Megaw L.J.</p><p>39. Rollinson v. Canada (1994), 20 C.C.L.T. (2d) 92, 73 F.T.R. 16, [1994] I.L.R. 1193-</p><p>594 (T.D.); Amar Cloth House Ltd. v. La Van & Co., supra, footnote 20, at paras.</p><p>27, 35 and 40, although Huddart J. said at para. 42: "It is important to emphasize</p><p>that while Liesbosch has been heavily criticized it has not been rejected in</p><p>Canada." See also Karod v. Lingstrom (1983), 30 R.P.R. 1 (B.C.S.C) at pp. 15-16;</p><p>Raven Developments Ltd. v. Tolsma, [1997] B.C.J. No. 545 (S.C.) at para. 40;</p><p>Scobie v. Wing, [1992] 2 W.W.R. 514, 63 B.C.L.R. (2d) 76, [1992] B.C.J. No. 35</p><p>(C.A.); Reid v. Barnes, [1990] O.J. No. 2113 (Gen. Div.); Perkin v. Canada,</p><p>[1976] F.C.J. No. 412 (T.D.) at paras. 10-11 (comments that appear to be contra-</p><p>dictory).</p><p>40. See footnote 33.</p><p>41. Linden, Canadian Tort Law, 5th ed. (Markham, Ontario: Butterworths, 1993), p.</p><p>305.</p><p>[Vol. 20</p><p>Case Comments 373</p><p>doing not occurred?" 2 Remoteness, on the other hand, is a creature</p><p>of the common law, created as a sort of governor to be applied to the</p><p>engine of causation. It is a method of placing reasonable constraints</p><p>upon what otherwise might be almost unlimited liability, because</p><p>the chain of factual causation can stretch very far indeed. Whereas</p><p>causation is an issue of fact, remoteness is a mixed issue of fact and</p><p>law involving the distinction between a remote and a proximate</p><p>cause, a question of degree involving the test of foreseeability.43 The</p><p>boundaries of the limitation imposed by the concept of remoteness,</p><p>although generally determined by the largely factual question of rea-</p><p>sonable foreseeability, are in the end based on policy considerations,</p><p>including fairness, justice, experience and value judgments." Stated</p><p>another way, the test of remoteness is based not on logic, but on val-</p><p>ues. 5 This is inherent from the inclusion of the term "reasonable" in</p><p>the "reasonable foreseeability" test. 6</p><p>The basic rule of remoteness in fact is no longer simply the rea-</p><p>sonable foreseeability test laid down in the landmark Wagon Mound</p><p>(No. 1) decision,47 although that remains the formulation generally</p><p>used in the contexts of remoteness of risk,'8 damages 9 and victim."</p><p>42. Yoshikawa v. Yu, [1996] 8 W.W.R. 239, 21 B.C.L.R. (3d) 318, 28 C.C.L.T. (2d)</p><p>217 at p. 225, para. 14 (C.A.).</p><p>43. Craven v. Strand Holidays (Canada) Ltd. (1982), 142 D.L.R. (3d) 31,40 O.R. (2d)</p><p>186 at p. 196 (C.A.), leave to appeal to S.C.C. refused 48 N.R. 320n; Yoshikawa</p><p>v. Yu, ibid., at p. 225 C.C.L.T., para. 14.</p><p>44. Kienzle v. Stringer (1981), 130 D.L.R. (3d) 272, 35 O.R. (2d) 85 at p. 90, 21 R.P.R.</p><p>44 (C.A.); Spagnolo v. Margesson's Sports Ltd. (1983), 145 D.L.R. (3d) 381, 41</p><p>O.R. (2d) 65 at p. 66 (C.A.); Bechard v. Haliburton Estate (1991), 84 D.L.R. (4th)</p><p>668, 5 O.R. (3d) 512 at p. 514, 10 C.C.L.T. (2d) 156 (C.A.); Canadian National</p><p>Railway Co. v. Norsk Pacific Steamship Co. (1992), 91 D.L.R. (4th) 289 at pp. 360</p><p>and 369, [19921 1 S.C.R. 1021, 11 C.C.L.T. (2d) 14; Caparo Industries v.</p><p>Dickman, [19901 1 All E.R. 568 (H.L.) at p. 585; Gallant v. Beitz (1983), 148</p><p>D.L.R. (3d) 522, 14 E.T.R. 81, 42 O.R. (2d) 86 at p. 92 (H.C.J.); Duwyn v.</p><p>Kaprielian (1978), 94 D.L.R. (3d) 424, 22 O.R. (2d) 736 at p. 749, 7 C.C.L.T. 121</p><p>(C.A.); Yoshikawa v. Yu, supra, footnote 42, at p. 226, para. 17.</p><p>45. Linden, Canadian Tort Law, 5th ed, supra, footnote 41, p. 320; Yoshikawa v. Yu,</p><p>ibid.</p><p>46. Kienzle v. Stringer, supra, footnote 44, at p. 90 O.R.</p><p>47. Overseas Tankship (U.K.) Ltd. v. Morts Dock & Engineering Co. Ltd., [19611 A.C.</p><p>388.</p><p>48. Stewart v. Pettie (1995), 121 D.L.R. (4th) 222, [1995] 1 S.C.R. 131, 23 C.C.L.T.</p><p>(2d) 89 at para. 50.</p><p>49. Bow Valley Huskey (Bermuda) v. Saint John Shipbuilding (1997), 153 D.L.R. (4th)</p><p>385, 221 N.R. 1, [1997] S.C.J. No. 111 at para. 55; South Australia Asset</p><p>Management Corp. v. York Montague Ltd., [1996] 3 All E.R. 365 (H.L.) at p. 371.</p><p>50. Bow Valley Huskey, ibid.</p><p>1998]</p><p>374 Advocates Quarterly</p><p>That test has been considerably loosened, the requirement now</p><p>being only that a possibility of injury be foreseeable. A "real" risk,</p><p>one that a reasonable person would not "brush aside as far-fetched</p><p>or fanciful", will satisfy the test of remoteness." Another formula-</p><p>tion is to ask the question whether the ultimate consequence may</p><p>fairly be regarded as within the risk created by the wrongdoing. 2</p><p>The most recent pronouncements on the issue indicate a slight</p><p>swing of the pendulum back to a stricter test of remoteness, while</p><p>retaining policy and value considerations as the ultimate arbiter. In</p><p>England, Lord Hoffman rejected the recoverability of damages for</p><p>consequences which "though in general terms foreseeable, do not</p><p>appear to have a sufficient causal connection with the subject mat-</p><p>ter of the duty". (Emphasis added.) He also made reference to what</p><p>would be "fair and reasonable as between the parties". 