Sunshine Exploration Ltd. et al. v. Dolly Varden Mines Ltd. (N.P.L.)

Cunningham v. Insinger, [1924] S.C.R. 8, fol-

J.-This appeal is in an action for damages for breach of contract brought by the respondent against the appellants. The breach is admitted and the sole issue before the Court is as to the measure of damages.

The respondent, hereinafter referred to as

"Dolly Varden", entered into an agreement made on March 4, 1964, and dated, for reference,

February 1, 1964, with the appellant, Sunshine

Exploration Ltd., an Alberta company, registered in British Columbia. This company is a wholly owned subsidiary of Sunshine Mining

Company, incorporated in the State of Idaho, which could not be registered in British Columbia as its name was similar to another company, already registered in that province. Because of this, the agreement was made by the subsidiary company, but the parent company agreed with

Dolly Varden and with the subsidiary that the subsidiary was an agent of the parent to perform the mining operations required under the agreement and that the parent should be liable to

Dolly Varden as though it had executed the agreement.

For the purposes of this appeal, the legal situation of both appellants is the same and I will refer to them both, jointly, as "Sunshine" as

Arr8t suivi: Cunningham c. Insinger, [1924] R.C.S. 8. Distinction faite avec les arrits: Cotter c. General Petroleums Ltd. et al., [1951] R.C.S. 154; Wigsell c. School for Indigent Blind (1882),

Q.B.D. 357; James c. Hutton et J. Cook & Sons Ltd., [1950] 1 K.B. 9.

APPEL d'un jugement de la Cour d'appel de la Colombie-Britanniquex, rejetant un appel et accueillant un contre-appel d'un jugement du Juge McIntyre. Appel rejet6.

W. J. Wallace, c.r., et Jurgen Law, pour les d6fenderesses, appelantes.

John L. Farris, c.r., et George S. Cumming, pour la demanderesse, intimbe.

Le jugement de la Cour a 6t6 rendu par LE JUGE MARTLAND-Le pourvoi d6coule d'une action en dommages pour rupture de contrat, intent6e par l'intim6e contre les appelantes. Les parties admettent la rupture du contrat et la seule question h trancher en cette Cour est celle du montant des dommages.

L'intim6e, ci-apris appel6e «Dolly Varden>, a, le 4 mars 1964, pass6 un contrat portant la date formelle du ler f6vrier 1964, avec l'appelante, Sunshine Exploration Ltd., une soci6t6 de 1'Alberta enregistr6e en Colombie-Britannique. Cette soci6t6 est une filiale A 100 p. 100 de la Sunshine

Mining Company, constitu6e dans l'tat d'Idaho, qui ne pouvait pas se faire immatriculer en Colombie-Britannique parce que son nom ressemblait A celui d'une autre soci6t6 qui y 6tait d6jh immatricule. Pour cette raison, c'est la filiale qui a sign6 le contrat, mais il 6tait convenu entre la soci6t6 mire et Dolly Varden, de mme qu'entre la soci6t6 mire et la filiale, que celle-ci agissait A titre d'agent de la premiere pour 'ex6cution des travaux miniers qu'elle s'engageait A faire en vertu du contrat et que la soci6t6 mare serait tenue envers Dolly Varden aux mimes obligations que si elle avait 6t6 partie au contrat.

Aux fins du pr6sent pourvoi, la situation juridique des deux appelantes est la meme et je les d6signerai toutes deux sous le nom de <Sunthough they constituted, together, one party to the agreement.

By the terms of the agreement, Dolly Varden, which is the owner of certain mining properties in British Columbia, described in the agreement, granted to Sunshine an exclusive right, at Sunshine's expense, to explore and develop those properties. The agreement contemplated four stages of development. The first was exploratory, to enable Sunshine to determine what mining operations it was prepared to conduct during later stages. The second stage involved further exploration and was to continue until commercial production was obtained. The third stage was a period for the recovery, out of production, of the respective investments of the parties. The fourth stage was defined as "the remaining life of the agreement" (for a maximum of 50 years)

during which the parties would share equally any profits realized from production.

Sunshine was given the right to elect whether or not it would proceed from the first to the second stage, and, as matters turned out, it never did so proceed.

Dolly Varden agreed, on the closing date, to assign and convey to Sunshine one half of its interest in the mining properties described in the agreement. Sunshine agreed to deposit with an escrow agent documents to evidence a complete reconveyance of the half interest to Dolly Varden, which were to be delivered to that company if Sunshine terminated the agreement or failed to give notice of its intention to proceed to the second development stage. In the event, these documents were so delivered.

The first development period was defined as follows:

The First Stage or the First Development Period shall mean the period commencing from the Closing

Date and ending on December 31, 1964 unless extended by written notice given by the Operator

(Sunshine) to the Company (Dolly Varden) before

November 30, 1964 whereupon the First Development Period shall end on June 30, 1965.

shine>, comme s'il s'agissait d'une seule et mime partie au contrat.

Selon les termes de ce contrat, Dolly Varden accordait A Sunshine le droit exclusif de faire la prospection et 1'exploitation de certaines de ses propri6t6s minibres, situdes en Colombie-Britannique et d6signies dans la convention, le tout aux frais de Sunshine. Le contrat pr6voyait quatre 6tapes dans la mise en valeur. La premiere 6tape, la prospection, devait permettre & Sunshine de d6terminer quels travaux miniers elle pourrait effectuer A des stades ult6rieurs. La deuxibme comportait d'autres travaux de prospection et devait aboutir A l'exploitation commerciale. La troisibme phase devait permettre h chacune des parties de r6cup6rer leur mise de fonds respective h mime la production. Durant la quatri&me 6tape, d6signie comme la dur6e suppl6mentaire de validit6 du contrat (soit 50 ans au maximum), il 6tait pr6vu que les parties diviseraient 6galement les profits tir6s de I'exploitation.

Sunshine avait le privilege de d6cider si elle s'engageait dans la deuxibme 6tape, aprbs avoir termin6 la premi&re. Il s'est trouv6 que, de fait, elle n'a jamais entrepris la deuxibme 6tape. Dolly Varden avait convenu, au moment de la signature du contrat, de c6der & Sunshine la moiti6 des int6r~ts qu'elle poss6dait dans les propri6t6s minibres d6sign6es dans la convention. Sunshine 6tait d'accord pour remettre A un d6positaire public toutes les pices constatant la r6trocession complkte A Dolly Varden de cette moiti6 des int6rts, lequel d6positaire devait remettre ces pieces A Dolly Varden si Sunshine mettait fin au contrat ou n6gligeait de signifier son intention de s'engager dans la deuxibme phase des travaux. De fait, on a remis ces piices A Dolly Varden. La premidre 6tape de mise en valeur se d6finissait comme suit:

La premibre 6tape ou p6riode de mise en valeur signifie la p6riode commengant le jour de la signature du pr6sent contrat et se terminant le 31 d6cembre 1964, h moins que l'entrepreneur (Sunshine) n'avise par 6crit la compagnie (Dolly Varden), avant le 30 novembre 1964, de son intention de prolonger la premibre p6riode de mise en valeur, auquel cas cette dernibre se prolongera jusqu'au 30 juin 1965.

Regarding the first stage of development, Sunshine covenanted as follows:

6.01 Forthwith after the Closing Date it will enter upon the Mining Property and undertake the development program which is generally described in Schedule F hereto (herein referred to as "the development program") provided that in any event the Operator shall be free during the First Development Period to accelerate, retard or vary such program as it progresses.

6.02 Notwithstanding any termination provision herein contained the Operator will expend in the development program as set out in Schedule F hereto during the period ending December 31,

1964 not less than $250,000 and will maintain the

Mining Property during the First Development

Period, reasonable wear and tear and loss by fire and the elements excepted.

6.03 If the Operator shall have notified the

Company of its intention to extend the First Development Period to June 30, 1965 it shall thereupon be obligated to expend in development in each quarterly period or any part thereof between

January 1, 1965 and June 30, 1965 not less than

$60,000 which shall include the maintenance of the Mining Property during such extension period.

Sunshine also agreed to consult with an officer of Dolly Varden on all phases of the development program; to give him progress reports at least monthly; and to give him reports, on request, as to the results of drilling, sampling and other engineering data. Sunshine was required to maintain complete records and sufficient surveys, assays, maps and logs so that Dolly Varden would be fully informed as to the nature and character of the mine workings and the operations performed.

Between March and October, 1964, exploration work was done and Sunshine expended some

$348,000. However, this work was not done to the satisfaction of Dolly Varden, which complained that it was not being provided with

Sunshine s'6tait engagee aux conditions qui suivent, quant A la premibre 6tape de mise en valeur:

6.01 Dis la signature des pr~sentes, i prendre possession des propri6tis minibres et h ex6cuter le programme de mise en valeur d6crit en termes gbn6raux h l'annexe %F,) ci-apris (d6sign6e sous le nom de aprogramme de mise en valeurz), I'entrepreneur se r6servant cependant la libert6, quelles que soient les circonstances, d'acc6l6rer, de retarder ou de modifier l'ex~cution dudit programme, au fur et A mesure.

6.02 Nonobstant toute disposition des pr6sentes relative A la cl6ture de ladite premibre 6tape, A d6penser au moins $250,000, avant le 31 d6cembre 1964, pour l'ex6cution du programme de mise en valeur mentionn6 dans l'annexe cF- des pr6sentes et i entretenir la propri6t6 minibre, 6tant convenu qu'il ne r6pondra pas de la d6pr6ciation raisonnable, des risques d'incendie ou de ceux de la nature.

6.03 Si l'entrepreneur veut prolonger la dure de la premibre 6tape de mise en valeur jusqu'au 30 juin 1965 et qu'il avise la Compagnie en cons6quence, il s'engage A d6penser la somme d'au moins $60,000 par trimestre, ou fraction de trimestre, entre le 1" janvier 1965 et le 30 juin 1965, pour la mise en valeur de la propri6t6, les frais d'entretien de ladite propri6t6 minibre, pendant tel d6lai, 6tant inclus dans cette somme suppl6mentaire.

Sunshine avait 6galement convenu de se maintenir en rapport avec un administrateur de Dolly Varden h tous les stades de mise en route du programme d'exploitation, de lui rendre compte, au moins tous les mois, de la marche des travaux et de lui fournir, sur demande, des rapports concernant le forage, l'6chantillonnage et autres donn6es techniques. Sunshine devait tenir A jour des dossiers complets et des registres d6taill6s des lev6s, des plans et des analyses, de fagon & tenir Dolly Varden parfaitement renseign6e sur la nature et les caract6ristiques des travaux miniers et de leur ex6cution.

