A-329-85
The Queen (Appellant) (Defendant)
v.
Canamerican Auto Lease and Rental Limited
(carrying on business under the firm name and
style of "Hertz") and Hertz Canada Limited
(carrying on business under the firm name and
style of "Hertz") (Respondents) (Plaintiffs)
INDEXED AS: CANAMERICAN A UTO LEASE AND RENTAL LTD. V.
CANADA
Court of Appeal, Heald, Mahoney and Stone
JJ.—Ottawa, January 21, 22 and 23; March 17,
1987.
Crown — Contracts — Liability — Appeal from trial
judgment whereby appellant found liable to pay damages for
breach of contract — Transport Canada calling for bids for
providing car rental services at airports — Tilden qualifying to
bid in two categories — Hertz preparing bid based on
representations and Award Procedure clause in Specifications
that bid in open category to be accepted if higher than bid in
domestic category — Lower bid accepted — Action for breach
of contract — Trial Judge correctly finding tendering process
creating preliminary contract leading to formation of final
contract — R. in right of Ontario et al. v. Ron Engineering &
Construction (Eastern) Ltd., [1981] 1 S.C.R. 111; 119 D.L.R.
(3d) 267 correctly applied — Specific clause in Award Proce
dure that award go to highest offer of tenderer in any group
not subservient to general clause that "no tender need neces
sarily be accepted" — Policy and Specifications not mere
expressions of policy — Tendering process designed to create
competition in exchange for promise to evaluate bids according
to terms of tender Specifications and to accord offer to enter
rental contract.
Crown — Contracts — Damages — Remoteness and quan
tum — Appeal from trial judgment whereby damages awarded
equivalent to respondents' excess bid — Same test for remote
ness of damage whether contract or tort case — Trial Judge
correctly relying on Esso Petroleum Co. Ltd. v. Mardon,
/1976J Q.B. 801 (C.A.) — Contract not guaranteeing immunity
from on-airport competition but merely providing certain bid
selection process to be utilized — Measure of damages limited
to what was reasonably foreseeable: Hadley v. Baxendale
(1854), 9 Ex. 341 — Excess bid reasonably foreseeable —
Loss of profits not reasonably foreseeable as no guarantee
competitor to be forced off-airport.
This is an appeal from the trial judgment whereby the
appellant was found liable to pay damages for breach of
contract. Transport Canada called for bids for providing car
rental services at airports. Bids could be submitted under three
categories. Tilden qualified to bid in both the domestic and
open categories. In preparing its financial offer, Hertz relied
upon Transport Canada's representations that if a tenderer bid
in two categories the higher bid in the open category would be
awarded, and the Award Procedure clause from the Specifica
tions specifically so provided. However, a subsequent memoran
dum indicated that if purely revenue considerations would give
any company an unfair advantage, the evaluation committee
would exercise the condition of the tender specifications i.e.
"Department will not necessarily accept the highest offer, nor
will it be bound to accept any tender submitted". Hertz pre
pared its tender on the basis that it could not afford to be
forced off-airport. It was necessary to outbid Avis. Transport
Canada accepted the lower of Tilden's bids (in the domestic
category). Hertz commenced an action for breach of contract
and tort. The Trial Judge found breach of contract and award
ed damages. The issues are 1) whether there was a breach of
contract; 2) whether the damages were too remote; and 3)
whether the Trial Judge erred as to the quantum of damages.
Held, the appeal and cross-appeal should be dismissed.
The Trial Judge correctly found that the tendering process in
this case created a preliminary contract leading to the forma
tion of a final contract, following the Ron Engineering case.
The industry was invited to submit tenders on very specific
terms and conditions. The consideration was the submission of
a tender and a non-refundable deposit, and the tendering
contract was formed when the plaintiff submitted its tender and
contract. She then found a breach of contract based on the
Award Procedure clause of the tender specifications and
representations by Crown officials at briefing sessions. The
Trial Judge rejected the appellant's reliance on the "no tender
need necessarily be accepted" clause. To give paramountcy to
this clause of the Specifications would be to render nugatory
the Award Procedure clause, which provides that where a
tenderer is successful within more than one counter group, only
one counter will be awarded and "the award will be made on
the basis of the highest offer made by that tenderer in any
group." The tender document provides a specific and precise
rule for the disposition to be made of double tenders. Such a
specific rule should not be presumed to be subservient to a
general rule of uncertain applicability which contradicts the
specific rule. There is a contract of the nature of contract A in
the Ron Engineering case. The terms are set forth in the Policy
and Specifications.
The Trial Judge properly applied the principles of contractu
al liability in rejecting the submission that the Specifications
were mere expressions of policy. She held that the whole
purpose of the tendering process was to put the car rental
concessionnaires in competition for airport counters. The appel
lant's side of the bargain was the promise to evaluate the bids
in accordance with the terms of the tender Specifications and to
accord an offer to enter into a rental contract to the successful
bidders in accordance with those Specifications.
The Trial Judge's comments concerning negligent misrepre
sentation appear to be obiter dicta. However, the quantum of
damages determined will be the same, as will the test of
remoteness of damages, whether the case is regarded as one of
breach of contract or tort.
The Trial Judge did not err in relying on Esso Petroleum Co.
Ltd. v. Mardon, [I976] Q.B. 801 (C.A.) to award damages
equal to the amount of the excess which the respondents bid.
Loss of profits would have been recoverable only if the contract
had contained a guarantee of immunity from on-airport compe
tition. The contract merely provided that a certain bid selection
process would be utilized and since, because of a breach of that
term, Hertz suffered loss, the amount of that loss should be
restricted to the excess amount which was bid because of the
breach of the contract.
The Trial Judge correctly held that the damages were not too
remote. The measure of damages is limited to what was reason
ably foreseeable. Applying the test in Hadley v. Baxendale it
was reasonably foreseeable that the respondents, wanting to
ensure that they would not be forced off-airport, would raise
their bid so as to preclude such an eventuality. Transport
Canada ought to have foreseen that the excess amount of rental
paid by the respondents to "buy insurance", on the assumption
that Transport Canada would comply with the terms of the
contract, was a likely or probable consequence of their breach
of the terms of the contract.
The loss of profits because Avis was not forced off the airport
was not reasonably foreseeable. There was no bargain that Avis
should be placed off the airport. Consequently, the plaintiffs
should not be entitled to compensation for loss of profit which
they expected to make in the event Avis was forced off-airport.