3 Here in</p><p>Canada, Sopinka J. made the following statement: 4</p><p>The happening of an event can be traced to a whole range of causes along a</p><p>spectrum of diminishing connections to the event. The common law of torts has</p><p>grappled with the problem of causation. In order to inject some degree of</p><p>restraint on the potential reach of causation, the concepts of proximate cause</p><p>and remoteness were developed. These concepts place limits on the extent of</p><p>liability in order to implement the sound policy of the law that there exist a sub-</p><p>stantial connection between the tortious conduct and the injury for which com-</p><p>pensation is claimed. [Emphasis added.]</p><p>Liesbosch was decided well before the modem concepts of</p><p>remoteness, beginning with Wagon Mound (No. 1),55 were devel-</p><p>oped. The statements made in the decision must be viewed with that</p><p>consideration in mind. Lord Wright spoke of the plaintiffs' impecu-</p><p>niosity being "a separate and concurrent cause, extraneous to and</p><p>distinct in character from the tort",56 but then almost immediately</p><p>went on to say that "The law cannot take account of everything that</p><p>follows a wrongful act; it regards some subsequent matters as out-</p><p>side the scope of its selection, because 'it were infinite for the law</p><p>51. Linden, Canadian Tort Law, 5th ed. supra, footnote 41, pp. 316-19; Cotic v. Gray</p><p>(1981), 124 D.L.R. (3d) 641, 33 O.R. (2d) 356, 17 C.C.L.T. 138 at pp. 155 and 170</p><p>(C.A.), affd 26 C.C.L.T. 163 (S.C.C.).</p><p>52. Price v. Milawski (1977), 18 O.R. (2d) 113 (C.A.) at p. 123.</p><p>53. South Australia Asset Management Corp., supra, footnote 49, at p. 372.</p><p>54. R. v. Goldhart (1996), 136 D.L.R. (4th) 502, [1996] 2 S.C.R. 463 at p. 480, 92</p><p>O.A.C. 161.</p><p>55. Supra, footnote 47.</p><p>56. Dredger Liesbosch (Owners) v. The Edison (Owners), [1933] A.C. 449 at p. 460.</p><p>[Vol. 20</p><p>Case Comments 375</p><p>to judge the cause of causes,' or consequences of consequences"."</p><p>This intermixing of causation and remoteness was then repeated in</p><p>the following remarks: 8</p><p>In the varied web of affairs, the law must abstract some consequences as rele-</p><p>vant, not perhaps on grounds of pure logic but simply for practical reasons. In</p><p>the present case if the appellants' financial embarrassment is to be regarded as</p><p>a consequence of the respondents' tort, I think it is too remote, but I prefer to</p><p>regard it as an independent cause, though its operative effect was conditioned</p><p>by the loss of the dredger.</p><p>Should those statements be seen as grounding the decision in cau-</p><p>sation or in remoteness? In an article analyzing the Liesbosch deci-</p><p>sion, Professor S.M. Wexler interpreted the decision as being based</p><p>on a finding that the plaintiffs' impecuniosity was a separate and</p><p>independent cause of the loss in question and was unrecoverable for</p><p>that reason." Certainly, there is support for that view in Lord</p><p>Wright's judgment, as may be seen in the extracts quoted above.</p><p>Those extracts, however, equally support the view that Lord Wright</p><p>was making an early and anticipatory attempt to consider the impe-</p><p>cuniosity issue in the context of a policy-based theory of remote-</p><p>ness. The ambiguous nature of Lord Wright's underlying rationale</p><p>may be seen in the view taken of that decision by other judges.' An</p><p>interesting point is that Lord Wright later made the following state-</p><p>ment on the issue of foreseeability, one which appears to accord</p><p>with his remarks in Liesbosch and suggests that his decision there</p><p>was based on policy considerations. In commenting on where the</p><p>line should be drawn as to what the hypothetical reasonable man</p><p>57. Ibid.</p><p>58. Ibid.</p><p>59. S.M. Wexler, "The Impecunious Plaintiff: Liesbosch Reconsidered" (1987), 66</p><p>Can. Bar Rev. 129 at pp. 136 and 137, adopted in Rollinson v. Canada (1994), 20</p><p>C.C.L.T. (2d) 92, 73 F.T.R. 16, [1994] I.L.R. 93-594 (T.D.).</p><p>60. Dodd Properties (Kent) Ltd. v. Canterbury City Council, [1980] 1 All E.R. 928</p><p>(C.A.) at p. 940, where Donaldson L.J. said:</p><p>As I understand Lord Wright's speech, he took the view that in so far as the</p><p>plaintiffs in fact suffered more than the loss assessed on a market basis, the</p><p>excess loss flowed directly from their lack of means and not from the tortious</p><p>act, or alternatively it was too remote in law. In modem terms, I think that he</p><p>would have said that it was not foreseeable.</p><p>In Alberta Caterers Ltd. v. R. Vollan Alberta Ltd. (1977), 81 D.L.R. (3d) 672 at pp.</p><p>683-4, 5 C.P.C. 135 (Alta. S.C.), Cavanagh J. referred both to causation and remote-</p><p>ness. In Freedhof v. Pomalift Industries Ltd. (1971), 19 D.L.R. (3d) 153, [1971] 2</p><p>O.R. 773 at p. 778 (C.A.), Kelly J.A., without referring to Liesbosch, said that the</p><p>failure to mitigate due to impecuniosity did not meet the test of foreseeability.