Sunshine a fait du forage de mars A octobre 1964, auquel elle a consacr6 quelque $348,000. Cependant, Dolly Varden 6tait insatisfaite des travaux parce que, disait-elle, Sunshine ne lui avait pas fourni d'6tats r6guliers des d6penses et proper reports of expenditures and on work done, and that Sunshine had changed materially the emphasis of the drilling program.

On November 30, 1964, Dolly Varden received notice that Sunshine proposed to enter the second development period. On January 14,

1965, Dolly Varden gave notice of default to

Sunshine, specifying a large number of points in respect of which defaults under the agreement were alleged.

Thereafter, there were various meetings between the directors of Dolly Varden and of

Sunshine, as a result of which, finally, an amending agreement was executed, dated, formally,

January 22, 1965. Under the provisions of this latter agreement:

Notwithstanding any termination provision herein contained, the Operator, during the remainder of the First Development Period but prior to October 1,

1965, will perform the work outlined in Schedule

"A" to this Agreement. Once the Operator commences the work outlined in Schedule "A" hereto, it will proced therewith continuously and at no time during the performance of the work outlined in

Schedule "A" hereto will the properties be left with no exploration or development work in progress. In the event that the work outlined in Schedule "A"

hereto shall not be completed prior to October 1,

1965, the Company shall have the right to terminate the Principal Agreement by giving notice in writing of such termination to the Operator and upon the

Company giving such notice the Principal Agreement shall thereupon be at an end subject however to the

Operator's continuing obligations with respect to termination as provided in Clause 15 of the Principal

Agreement. Provided however, that such termination des travaux ex6cut6s et qu'elle avait sensiblement chang6 l'6tendue du programmne de forage. Le 30 novembre 1964, Dolly Varden a regu un avis oji Sunshine lui indiquait qu'elle avait I'intention de s'engager dans la deuxibme 6tape de la mise en valeur. Le 14 janvier 1965, Dolly Varden avisait Sunshine qu'elle lui reprochait d'avoir manqu6 aux obligations du contrat, et ce sous plusieurs chefs qui 6taient 6num6r6s. Les administrateurs de Dolly Varden et ceux de Sunshine se sont r6unis h diverses reprises, par la suite. Ils se sont finalement mis d'accord pour signer un avenant, en date formelle du 22 janvier 1965. Selon les termes de cet avenant: 1. Sunshine retirait et annulait l'avis oit elle avait fait part de son intention de s'engager dans la deuxibme 6tape de la mise en valeur. 2. Dolly Varden retirait sa mise en demeure et dispensait Sunshine de tous travaux ult&rieurs pr6vus au programme 6tabli A l'annexe <F du contrat principal.

Nonobstant toute disposition des pr&sentes relative a la clfture de ladite premibre 6tape, I'Entrepreneur ex6cutera les travaux mentionnis i l'annexe des pr6sentes pendant la premibre 6tape de mise en valeur, avant le 1" octobre 1965. Aprbs avoir commenc6 les travaux mentionnis h I'annexe xAD des pr6sentes, l'Entrepreneur les poursuivra sans interruption; le forage et la mise en valeur desdites propri6t6s devront se poursuivre pendant toute la dur6e des travaux mentionnis A l'annexe des pr6sentes. Advenant que les travaux mentionnis A l'annexe des pr6sentes ne soient pas termin6s avant le 1" octobre 1965, la Compagnie se r6serve le droit de mettre fin au contrat principal en donnant un avis 6crit h cet effet h l'Entrepreneur. Le fait pour la Compagnie de donner un tel avis mettra fin au contrat principal, sous r6serve cependant que l'Entrepreneur continuera d'8tre tenu aux obligations relatives A la risiliation du contrat, stipul6es A la clause n' 15 du contrat principal. II shall not relieve the Operator from the obligations to complete the work outlined in Schedule "A".

Schedule "A" to the amending agreement called for the undertaking of an agreed program of diamond drilling and unwatering of the Torbrit mine (one of the mining properties described in the principal agreement); the testing of the downward plunge of the Torbrit ore body; testing by diamand drilling of the width of mineralization in the east end of the Torbrit mine; completion of approximately 5,000 feet of diamond drilling on the Wolf property (another of the mining properties covered by the principal agreement); and completion of approximately 500 feet of diamond drilling on the Sussex claims

(another mining property covered by the principal agreement).

Although some preparatory organizational work was done to implement the amending agreement, nothing was done by Sunshine on the ground to carry out the work called for by

Schedule "A". Sunshine shut down the operation.

Under the provisions of the principal agreement, as amended, the first development period expired on September 30, 1965, unless extended by Sunshine by notice given prior to August 31,

1965, or unless, prior to that date, Sunshine gave notice of intention to enter upon the second development period. No notice of extension was given, nor did Sunshine give notice of intention to undertake the second development period.

It is admitted, in the argument in this Court, that the agreement came to an end, and that

Sunshine was in breach of its contractual obligation to carry out the work prescribed in Schedule

"A" which it had agreed to perform.

Dolly Varden commenced action against Sunshine for damages for breach of the agreement.

The action was tried between January 30 and

February

17,

1967, inclusive.

Following the hearing, further documents were filed and argument submitted respecting the consequences of an agreement which took effect on March 9, est toutefois entendu que la r6siliation ci-dessus pr~vue du contrat ne soustraira pas l'Entrepreneur A l'obligation de parfaire les travaux mentionn6s A l'annexe

L'annexe (<A> de l'avenant prdvoyait I'ex6cution d'un programme convenu de forage au diamant et d'asshchement de la mine Torbrit (une des propri6tds minibres d6sign6es au contrat principal), I'6tude de la profondeur du gisement de la mine Torbrit, la d6termination par forage au diamant de la largeur du gisement dans la partie est de la mine Torbrit, 1'achivement d'environ 5,000 pieds de forage au diamant dans la mine Wolf (une autre propri6t6 minibre d6sign6e au contrat principal), le parachivement d'environ 500 pieds de forage au diamant dans les <<claims>' Sussex (autre propri6t6 minibre d6sign6e an contrat principal).

Sunshine a amorc6 certains travaux pr61iminaires, mais elle n'a rien fait sur le terrain mime pour s'acquitter des tfiches indiquies A l'annexe <A>. Elle a cess6 toute activit6.

Selon les termes du contrat principal, tel que modifi6, la premiere 6tape de mise en valeur devait se terminer le 30 septembre 1965, A moins que Sunshine ne prolonge cette phase en donnant avis avant le 31 aofit 1965 ou A moins qu'elle ne signifie son intention, avant cette dernitre date, de s'engager dans la deuxitme 6tape de mise en valeur. Sunshine n'a pas donn6 d'avis pour faire prolonger la premiere 6tape ni fait connaitre son intention de s'engager dans la seconde.

Les parties ont admis, dans leur argumentation devant cette Cour, que le contrat avait pris fin et que Sunshine avait failli & ses obligations contractuelles d'ex6cuter, comme il avait 6t6 convenu, les travaux mentionnis A 1'annexe eA>'. Dolly Varden a intent6 contre Sunshine une action en dommages pour rupture de contrat. Le procks a dur6 du 30 janvier au 17 f6vrier 1967, inclusivement. On a ensuite produit des pibces suppl6mentaires et pr6sent6 des plaidoiries sur les consdquences d'un contrat entr6 en vigueur le 9 mars 1967 entre Dolly Varden et 1967, between Dolly Varden and Newmont Mining Corporation of Canada Limited (hereinafter referred to as "Newmont").

Briefly, this agreement provided that Dolly

Varden would give to Newmont exclusive possession, management and control of the mining properties of Dolly Varden, so as to conduct drilling, exploration and development work thereon. Newmont agreed to conduct a geological survey of the property, in such manner as it decided, and a geophysical survey of such portion of the property as it considered advisable.

These surveys were to be completed by December 31, 1967. If this work were completed, as provided, Newmont had the right to terminate the agreement, or to extend its rights for a year, in which event it would be committed to expend not less than $200,000 on or for the benefit of the property. Two further periods of extension, for one year, were similarly provided for, at the option of Newmont, involving expenditure in each year of not less than $300,000. Thereafter

Newmont had the right, either to terminate the agreement or to equip the property for mining, in which event it would acquire title to the property, for the joint venture. Profits of operation would be divided equally after reimbursement to the parties of their respective expenditures. There was no covenant by Newmont to do the work described in Schedule "A" to the amending agreement with Sunshine.

The learned trial judge gave judgment for damages for breach of contract, the award for nonperformance of the Schedule "A" work being

$314,051 based on evidence as to the cost of performing such work.

Sunshine's appeal from this judgment was dismissed, unanimously, by the Court of Appeal', and a cross-appeal by Dolly Varden seeking an increase in this award was allowed, the damages being increased by $64,976.

The appeal to this Court is based solely on the issue of the measure of damages, it being contended that Dolly Varden had neither proved nor suffered any damage by reason of the nonperformance of the Schedule "A" work. It was submitted that it was an error in law to award an amount equivalent to the cost of performance of that work.

Newmont Mining Corporation of Canada Limited (ci-aprbs d6sign6e sous le nom de <Newmont>). En r6sum6, ce contrat stipulait que Dolly Varden remettrait A Newmont la possession, la gestion et l'administration exclusives de ses propriet6s minibres pour y proc6der A des travaux de forage, de prospection et de mise en valeur. Newmont s'engageait A faire une 6tude gdologique du terrain, comme elle le voudrait, et une 6tude gdophysique, 11 elle jugerait bon de le faire. Ces 6tudes devaient &re achev6es le 31 d6cembre 1967. Si elle parachevait ces travaux tel que convenu, Newmont pouvait soit mettre fin au contrat, soit le prolonger d'une ann6e, mais en ce cas, elle serait tenue de d6penser au moins $200,000 pour la mise en valeur de la propri6t6. Le contrat pr6voyait deux autres p6riodes de prolongation d'un an, au gr6 de Newmont, assorties de d6penses annuelles d'au moins $300,000. Aprbs quoi, Newmont pouvait soit risilier le contrat, soit am6nager la propri6t6 pour l'exploitation minibre. Dans ce dernier cas, elle en deviendrait propri6taire mais pour le compte des deux soci6t6s. Les b6ndfices d'exploitation se diviseraient A parts 6gales, apr6s remboursement h chacune des parties de ses d6penses. Newmont ne s'engageait pas & ex6cuter les travaux mentionn6s A l'annexe <A> de l'avenant du contrat entre Sunshine et Dolly Varden. Le savant juge de premiere instance a accord6 des dommages pour rupture de contrat, soit la somme de $314,051 pour inex6cution des travaux sp6cifi6s a l'annexe <A>, selon la preuve de ce que cofiterait l'ex6cution de ces travaux. La Cour d'appeP, A I'unanimit6, a rejet6 l'appel de Sunshine A l'encontre de ce jugement et elle a accueilli l'appel incident de Dolly Varden qui demandait des dommages plus 6lev6s, en lui accordant un suppl6ment de $64,976.