The evidence at trial supports the finding that it was not within
the reasonable contemplation of Transport Canada that Avis
would be forced off-airport at the time the tenders were
submitted. They did not know what the amounts of the tenders
were going to be. Neither the objective nor the subjective test of
Hadley v. Baxendale were met. Neither the Heron II nor the
Parsons case have altered the classical test formulated in
Hadley v. Baxendale.
Per Stone J.: The Trial Judge drew an analogy between the
basis for the award of damages in the Esso Petroleum case and
her award of the excess bid amount. The same result is possible
under established legal principles governing recovery of dam
ages for a breach of contract simpliciter. Given that it was
possible to bid in two categories and that a successful bid in
both categories would result in the higher bid being selected, it
was reasonable to anticipate that Tilden would bid higher in the
open category where competition was more intense. Some
recent case law indicates that a plaintiff has a choice of
claiming either its expectation interest (lost profits) or its
reliance interest (excess bid amount). The reliance interest is
compensable as flowing from the breach. It was additional to
the amount actually required to secure a car rental counter in
the open category and was incurred in reliance upon the Award
Procedure clause. The harm can be undone by compensating
Hertz for that loss and that may be accomplished within
established contract principles. The expectation interest is not
compensable. It is not complained that the breach caused Hertz
to lose profits under its final contract, but that the configura
tion resulting from the breach prevented Hertz from gaining
additional profits from a share of Avis' business. Such a loss is
too remote according to the test in Hadley v. Baxendale.
CASES JUDICIALLY CONSIDERED
APPLIED:
R. in right of Ontario et al. v. Ron Engineering &
Construction (Eastern) Ltd., [1981] 1 S.C.R. 111; 119
D.L.R. (3d) 267; H. Parsons (Livestock) Ltd. v. Uttley
Ingham & Co. Ltd., [1978] Q.B. 791; [1978] 1 All ER
525 (C.A.); Esso Petroleum Co. Ltd. v. Mardon, [1976]
Q.B. 801 (C.A.); R. v. CAE Industries Ltd., [1986] 1
F.C. 129 (C.A.); Hadley v. Baxendale (1854), 9 Ex. 341.
CONSIDERED:
C. Czarnikow Ltd. v. Koufos, [1969] 1 A.C. 350 (H.L.).
REFERRED TO:
V.K. Mason Construction Ltd. v. Bank of Nova Scotia et
al., [1985] 1 S.C.R. 271; 16 D.L.R. (4th) 598; Asamera
Oil Corporation Ltd. v. Sea Oil & General Corporation
et al., [1979] 1 S.C.R. 633; Sunshine Vacation Villas
Ltd. v. Governor and Company of Adventurers of Eng-
land Trading into Hudson's Bay (1984), 13 D.L.R.
(4th) 93 (B.C.C.A.); Cullinane v. British "Rema"
Manufacturing Co. Ld., [1954] 1 Q.B. 292 (C.A.);
Anglia Television Ltd. v. Reed, [ 1972] 1 Q.B. 60 (CA.);
Bowlay Logging Ltd. v. Domtar Ltd., [1978] 4 W.W.R.
105 (B.C.S.C.); Orvold, Orvold, Orvold and R.E.G.
Holdings Ltd. v. Turbo Resources Ltd. (1984), 33 Sask.
R. 96 (Q.B.); C.C.C. Films (London) Ltd. v. Impact
Quadrant Films Ltd., [1985] Q.B. 16; Victoria Laundry
(Windsor), Ld. v. Newman Industries, Ld. Coulson &
Co., Ld. (Third Parties), [1949] 2 K.B. 528 (C.A.).
COUNSEL:
Derek Aylen, Q.C. and D. J. Rennie for appel
lant (defendant).
Raymond D. LeMoyne and Georges R.
Thibodeau for respondents (plaintiffs).
SOLICITORS:
Deputy Attorney General of Canada for
appellant (defendant).
Doheny, Mackenzie, Montréal, for respon
dents (plaintiffs).
The following are the reasons for judgment
rendered in English by
HEALD J.: This is an appeal from a judgment of
the Trial Division [judgment dated March 4, 1985,
T-4780-76, not reported] whereby the appellant
was found liable to pay $232,500 in damages
arising out of an award in 1976 of contracts to car
rental concessionaires at the nine major interna
tional airports in Canada.' There is also a cross-
appeal by the respondents (plaintiffs) concerning
the findings of the learned Trial Judge with
respect to damages. The two respondents were, at
all relevant times, Canadian subsidiary companies
of the Hertz Corporation of New York City (here-
inafter referred to as Hertz). Hertz operated its
Canadian Airport Rent-a-Car business during the
years 1976 to 1979 through licensees at the Hali-
fax, Ottawa, Winnipeg and Edmonton airports and
with its own corporate staff at Montréal -Dorval,
Montréal-Mirabel, Toronto, Calgary and Vancou-
ver. On occasions, during change-overs of licensees
Halifax, Montréal -Dorval, Montréal-Mirabel, Ottawa,
Toronto, Winnipeg, Edmonton, Calgary and Vancouver.
at the licensee locations supra, Hertz's corporate
staff also operated those locations as well. Basical
ly, Hertz's action for damages is based on the
claim that if the Ministry of Transport (herein-
after Transport Canada) had awarded the subject
nine airport concessions in the manner it had
allegedly promised to do, Avis, Hertz's chief com
petitor, would not have had airport locations on
the nine major international airports in Canada for
three years and, as a result, Hertz would have
realized a significant amount of additional income
because of that circumstance.
THE FACTS
On July 13, 1976, Transport Canada published
a document entitled Airport Car Rental Conces
sion Policy (The Policy) (Vol. 1, A.B. pages 85-96
inclusive) which was an invitation to participate in
public tender calls for the opportunity to provide
car rental services at the nine major international
airports in Canada and to submit bids "by groups"
under standards which provided for three separate
groupings of counters. Those groupings were:
1. local (any person not associated with a
system type operation who is unable to compete
for the system package. The Specifications later
referred to herein define a system type operation
as one which has outlets in 5 cities or more at
which international airports are located);
2. domestic (any person being a Canadian or
landed immigrant carrying on a car rental business
which is more than 50% Canadian in terms of
volume of business); and
3. open (available to all parties including those
not successful in obtaining a domestic or local
counter).
On July 21, 1976, Transport Canada, pursuant to
the above Policy published Specifications—The
Lease for the Car Rental Concession (the Specifi
cations), (Vol. 1, A.B. pages 96-106 inclusive).