</p><p>1998]</p><p>376 Advocates Quarterly</p><p>would say it was proper to foresee, he said "it should stop where in</p><p>the particular case the good sense of the jury or the judge decides".6'</p><p>Professor Wexler suggested that Liesbosch should not stand for</p><p>the rule of general application with which it had been associated, but</p><p>rather for the much narrower proposition that a plaintiff "may not</p><p>recover for damages he caused by unreasonably making himself</p><p>impecunious in circumstances where he knows that to be impecu-</p><p>nious is to run the risk of very large losses".62 Professor Wexler</p><p>referred in particular to persons who do not arrange to be adequately</p><p>insured so as to cover the contingency of the loss for which they</p><p>ultimately make claim. While there is much to commend this view,</p><p>our approach is somewhat different. As will be detailed later, it is</p><p>our view that the impecuniosity issue should be determined on the</p><p>basis of policy considerations, just as such considerations ultimately</p><p>govern the issue of</p><p>remoteness, and should be subject to apportion-</p><p>ment for comparative fault on the basis of Negligence Act legisla-</p><p>tion, as well as subject to the "crumbling skull" doctrine. A</p><p>plaintiff's failure to provide adequately for contingencies of loss</p><p>may well constitute contributory negligence in certain circum-</p><p>stances, but it is well to remember that in most cases persons pur-</p><p>chase insurance coverage for protection against losses due to causes</p><p>other than solely that of another person's fault, and that losses, per-</p><p>haps in the majority of cases, are not the result of another's fault.</p><p>The failure to arrange for such coverage is therefore not necessarily</p><p>based on the attempt to save the cost of insurance premiums in the</p><p>belief that if a loss occurs it can be recovered through a tort claim.</p><p>Rather, it will often be based on legitimate business reasons, as may</p><p>have been the case in regard to the Liesbosch plaintiffs themselves.</p><p>As indicated by Professor Wexler, it is only the plaintiff who</p><p>"unreasonably made himself impecunious" who should himself</p><p>bear part or all of his aggravated loss.</p><p>The Thin-Skull Rule</p><p>One of the sources of difficulty in analyzing the matter is that</p><p>"mitigation has to do with post-accident events",63 while the plain-</p><p>61. Hay or Bourhill v. Young, [1943] A.C. 92 (H.L.) at p. 110, quoted in Duwyn v.</p><p>Kaprielian (1978), 94 D.L.R. (3d) 424, 22 O.R. (2d) 736 at p. 749, 7 C.C.L.T. 121</p><p>(C.A.).</p><p>62. S.M. Wexler, "The Impecunious Plaintiff: Liesbosch Reconsidered", supra, foot-</p><p>note 59, at p. 130.</p><p>63. Janiak v. Ippolito (1985), 16 D.L.R. (4th) 1 at p. 17, [1985] 1 S.C.R. 146, 9 O.A.C.</p><p>[Vol. 20</p><p>Case Comments 377</p><p>tiff's impecuniosity (assuming it was not caused by the wrongdoing)</p><p>is a pre-existing condition. This brings into consideration the "thin-</p><p>skull" rule, which is the common title given to the principle that a</p><p>tortfeasor must take his victim as he finds him. This rule was devel-</p><p>oped for plaintiffs who had some unusual physical susceptibility to</p><p>injury, thus sustaining harm more serious than would be expected to</p><p>arise from the wrongdoing. ' The rule was extended to pre-existing</p><p>psychological infirmities, it being said that "there is no difference in</p><p>principle between an egg-shell skull and an egg-shell personality".'</p><p>What was to be done with this rule, however, following adoption</p><p>of the reasonable foreseeability test of remoteness in Wagon Mound</p><p>(No. 1)? 6 In most cases, the defendant would have no knowledge of</p><p>the plaintiff's pre-existing physical or psychological condition, nor</p><p>would that have been reasonably foreseeable. Two reasons for the</p><p>continued acceptance of the doctrine were given by Lord Parker C.J.</p><p>in the case most often cited on the matter. 67 The first was that the</p><p>thin-skull doctrine was of such long standing and was so well estab-</p><p>lished that it would require express, not merely implied, rejection.</p><p>The second was that Wagon Mound (No. 1) had distinguished</p><p>between foreseeability of a type of injury and of the extent of that</p><p>injury. So long as the type of injury were foreseeable, the non-fore-</p><p>seeability of its extent was irrelevant.</p><p>The first of those reasons has been reformulated so as to better</p><p>accord with the modem view of remoteness. It is now stated that the</p><p>thin-skull doctrine is an exception to the normal foreseeability test</p><p>because it is proper to make it so on policy grounds.' The second</p><p>reason retains some following, 69 and no definitive preference as</p><p>1, per Wilson J.</p><p>64. De Sousa v. Kuntz (1988), 24 B.C.L.R. (2d) 206, 28 C.P.C. (2d) 213, [19881 B.C.J.</p><p>No. 36 (S.C.).</p><p>65. Janiak v. Ippolito, supra, footnote 63, at p. 7 D.L.R.; Cotic v. Gray (1981), 124</p><p>D.L.R. (3d) 641, 33 O.R. (2d) 356, 17 C.C.L.T. 138 at p. 171 (C.A.), affd 26</p><p>C.C.L.T. 163 (S.C.C.).</p><p>66. Supra, footnote 43.</p><p>67. Smith v. Leech Brain & Co., [1962] 2 Q.B. 405, cited in Cotic v. Gray, supra, foot-</p><p>note 65, at pp. 162 and 173 C.C.L.T.</p><p>68. Cotic v. Gray, ibid., at pp. 174-5 and 178-9 C.C.L.T.; Yoshikawa v. Yu, [1996] 8</p><p>W.W.R. 239, 21 B.C.L.R. (3d) 318, 28 C.C.L.T. (2d) 217 at p. 228, paras. 26-7 and</p><p>pp. 251-2, paras. 