Le pourvoi devant cette Cour porte seulement sur le montant des dommages, I'appelante soutenant que Dolly Varden n'a subi ni prouv6 aucun dommage du fait de l'inex6cution des travaux sp6cifi6s A l'annexe <A> et que c'6tait une erreur de droit que d'adjuger une somme 6gale au cofit d'ex6cution de ces travaux.

119701 S.C.R. The learned trial judge found, as a fact, that:

I am of the opinion that the completion of the

Schedule "A" work was a necessary and economic step in the development of the Torbrit mine.

In the light of this finding and his finding that the officers of Dolly Varden intended the completion of the Schedule "A" work, the learned trial judge held that the damages should be assessed upon the same basis as was approved by this Court in the case of Cunningham v.

Insinger . In that case a mine owner gave to a mine operator an option to purchase a mine for a cash amount, payable in instalments. When the first instalment fell due, the operator negotiated for an extension of time. This extension was granted by the owner in consideration of the operator agreeing to do certain development work not mentioned in the option, consisting mainly of the driving of certain tunnels. The operator failed to pay, relinquished possession of the mine, and surrendered the option without having done the work. The owner sued for damages in the amount of the cost of this work. This Court decided that he was entitled to recover this amount. Idington J.

dissented. Counsel for the operator, Mr. Lafleur, contended that the owner was only entitled to recover the pecuniary advantage he would have obtained by performance of the contract, which, in this case, would be the equivalent of any increase in the value of the mine arising therefrom.

Duff J. (as he then was) said, at p. 14:

It would be inadvisable, I think, to attempt to lay down any general rule for ascertaining the damages to which a mine-owner is entitled for breach of a covenant to perform development work or exploratory work by a person holding an option of purchase.

Cases may no doubt arise in which the test suggested by Mr. Lafleur's argument would be the only proper test, and difficult and intricate as the inquiry might be, it would be the duty of the court to enter upon an examination of the effect of doing the work upon the value of the property.

Le savant juge de premibre instance a conclu, en fait:

Je suis d'avis que le parachbvement des travaux mentionn6s h l'annexe (A) constituait une 6tape n6cessaire et justifibe en termes 6conomiques dans la mise en valeur de la mine Torbrit. Vu cette conclusion, et une autre i l'effet que les administrateurs de Dolly Varden entendaient faire achever les travaux mentionn~s A l'annexe le savant juge de premibre instance a d6cid6 qu'il fallait d6terminer le montant des dommages selon les critbres que cette Cour a approuv6s dans l'affaire Cunningham c. Insinger . Il s'agissait li d'une affaire oa le propri6taire d'une mine avait accord6 a un concessionnaire une option d'achat A prix fixe payable par versements. A l'6ch6ance du premier versement, le concessionnaire sollicita une prorogation de d6lai. Le propri6taire y consentit a condition que le concessionnaire s'engageat h faire certains travaux d'am6nagement non pr6vus a l'option d'achat. Ces travaux consistaient surtout h percer un certain nombre de galeries. Le concessionnaire ayant n6glig6 de payer, abandonn6 la possession de la mine et renonc6 i l'option d'achat sans avoir ex6cut6 les travaux, le propri6taire en a r6clam6 le cofit A titre de dommages et cette Cour a jug6 qu'il y avait droit, le Juge Idington 6tant dissident. L'avocat du concessionnaire, Me Lafleur, avait soutenu que le propri6taire ne pouvait recouvrer que l'avantage p6cuniaire qu'il aurait retir6 de l'ex6cution du contrat, c'est-Adire, dans ce cas, la plus-value donn6e h la mine par suite des travaux.

Le Juge Duff, alors juge puin6, dit i la page 14:

II ne serait pas prudent, je pense, d'essayer de poser un principe g6n6ral sur la fagon de fixer les dommages que peut recouvrer un proprietaire de mine quand le d6tenteur d'une option d'achat manque A son engagement d'ex6cuter des travaux d'aminagement ou de prospection. Il y aura sans doute des cas le critbre invoqu6 par M' Lafleur dans son plaidoyer sera le seul critbre qui s'impose. Quelles que soient alors les difficultis et les complications auxquelles la recherche des faits donnera lieu, il sera du devoir de la Cour de d6terminer la plus-value que les travaux auraient donn6e a la propri6t6.

On the other hand, cases must arise in which the plaintiff's right is plainly to recover at least the cost of doing the work. If it were conclusively made out, for example, that the work to be done formed part and a necessary part of some plan of exploration or development requisite, from the miner's point of view, for developing the property as a working mine, and necessary, from the point of view of businesslike management, so that it might fairly be presumed that in the event of the option lapsing the owner would in the ordinary course have the work completed, then the damages arising in the ordinary course would include the cost of doing the work and would accordingly be recoverable under the rule.

Anglin J. (as he then was) said, at p. 16:

Acting on the advice of Mr. M. S. Davys, a mining engineer, the plaintiff insisted on the promise by

Cunningham to undertake and prosecute this work immediately and continuously as the basis of any extension to be given him. Davys deposes that he and Mr. Moore had agreed that the work in question should be done. The plaintiff relied upon Davys, and it is a fair inference not only that he regards the work as essential but that it is work which he will have done. It is probably necessary to reach that conclusion in order to justify the departure made by the trial judge from the ordinary rule that the measure of damages for breach by a defendant of a contract to perform work on the plaintiff's land is the actual pecuniary loss sustained by the plaintiff as a result of such breach, i.e., the difference between what would have been the value of the premises had the work contracted for been done and their value with it unperformed. The question is by no means free from difficulty and, as presently advised, it is only because I think the learned trial judge must have dealt with it on the footing indicated and because his having done so was warranted by the evidence that I accept the measure of damages as determined.

Reference may be had to Pell v. Shearman, (1855)

10 Ex. 766; Mayne on Damages (9 ed.), pp. 237-8;

Sedgwick on Damages (9 ed,), s. 619; Wigsell v.

School for Indigent Blind, (1882) 8 Q.B.D. 357;

Joyner v. Weeks, [18911 2 Q.B. 31, 37-8. In the last cited case the Court of Appeal treated the breach of a tenant's covenant to yield up premises in good repair as subject to a convenient rule of inveterate practice ordinarily applicable specially to such cases

VARDEN MINES

D'autre part, il doit y avoir des cas oi le demandeur a un droit strict de recouvrer au moins le coat des travaux. S'il 6tait clairement 6tabli, par exemple, que les travaux A ex6cuter constituent une partie, une partie essentielle, d'un programme de prospection ou d'aminagement indispensable, d'aprbs un sp6cialiste, A l'exploitation de la mine et n6cessaire, d'apris des administrateurs s6rieux, de sorte qu'on devrait raisonnablement pr6sumer qu'advenant I'abandon de l'option, le propri6taire ferait normalement parachever les travaux, les dommages normaux comprendraient alors le coCt d'ex6cution des travaux et seraient donc recouvrables en droit.

Le Juge Anglin, alors juge puind, dit a la page 16:

Sur la recommandation de M. M. S. Davys, ing6nieur des mines, le demandeur a exig6 que M. Cunningham promette de commencer les travaux imm6diatement et de les poursuivre sans interruption, avant de lui accorder une prorogation de d6lai. M. Davys a t6moign6 que M. Moore et lui 6taient d'accord que les travaux en cause 6taient n6cessaires. Le demandeur s'en est remis A M. Davys, et on a raison d'en conclure que non seulement il considbre ces travaux comme essentiels, mais aussi qu'il les fera ex6cuter. C'est la conclusion A laquelle il faut en venir pour expliquer pourquoi le Juge de premiere instance a d6rog6 a la r~gle ordinaire voulant que le montant des dommages, quand le d6fendeur omet d'ex~cuter certains travaux qu'il s'est oblig6 par contrat A faire sur la propri6t6 du demandeur, s'6tablisse selon la perte p6cuniaire r6elle que subit le demandeur par suite de ce d6faut, c'est- A-dire la diff6rence entre la valeur qu'aurait eue la propri6t6 si le d6fendeur avait rempli son obligation et la valeur de celle-ci sans l'addition de ces travaux. La question n'est pas sans difficultis et, en cette affaire, c'est uniquement parce que je crois que le savant Juge de premidre instance en a d6cid6 selon le critbre que je viens d'indiquer, ce que la preuve lui permettait de faire, que j'accepte sa d6termination des dommages.

On peut consulter: Pell v. Shearman, (1855) 10 Ex. 766; On Damages de Mayne (9' 6d.) pp. 237- 238; On Damages de Sedgwick (9' 6d.) art. 619; Wigsell v. School for Indigent Blind, (1882) 8 Q.B.D. 357; Joyner v. Weeks [1891] 2 Q.B. 31, pp, 37-38. Dans la dernibre affaire cit6e, la Cour d'appel a jug6 que la violation par un locataire de son engagement de remettre les lieux en bon 6tat donne lieu A l'application d'une rkgle commode r6gulibrement suivie and tantamount to a rule of law that the measure of the lessor's damages should be the cost of making the omitted repairs. A recent decision of an Appellate Divisional Court in Ontario may also be adverted to, M. J. O'Brien Ltd. v. Freedman, (1923) 25

O.W.N. 240.