Pursuant to the procedure set out in the Specifica
tions, the tender calls for the concession opportuni
ties were conducted in two stages: stage one—
interested parties were required to submit corpo
rate data, an operational proposal, evidence of
ability to provide the necessary insurance cover
age, and such other documentation as was neces
sary to show the ability to meet eligibility require
ments; stage two—those persons who bid in stage
one and who satisfied the criteria for eligibility
were then invited to submit financial offers. The
successful bidders in stage two then entered into
an agreement with Transport Canada for the
period November 1, 1976 to December 31, 1979.
For the purposes of this appeal and cross-appeal,
it is only necessary to consider the tenders of five
companies: Budget, Tilden, Avis, the respondent
Canamerican (which was sold in 1977 to Hertz),
and Host. It was acknowledged that, at all relevant
times, these five companies had the following
percentages of the Canadian car rental business:
Budget-29%; Tilden-25%; Avis-20%;
Canamerican-20%; and Host, a very small per
centage. It seems to have been generally known in
the industry that within these five bidders, only
Tilden and Host would qualify to bid in both the
domestic and open categories. For the purpose of
better preparing their financial offer in stage two,
the respondents, pursuant to a written invitation
from Mr. Russell O'Neill, the Director of Airport
Marketing for Transport Canada, arranged for a
meeting with officials of Transport Canada. This
meeting was held in Ottawa on July 22, 1976. As
noted by the learned Trial Judge, it was known to
Hertz as well as to the rest of the market that
Tilden could compete in both the domestic and the
open categories while the other three traditional
airport concessionaires (Hertz, Avis and Budget)
could compete only in the open category. It was
also known from the relative strength of the four
largest companies in the existing airport market
that Tilden could afford to outbid both Hertz and
Avis in the open counter category. Accordingly, it
was important to know from Transport Canada
what allocation would be made of a Tilden bid, if
it bid in both the open and the domestic categories.
More particularly, Hertz needed to know, as well,
what allocation would be made if Tilden's bid in
the open category was higher than its bid in the
domestic category. It seemed clear that if Tilden's
bid were to be allocated to the open counters, the
result would be that either Hertz or Avis would be
off the airports. On the eve of the meeting called
for July 22, 1976, Transport Canada issued the
Specifications referred to supra.
It is necessary at this juncture, in my view, to set
out the portions of both the Policy and the Specifi
cations which bear directly on the issues herein:
I. FROM THE POLICY
Objective (Vol. 1, A.B. page 86)
This policy will provide equitably for industry competition in
rental car operations at airports, while optimizing revenue to
Transport Canada.
Policy (Vol. 1, A.B. page 86)
Any person (proprietorship, partnership, corporation) may
seek access to the airport car rental market after meeting
eligibility requirements. Access to the airports will be awarded
by public tender for a defined term to the parties offering the
highest financial return, subject to a minimum bid base ....
Highest Financial Return (Vol. 1, A.B. page 89)
Bidders will be required to offer a percentage of their gross
sales and a guaranteed annual minimum, for the right and
privilege of access to the airport car rental market. The tenders
will be awarded to qualified tenderers on the basis of the
highest offers to Transport Canada.
Accommodation (Vol. 1, A.B. page 94)
Counter space within the terminal building will be leased to
car rental concessionaires for the term of their agreement with
the location preference in accordance with the offers received—
i.e., the highest bidder will have the first choice, the second
highest bidder the second choice, and so on ....
H. FROM THE SPECIFICATIONS
Introduction (Vol. 1, A.B. page 97)
Any person (proprietorship, partnership corporation) may
seek access to the airport car rental market after meeting
eligibility requirements. Access to the airport will be awarded
by public tender for a term of three years to the parties offering
the highest financial return, subject to a minimum bid base....
Highest Financial Return (Vol. 1, A.B. page 98)
Bidders will be required to offer a percentage of their gross
sales and a guaranteed annual minimum for the right and
privilege of access to the airport car rental market. The success
ful tenderer will be required to pay the greater of the percent
age offer or the guaranteed minimum.
There will be a minimum bid base in respect to the percent
age of gross revenue offer:
(a) major international airports 10%
(b) all other airports 5%
Award Procedure (Vol. 1, A.B. page 98)
Where a tenderer is successful within more than one counter
group, only one counter will be awarded and the award will be
made on the basis of the highest offer made by that tenderer in
any group ....
Administration—Major International Airports (Vol. 1, A.B.
page 100)
Operators qualified to bid on "domestic counters" may
submit bids on either the major international airport package
or on an airport by airport basis or both. They may also bid on
the open counters ....
Accommodation (Vol. 1, A.B. page 100)
Counter space within the terminal building will be leased to
car rental concessionaires for the term of their agreement with
the location preference in accordance with the offers received,
i.e., the highest bidder will have the first choice, the second
highest bidder the second choice, and so on ....
Security Deposit (Vol. 1, A.B. page 102)
Tenders for Stage Two will be rejected unless a security
deposit in an amount equal to the first three (3) months of fees
based on the tenderer's highest applicable minimum guarantee
is enclosed.... The security deposit of the successful tenderer
will be retained by the Department and will be applied to the
concession fee for the first year.
The deposit will be the higher of the highest system offer or
the combined individual airports offer. Deposit is to be cal
culated on minimum guarantees and must equal three (3)
months of fees as per tendered offer ....
Tenders (Vol. I, A.B. page 102)
Only one counter per name and style will be allowed at each
airport. In the consideration of tenders, the Department will
attach importance to the ability of the tenderer to operate the
car rental concession within the terms of reference of this
Information Section. The Department will not necessarily
accept the highest offer, nor will it be bound to accept any
tender submitted ....
Returning now to the factual narrative and
coming to the meeting in Ottawa on July 22, 1976
between six representatives of Hertz and three
officials of Transport Canada, the Trial Judge
carefully summarized the evidence of witnesses on
both sides as to what transpired at this meeting
(A.B., Vol. 1, pages 29-32). She specifically
referred to the evidence of Messrs. Richard and
Kennedy who attended the meeting on behalf of
Hertz. They both raised the question referred to
earlier as to what allocation would be made of a
Tilden bid if Tilden bid in both the open and
domestic categories and, furthermore, what alloca
tion would be made if Tilden's bid in the open
category was higher than its bid in the domestic
category. Both testified that the response from the
Transport Canada officials and, in particular,
from Mr. O'Neill of Transport Canada was to the
effect that the higher bid in the open category
would be awarded since the Award Procedure
(A.B., Vol. 1, page 98) supra, specifically so pro
vided. The Trial Judge, after summarizing the
evidence of Messrs. Kennedy and Richard stated
(A.B., Vol. 1, page 31):
I have no reason to doubt the evidence of either Mr. Kennedy
or Mr. Richard.
