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Damages – Minimum Performance Principle

Atos IT Solutions v. Sapient Canada Inc. 2018 Ont CA

A technology subcontract was comprised of different rushes of work. The contractor was allowed to terminate one of those tranches for convenience upon payment of an amount as set out in a formula in the contract. The contractor purported to terminate the entire subcontract for cause. The trial judge held that there was no cause and allowed full damages. The Court of Appeal reduced the damages for the portion of the contract for which the contractor could have terminated for convenience. The minimum performance principle was articulated by the SCC in Hamilton v. Open Window Bakery Ltd. Under that principle, a wrongdoer is liable for damages in accordance with the minimum or least expensive contract performance. The trial judge had also allowed damages for lost profits in the face of a clause that stated that there would be no liability for “indirect, special, consequential or punitive damages or for lost profits.” The trial judge interpreted loss of profits to mean loss of profits from other work foregone as a result of the breach. Relying on Satva and the principle of deference to a trial judge’s contract interpretation, the court refused to set aside this interpretation – even though it may have come to a different interpretation.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.