Mignault J. said, at p. 17:

In my opinion, on the construction of the agreement entered into by the parties, by their letters of

October 19, October 26, and November 2, 1918, the carrying on of the development work mentioned in paragraph three of the appellant's letter of October

19, was the consideration of the extension of time granted by the respondent for the payment of the balance of the first instalment under the option contract between the parties. It was in no wise a condition of the original option to be unenforceable in case the option to purchase was not exercised by the appellant. On the contrary, the only possible interest the respondent could have in view when he stipulated for this development work, was in case the appellant relinquished his option. If he purchased the property, and paid for it, it would be a matter of indifference to the respondent what development work had been done. Moreover, the letter stated that the work should begin immediately.

Counsel for Sunshine contends that the learned trial juge should have applied the decision of this Court in Cotter v. General Petroleums Limited et al. , and should have awarded only nominal damages.

In that case, Cotter had granted to General

Petroleums Limited and Superior Oils, Limited an option on petroleum and natural gas in certain lands held under lease by Cotter. Clause 2 of the agreement provided for the exercise of the option within a stipulated period by commencing the drilling of a well upon the lands described and by notifying Cotter of the exercise of the option. Under clause 3 of the agreement, the companies covenanted to exercise the option within the period prescribed in clause 2. It was provided that on their failure to do so, Cotter, notwithstanding the lapse of the option, could be entitled to exercise any legal remedies available for breach of the covenant, which, the parties agreed, was given as the substantial consideration for the granting of the option.

* [1951] S.C.R. 154.

depuis longtemps, sp6cialement dans les affaires de ce genre, et 6quivalant h une rigle de droit selon laquelle 1'6tendue des dommages subis par le bailleur est 6gale au coeit des r6parations qui n'ont pas 6t6 faites. On peut 6galement relever un arrit r6cent de la Chambre d'appel de l'Ontario: M. J. O'Brien Ltd. v. Freedman, (1923) 25 O.W.N. 240.

Le Juge Mignault dit A la page 17:

[TRADUCTION]

A mon avis, d'apris l'interpr6tation du contrat que les parties ont conclu par 1'6change de trois lettres dat6es du 19 octobre, du 26 octobre et du 2 novembre 1918, I'ex6cution des travaux d'aminagement mentionnis au paragraphe 3 de la lettre de l'appelant, en date du 19 octobre, constituait la compensation pour la prorogation, consentie par I'intim6, du d6lai de paiement du solde du premier versement privu dans le contrat A option conclu par les parties. Il ne s'agissait aucunement d'une condition de l'option originale qui devenait inop6rante si l'appelant n'exergait pas son option d'achat. Au contraire, l'intim6 n'avait int6rt a stipuler ces travaux d'am6nagement que pour le cas o6 l'appelant renoncerait h exercer son option. Si ce dernier avait achet6 la propri6t6 et en avait pay6 le prix, 1'6tendue des travaux d'aminagement aurait 6t6 sans importance pour l'intim6. De plus, la lettre indiquait que les travaux devaient commencer imm6diatement. L'avocat de Sunshine pr6tend que le savant juge de premibre instance aurait suivre l'arrat de cette Cour dans l'affaire Cotter c. General Petroleums Limited , et n'aurait dit accorder que des dommages symboliques.

Dans cette affaire-IA, Cotter avait accord6 & General Petroleums Limited et A Superior Oils, Limited une option sur le p6trole et le gaz naturel que renfermaient certains terrains qu'il d6tenait en vertu d'un bail. La clause no 2 du contrat stipulait que l'option devait s'exercer avant telle date, en commengant le forage d'un puits sur les terrains en question et en avisant Cotter de ce fait. En vertu de la clause no 3, les socidt6s s'6taient engag6es A exercer l'option dans le d6lai fix6 A la clause no 2. Il 6tait privu que, si elles n'exergaient pas ce droit, Cotter, m8me lorsqu'il serait p6rim6, aurait un recours en justice pour le d6faut des preneurs de remplir leur engagement qui, de l'avis mime des parties, constituait une consid6ration importante de l'octroi de l'option.

3 [1951] R.C.S. 154.

The companies did not fulfil their covenant, and Cotter sued them for damages. At trial he was awarded an amount equivalent to the cost of drilling a well. On appeal, the Appellate Division of the Supreme Court of Alberta found that clause 3 of the agreement was void for repugnancy and must be rejected as destructive of the object of the instrument, a view which was shared by Locke J. in this Court.

Rinfret C.J. and Kerwin J. (as he then was), while disagreeing with this conclusion, held that there was no covenant by the companies to drill a well. Kerwin J., who wrote the reasons, said at p. 159:

The allowance by the trial judge was made on the basis of reading together the head lease, the agreement in question, and the form of lease attached thereto and construing the covenant sued upon as one to dig a well. I am unable to agree that this is the proper way of approaching the matter.

Clause 4 of the agreement provides that the optionor shall grant to the optionees the sublease "in the event of the exercise of the said option" and I cannot read the document as equivalent to a simple agreement for a lease. Such a result could follow only if the option had in fact been exercised. It appears to me that clause 3 was drawn having in mind that the option might not be exercised and provided that, if the optionees neglected or failed to exercise it, certain results should follow. It was only if the option was exercised that the lease was to be entered into.

Notwithstanding that the appellant's case was put as if the respondents' covenant was to dig a well, which as I have indicated is not in my view its proper construction, the appellant is entitled to more than nominal damages.

In the present case there was a specific agreement to perform the Schedule "A" work and a clear breach of that undertaking.

Cartwright J. (as he then was), with whose reasons Fauteux J. concurred, held that clauses

2 and 3 were not repugnant to each other, and further held that the companies had covenanted to drill a well. He said, at p. 172:

I think that, read as a whole, the agreement of

April 21, 1948 with its schedules discloses the inten- Les soci6t6s n'ayant pas tenu leur engagement, Cotter a intent6 une action en dommages contre elles. En premiere instance, on lui a accord6 une somme 6gale au cofit du forage d'un puits. En appel, la Chambre d'appel de la Cour supreme de I'Alberta a jug6 que la clause no 3 6tait nulle parce qu'inconciliable avec 1'ensemble du contrat et a rejeter du fait qu'elle en d6truisait 1'objet. En cette Cour, le Juge Locke s'est rang6 & cet avis.

Le Juge en chef Rinfret et le Juge Kerwin, alors puin6, tout en ne partageant pas cette opinion, ont conclu que les soci6t6s ne s'6taient pas engag6es A forer un puits. Le Juge Kerwin, qui a r6dig6 les motifs de cette d6cision, dit A la page 159:

Le Juge de premiere instance s'est fond6, pour accueillir faction, sur l'ensemble du bail principal, du contrat en litige et du projet de bail qui l'accompagne, en interpr6tant comme une obligation de forer un puits l'engagement sur lequel la poursuite est fond6e. Je ne puis admettre que ce soit la bonne fagon d'aborder la question. La clause n' 4 du contrat stipule que celui qui donne l'option devra sous-louer aux preneurs as'ils exercent leur option>. Je ne peux voir dans ce contrat un simple bail. Ce ne serait le cas que si les preneurs avaient de fait exerc6 leur option. Il me semble qu'on a r6dig6 la clause en privoyant que les preneurs pouvaient ne pas exercer leur option et que, s'ils n6gligeaient de le faire, cela pourrait entrainer certaines cons6quences. Le bail ne devait intervenir que si les preneurs exergaient leur option.

L'appelant a prdsent6 sa cause comme si l'engagement des intimbes 6tait de forer un puits, ce qui, A mon sens, n'est pas I'interpr6tation qu'on doit lui donner, mais a quand mime droit h plus que des dommages symboliques.

Dans la pr6sente affaire, il y a eu engagement formel d'ex6cuter les travaux mentionnis h 1'annexe <A> et manquement manifeste a cet engagement.

Le Juge Cartwright, alors juge puin6, et le Juge Fauteux qui souscrivait aux mfmes motifs, ont conclu que les clauses 2 et 3 n'6taient pas inconciliables et que les soci6t6s s'6taient engag6es A forer un puits. Le Juge Cartwright dit h la page 172:

Je crois que, pris dans son ensemble, le contrat du 21 avril 1948 et ses annexes indiquent tion of the parties to agree that on or before August 1, 1948 the respondents would commence to drill a well in the manner set out in paragraph 2 of the agreement, that forthwith on such commencement the parties would execute the sub-lease and that the respondents would carry on the drilling of the well to completion in the manner set out in the sub-lease.

I think that the respondents were bound in contract not only to commence but to complete the drilling of the well within the time and in the manner prescribed, and that such obligations bound them from the moment that the agreement of April 21,

1948 was executed.

He then went on to hold that Cotter was not entitled, in the circumstances of the case, for breach of the covenant to drill a well, to recover the expense of such drilling. His reasoning is as follows (at p. 174):

It remains to be considered on what principle and at what amount the damages should be assessed.

The underlying principle is expressed by Lord

Atkinson in Wertheim v. Chicoutimi Pulp Co.,

[1911] A.C. 301 at 307: "And it is the general intention of the law that, in giving damages for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed . . . That is a ruling principle. It is a just principle." In the case at bar if the respondents had carried out the contract the appellant would not have had to pay the $1,000 for a six months' extension which he did in fact pay to the head-lessor. The circumstances as to the necessity of making such payment were known to the parties and I agree with the learned trial judge that that sum is recoverable. What further benefits would have resulted to the appellant from the performance of the contract? If the respondents had drilled the well to the prescribed depth and it had proved a producer, the appellant would have received, (a) his share of the proceeds and, (b) the benefit of having the head lease validated, by the performance of the lessee's covenant to drill, not only as to the 80 acres described in the sublease but as to the whole 160 acres described in the head lease. If on the other hand, as, from the evidence of the geologists, would seem much more probable, the well had proved a failure the appellant would not have received benefit (a) but would have received benefit (b). It must be remembered however that as a result of the respondents' breach the appellant holds the whole 160 acres free from any que les parties ont convenu qu'au plus tard le 1" aoat 1948 les intim6es commenceraient A forer un puits de la fagon d6termin6e A la clause n' 2 du contrat, que, dis le d6but de ces travaux, les parties signeraient le sous-bail et que les intimdes parach~veraient le forage de la manibre indiqu6e audit sous-bail. Je crois que les intimbes s'6taient engag6es par le contrat non seulement A commencer mais & terminer le forage du puits dans les d6lais et suivant les modalit6s convenus, et que cette obligation les liait depuis la signature du contrat du 21 avril 1948. conclut ensuite que, dans les circonstances, Cotter n'avait pas le droit de recouvrer pour la violation de l'engagement de forer un puits, le cofit du forage. Son raisonnement est le suivant (page 174):

Il reste A d6terminer d'apris quel principe et A quel montant il faut fixer les dommages. Lord Atkinson a expos6 le principe fondamental dans I'affaire Wertheim v. Chicoutimi Pulp Co. [1911] A.C. 301 h la p. 307: la loi vise g6n6ralement, en accordant des dommages pour rupture de contrat, h mettre le demandeur, dans la mesure oii cela peut se faire par l'allocation d'une somme d'argent, dans l'6tat il se serait trouv6 si le contrat avait 6t6 ex6cut6 . . . C'est le principe fondamental. C'est un principe juste.D Si, dans l'affaire qui est pr6sentement devant nous, les intimbes avaient rempli leurs obligations, I'appelant n'aurait pas eu A payer une somme de $1,000 au bailleur principal pour obtenir six mois de prolongation. Les parties savaient qu'il 6tait n&cessaire de faire ce paiement, et je suis d'accord avec le savant Juge de premiere instance que cette somme est recouvrable.