She went on to refer to the evidence of the Trans
port Canada officials who attended the meetings.
In my view, their evidence can best be character
ized as equivocal and not very helpful. They do not
seem to recall this specific question being raised.
In any event, the Trial Judge accepted the evi
dence of Messrs. Kennedy and Richard on this
issue. In my view, she was clearly entitled to do so
and an appellate court should not interfere with
this finding.
On August 3, 1976, a final briefing session for
the car rental industry was held in the offices of
Transport Canada in Ottawa. The Minutes of that
briefing reveal, inter alia,:
1. Transport Canada officials said that if a domestic open
bidder made equal bids in both categories, that bidder would be
assigned the domestic counter; and
2. the highest bid for each counter would be the winner.
During the period of August 7 to 10, 1976, Trans
port Canada circulated a memorandum to all
interested tenderers which purported to summarize
the questions and answers dealt with at the various
briefing sessions. One of the questions asked was
the central question in this case-namely-where
anyone qualifies in more than one counter group,
how will it be decided in which single group the
individual would win? The answer given in the
Transport Canada memorandum reads:
Basically by financial considerations however in the event that
purely revenue considerations would place an unfair advantage
with any company the evaluation committee would exercise the
condition of the tender specifications which states "Department
will not necessarily accept the highest offer, nor will it be bound
to accept any tender submitted."
The executives of Hertz then proceeded to pre
pare their tender on the basis that Hertz could not
afford to be forced off-airport. Accordingly, it was
necessary for them to beat Avis' offer. In order to
be sure of beating Avis, Hertz would have to
outbid Tilden since Hertz did not believe that Avis
would try to outbid Tilden. On this basis and
combined with Hertz's knowledge that Tilden
would bid higher in the open category than in the
domestic (because of greater competition in the
former), Hertz submitted its bid of slightly over
$2.8 million dollars.
The bids were opened in Ottawa on October 1,
1976. They were as follows:
MINIMUM PERCENTAGE OFFERS
COUNTERS BIDDERS GUARANTEE YEAR 1 % YEAR 2 % YEAR 3 %
Open 1. BUDGET $3,097,200.00 10.54 10.54 10.54
Open 2. HERTZ $2,809,002.00 11.00 11.00 11.00
Open 3. TILDEN $2,523,000.00 10.00 10.00 10.00
Open 4. HOST $2,496,000.00 14.57 14.71 15.05
Open 5. AVIS $2,433,200.00 10.00 10.00 10.00
(others bidding in the open category of an airport by airport basis were companies such as Holiday, Amleco, Compact
Rent-A-Car, Nashu-U Drive.)
Domestic 1. HOST $2,496,000.00 14.57 14.71 15.15
Domestic 2. TILDEN $2,305,300.00 10.00 10.00 10.00
(others bidding in the domestic category on an airport-by-airport basis were companies such as Holiday, Rent Rite, Pacific
Atlantic Rentals, Compact Rent-A-Car, Ottawa-Ford.)
SOUMIS- MINIMUM POURCENTAGE OFFERT
COMPTOIRS SIONNAIRES GARANTI I re ANNÉE 2` ANNÉE 3` ANNÉE
Ouvert 1. BUDGET 3 097 200 $ 10,54 10,54 10,54
Ouvert 2. HERTZ 2 809 002 $ 11,00 11,00 11,00
Ouvert 3. TILDEN 2 523 000 $ 10,00 10,00 10,00
Ouvert 4. HOST 2 496 000 $ 14,57 14,71 15,05
Ouvert 5. AVIS 2 433 200 $ 10,00 10,00 10,00
(Parmi les sociétés qui, dans la catégorie ouverte, ont fait une soumission distincte pour chaque aéroport figurent: Holiday,
Amleco, Compact Rent-A-Car et Nashu-U Drive.)
Domestique 1. HOST 2 496 000 $ 14,57 14,71 15,15
Domestique 2. TILDEN 2 305 300 $ 10,00 10,00 10,00
(Parmi les sociétés qui, dans la catégorie domestique, ont fait une soumission distincte pour chaque aéroport figurent: Holiday,
Rent Rite, Pacific Atlantic Rentals, Compact Rent-A-Car, Ottawa Ford.)
The Ministry of Transport then accepted the
lower of Tilden's bids (i.e., in the domestic cate
gory) in order to maximize revenues. The rationale
for this decision was as follows: acceptance of
Tilden's open bid would have resulted in Avis
being put off-airport and Holiday would have been
allotted the second domestic counter. However, the
lost revenues from Avis' departure from the air
port could not be recouped by the increase in
Tilden's open bid over its domestic bid plus Holi
day's rather meagre bid. Hertz commenced this
action in the Trial Division on December 6, 1976,
claiming damages for breach of contract and tort.
It also signed the required rental agreement on
February 7, 1977, making all the payments
required to be made by it pursuant to that agree
ment. The payments were made under reserve of
its right to pursue its claim for damages.
THE FINDINGS OF THE LEARNED TRIAL JUDGE ON
LIABILITY
The Trial Judge found that the tendering pro
cess employed in the instant case possessed the
ingredients necessary for the creation of a prelim
inary or initial contract leading to the formation of
the final contract. In this respect, she followed the
decision of the Supreme Court of Canada in R. in
right of Ontario et al. v. Ron Engineering &
Construction (Eastern) Ltd., [1981] 1 S.C.R. 111;
119 D.L.R. (3d) 267. She quoted, with approval,
the judgment of Mr. Justice Estey, speaking for
the Court, when he characterized this initial con
tract as contract A to distinguish it from the
construction contract itself which arose on the
acceptance of the tender in that case. Estey J.
referred to the construction contract as contract B.
In his view, contract A was a "unilateral contract
which arose by the filing of a tender in response to
the call therefor under the aforementioned terms
and conditions ..." (pages 119 S.C.R.; 272
D.L.R.). Estey J. went on to state (pages 122-123
S.C.R.; 275 D.L.R.):
The principal term of contract A is the irrevocability of the bid,
and the corollary term is the obligation in both parties to enter
into a contract (contract B) upon the acceptance of the tender.