114-16 (C.A.); Briffett v. Gander and District Hospital, [1996]</p><p>N.J. No. 34, C.A. at paras. 146-149; Linden, Canadian Tort Law, 5th ed., supra,</p><p>footnote 41, pp. 333-4.</p><p>69. Duwyn v. Kaprielian (1978), 94 D.L.R. (3d) 424, 22 O.R. (2d) 736 at p. 739, 7</p><p>C.C.L.T. 121 (C.A.); Linden, ibid., at p. 333.</p><p>1998]</p><p>378 Advocates Quarterly</p><p>between the two has been expressed,' although the issue may well</p><p>be academic in the usual type of mitigation case. In the leading</p><p>Supreme Court of Canada decision on mitigation and the thin-skull</p><p>rule, Wilson J. said that references to "proximate cause" and "inter-</p><p>vening cause" did not elucidate the problem, and rather than pro-</p><p>viding a rationale for the legal issue, predetermined it. She adopted</p><p>a passage which stated that it was more precise to say that perform-</p><p>ing the mitigating act would have avoided the part of the loss in</p><p>question, and therefore damages cannot be recovered for that avoid-</p><p>able loss.71 That statement, which is perhaps another way of saying</p><p>that recovery should not be available as a matter of policy for a vol-</p><p>untarily incurred loss, does not, however, provide assistance in the</p><p>situation where the plaintiff is unable, for example because of pre-</p><p>existing impecuniosity, to take that mitigating step. In that situation,</p><p>the underlying factors of foreseeability and/or policy remain rele-</p><p>vant, although it should be noted that failure to mitigate due to a pre-</p><p>existing condition of impecuniosity is one step removed from the</p><p>usual thin-skull situation. The latter involves unexpectedly severe or</p><p>prolonged loss or damage, whereas the former involves the unex-</p><p>pected inability to avoid or reduce expected loss or damage. In addi-</p><p>tion, the inability to mitigate due to impecuniosity is not as close to</p><p>the end of the scale of certainty/impossibility as is the inability to</p><p>avoid aggravated injury due to a physical or psychological suscep-</p><p>tibility.</p><p>Should the Thin-Skull Rule be Extended to Include</p><p>Impecunious Plaintiffs?7 2</p><p>If the matter turns on the foreseeability test of remoteness, it</p><p>would be difficult to argue with the proposition that impecuniosity</p><p>is not at least as, and probably significantly more, prevalent as a pre-</p><p>existing condition than is an unusual susceptibility to physical or</p><p>psychological injury. Vide the statement by Wilson J.A. (as she then</p><p>then was): "Neither the class or kind nor the extent of the injury, it</p><p>70. Cotic v. Gray, supra, footnote 65, at pp. 174-5 C.C.L.T.</p><p>71. Janiak v. Ippolito, supra, footnote 63, at p. 18 D.L.R.</p><p>72. In Amar Cloth House Ltd. v. La Van & Co., [1997] 6 W.W.R. 382 at p. 395, 33</p><p>B.C.L.R. (3d) 312, [19971 B.C.J. No. 1048 at para 43 (S.C.), this question was</p><p>reversed. Huddart J. asked</p><p>Should Liesbosch be considered as an exception to the thin-skull rule, an</p><p>exception that singles out impecunious individuals who are victims of</p><p>another's wrongdoing?</p><p>[Vol. 20</p><p>Case Comments 379</p><p>seems to me, can be reasonably foreseen in the case of a thin-skull</p><p>victim." 3 Even if a similar view could be taken of pre-existing</p><p>impecuniosity, the following remark, substituting "impecuniosity"</p><p>for "medical error", would be apt: "I have concluded that it is prefer-</p><p>able to treat medical error as a fact of life and therefore reasonably</p><p>foreseeable within the principle of the Wagon Mound." Also note-</p><p>worthy is the modified test of foreseeability, which requires fore-</p><p>sight only of a possibility of injury.75 On that test, the inability of a</p><p>plaintiff to mitigate because of pre-existing impecuniosity would</p><p>certainly be reasonably foreseeable.</p><p>If, on the other hand, policy considerations are to be determina-</p><p>tive, the answer is not quite so straightforward. As usual, policy jus-</p><p>tifications can be advanced on both sides of the issue.</p><p>The starting point should be two general principles. The first is</p><p>that "The essential purpose and most basic principle of tort law is</p><p>that the plaintiff must be placed in the position</p><p>he or she would have</p><p>been in absent the defendant's negligence ... However, the plaintiff</p><p>is not to be placed in a position better than his or her original one. 76</p><p>The qualification was then added, when considering the thin-skull</p><p>and crumbling-skull doctrines, that "the plaintiff must be returned to</p><p>the position he would have been in, with all of its attendant risks and</p><p>shortcomings, and not a better position".77 The second is the view</p><p>that the wrongdoer, not the innocent plaintiff, should bear the bur-</p><p>den of the plaintiff's loss, even if the extent of that loss is unex-</p><p>pected.8</p><p>On the other hand, as stated by Lord Hoffman: 79</p><p>73. Cotic v. Gray, supra, footnote 65, at p. 178 C.C.L.T.</p><p>74. Duwyn v. Kaprielian, supra, footnote 69, at p. 739 O.R., per Morden J.A.</p><p>75. Footnote 51.</p><p>76. Athey v. Leonati (1996), 140 D.L.R. (4th) 235 at para. 32, [1996] 3 S.C.R. 458, per</p><p>Major J.