Quels autres avantages aurait retir6s l'appelant de I'ex6cution du contrat? Si les intim6es avaient for6 le puits A la profondeur indiquie et celui-ci avait 6t6 productif, l'appelant aurait b6n6fici6: (a) de sa part de la production et, (b) de l'avantage de voir le bail principal confirm6 par l'ex6cution de l'obligation du locataire de forer un puits et ce, non seulement A l'6gard des 80 acres d6crits dans le sous-bail, mais h l'6gard des 160 acres qui faisaient l'objet du bail principal. D'autre part, si, comme il est beaucoup plus probable, selon le t6moignage des gbologues, le puits s'6tait av6r6 improductif, I'appelant n'aurait pas joui de l'avantage d6sign6 sous (a), mais il aurait quand mime profit6 de celui d6sign6 sous (b). On doit aussi retenir que, par suite du d6sistement des intim6es, I'appelant dispose des 160 acres de terrain libres de tous droits claim of the respondents. No part of the consideration which under the contract would have passed to the respondents has passed, except that from April

21, 1948 until some time in June 1948, when they repudiated the agreement, the respondents had rights in the 80 acres and the appellant was not free to deal therewith. Under these circumstances, I do not think that the cost of drilling is the proper measure of damages. Suppose that instead of the consideration set out in the contract the appellant had agreed to pay the respondents $53,500 to drill the well and the respondents had repudiated the contract before the date set for the commencement of the work and before any moneys had been paid to them. In such a case by analogy to the rule in the case of building contracts the measure of damages would seem to be the difference (if any) between the price of the work agreed upon and the cost to which the appellant was actually put in its completion. I think it will be found that those cases in which it has been held that the cost of drilling is the proper measure of damages, are cases where the consideration to be given for the drilling had actually passed to the defendant. Examples of such cases are

Cunningham Insinger, [1924] S.C.R. and Pell

Shearman, (1855) 10 Ex. 766 (a contract to sink a shaft).

It will be noted, from the passages above cited, that the obligation of the companies to drill a well (as distinct from commencing to drill a well) would arise only if the option had been exercised and they had been granted a sublease.

The consideration for the drilling was to be the granting of the sublease and that consideration had not passed to them. In the present case, the consideration for the undertaking of the Schedule

"A" work had been received by Sunshine in full.

Sunshine had received, under the principal agreement, the transfer to it of a one-half interest in the mining properties. Under the amending agreement, it had received from Dolly Varden the consideration stipulated in that agreement, namely, withdrawal of the notice of default, waiver of the performance of further work under Schedule "F" of the principal agreement, waiver of any prior defaults, and an extension of the term of the first development period. For that consideration Sunshine had given a firm commitment to perform the Schedule "A" work, which it failed and refused to perform.

h 1'6gard des intim6es. Celles-ci n'ont rien regu de ce qu'elles devaient toucher en vertu du contrat, sauf que, du 21 avril 1948 jusque vers juin 1948, c'est-Adire jusqu'au moment oii elles ont d6nonc6 le contrat, elles poss6daient les 80 acres de terrain et I'appelant ne pouvait en disposer. Dans ces conditions, je ne crois pas que le coft du forage corresponde vraiment au montant des dommages. Supposons qu'au lieu de ce qui est stipul6 dans le contrat l'appelant se soit engag6 A payer $53,500 pour le forage d'un puits, et qu'avant mime de commencer les travaux et d'avoir regu aucun paiement les intimbes aient refus6 d'ex6cuter le contrat. Dans un cas comme celui-ld, par analogie avec la rbgle suivie dans les contrats de construction, le montant des dommages serait sans doute la diff6rence qu'il pourrait y avoir entre le prix convenu pour 1'ex6cution des travaux et la somme que l'appelant a effectivement d6bours6e pour les faire terminer. Je crois que les affaires oti l'on a jug6 que le cofit du forage 6quivaut au montant des dommages sont celles oi l'intim6 avait regu de fait la prestation pr6vue pour l'ex6cution des travaux. Telles sont les affaires Cunningham c. Insinger, [1924] R.C.S. 8; et Pell v. Shearman, (1855) 10 Ex. 766 (contrat de forage d'un puits de mine).

Des passages ci-haut cit6s, il faut conclure que l'obligation incombant aux soci6t6s de forer un puits, par opposition A celle de commencer & en forer un, aurait pris naissance seulement si elles avaient exerc6 leur option et un sous-bail leur avait 6t6 consenti. Le forage devait avoir pour contrepartie l'octroi d'un sous-bail, et cela ne leur avait pas 6t6 fourni. Dans la pr6sente affaire, la contrepartie privue pour l'ex6cution des travaux mentionnis A l'annexe

<A> a 6t6 totalement fournie a Sunshine. En vertu du contrat principal, la moiti6 des propridt6s minibres lui a 6t6 transf6rde. En ex6cution des dispositions de I'avenant, elle a requ de Dolly Varden la contrepartie pr6vue, savoir le retrait de la mise en demeure, la renonciation a l'ex6cution du reste des travaux d6crits A l'annexe du contrat principal, la d6charge de tout manquement antirieur, et une prolongation du terme de la premibre pdriode de mise en valeur. En contrepartie, Sunshine a pris l'engagement ferme d'accomplir les travaux d6crits A l'annexe qu'elle a manqu6 et refus6 d'ex6cuter.

[1970] R.C.S.

For these reasons, I do not consider that the reasoning in the Cotter case is of assistance to

Sunshine in the present appeal.

Davey C.J.B.C., in the Court of Appeal, agreed with the judgment at trial that Dolly

Varden was entitled to receive the expense involved in performing the Schedule "A" work.

He reached this conclusion for reasons somewhat different from those of the learned trial judge.

He points out that the view of Duff J., in the

Cunningham case, as to the inadvisability of attempting to lay down a general rule of law for ascertaining the damages sustained by a mine owner for breach of a covenant to perform exploratory or development work is supported by high authority, and he cites the following statements of the law:

In Wertheim v. Chicoutimi Pulp Company, [1911]

A.C. 301, which was cited in Cunningham v. Insinger, and Cotter v. General Petroleums Ltd. et al.,

Lord Atkinson stated at p. 307:

And it is the general intention of the law that, in giving damages for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed: Irvine v. Midland Ry. Co. (Ireland),

(1880) L.R.Ir. at p. 63, approved of by Palles

C.B. in Hamilton Magill, (1883) 12 L.R.Ir. at p. 202. That is a ruling principle. It is a just principle. The rule which prescribes as a measure of damages the difference in market prices at the respective times above mentioned is merely designed to apply this principle and, as stated one of the American cases cited, it generally secures a complete indemnity to the purchaser.

But it intended to secure only an indemnity.

The market value is taken because it is presumed to be the true value of the goods to the purchaser.

In the case of non-delivery, where the purchaser does not get the goods he purchased, it is assumed that these would be worth to him, if he had them, what they would fetch in the open market; and that, if he wanted to get others in their stead, he could obtain them in that market at that price.

Pour ces raisons, je considbre que les motifs de l'affaire Cotter ne peuvent 6tre, dans la pr6sente affaire, d'aucun secours A Sunshine. Le Juge en Chef Davey de la Cour d'appel est d'accord avec le jugement de premiere instance pour admettre que Dolly Varden 6tait en droit de recevoir le montant des d6penses A pr6voir pour 1'ex6cution des travaux d6crits A I'annexe <Ai. II arrive A cette conclusion pour les motifs quelque peu diffdrents de ceux du juge de premiere instance. II signale que l'opinion du Juge Duff, dans I'affaire Cunningham, selon laquelle il serait imprudent d'essayer de poser un principe g6n6ral sur la fagon de fixer les dommages subis par un propri6taire de mine par suite de l'inex6cution d'un contrat de prospection et d'am6nagement, repose sur des pr6c6dents importants, et il cite les suivants:

Dans l'affaire Wertheim v. Chicoutimi Pulp Company, [1911] A.C. 301, cit6e dans Cunningham c. Insinger et Cotter c. General Petroleums Ltd., Lord Atkinson d6clare A la page 307:

Et la loi vise g6n6ralement, en accordant des dommages pour rupture de contrat, A mettre le demandeur, dans la mesure ol cela peut se faire par l'allocation d'une somme d'argent, dans 1'6tat oii il se serait trouv6 si le contrat avait 6t6 ex6cut6: Irvine v. Midland Ry. Co. (Ireland), (1880) L.R.Ir. A la page 63, suivi par le Baron en chef Palles dans Hamilton Magill, (1883) 12 L.R.Ir. la page 202. C'est le principe fondamental. C'est un principe juste. La r~gle qui veut qu'on s'en rapporte, pour 1'6valuation des dommages, l'6cart dans le prix du march6 aux p~riodes respectives sus-indiqu6es, a tout simplement pour but d'appliquer ce principe, et, ainsi qu'on l'6nonce dans une des affaires am6ricaines cit6es, elle assure g6ndralement l'indemnisation totale de l'acqu6reur. Cependant elle se propose uniquement d'assurer l'indemnisation. La valeur marchande est prise en consid6ration parce qu'elle est pr6sum6e repr6senter, aux yeux de l'acheteur, la v6ritable valeur de la marchandise. En cas de d6faut de livraison, lorsque l'acheteur n'obtient pas la marchandise achet6e, on suppose que valeur de celle-ci, s'il l'avait reque, aurait 6t6 6gale A sa valeur marchande, et que, s'il avait voulu la remplacer par une autre, il aurait pu l'obtenir A ce prix sur le march6.