After observing that not every tendering process
will create a preliminary or initial contract, the
Trial Judge examined the circumstances in the
case at bar to determine whether the tendering
procedure here amounted merely to a simple invi
tation to treat or whether it was in the nature of an
offer to enter into a preliminary contract. She
concluded that the tendering process here was the
latter for the following reasons (A.B., Vol. 1, pages
40-41):
The industry was invited to submit tenders on very specific
terms and conditions; in fact virtually all the terms of the final
rental contract were contained in the tender specifications. A
tender was submitted, with the payment of a deposit equal to
the first three months fees the tenderer expected to pay,
$204,928 in the plaintiffs' case. This deposit was not refundable
should the plaintiffs' bid be accepted. The submission of the
tender and the deposit was the consideration and the tendering
contract (contract 'A' in the words of Mr. Justice Estey) was
formed when the plaintiff submitted its tender and its $204,928
deposit. The eventual acceptance of the tender constituted an
irrevocable offer made by the defendant to the plaintiffs to
enter into contract 'B' (an analogy might be made to the giving
of an option to purchase). The final rental contract (contract
'B') was formed when that irrevocable offer is accepted by the
concessionaires.
She then proceeded to find a breach of contract
A based not only on the Award Procedure clause
of the tender Specifications supra, but also on the
answers given to Tilden at the final briefing ses
sion on August 3, 1976, supra, by representatives
of Transport Canada.
Counsel for the appellant submits that the
learned Trial Judge misapplied the principles
enunciated in the Ron Engineering case, supra,
and should not have found that the appellant was
contractually bound to award Tilden a concession
in the open category. Accordingly, in his submis
sion, the Trial Judge erred in finding a breach of
contract on the part of the appellant. In the appel
lant's view, the tender documents did not oblige
Transport Canada to accept Tilden's bid in the
open category because, in calling tenders, Trans
port Canada was under no obligation to accept any
tender unless it had expressly so stated. As support
for this submission, the appellant relies on the
Specifications under the sub-heading of "Tenders"
(A.B., Vol. 1, page 102) supra, where it is stated,
inter alia, that: "The Department will not neces
sarily accept the highest offer, nor will it be bound
to accept any tender submitted ...." Reliance is
also placed on the final memorandum circulated to
interested tenderers during the period August 7 to
10, 1976 and referred to supra. The submission is
that since this provision, as contained in the
Specifications and confirmed by the August 7 to
10 memorandum to tenderers was never altered
either orally or in writing, and since it forms an
important part of the contract between the parties,
it should be adhered to. Accordingly, in the appel
lant's submission, no breach of contract has
ensued.
The Trial Judge rejected the appellant's reliance
on the "no tender need necessarily be accepted"
clause. After observing that it was "a 'boiler-plate'
type" clause she expressed the following view
(A.B., Vol. 1, page 43):
If the defendant's argument is correct, that clause would vitiate
any tender contract; it would empower the Department to
choose in a completely arbitrary way between tenderers.
I agree with that view of the matter. I would add
that to give paramountcy to this clause of the
Specifications would be to render nugatory and
completely meaningless the Award Procedure
clause of the Specifications quoted earlier herein
(A.B., Vol. 1, page 98). That clause specifically
provides that where a tenderer is successful within
more than one counter group, only one counter will
be awarded and "the award will be made on the
basis of the highest offer made by that tenderer in
any group ..." (emphasis added). As noted by the
Trial Judge (A.B., Vol. 1, page 44):
... it was not argued that the award procedure clause of the
tender specifications was in any way ambiguous. Both parties
treated it as indicating that the highest bid by a tenderer would
be chosen.
I agree with the learned Trial Judge. I also agree
with counsel for the respondents that, in this case,
the tender document creates three categories of
tenderers and gives to Canadian operators an op
portunity to bid in more than one category. It also
provides a specific and precise rule for the disposi
tion to be made of double tenders. Accordingly,
such a specific Award Procedure rule should not
be presumed to be subservient to a general rule of
uncertain applicability which contradicts the spe
cific rule. I therefore reject this submission by
counsel for the appellant.
In my view, and for the reasons expressed,
supra, there is in this case a contract of the nature
of contract A in the Ron Engineering case, supra.
The terms of that contract are to be derived from
the Policy and Specifications set forth supra. In so
far as the oral representations and discussions of
July 22, 1976 and August 3, 1976 are concerned, it
makes no difference to the final determination of
this issue whether they are given due consideration
or whether they are excluded pursuant to the parol
evidence rule. If this evidence is properly admis
sible, I agree with the Trial Judge that it further
supports the respondents' interpretation of the con
tract. On the other hand, if that evidence is
excluded, there still remains, in my view, a legally
enforceable contract between the parties.
The final submission by the appellant on the
issue of contractual liability is, necessarily, an
argument in the alternative to its earlier submis-
sion. The submission is summarized in the appel
lant's factum as follows (page 29):
The written policy statement and specifications were expres
sions of policy and did not form actionable, binding promises or
warranties.
In my view, this submission is answered by the
views of the Trial Judge as expressed in Volume 1
of the Appeal Book at pages 40 and 41 thereof and
quoted supra. As noted, additionally, by her at
page 41:
The whole purpose of the tendering process was to put the
would-be car rental concessionaires in competition with each
other for counters at the airports.
She also summarized the appellant's side of the
bargain as follows (A.B., Vol. 1, page 41):
... the promise to evaluate the bids in accordance with the
terms of the tender specifications and to accord an offer to
enter into a rental contract to the successful bidders in accord
ance with those specifications.
In my view, she has properly applied the principles
of contractual liability to the factual situation in
this case and, for this reason, I would reject this
alternative submission by the appellant.
In addition to claiming damages for breach of
contract, the respondents also claimed damages for
"negligent or reckless misrepresentation". With
respect to this claim, the Trial Judge said (A.B.,
Vol. 1, page 46):
With respect to a claim on the ground of negligent misrepre
sentation, such would only become relevant if there were no
breach of a term of the contract.
She then went on to conclude, after "considerable
hesitation" that the respondent's claim, "if there
were no breach of contract" would be well founded
in tort on the ground of negligent misrepresenta
tion. Subsequently, on pages 46 to 49 of the
Appeal Book, Volume 1, she develops her reasons
for so concluding.