</p><p>77. Ibid, at para. 35. The importance of this "governing principle" in cases involving</p><p>difficulty fitting the problem within conventional legal precepts such as foresee-</p><p>ability, causation, proximity and remoteness is emphasized in Morrison v.</p><p>Pankratz (1995), 122 D.L.R. (4th) 352 at para. 94, [19951 5 W.W.R. 69, 3</p><p>B.C.L.R. (2d) 1 (C.A.), although there it was held that the principle of restitution</p><p>did not require payment of the loss claimed.</p><p>78. Linden, Canadian Tort Law, 5th ed., supra, footnote 41, pp. 320 and 321; Bloor</p><p>Italian Gifts Ltd. v. Dixon, [1997] O.J. No. 3088 (Gen. Div.), at para. 17.</p><p>79. South Australia Asset Management Corp. v. York Montague Ltd., [1996] 3 All E.R.</p><p>365 (H.L.) at p. 371. A similar remark was quoted in Bow Valley Huskey</p><p>(Bermuda) v. Saint John Shipbuilding (1997), 153 D.L.R. (4th) 385, 221 N.R. 1,</p><p>[1997] S.C.J. No. 111 at para. 50.</p><p>1998]</p><p>380 Advocates Quarterly</p><p>There is no reason in principle why the law should not penalise wrongful</p><p>conduct by shifting on to the wrongdoer the whole risk of consequences which</p><p>would not have happened but for the wrongful act ... But that is not the nor-</p><p>mal rule ...</p><p>Rules which make the wrongdoer liable for all the consequences of his</p><p>wrongful conduct are exceptional and need to be justified by some special pol-</p><p>icy.</p><p>It was the perceived injustice of holding a defendant liable for all of</p><p>the direct consequences of his wrongdoing that led to the rejection</p><p>of the Polemis0 test of remoteness."1 Should a defendant, for exam-</p><p>ple, be liable for additional loss arising from the plaintiff's lack of</p><p>fluency in the English language and from his lack of education? 2</p><p>That brings us full circle to the question whether there are any</p><p>special policy considerations that would warrant departure from the</p><p>ordinary rules of remoteness in regard to the impecuniosity issue.</p><p>The wrongdoing presumably would not involve fraud 3 or inten-</p><p>tional misconduct" or breach of a fiduciary duty, 5 all of which are,</p><p>or at least may in the circumstances be, recognized exceptions to the</p><p>general rule. One obvious answer is that to deny compensation for a</p><p>loss caused by pre-existing impecuniosity constitutes discrimination</p><p>against, and penalization of, plaintiffs who were impecunious at the</p><p>time of the wrongdoing through no fault of their own." The impor-</p><p>tance of the inability, as contrasted to unwillingness, of such plain-</p><p>tiffs to mitigate their losses has been the subject of comment. 7</p><p>Employing the language of Lord Hoffman, it would not be "fair and</p><p>reasonable as between the parties" to penalize a plaintiff for the con-</p><p>sequences of a pre-existing condition arising from circumstances</p><p>not involving any fault on his part.88 Against this, the "idea that a</p><p>80. Polemis and Furniss, Withy & Co. Ltd. (Re), [1921] 3 K.B. 560.</p><p>81. Linden, Canadian Tort Law, 5th ed. supra, footnote 41, pp. 307-8.</p><p>82. The question was posed, but not answered, in De Sousa v. Kuntz (1988), 24</p><p>B.C.L.R. (2d) 206, 28 C.P.C. (2d) 213, [1988] B.C.J. No. 36 (S.C.).</p><p>83. South Australia Asset Management Corp., supra, footnote 79, at pp. 373-4.</p><p>84. Ronald Elwyn Lister Ltd. v. Dayton Tire Canada Ltd. (1985), 52 O.R. (2d) 88</p><p>(C.A.) at p. 107.</p><p>85. Hodgkinson v. Simms (1994), 117 D.L.R. (4th) 161 at pp. 199-203, [1994] 3 S.C.R.</p><p>377, [1994] 9 W.W.R. 609.</p><p>86. S.M. Wexler, "The Impecunious Plaintiff: Liesbosch Reconsidered" (1987), 66</p><p>Can. Bar Rev. 129; Rollinson v. Canada (1994), 20 C.C.L.T. (2d) 92, 73 F.T.R.</p><p>[1994] I.L.R. 93-594 (T.D.).</p><p>87. Janiak v. Ippolito (1985), 16 D.L.R. (4th) 1 at pp. 11-13, [1985] 1 S.C.R. 146, 9</p><p>O.A.C. 1.</p><p>88. South Australia Asset Management Corp., supra, footnote 79, at p. 372.</p><p>[Vol. 20</p><p>Case Comments 381</p><p>plaintiff must take care of himself'' 9 falls short because the very</p><p>point here is that the plaintiff, through no fault of his own, is inca-</p><p>pable of keeping down his loss. It is only in situations in which some</p><p>form of blame can be attached to the plaintiff regarding his pre-</p><p>existing condition of impecuniosity that the latter policy considera-</p><p>tion should prevail over the former. Such situations would include</p><p>poor business practice such as commencing a business operation or</p><p>entering into a transaction without adequate capital or financing, as</p><p>opposed to impecuniosity developing without any fault on the part</p><p>of the plaintiff.'</p><p>There are other matters and legal principles that should be con-</p><p>sidered. First is the general nature of the thin-skull rule, as exempli-</p><p>fied by the statement "The tortfeasor must take his or her victim as</p><p>the tortfeasor finds the victim, and is therefore liable even though</p><p>the plaintiff's losses are more dramatic than they would be for the</p><p>average person."'" Is there any more basis for giving a restrictive</p><p>application to the doctrine where financial losses are sustained than</p><p>would be given in cases where physical or psychological injuries are</p><p>suffered?"2 Lord Collins, in the earlier House of Lords decision dis-</p><p>tinguished in Liesbosch, answered that in the negative.93 The fact</p><p>that the thin-skull doctrine has been extended to property-damage</p><p>claims lends strong support to this view, ' while the refusal to extend</p><p>89. De Sousa v. Kuntz, supra, footnote 82.