In British Westinghouse Electric and Manufacturing Company Limited v. Underground Electric Railways Company of London, Limited, [1912] A.C.

673, Lord Haldane at pp. 688-9 stated:

In order to come to a conclusion on the question as to damages thus raised, it is essential to bear in mind certain propositions which I think are well established. In some of the cases there are expressions as to the principles governing the measure of general damages which at first sight seem difficult to harmonize. The apparent discrepancies are, however, mainly due to the varying nature of the particular questions submitted for decision. The quantum of damage is a question of fact, and the only guidance the law can give is to lay down general principles which afford at times but scanty assistance in dealing with particular cases. The judges who give guidance to juries in these cases have necessarily to look at their special character, and to mould, for the purposes of different kinds of claim, the expression of the general principles which apply to them, and this is apt to give rise to an appearance of ambiguity.

Subject to these observations I think that there are certain broad principles which are quite well settled. The first is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed.

The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; ...

In Monarch Steamship Co., Limited v. Karlshamns

Olfefabriker A/B, [1949] A.C. 196, the House of

Lords followed the principle applied in Wertheim v.

Chicoutimi Pulp Company, and by Duff J., in

Cunningham v. Insinger, which is founded upon

Hadley v. Baxendale, (1854),

9 Ex. 341. At pp. 222-3 Lord Wright repeated the passage from

Lord Haldane's speech which I have quoted above.

The following passage from the speech of Lord

Du Parcq at p. 232 puts the particular rules for measuring damages in their proper light, as simply methods of solving what is after all essentially a

Dans l'affaire British Westinghouse Electric and Manufacturing Company Limited v. Underground Electric Railways Company of London, Limited [1912] A.C. 673, Lord Haldane dit aux pages 688 et 689:

En vue d'arriver a une conclusion sur la question des dommages ainsi soulev6e, il est essentiel de garder presents a l'esprit certains principes qui, je le pense, sont bien 6tablis. Dans certaines affaires, on relive des 6nonc6s de principes r6gissant l'6valuation des dommages qui semblent, a premibre vue, difficilement conciliables. Toutefois, ces divergences apparentes tiennent principalement h la nature diverse des questions particulibres A trancher. Le montant des dommages est une question de fait, et la seule indication que la loi peut donner consiste A formuler des principes generaux qui parfois ne sont pas tris utiles quand il s'agit de traiter de cas particuliers. Les juges qui, dans ces cas, donnent des directives A des jur6s doivent tenir compte de leur caractbre particulier, et adapter aux diff6rentes cat6gories de demandes leur 6nonc6 des principes g6n6raux applicables, et cela peut cr6er use ambiguit6 apparente.

Ceci dit, je pense qu'il y a certains principes g6ndraux qui sont bien 6tablis. Le premier consiste, dans la mesure du possible, A remettre celui qui a prouv6 la rupture de contrat, savoir l'inex6cution d'un march6 par lequel il devait obtenir quelque chose, dans une situation aussi avantageuse, pour autant que cela puisse se faire par I'allocation d'une somme d'argent, que si le contrat avait 6t6 ex6cut6.

Le principe fondamental est donc la compensation des pertes pcuniaires d6coulant naturellement de l'inex6cution; . . .

Dans l'affaire Monarch Steamship Co. Limited v. Karlshamns Olfefabriker A/B, [1949] A.C. 196, la Chambre des Lords a suivi le principe appliqu6 par le Conseil Priv6 dans l'affaire Wertheim v. Chicoutimi Pulp Company, et par le Juge Duff dans l'affaire Cunningham c. Insinger, lequel principe est bas6 sur Hadley v. Baxendale, (1854), 9 Ex. 341. Lord Wright, aux pages 222 et 223, a repris les passages du discours de Lord Haldane que je viens de citer.

Dans la prochaine' citation, tir6e du discours de Lord Du Parcq (page 232), celui-ci considbre que les r~gles de la juste 6valuation des dommages sont de simples m6thodes de rdsoudre ce qui, apris tout, [1970] R.C.S.

EXPLORATION DOLLY MINES question of fact, and that this application must vary according to the circumstances of each case:

I do not doubt the wisdom of the judges who, in Hadley v. Baxendale and the many later cases which interpreted or explained that classic decision, have laid down rules or principles for the guidance of those whose duty it is, as judges or jurymen, to assess damages. When those rules or principles are applied, however, it is essential to remember what my noble and learned friend Lord

Wright, and Lord Haldane in the passage cited by him, have emphasized, that in the end what has to be decided is a question of fact, and therefore a question proper for a jury. Circumstances are so infinitely various that, however carefully general rules are framed, they must be construed with some liberality, and not too rigidly applied. It was necessary to lay down principles lest juries should be persuaded to do injustice by imposing an undue, or perhaps an inadequate, liability on a defendant. The court must be careful, however, to see that the principles laid down are never so narrowly interpreted as to prevent a jury, or judge of fact, from doing justice between the parties. So to use them would be to misuse them.

Applying these principles,

Davey C.J.B.C.

reaches the following conclusions:

So in the result the appellants have received from the respondent everything they bargained for under the principal and amending agreement as the consideration for their contract to do the work specified in Schedule "F" as modified by Schedule "A", but have done nothing they agreed to do under Schedule "A". The respondent has been denied the information it would have got if the work had been done under Schedule "A", for which it had paid by fulfilling all its obligations under the principal and amending agreements.

If appellant had performed its obligations respondent would have received valuable information about the Torbrit property. True the information might have shown the property to be of great value, or valueless, but even in the latter case the information would have been valuable to the respondent to enable it to adopt a realistic policy, and save expense of carrying worthless claims.

est essentiellement une question de fait, et que l'application des rkgles doit varier selon les circonstances de chaque affaire:

Je ne mets pas en doute la sagesse des juges qui, dans l'affaire Hadley v. Baxendale et dans plusieurs affaires subs6quentes oii l'on interprite ou explique cette d6cision classique, ont 6tabli des rkgles ou principes pour guider ceux auxquels il incombe, de par leurs fonctions de juges ou de jurds, d'estimer des dommages. Toutefois, quand on applique ces rigles ou principes, il est essentiel de se rappeler ce que mon noble et savant coll~gue Lord Wright, de mime que Lord Haldane dans le passage qu'il a cit6, ont soulign6, savoir que ce qui doit 8tre d6cid6 est une question de fait et, par cons6quent, une question du ressort du jury. Les circonstances varient tellement que, m8me si l'on a mis beaucoup de soin A formuler des rigles g6ndrales, celles-ci doivent 8tre interpr6t6es dans un sens large, et ne pas 8tre trop rigoureusement appliquies. Il s'est av6r6 n6cessaire d'6tablir des principes, de peur que les jurbs ne commettent des injustices en imposant aux d6fendeurs une responsabilit6 qui pourrait s'av6rer trop 16gbre, ou trop lourde. Toutefois, la Cour doit veiller h ce que les principes 6tablis ne soient jamais interpr6t6s si 6troitement qu'ils emp&chent un jury, ou un juge des faits, de rendre justice aux parties. Les appliquer dans ce sens serait en abuser.

En appliquant ces principes, le Juge en Chef Davey en est arriv6 aux conclusions suivantes: Ainsi, en d6finitive, les appelantes ont regu de l'intimbe toutes les prestations dues en vertu du contrat principal et de l'avenant, en contrepartie de leur engagement d'ex6cuter les travaux d6crits h l'annexe aFD, telle que modifide par l'annexe mais elles n'ont rien ex6cut6 de ce qu'elles s'6taient engag6es A faire en vertu de l'annexe cAv. L'intimbe a 6t6 priv6e des renseignements qu'elle aurait obtenus par l'ex6cution des travaux d6crits i l'annexe aA>, et pour lesquels elle avait pay6 en remplissant toutes ses obligations en vertu du contrat principal et de l'avenant.

Si l'appelante avait rempli ses engagements, l'intime aurait regu des renseignements valables sur la propri6t6 Torbrit. Il est vrai que ces renseignements auraient pu d6montrer que la propri6t6 avait une grande valeur, ou n'en avait aucune, mais mime dans cette dernidre hypothbse, les renseignements auraient 6t6 pricieux, en ce sens qu'ils auraient permis A l'intimbe d'adopter une attitude r6aliste, et d'6conomiser les frais courants de mclaimsi, sans valeur. EXPLORATION DOLLY MINES

It seems quite clear that the direct and natural consequences of the appellant's default was to deprive the respondent of essential information about the value of its properties for which it had paid. The measure of that loss is the value of the information that respondent would have obtained from the performance by appellant of its contract to do the drilling. The value of that information cannot be determined by what it would have disclosed, for that is not known, but by what it would cost the respondent to obtain it, following the analogy of determining the value to the purchaser of goods bought but not delivered by the cost of replacing them: Wertheim v. Chicoutimi Pulp Company quoted supra.

The reasons of Branca J.A. for supporting the judgment at trial are substantially similar to those of the Chief Justice. Nemetz J.A. agreed with the learned trial judge that, on its facts, this case was similar to the Cunningham case and that the same measure of damages ought to be applied.

The submissions made on behalf of Sunshine in this Court have failed to persuade me that, in the circumstances of the case, the Courts below were in error in awarding to Dolly Varden damages equivalent to the expense involved in performing the Schedule "A" work which Sunshine contracted to perform and deliberately failed to carry out. As stated by Lord Du Parcq in the passage cited earlier, what has to be decided, in determining damages, is a question of fact, and the Cunningham case certainly establishes that there is no rule of law which precludes the application of the method of assessing damages which was adopted by the learned trial judge in this case, when the Court considers it to be appropriate. For the reason already stated,

I do not think that the Cotter case is of any assistance to Sunshine in this appeal.

It was contended, for Sunshine, that Dolly

Varden was only entitled to receive, by way of damages, the difference between the value of the premises if the work had been performed, and their value with the work unperformed, and that there was no evidence to establish any damage upon this basis. In the circumstances of this case

Il semble tout A fait clair que la cons6quence directe et naturelle du d6faut de l'appelante a 6t6 de priver l'intim6e de renseignements essentiels sur la valeur de ses propri6t6s, renseignements pour lesquels elle avait pay6. Le montant de cette perte est la valeur des renseignements que l'intim6e aurait obtenus si l'appelante avait ex6cut6 son contrat en entreprenant le forage. La valeur de ces renseignements ne peut 8tre d6terminde par ce qu'ils auraient riv616, puisque cela n'est pas connu, mais par ce qu'il en aurait cofit6 A l'intime pour les obtenir, en prenant, par analogie, la m6thode qui veut que la valeur de marchandises acheties mais non livrdes soit leur coct de remplacement: Wertheim v. Chicoutimi Pulp Company, pr6cit6e.