In view of her initial conclusion that there was a
breach of contract in this case, I think those
reasons relative to negligent misrepresentation are
obiter dicta in this case. My appreciation of the
totality of her reasons relative to quantum of
damages leads me to think that she was quantify
ing damages on the basis of breach of contract.
In any event, while, conceptually, there are dif
ferences between damages in contract and in tort,
in many cases the quantum determined will be the
same even though the principles employed are
different. 2 In contract, the prima facie object is to
put the plaintiff in the position he would have
enjoyed had the contract been satisfactorily per
formed. In tort, the objective is to put the plaintiff
in the position he would have enjoyed had the tort
not been committed.
With respect to both types of cases, the test of
remoteness of damage, whether in tort or in con
tract is, in principle, the same.' This was clearly
stated by Scarman L.J., in H Parsons (Livestock)
Ltd v Uttley Ingham Et Co Ltd 4 where he said: "I
agree with him in thinking it absurd that the test
for remoteness of damage should, in principle,
differ according to the legal classification of the
cause of action ... the law is not so absurd as to
differentiate between contract and tort save in
situations where the agreement, or the factual
relationship, of the parties with each other requires
it in the interests of justice." In my view, there is
nothing in the facts and circumstances of the case
at bar to justify a different test or standard, from
the perspective of remoteness, whether the cause of
action is said to arise in contract or in tort.
2 For a similar view see: V.K. Mason Construction Ltd. v.
Bank of Nova Scotia et al., [1985] 1 S.C.R. 271, at p. 285; 16
D.L.R. (4th) 598, at p. 607 per Wilson J. speaking for the
Supreme Court of Canada.
3 Compare: Asamera Oil Corporation Ltd. v. Sea Oil &
General Corporation et al., [1979] 1 S.C.R. 633, at p. 673 per
Estey J.
4 [1978] 1 All ER 525 (C.A.), at p. 535.
THE FINDINGS OF THE LEARNED TRIAL JUDGE ON
DAMAGES
The Trial Judge awarded damages to the
respondents on the basis that they were entitled to
recover the excess amount which they bid as a
result of what they understood to be the terms of
the tender contract. In so doing, she relied on the
decision of the English Court of Appeal in Esso
Petroleum Co. Ltd. v. Mardon, [1976] Q.B. 801.
In that case, the contract in question involved the
acquisition and operation of a gas station on the
basis of an estimate by the vendor's representative
that the throughput of petrol would reach 200,000
gallons a year in the third year of operation of the
station. The purchaser sued for loss of profit
because the annual sales did not nearly approach
that figure. In dealing with the question of dam
ages, Lord Denning M.R. decided that the plain
tiff could not be compensated for loss of bargain
because he was given no bargain that the through
put would amount to 200,000 gallons a year. In his
view, the plaintiff could only receive compensation
for having been induced to enter into a contract
which turned out to have disastrous consequences
for him. The measure of that compensation would
be measured by the loss which he suffered. Apply
ing the rationale of that case to the case at bar, the
Trial Judge concluded that these respondents
should recover the amount of the excess which
they bid. In my opinion, and on these facts, she did
not err in adopting this view. Contract A did not
promise Hertz that it would be able to operate on
the airport free of on-airport competition from
Avis. This is analogous to the factual situation in
Mardon where the bargain did not guarantee a
specified throughput. In my view, loss of profits
would have been recoverable in this case only if
contract A had contained such a guarantee of
immunity from on-airport competition. However,
contract A merely provided that a certain bid
selection process would be utilized and since,
because of a breach of that term, Hertz suffered
loss, the amount of that loss should be restricted to
the excess amount which was bid because of the
breach of contract A.
The amount awarded to the respondents in
excess concession fees was the sum of $232,500.
This figure was taken by the Trial Judge from a
report prepared for the respondents by Mr. M. A.
MacKenzie, an auditor and consultant with the
firm of Clarkson Gordon & Co., Chartered
Accountants. In his report, Mr. MacKenzie quan
tified the respondents' claim for recovery of excess
commission fees in the sum of $232,500 (A.B.,
Vol. 10, page 1349). Particulars of this claim are
contained in Schedule T to the report (A.B., Vol.
10, page 1376). Mr. MacKenzie was not cross-
examined at trial with respect to Schedule T.
Neither his assumptions nor his methodology were
put in issue. It seems evident that the Trial Judge
accepted his evidence in respect of this item. Since
the witness has impressive credentials and since his
evidence in this regard was not impeached or
challenged in any way, the Trial Judge quite prop
erly, in my view, accepted that evidence and
awarded the respondents' damages accordingly.
At the hearing of the appeal before us, counsel
for the appellant submitted to the Court a series of
calculations designed to show that the correct
figure to be assessed in damages under this head
ing would be in the order of $145,000 rather than
the figure of $232,500 awarded at trial. In my
view, the proper forum in which to question the
validity of Mr. MacKenzie's quantification would
have been by way of cross-examination at trial.
For an Appellate Court to accept "corrections" of
evidence given by a credible expert witness at trial,
particularly when that witness was not challenged
in any way in so far as that evidence was con
cerned would be quite improper. As Mr. Justice
Stone noted in R. v. CAE Industries Ltd., [1986] 1
F.C. 129 (C.A.), at page 173:
It is not, of course, for this Court sitting in appeal to assess
the damages, for to do so would be to remove the function from
the hands of the Trial Judge where it properly belongs. It has
been stated many times over that an appellate court ought not
to reverse a finding of a Trial Judge as to the amount of
damages merely because it thinks that, had it tried the case in
the first instance, it would have awarded a lesser or greater
sum. In order to justify reversing a Trial Judge on his assess
ment of damages it must be demonstrated that he acted on a
wrong principle.
For the reasons expressed supra, I conclude that
the amount awarded as damages by the Trial
Judge was based on uncontradicted and highly
credible evidence which is not reversible on the
record before us.
The only remaining question is whether the
damages awarded were too remote. I have no
hesitation in agreeing with the Trial Judge that the
damages which she awarded the respondents under
this heading were not remote. Furthermore, I did
not perceive that counsel for the appellants seri
ously contested this view of the matter. On this
branch of the main appeal, the thrust of their
submissions, rather, related to the quantum of the
damages awarded, as noted, supra. The measure
of damages is, of course, always limited to what
was reasonably foreseeable. The classic test from
Hadley v. Baxendale, 5 provides:
Where two parties have made a contract, which one of them
has broken, the damages which the other party ought to receive
in respect of such breach of contract should be such as may
fairly and reasonably be considered either arising naturally, i.e.
according to the usual course of things, from such breach of
contract itself, or such as may reasonably be supposed to have
been in the contemplation of both parties, at the time they
made the contract as the probable result of the breach of it.