</p><p>90. In Alberta Caterers Ltd. v. R. Vollan Alberta Ltd. (1977), 81 D.L.R. (3d) 672 at p.</p><p>683, 5 C.P.C. 135 (Alta. S.C.), Cavanagh J. said:</p><p>That impecuniosity was not created by the defendants. That condition was</p><p>created by the plaintiff itself. It risked its all on this venture. It did not have a</p><p>reserve fund for contingencies. It gambled that nothing would happen before it</p><p>could earn some money to meet contingencies. It lost that gamble.</p><p>That view, however, should not have been formed without first considering the</p><p>business legitimacy of that "gamble".</p><p>91. Athey v. Leonati (1996), 140 D.L.R. (4th) 235 at para. 34, [1996] 3 S.C.R. 458,per</p><p>Major J.</p><p>92. The question asked in Yoshikawa v. Yu, [1996] 8 W.W.R. 239, 21 B.C.L.R. (3d)</p><p>318, 28 C.C.L.T. (2d) 217 at p. 226, para. 19 (C.A.).</p><p>93. Clippens Oil Co., Ltd. v. Edinburgh and District Water Trustees, [1907] A.C. 291</p><p>at p. 303.</p><p>94. Oakville Storage & Forwarders Ltd. v. C.N.R. Co. (1991), 80 D.L.R. (4th) 675, 3</p><p>O.R. (3d) 1, 46 O.A.C. 292 at paras. 80-82, sub nom. Armak Chemicals Ltd. v.</p><p>Canadian National Railway Co., leave to appeal to S.C.C. refused 84 D.L.R. (4th)</p><p>viii, 6 O.R. (3d) xiii, although it should be noted that the thin-skull nature of the</p><p>building there was known to all concerned parties at the time of the wrongdoing.</p><p>That, however, was apparently not so in the decision there relied upon, C.N.R. Co.</p><p>v. Canadian Steamship Lines Ltd., [1947] 4 D.L.R. 505, [1947] O.R. 585, 61</p><p>1998]</p><p>382 Advocates Quarterly</p><p>it to nervous-shock claims has the opposite effect.95 Secondly, the</p><p>court should not "ignore the practical realities",96 which Professor</p><p>Wexler identified as insurance coverage being "part of the reality</p><p>behind tort","7 to which might be added the unfortunately continued</p><p>prevalence of impecuniosity among large segments of society. As to</p><p>insurance coverage, however, not all defendants are insured, and</p><p>even when they are, some claims are outside</p><p>of coverage. Thirdly, a</p><p>strong analogy can be made to the rule, recently confirmed by the</p><p>Supreme Court of Canada, that if the defendant's wrongdoing is</p><p>found to be one of two or more causes of the plaintiff's injury, and</p><p>if that injury would not have occurred without that wrongdoing,</p><p>then the defendant is liable for the full extent of the injury, the only</p><p>condition being that the wrongdoing "materially contributed" to the</p><p>occurrence of the injury, a contributing factor being "material" if it</p><p>falls outside the de minimis range. "8 When the concurrent cause is a</p><p>pre-existing condition related to the plaintiff, such as impecuniosity,</p><p>this rule essentially constitutes a reformulation of the thin-skull doc-</p><p>trine, but without any limitation as to the type of injury for which</p><p>claim is made. This confluence of the doctrines of causation and</p><p>mitigation is hardly surprising, as mitigation is "rooted in causa-</p><p>tion"."</p><p>Perhaps the strongest argument is this: The reduction of a plain-</p><p>tiff's damages is based not on the breach of a duty to mitigate</p><p>(because there is no such duty in law),'" but rather on the policy that</p><p>a reasonably avoidable loss ought not to be recoverable because, in</p><p>effect, it has been voluntarily incurred. That policy consideration</p><p>does not apply when the plaintiff's pre-existing impecuniosity arose</p><p>through no fault of his own, and the concept of remoteness should</p><p>be inapplicable (except when initially considering whether the loss</p><p>C.T.R.C. 217, affd [1948] 2 D.L.R. 440,[1948] O.R. 311, 62 C.R.T.C. 279 (C.A.),</p><p>affd [1949] 2 D.L.R. 461, 64 C.R.T.C. 196 (S.C.C.).</p><p>95. Duwyn v. Kaprielian (1978), 94 D.L.R. (3d) 424, 22 O.R. (2d) 736 at p. 754, 7</p><p>C.C.L.T. 121 (C.A.).</p><p>96. Morrison v. Pankratz (1995), 122 D.L.R. (4th) 352 at para. 55, [1995] 5 W.W.R.</p><p>69, 3 B.C.L.R. (2d) 1 (C.A.), per Prowse J.A., dissenting in part.</p><p>97. S.M. Wexler, "The Impecunious Plaintiff: Liesbosch Reconsidered" (1987), 66</p><p>Can. Bar Rev. 129 at p. 144.</p><p>98. Athey v. Leonati, supra, footnote 91, at paras. 12-20. This is essentially the com-</p><p>mon law joint and several rule of liability restated in the context of causation.</p><p>99. Hodgkinson v. Simms (1994), 117 D.L.R. (4th) 161 at p. 208, [1994] 3 S.C.R. 377,</p><p>[1994] 9 W.W.R. 609, per La Forest J.</p><p>100. See The "Duty" To Mitigate above [galley p. 1].</p><p>[Vol. 20</p><p>Case Comments 383</p><p>claimed is remote in law) because the issue of whether to exclude</p><p>that otherwise recoverable loss does not turn on the breach of a duty.