Les motifs du Juge d'appel Branca pour confirmer le jugement de premiere instance sont en substance semblables A ceux du Juge en Chef. Le Juge d'appel Nemetz a 6t6 d'accord avec le juge de premiere instance, pour consid6rer que cette affaire est semblable, quant aux faits, h I'affaire Cunningham et qu'il faut appliquer la m8me m6thode d'6valuation des dommages. La plaidoirie de 1'avocat de Sunshine devant cette Cour n'a pas r6ussi h me convaincre que, dans le cas pr6sent, les tribunaux de la Colombie- Britannique ont fait erreur en accordant A Dolly Varden des dommages 6quivalant aux d6penses A pr6voir pour l'ex6cution des travaux d6crits A l'annexe <A>, que Sunshine s'6tait engag6e A effectuer et qu'elle a ddlib6r6ment omis d'ex6cuter. Ainsi que le pr6cise Lord Du Parcq dans le passage cit6 plus haut, ce qu'il fallait d6cider, pour estimer les dommages, est une question de fait, et l'affaire Cunningham 6tablit clairement qu'aucune rigle de droit n'exclut l'application de la m6thode d'6valuation des dommages adopt6e par le juge de premibre instance dans cette affaire, quand la Cour I'a jug6e appropri6e. Pour les motifs d6ji expos6s, je ne pense pas que 'affaire Cotter puisse 6tre, dans cet appel-ci, d'aucun secours pour Sunshine.

L'avocat de Sunshine a soutenu que Dolly Varden n'6tait en droit de recevoir, A titre de dommages, que la diff6rence entre la valeur que les terrains auraient eue si les travaux avaient 6t6 ex6cut6s, et leur valeur sans ces travaux, et qu'il n'y avait aucune preuve qui permettait d'6tablir un dommage sur cette base. Dans le cas pr6sent, [19701 R.C.S.

I do not think that this was a proper test for ascertaining damages.

Counsel for Sunshine, in this connection, relied upon two cases, Wigsell v. School for Indigent

Blind , and James v. Hutton and J. Cook & Sons

Ltd .

In the former case, a grantee of land had covenanted to construct around the land conveyed, on all sides where it abutted on the grantor's land, a seven-foot brick wall. The wall was not erected and an action was brought for damages.

It appeared that the value of the adjoining land was not decreased by the non-erection of the wall to anything like the amount required to construct it.

The Court refused to award damages equivalent to the cost of constructing the wall.

This was a case of a purchaser's covenant, similar to a restrictive covenant, taken by the seller for the protection of his adjoining land, and the measure of damages in such cases is usually the diminution in value of the adjoining land resulting from non-performance. In cases of this kind, the grantor has available the remedy of specific performance, where damages would not adequately protect his rights.

The latter case involved a covenant by a lessee, who, under licence, made an alteration to the front of the store he had leased. The lessee undertook, on request, to restore the building to its original condition on the expiration of the lease. The lessee failed to comply with such a request by the lessor. There was no evidence that the restoration would make the premises suitable for any particular purpose or business or that the premises were adversely affected or made less valuable by reason of the new store front which replaced the old.

The Court held that the lessor was only entitled to recover the damage he had actually suffered, which, in this case, was merely nominal.

The Court, however, expressly disclaimed that it was suggested that the plaintiff could not give evidence that he desired to use the premises for a purpose for which the new front was unsuitable.

je ne pense pas que ce soit un juste critbre pour fixer les dommages.

L'avocat de Sunshine s'est fond6, h ce sujet, sur deux affaires: Wigsell v. School for Indigent Blind et James v. Hutton and I. Cook & Sons Ltd .

Dans le premier cas, I'acqu6reur d'un terrain s'6tait engag6 A construire un mur de briques de sept pieds de haut tout le long de la partie contigui au terrain du c6dant. Le mur n'ayant pas 6t6 construit, une action en dommages lui a 6t6 intent6e. La preuve a d6montr6 que le terrain contigu n'6tait pas, de ce fait, d6pr6ci6 d'un montant comparable au cofit du mur A construire. La Cour a refus6 d'accorder des dommages 6quivalents au cofit de construction du .mur. Il s'agissait, dans cette affaire-11, d'une stipulation accessoire, semblable h une clause restrictive, imposde par le vendeur pour prot6ger son terrain contigu; le montant des dommages, en pareil cas, est habituellement 6tabli d'aprbs la d6pr6ciation du terrain contigu par suite de la non-ex6cution des travaux. Dans des affaires de ce genre-lA, le c6dant peut exiger 1'ex6cution mime du contrat, si le recours en dommages ne protege pas suffisamment ses droits.

L'autre affaire concerne 1'engagement pris par un locataire autoris6 A faire des changements A la devanture d'un magasin qu'il avait lou6. Il s'6tait engag6 h remettre l'immeuble en 6tat, a l'expiration du bail, et ce, A la demande du propri6taire. Il ne se conforma pas h la demande du bailleur. Il ne fut pas prouv6 que la remise de l'immeuble en 6tat l'aurait adapt6 i telle ou telle fin, ou qu'il avait 6t6 endommag6 ou d6pr6ci6 par la substitution d'une nouvelle devanture A 1'ancienne.

La Cour a d6cid6 que le bailleur n'avait droit de se faire d6dommager que pour les dommages effectivement subis et qui, en l'occurrence, 6taient purement symboliques. Toutefois, la Cour fit observer que l'on n'avait pas pr6tendu que le demandeur n'6tait pas redevable a prouver son intention d'utiliser l'immeuble A des fins pour lesquelles la nouvelle devanture ne convenait pas. I do not regard these cases as being analogous to the circumstances of the present case. The covenant of the grantee in the Wigsell case was given for the benefit of the adjacent lands retained by the grantor. The extent to which the value of those lands was affected by breach of the covenant was not, in the circumstances of that case, determinable by reference to the cost of construction of the wall. Similarly, in the James case, the covenant given by the lessee under the licence granted to him by the lessor, was for the benefit of the reversionary interest of the lessor.

In the absence of evidence that breach of the covenant affected the use to which the lands were to be put, or their value, after the expiration of the lease, the lessor was held not entitled to recover the cost of restoration of the store front to its previous condition.

The agreements in the present case related to a joint venture for exploration, development and production of minerals underlying the mining properties. These properties were known to have good prospects. Stage one of the principal agreement provided Sunshine with an opportunity to ascertain whether these properties offered a potential return to it sufficient to warrant a decision to proceed further into stage two. Dolly Varden's interest was in having Sunshine proceed with the various stages into commercial production, but, failing such further progress, it would obtain, pursuant to the provisions of the agreement, full information as to the work done, the results thereof and the cost involved. In a sense, although the agreement provided that it should not be construed as creating a partnership, the parties were partners in a joint venture.

The work described in Schedule "A" to the amending agreement was work which Sunshine had decided would be of advantage, after conducting a study of the Torbrit mine and on the recommendation of its chief geologist. It committed itself to do that work for the consideration given by Dolly Varden, which Sunshine received in full. Sunshine committed itself to perform that work, obviously because it considered the results of it would be of value. Dolly

Varden gave the stipulated consideration be- Je ne considbre pas ces affaires-14 comme ayant une analogie avec les faits invoqu6s dans la pr6sente. L'engagement de P'acqu6reur, dans laffaire Wigsell, a 6t6 pris A l'avantage des terrains adjacents que retenait le c6dant. On ne pouvait pas, en l'occurrence, d6terminer en fonction du coit de construction du mur dans quelle mesure la valeur de ces terrains 6tait r6duite par l'inex6cution de

'engagement. De m8me dans l'affaires James, I'engagement pris par le locataire en rapport avec Pautorisation donn6e par le bailleur 6tait A l'avantage de la propri6t6 A l'expiration du bail. En l'absence d'une preuve que l'inex6cution de cet engagement avait 6t6 nuisible A 1'usage auquel les lieux 6taient destinds, ou A leur valeur, h l'expiration du bail, il a 6t6 jug6 que le bailleur n'6tait pas en droit de recouvrer le cofit de la remise en 6tat de la devanture du magasin.

Les contrats, dans la pr6sente affaire, avaient trait A une entreprise commune de prospection, de mise en valeur et d'extraction du minerai renferm6 dans les propri6t6s minibres. On savait que ces propri6t6s 6taient prometteuses. La premibre phase du contrat principal donnait A Sunshine l'occasion de voir si la rentabilit6 6ventuelle 6tait suffisante pour justifier la d6cision de s'engager dans la deuxitme phase. Dolly Varden avait intir~t A voir Sunshine s'engager dans les diff6rentes phases, jusqu'd l'extraction commerciale du minerai, mais, d6faut d'une telle progression des travaux, elle devait obtenir, suivant les stipulations du contrat, des renseignements complets sur les travaux effectu6s, leur r6sultat et les frais A pr~voir. En un sens, et m8me si le contrat stipulait qu'il ne devait pas 8tre interpr6t6 comme cr6ant une soci6t6, les parties 6taient associ6s dans une entreprise commune. Les travaux d6crits A l'annexe <AD de l'avenant 6taient des travaux que Sunshine avait jug6s avantageux, apris une 6tude de la mine Torbrit, et sur l'avis de son gdologue en chef. Elle s'est engag6e A effectuer des travaux en contrepartie des avantages consentis par Dolly Varden, et que Sunshine a regus en totalit6. Elle s'est 6videmment engag6e A faire ces travaux, parce qu'elle a consid6r6 qu'ils lui seraient pr6cieux. Dolly Varden a fourni la contrepartie convenue, parce que, si les r6sultats avaient 6t6 favorables, sa atadI

17]SCR cause, if the results were favourable, it would obtain the further development of its property, and, if Sunshine was not satisfied with the results, it would be the recipient of useful information about its property. Clearly, in this case, both parties considered that the work, contracted to be performed, would be worth the expense of doing it. This is an entirely different situation from the covenants given in the two cases mentioned, which would be of advantage only, if at all, to the grantor and the lessor respectively.