As noted by Fridman in his work on The Law of
Contract in Canada (2nd Edition) 1986, at page
656, the first branch of the Hadley v. Baxendale
test is objective "that is, what the reasonable man
would or ought to have foreseen as being the likely
or probable consequence of his breach." Fridman
goes on to observe: "This will be, and was intended
to be the normal, most usual test. However, excep
tionally, it is recognized that, in some instances,
the recoverable damages may go beyond what the
ordinary, reasonable man would foresee as being
likely, and might extend to consequences not ordi
narily foreseeable, as long as the particular conse
quences were foreseeable in the light of their par
s (1854), 9 Ex. 341, at p. 354.
ticular contract and its special circumstances. In
such instances the test is subjective."
In my view, and applying the Hadley v. Baxen-
dale test, the award of $232,500 is proper. While
the respondents could not have known that Tilden
would definitely bid in both categories, thus poss
ibly forcing the respondents off-airport, the
respondents, as reasonable persons, would know
that Tilden possessed the qualifications and the
potential to bid in both categories. Hence, it was
reasonably foreseeable, in my view, that the
respondents, wanting and needing to ensure they
would not be forced off-airport (a distinct possibil
ity because of Tilden's dual bidding advantage)
would raise their bid so as to preclude such an
eventuality. Likewise, I conclude that, in these
circumstances, Transport Canada would or ought
to have foreseen that the excess amount of rental
paid by the respondents to "buy insurance", on the
assumption that Transport Canada would comply
with the terms of contract A, was a likely or
probable consequence of their breach of the terms
of contract A.
THE CROSS-APPEAL
The respondents (in the main appeal) have
cross-appealed the decision of the Trial Judge not
to award them damages for loss of profits. The
respondents submit that the loss of profit was
foreseeable. They submit further, that their loss of
profit was $930,000 and not $725,000, as quanti
fied (although not awarded) by the Trial Judge.
Applying the first of the Hadley v. Baxendale
tests to the facts of this case, the question to be
answered is whether or not a reasonable person
would know or ought to have known, at the time
the contract was entered into, that the respondents
would suffer a loss of profits because Avis was not
forced off-airport when Transport Canada selected
Tilden's lower bid in the domestic category over its
higher bid in the open category in breach of the
Award Procedure provisions of the Specifications.
Under the second test, the issue is whether Trans-
port Canada, in addition to the ordinary knowl
edge of a reasonable person in the usual course of
things, was in possession, at the time the contract
was entered into, of knowledge of special circum
stances outside the ordinary course of events of
such a nature as to make the consequences of the
breach foreseeable.
Applying these tests, I cannot conclude that
either a reasonable person or the respondents or
Transport Canada, for that matter, would or ought
to have foreseen that the respondents would suffer
loss of profits because Avis was not forced off the
airport. As found by the Trial Judge and quoted,
supra: "The plaintiffs were given no bargain that
Avis would be placed off the airport."
Consequently they should not be entitled to
compensation for loss of profit which they expect
ed to make in the event Avis was forced
off-airport. Such a loss of profit would not be
reasonably foreseeable, in my view. This view of
the matter is reinforced by the evidence at trial.
Mr. Gerrie, the Director of Airport Marketing for
Transport Canada swore that it did not occur to
him what the result might be if an operator like
Tilden with double eligibility placed bids in both
categories. He said: "we did not feel that there was
a strong likelihood of that, given the market shares
in Canada at that time." (Transcript, Vol. 6, pages
717 and 718). Mr. Gerrie was also asked whether,
in his view, the respondents had any particular
understanding of how the tenders would be award
ed in the event of Tilden bidding in both the open
and domestic categories with its higher bid being
in the open category. His response reads (Tran-
script, Vol. 6, page 721):
To my knowledge there was never any written or verbal discus
sions as to how we might award the tenders. Indeed, at that
time, I think it would be very difficult for us to know until we
had seen the dollar values.
From this evidence, I think it clear, that in so far
as Transport Canada was concerned, it was not in
their "reasonable contemplation" that Avis would
be forced off-airport at the time the tenders were
submitted. At that point in time, they did not
know what the amounts of the tenders were going
to be. At that juncture, everything was speculative.
Accordingly, neither the objective nor the subjec
tive test of Hadley v. Baxendale were met in the
circumstances of this case, in my view.
At the hearing of the appeal, counsel for the
respondents relied on certain passages from judg
ments in the House of Lords in C. Czarnikow Ltd.
v. Koufos [hereinafter the "Heron IT'], [1969] 1
A.C. 350 and from a decision of the English Court
of Appeal in H Parsons (Livestock) Ltd v Uttley
Ingham Et Co Ltd, [1978] 1 All ER 525. Particu
lar reliance was placed on the comments of Scar-
man L.J. in the Parsons case, at pages 539 to 541
inclusive, where he appears to broaden the test for
remoteness. At page 541 he said:
Given the situation of the parties at the time of contract, was
the loss of profit, or market, a serious possibility, something
that would have been in their minds had they contemplated
breach? (Emphasis added.)
However, earlier in his reasons (page 535) he said:
... the type of consequence, loss of profit or market or physical
injury, will always be an important matter of fact in determin
ing whether in all the circumstances the loss or injury was of a
type which the parties could reasonably be supposed to have in
contemplation. (Emphasis added.)
I conclude from a perusal of both the Heron II
and the Parsons cases, that they have not altered
the classical test formulated in Hadley v. Baxen-
dale, supra. I am fortified in this view by a similar
view expressed by Fridman in the review which he
makes of the relevant jurisprudence at pages 655
to 660 of his text (quoted earlier herein). He
concludes, at page 660:
What does seem clear is that, in contract cases, the test is the
classical one of Hadley v. Baxendale .... The appropriate gen
eral test is one of "reasonable contemplation" by the parties at
the time of the contract, whether or not the results are more
serious than would have been reasonably contemplated.
In view of my conclusion that the damages
claimed for loss of profits were not reasonably
foreseeable or could not be reasonably contemplat
ed, it follows that the respondents cannot succeed
in their cross-appeal. Accordingly it becomes un
necessary to deal with their submissions to the
effect that their loss of profits should be increased.