</p><p>As with the thin-skull rule generally, "there are difficulties fitting</p><p>this problem within conventional legal precepts, particularly fore-</p><p>seeability, causation, proximity, remoteness and res inter alios</p><p>acta".101 While it is desirable to put in place a consistent rule, 02 and</p><p>in thin-skull cases (assuming that doctrine is extended to pre-</p><p>existing impecuniosity) it should not be difficult to adopt a stable</p><p>legal rule, 03 that rule nevertheless should not be so inflexible as to</p><p>be applied in any and all circumstances.'10 For example, it may well</p><p>be considered right and proper to deny recovery of the additional</p><p>loss arising from a plaintiff's lack of English fluency and lack of</p><p>education 5 if he had failed to make appropriate effort in regard to</p><p>those matters.</p><p>Causation and the "Crumbling-Skull" Doctrine</p><p>The "but for" test for causation-in-fact is a fundamental part of</p><p>the law of tort," subject only to somewhat relaxed rules of proof</p><p>when circumstances so warrant,0 7 and it is equally applicable to</p><p>thin-skull claims."° As indicated earlier," a defendant whose</p><p>wrongdoing materially contributes to an injury which would not</p><p>101. Morrison v. Pankratz, supra, footnote 96, at para. 94, per McEachern C.J.B.C.</p><p>102. Bow Valley Huskey (Bermuda) v. Saint John Shipbuilding (1997), 153 D.L.R.</p><p>(4th) 385, 221 N.R. 1, [1997] S.C.J. No. 111 at paras. 45 and 50; Yoshikawa v.</p><p>Yu, supra, footnote 92, at p. 226, para. 17.</p><p>103. Linden, Canadian Tort Law, 5th ed., supra, footnote 41, at p. 320.</p><p>104. De Sousa v. Kuntz (1988), 24 B.C.L.R. (2d) 206, 28 C.P.C. (2d) 213, [1988]</p><p>B.C.J. No. 36 (S.C.) quoting from Jobling v. Associated Dairies Ltd., [1981] 2 All</p><p>E.R. 752 (H.L.). See also, Bow Valley Huskey v. Saint John Shipbuilding, supra,</p><p>footnote 102, at para. 50.</p><p>105. Footnote 75.</p><p>106. Stewart v. Pettie (1995), 121 D.L.R. (4th) 222, [1985] 1 S.C.R. 131, 23 C.C.L.T.</p><p>(2d) 89 at paras. 59-68; South Australia Asset Management Corp. v. York</p><p>Montague Ltd., [1996] 3 All E.R. 365 (H.L.) at p. 374.</p><p>107. Athey v. Leonati (1996), 140 D.L.R. (4th) 235 at paras. 15-16, [1996] 3 S.C.R.</p><p>458. The statement was made in para. 15 that the "but for" test is unworkable in</p><p>some circumstances, leaving the impression that in those cases it is neither</p><p>required nor applied. It is suggested that a more appropriate comment would be</p><p>that the "but for" test is always applied, although it is not necessary to show that</p><p>the defendant's wrongdoing was the sole cause of the injury, and in some cir-</p><p>cumstances the manner of satisfying the test will be relaxed.</p><p>108. Cotic v. Gray (1981), 124 D.L.R. (3d) 641, 33 O.R. (2d) 356, 17 C.C.L.T. 138 at</p><p>p. 178 (C.A.), affd 26 C.C.L.T. 163 (S.C.C.).</p><p>109. See, supra, footnote 98.</p><p>1998]</p><p>384 Advocates Quarterly</p><p>otherwise have occurred is liable, despite the presence of other con-</p><p>tributing causes, for the full extent of the plaintiff's damages. 110</p><p>Decisions which have held the defendant in such situations liable on</p><p>an apportionment basis"' have been effectively overruled."'</p><p>That does not, however, preclude the application of the "crum-</p><p>bling skull" doctrine in appropriate circumstances. The difference</p><p>between this and the thin-skull doctrine is that here there is some</p><p>chance that the injury, perhaps to a lesser extent and perhaps at a</p><p>later date, would have occurred even without the defendant's</p><p>wrongdoing. The difficulty here involves the matter of proof. In</p><p>most cases the defendant will be hard put to show whether, and if so</p><p>with what likelihood, the loss or damage would have occurred even</p><p>absent the defendant's wrongdoing, and the extent and timing of</p><p>that loss or damage were it to have occurred anyway. There are two</p><p>principles that ought to be applied to this problem. The first is that</p><p>"A future or hypothetical possibility will be taken into consideration</p><p>as long as it is a real and substantial possibility and not mere spec-</p><p>ulation."' 13 That principle is applicable both to positive and negative</p><p>contingencies,"' and ought therefore to be available to a defendant</p><p>raising a crumbling skull defence."5 The second involves the man-</p><p>ner of proof. Causation, at least from a plaintiff's perspective, is</p><p>"essentially a practical question of fact which can best be answered</p><p>by ordinary common sense" and, in some circumstances, can be</p><p>proved by way of inference without positive scientific proof."'6 A</p><p>defendant should equally have the benefit of that principle in regard</p><p>to a crumbling-skull defence.</p><p>110. An example of that principle being applied in a thin-skull claim is Briffett v.</p><p>Gander and District Hospital, [1996] N.J. No. 34 (C.A.) at paras. 151-62.</p><p>111. See Wall v. Phan (1996), 29 C.C.L.T. (2d) 31 (B.C.S.C.) at paras. 21-7, follow-</p><p>ing Pryor v. Baines (1986), 69 B.C.L.R. 395 (C.A.). See also Kardan v. Bartholdt</p><p>(1995), 83 O.A.C. 158 (C.A.) at para. 11 (ambiguous comments).</p><p>112. Athey v. Leonati, supra, footnote 107, at paras. 12 and 19-20. The position in</p><p>England appears to be different: South Australia Asset Management Corp. v. York</p><p>Montague Ltd., [1996] 3 All E.R. 365 (H.L.) at p. 374.