When Sunshine, later, deliberately breached its contract to perform the work, what was the measure of Dolly Varden's damage? If it had paid cash for the work, it would clearly be entitled to a repayment of it, and would also have a claim in damages. The consideration was not in cash, but Sunshine, when it executed the amending agreement, considered it to be of sufficient value to warrant the expenditure necessary to perform the work.

It is pointless, in these circumstances, to suggest that a comparison be made between the value of the mining property with and without the work being done. The result of the Schedule

"A" work is unknown, and it is unknown because

Sunshine elected to break the contract for its performance. But when Sunshine, by entering the agreement, acknowledged that, in the light of its future potential benefits under the agreement, its own suggested program of work was worth the cost of performing it, and when Dolly Varden was prepared to give, and did give, valuable consideration for its performance, I consider that it was entirely proper for the learned trial judge to assess the damage resulting from the breach as being equivalent to the cost of doing the work.

In so doing he was seeking to fulfil the underlying principle stated by Lord Atkinson in Wertheim v. Chicoutimi Pulp Co.", and cited by

Cartwright J. in the Cotter case in the passage already quoted:

propridt6 aurait 6t6 mise en valeur; si, par ailleurs, Sunshine n'avait pas 6t6 satisfaite des r6sultats, elle aurait obtenu des renseignements utiles sur sa proprit6. Il est clair que dans cette affaire les deux parties ont consid6r6 que les travaux & ex6cuter vaudraient les frais occasionn6s. Il s'agit d'une situation entibrement diff6rente de celles cr66es par les engagements consentis dans les deux affaires susmentionn6es et dont l'ex6cution ne pouvait profiter, si peu que ce soit, qu'au c6dant et au bailleur, respectivement.

Quand Sunshine a d6lib6r6ment rompu, par la suite, son engagement d'ex6cuter les travaux, quel pouvait 6tre le montant des dommages h allouer A Dolly Varden? Si elle avait donn6 de I'argent pour les travaux, elle aurait 6videmment eu droit an remboursement de la somme payee, et elle aurait 6galement pu r6clamer des dommages. La contrepartie fournie n'6tait pas de 1'argent comptant, mais Sunshine, en signant 1'avenant, a jug6 que la valeur de cette contrepartie pouvait justifier les d6penses n6cessaires h l'ex6cution des travaux.

Il est impossible, dans ces conditions, de chercher A comparer la valeur de la propri6t6 minibre transform6e par l'ex6cution des travaux avec la valeur de cette mme propri6t6 sans ces travaux. Le rdsultat des travaux d6crits A 1'annexe <A> n'est pas connu, et il en est ainsi du fait que Sunshine a choisi de rompre le contrat sign6 pour leur ex6cution. Mais, alors que, d'une part, Sunshine, par son adh6sion au contrat, a reconnu que son propre programme de travail valait bien le cofit de son ex6cution, vu les b6n6fices possibles qu'elle pouvait retirer du contrat, et que, d'autre part, Dolly Varden 6tait pr&e verser, et a effectivement vers6, une contrepartie appr6ciable pour la r6alisation de ce programme, je considare qu'il 6tait tout h fait judicieux de la part du juge de premiere instance d'6valuer le dommage r6sultant de la rupture du contrat A un montant 6quivalent an cofit de l'ex~cution des travaux. Ce faisant, il a cherch6 A se conformer au principe fondamental 6tabli par Lord Atkinson dans l'affaire Wertheim v. Chicoutimi Pulp Co. , et cit6 par le Juge Cartwright dans l'affaire Cotter:

And it is the general intention of the law that, in giving damages for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position as he would have been if the contract had been performed.

Having reached this conclusion, I must go on to consider whether the right to receive damages, determined in this manner, is affected by Dolly

Varden having entered into the agreement with

Newmont, which did not become effective until after Dolly Varden had asserted its right to damages against Sunshine, and after that action had been tried.

In this Court, counsel for Sunshine did not contend that the benefits accruing to Dolly Varden under that contract should be considered by way of mitigation of damages. His position was that no question of mitigation arises because, he said, Dolly Varden had not established any damages. I have already indicated my reasons for disagreeing with this latter assertion. His submission was that the Newmont agreement was relevant as showing that, from its effective date,

Dolly Varden had abandoned any power or intention of doing the Schedule "A" work itself, and, on this basis, this case was not analogous to the Cunningham case.

The same submission was made at trial and, in respect of it, the learned trial judge made the following finding:

However I have found that the work was economic and necessary as a part of the overall scheme of development of Torbrit. I also accept the evidence of the officers of the plaintiff company to the effect that they intend the completion of the Schedule "A"

work.

The fact that the new agreement with Newmont does not make specific reference to the work and does not provide for its completion at once does not mean that the plaintiff does not intend to do the work or have it done or exclude the possibility that it will be done, and the work being a necessary step in the development of the mining properties the introduction of a new principal cannot justify a finding, by itself, that the work would not be done.

Et la loi vise g6n6ralement, en accordant des dommages pour rupture de contrat, A mettre le demandeur, dans la mesure oii cela peut se faire par I'allocation d'une somme d'argent, dans l'6tat oi il se serait trouv6 si le contrat avait 6t6 ex6cut6.

Etant arriv6 & cette conclusion, il me faut maintenant voir si le droit aux dommages d6terminds de cette manibre se trouve modifi6 par le fait que Dolly Varden a conclu avec Newmont un contrat qui n'est devenu ex6cutoire qu'aprbs l'institution par Dolly Varden d'une action en dommages contre Sunshine, et l'audition de la cause.

Devant cette Cour, l'avocat de Sunshine n'a pas soutenu que les prestations dues i Dolly Varden en vertu de ce dernier contrat pouvaient 6tre invoquies en r6duction des dommages. Sa pr6tention a t6 que la r6duction des dommages n'6tait pas A considdrer parce que, a-t-il dit, Dolly Varden n'a pas prouve avoir subi un dommage quelconque. J'ai d6ji indiqu6 pourquoi je ne suis pas d'accord avec cette dernidre affirmation. D'apris sa plaidoirie, le contrat Newmont est pertinent pour d6montrer qu'd dater de son entr6e en vigueur, Dolly Varden a abandonn6 toute possibilit6 ou intention d'ex6cuter ellem~me les travaux d6crits A l'annexe <A>, et que, de ce fait, cette affaire ne pr6sente aucune analogie avec l'affaire Cunningham.

La mime argumentation a t6 pr6sent6e en premiere instance, et, A ce sujet, le savant juge de premiere instance a conclu comme suit: Toutefois, j'ai conclu que ces travaux 6taient justifi6s 6conomiquement et n6cessaires dans le cadre du programme g6ndral de mise en valeur de la mine Torbrit. Je retiens aussi le temoignage des administrateurs de la compagnie demanderesse, selon lequel c'est leur intention ferme d'ex6cuter les travaux d6crits a l'annexe <As.

Le fait que le nouveau contrat pass6 avec Newmont ne fasse pas sp6cifiquement allusion A ces travaux, et ne comporte aucune mesure relative ii leur ex6cution imm6diate, ne signifie pas que la demanderesse n'a pas l'intention de les ex6cuter, ou de les faire ex6cuter, et n'exclut point la possibilit6 qu'ils soient ex6cut6s. Ces travaux 6tant une 6tape n6cessaire dans la mise en valeur des propri6tis minibres, le recours A un nouveau commettant ne peut pas justifier, en lui-mime, Ia conclusion que les travaux ne seront pas faits.

I am not prepared to disturb this finding.

Furthermore,

I do not regard the Newmont agreement as having any bearing in this case.

The agreement with Sunshine terminated at the end of the first development stage. Sunshine had not given notice of intent to extend that period or to enter the next development stage. It abandoned the agreement. Immediately upon the termination of the agreement, in my opinion, for the reasons already given, Dolly Varden had a valid claim in damages equivalent to the expense of doing the Schedule "A" work, which it asserted by action against Sunshine. On such termination Dolly Varden had the mining property on its hands, and, later, it was able to obtain the agreement with Newmont for its development.

Under that contract, the work to be done by

Newmont was in its discretion, subject to its commitment, if it entered the second and later stages, to expend stipulated amounts of money

"for the benefit of the property." It was not obligated to perform the Schedule "A" work. In view of these circumstances, I do not see how this contract can affect the cause of action of

Dolly Varden to recover damages equivalent to the cost of the Schedule "A" work, arising out of Sunshine's failure to do that work, which cause of action arose on the termination of the Sunshine agreement.

I would dismiss this appeal, with costs.

Appeal dismissed with costs.

Housser & Tupper, Vancouver.

Je ne suis pas dispos6 & remettre en cause cette conclusion. Bien plus, je ne considbre pas que le contrat Newmont ait aucune influence sur le sort de ce litige. Le contrat pass6 avec Sunshine a pris fin & 1'expiration de la premiere phase de mise en valeur. Sunshine n'a donn6 aucun avis de son intention de prolonger cette p6riode ou d'entreprendre la seconde phase. Elle a rompu le contrat. A mon avis, imm6diatement aprbs la rupture du contrat, et pour les raisons d6ji invoquies, Dolly Varden avait le droit de r6clamer des dommages 6quivalents au cofit d'ex6cution des travaux d6crits a I'annexe «A>, droit qu'elle a fait valoir en intentant une action contre Sunshine. Dis la rupture du contrat, la propri6t6 minibre a 6 laissde pour compte A Dolly Varden qui, plus tard, a pu conclure un contrat avec Newmont pour sa mise en valeur. En vertu de ce contrat, les travaux que devait effectuer Newmont 6taient laiss6s a sa discr6tion, sous r6serve de son engagement, si elle d6cidait d'entamer la seconde phase et les phases ult6rieures, de d6penser les montants convenus pour la mise en valeur de la propri6t6. Elle n'6tait pas oblig6e d'ex6cuter les travaux pr6vus A l'annexe <A.

Dans ces conditions, je ne vois pas comment ce contrat peut porter atteinte au droit de Dolly Varden d'obtenir des dommages equivalents au cotit des travaux d6crits A l'annexe <A , par suite du d6faut de Sunshine d'ex6cuter ces travaux; ce droit d'action a pris naissance au moment de la rupture du contrat Sunshine. Je suis d'avis de rejeter le pourvoi avec d6pens. Appel rejetg avec ddpens.