CONCLUSION
For all of the reasons expressed supra, I would
dismiss the main appeal with costs. I would also
dismiss the cross-appeal with costs.
MAHONEY J.: I agree.
* * *
The following are the reasons for judgment
rendered in English by
STONE J.: It is not necessary to recite the facts
as they have been already fully outlined by Mr.
Justice Heald. I have little to add to his reasons for
judgment with which I agree. I shall limit myself
to a few observations on the award by the learned
Trial Judge of the excess concession fees paid
pursuant to the tender process and on the loss of
profits claimed as a consequence of the breach of
what Mr. Justice Heald identifies as the prelim
inary or initial contract leading to the formation of
the final contract.
In making her award of damages the learned
Trial Judge relied upon the decision of the English
Court of Appeal in Esso Petroleum Co. Ltd. v.
Mardon, [1976] Q.B. 801. In that case, the
defendant made a representation as to the poten
tial annual throughput of one of its petrol stations,
and this was found to have induced the plaintiff to
become the tenant of that station. The representa
tion was wholly inaccurate. The Court of Appeal
held that since the statement amounted to a war
ranty as well as to a negligent misstatement the
defendant was liable for damages both in contract
and in tort. Any distinction between the measure
of damages under the different heads was avoided
by construing the warranty not as a bargain that
the petrol throughput would amount to a certain
number of gallons annually, but as a guarantee
that the estimate had been carefully made. Thus,
as the ambit of the warranty was co-extensive with
the defendant's duty in tort, the plaintiff was
entitled to recover damages which would place him
in the position he would have been in had he never
entered into the contract (per Lord Denning M.R.,
at page 821). He was allowed his capital loss and
the overdraft incurred in running the business. A
claim for lost earnings was not allowed because it
was deemed virtually incapable of proof (per
Ormrod L.J., at page 829). I understand the lost
earnings to refer to moneys the plaintiff would
have earned had he not entered into the contract,
rather than lost business profits resulting from its
breach (see Sunshine Vacation Villas Ltd. v. Gov
ernor and Company of Adventurers of England
Trading into Hudson's Bay (1984), 13 D.L.R.
(4th) 93 (B.C.C.A.), at pages 99-102). In the
present case, the learned Trial Judge drew an
analogy between the basis for the award of dam
ages in the Esso Petroleum case and her award of
the excess bid amount. While I do not disagree, I
think the same result is open to us under estab
lished legal principles governing recovery of dam
ages for a breach of contract simpliciter.
I wish to stress two important features of the
ground rules which governed the awarding of
counters under the tender specifications. First,
they made it possible for Tilden to bid both in the
open and domestic categories and, secondly, a
successful bid by the same tenderer in both catego
ries would result in the higher bid being selected.
It was therefore evident that the competition
would be more intense in the open category
because the big four of Budget, Hertz, Tilden and
Avis would ' be competing for the three counters
available in that category. Given that situation, I
think it was reasonable to anticipate (as Hertz did)
that Tilden would bid higher in that category than
in the domestic category. In order to assure itself
of a counter at the airports Hertz strove to outbid
Tilden rather than chance being pushed off the
airports by being outbid by Avis.
Hertz asks either for its expectation interest (the
lost profits) or its reliance interest (the excess bid
amount). Some recent case law indicates that a
plaintiff has a choice of claiming one or the other
as the circumstances may appear. (See e.g. Culli-
nane v. British "Rema" Manufacturing Co. Ld.,
[1954] 1 Q.B. 292 (C.A.), at page 303; Anglia
Television Ltd. v. Reed, [1972] 1 Q.B. 60 (C.A.),
at page 64; Bowlay Logging Ltd. v. Domtar Ltd.,
[1978] 4 W.W.R. 105 (B.C.S.C.), at pages 113-
114; Sunshine Vacation Villas Ltd. v. Governor
and Company of Adventurers of England Trading
into Hudson's Bay, supra; Orvold, Orvold, Orvold
and R.E.G. Holdings Ltd. v. Turbo Resources
Ltd. (1984), 33 Sask. R. 96 (Q.B.), at page 102;
C.C.C. Films (London) Ltd. v. Impact Quadrant
Films Ltd., [1985] Q.B. 16, at page 32.) In my
view, the reliance interest is compensable for it
seems to me the excess bid amount is a loss that
flows from the breach. It was additional to the
amount actually required to secure a car rental
counter in the open category and was incurred in
reliance upon the Award Procedure clause. The
harm can be undone by compensating Hertz for
that loss and that may be accomplished within
established contract principles. (Hadley v. Baxen-
dale (1854), 9 Ex. 341; Victoria Laundry (Wind-
sor), Ld. v. Newman Industries, Ld. Coulson &
Co., Ld. (Third Parties), [1949] 2 K.B. 528
(C.A.); C. Czarnikow Ltd. v. Koufos, [ 1969] 1
A.C. 350 (H.L.); see also H. Parsons (Livestock)
Ltd. v. Uttley Ingham & Co. Ltd., [1978] Q.B. 791
(C.A.) and Asamera Oil Corporation Ltd. v. Sea
Oil & General Corporation et al., [1979] 1 S.C.R.
633.)
I agree that the expectation interest is not com-
pensable. The preliminary or initial contract came
into existence when Hertz submitted its bid in
conformity with the Specifications. It was
breached by non-compliance with the Award
Procedure clause. I do not consider this to be the
classic breach of contract scenario with a single
contract, two parties and loss of profits stemming
directly from the breach. Some factors are unique
to the present situation. Here we have multiple
double contracts (initial and final), breaches of the
initial contracts, numerous parties and indirect loss
of additional profits based upon the continued
presence of Avis at the airports. Notwithstanding
these breaches, a number of final contracts did
come into existence. One such contract gave Hertz
a counter at the airports and left Hertz to profit by
that contract if it could. It is not complained that
the breach caused Hertz to lose profits under its
final contract but that the configuration resulting
from the breach prevented Hertz from gaining
additional profits from a share of Avis' business. I
agree that loss of those profits is not compensable
because they are too remote according to the test
enunciated in Hadley v. Baxendale.
In conclusion, I see no reason for interfering
with the assessment of damages made by the
learned Trial Judge. While she relied on the prin
ciple of the Esso Petroleum case I believe the
damages allowed are also recoverable under classic
legal principles governing an award of damages for
breach of contract. For the reasons given by Mr.
Justice Heald and for these additional reasons, I
would dispose of the appeal and cross-appeal as
proposed by him.
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