</p><p>113. Athey v. Leonati, ibid., at paras. 26-8.</p><p>114. Schrump v. Koot (1977), 82 D.L.R. (3d) 553, 18 O.R. (2d) 337 at p. 340, 4</p><p>C.C.L.T. 74 (C.A.); Graham v. Rourke (1990), 74 D.L.R. (4th) 1, 75 O.R. (2d)</p><p>662 at p. 634, 40 O.A.C. 301 (C.A.); Ziehlke v. Amisk Drilling Co. (1993), 110</p><p>D.L.R. (4th) 172, [1994] 2 W.W.R. 107, 92 Man. R. (2d) 83 (C.A.).</p><p>115. See, however, Briffett. v. Gander and District Hospital, [1996] N.J. No. 34 (C.A.)</p><p>at paras. 151-63, relying on Hotson v. East Berkshire</p><p>Area Health Authority,</p><p>[1987] A.C. 750.</p><p>116. Athey v. Leonati, supra, footnote 107, at para. 16.</p><p>[Vol. 20</p><p>Case Comments 385</p><p>The application of these principles would, at least to some degree,</p><p>offset the difficulties inherent in the proof of most crumbling-skull</p><p>defences. A problem exists, however, in that the same decision cited</p><p>for these principles also held that there is need for a finding that</p><p>there was a "measurable risk" that the pre-existing condition would</p><p>have detrimentally affected the plaintiff in the future even had there</p><p>been no wrongdoing by the defendant."7 If the term "measurable</p><p>risk" means something more than "a real and substantial possibility</p><p>and not mere speculation", or if it requires proof with scientific pre-</p><p>cision or on a standard higher than that referred to above, a defen-</p><p>dant raising a crumbling-skull defence will be in a position of</p><p>serious difficulty. The arguments regarding discrimination against</p><p>and penalization of impecunious plaintiffs would then be equally</p><p>applicable here.</p><p>Miscellaneous Matters</p><p>The onus of proving that the plaintiff could and should have mit-</p><p>igated his loss rests with the defendant,"' while the onus of proving</p><p>pre-existing impecuniosity and the inability to raise or borrow the</p><p>funds necessary to take the reasonable steps which would have mit-</p><p>igated the loss, rests with the plaintiff."9 If a finding of failure to rea-</p><p>sonably mitigate is made, the plaintiff should be credited with the</p><p>amount of money he would have expended had he in fact miti-</p><p>gated, 20 meaning that the reduction in his damages claim should</p><p>only be a net reduction. Finally, in those cases in which the inabil-</p><p>ity to mitigate due to impecuniosity creates a continually rising loss,</p><p>the time taken by the plaintiff to commence and get the action to</p><p>trial should be a relevant consideration.</p><p>On a closing note, the most recent decision available at the time</p><p>117. Ibid., at paras. 34-6. See also Briffett v. Gander and District Hospital, supra, foot-</p><p>note 115 at para. 156, referring to a "definable aggravating impact".</p><p>118. Janiak v. Ippolito (1985), 16 D.L.R. (4th) 1 at p. 14, [1985] 1 S.C.R. 146, 9</p><p>O.A.C. 1.</p><p>119. Bloor Italian Gifts Ltd. v. Dixon, [1997] O.J. No. 3088 (Gen. Div.), at para. 20;</p><p>Marigold Hldgs Ltd. v. Norem Const. Ltd., [1988] 5 W.W.R. 710 at pp. 765-6,89</p><p>A.R. 81, 31 C.L.R. 1 (Q.B.); Carpentier v. Goulard, [1993] O.J. No. 1933 (Gen.</p><p>Div.), at paras. 24-7; Matthews v. Grand Bank (Town) (1994), 119 Nfld. &</p><p>P.E.I.R. 16 (Nfld. S.C.), at paras. 11-16; Bishop v. Brown, [1993] B.C.J. No. 2493</p><p>(S.C.) at paras. 13-15; Millport Industrial Construction Ltd. v. Toronto Arts</p><p>Productions, [1984] O.J. No. 393 (H.C.J.), at para. 37.</p><p>120. M & M Fashions Ltd. v. Blackbeard's Restaurant Ltd. (1986), 68 A.R. 37 (Q.B.),</p><p>at paras. 88 and 94.</p><p>1998]</p><p>386 Advocates Quarterly</p><p>of preparation of this article makes reference to both sides of the</p><p>argument, but does not choose between them.'</p><p>Conclusion</p><p>There is no legal duty to mitigate. The disallowance of damages</p><p>that reasonably could have been avoided rather is based on the pol-</p><p>icy consideration that loss or damage which is voluntarily incurred</p><p>should not be recoverable. The inability to avoid aggravated loss</p><p>due to impecuniosity caused by the wrongdoing does not attract the</p><p>rule of non-recoverability, nor should inability due to pre-existing</p><p>impecuniosity, unless fault can be attributed to the plaintiff, as for</p><p>example by having entered into a transaction without adequate cap-</p><p>ital or financing. Pre-existing impecuniosity is no more blamewor-</p><p>thy, nor any less foreseeable, than an unusual susceptibility to</p><p>physical or psychological injury, and therefore should be treated no</p><p>differently than those types of "thin-skull" claims. The "crumbling-</p><p>skull" doctrine, on the other hand, should be available to the defen-</p><p>dant to show that some or all of the aggravated loss arising from the</p><p>plaintiff's impecuniosity probably would, or even might, have</p><p>occurred in any event.</p><p>Hillel David*</p><p>Jason Balgopal*</p><p>Leah Bowness*</p><p>David Levy*</p><p>121. Alton Artisans Guild In The Carriage Works Inc. v. Clearway Construction Ltd.,</p><p>unreported (January 16, 1998, Ont. Ct. Gen. Div.)), summarized 77 A.C.W.S.</p><p>(3d) 315.</p><p>* Of Thomson Rogers, Toronto.</p><p>* Student-at-Law.</p><p>* Student-at-Law.</p><p>* Student-at-Law.</p><p>[Vol. 20</p>