Axiom Real Estate v Abell Software Ltd., 2019 (MBQB) Date: 2019-06-09 Other citations: [2019] 3 DR 268; 22 DLR (3d) 496 Citation: Breach of Contract -- Damages - Mitigation of Damages - Breach of Warranty/Breach of Condition -- FrustrationForce Majeure ACTION for the price of certain goods. Breach of Contract FACTS [1] On January 1, 2019, the plaintiff, Axiom Real Estate Ltd., entered into a written contract with Abell Software Development whereby the defendant was to develop and "make life" a real estate web app the primary of which was to facilitate the online browsing of properties listed for sale by Axiom Real Estate. Costs for development were agreed on at $300.00 per hour for 100 hours for a total of $30,000.00. [2] The contract explicitly indicated that the web app needed to be able to allow for the uploading and online viewing of multiple images of the listed properties including online virtual tours. [3] The contract further stipulated that the defendant was responsible for hosting and ensuring delivery of a live version of the web app for market testing by March 31, 2019. [4] During the period leading up to March 31, the plaintiff and the defendant had multiple meetings where design changes were discussed, however, the fundamental requirements of the web app did not change and the contract was not varied during this time. Plaintiff reiterated the importance of potential buyers being able to see the properties on the website. Defendant indicated that the project was on track. [5] On March 31, 2019, the defendant made the product available for market testing as discussed however they failed to provide any facility to host images, claiming difficulty in getting it to work properly. All other requirements were met. [6] The contract did not include curing or an ADR clause. The contract did however include an Entire Agreement clause. 2 [7] On April 5th the plaintiff requested, by registered letter, the immediate transfer of all Intellectual Property belonging to the plaintiff to Axiom Real Estate, terminated its agreement with Abell Software and initiated legal action for breach of contract. [8] On April 10th the defendant complied with the plaintiff's request and transferred the plaintiff's property to the custody of the plaintiff's attorney. [9] On April 12th the plaintiff secured the services of Trident Wave Development Corporation to complete the web application, whereby Axiom agree to pay Trident a rate of $500/hour for a total of 50 hours or $25,000 to be completed Asap. [10] Upon discovery, the following information was introduced and is accepted as valid evidence. i) the defendant wishes to enter into evidence an email sent by the plaintiff to the defendant on February 15th in which the plaintiff agrees to give the defendant another 2 weeks to complete the image hosting requirement of the web application and further indicated the reason for the delay being the temporary loss of access to the cloud data necessary to complete the project, due to a storm their data farm site. ii) it has been determined that the market hourly rate for a developer with the appropriate level of knowledge and skill to build the image component of the web app is $300/hour. iii) it was further agreed, based on market consensus, that the remainder of the web app could be completed by a competent developer in 30 hours. iv) it has been determined that the plaintiff has paid $10,000 in advertising costs promoting the web apps availability for March 31st. v) the plaintiff is claiming that its reputation has been damaged due to its inability to launch the web app on time as promoted. vi) the plaintiff is arguing that it had a reasonable expectation of the web app generating at least 1 additional sale for each of the months of April and May. The average commission payable to Axiom based on the average property sale price is $30,000. It was agreed that the commission amount is reasonable. 3 [10] Axiom is claiming the defendant's breach was a fundamental breach and is suing for damages. Questions: Remember to cite paragraphs in your answers 1. Do you the defendant has to breach its agreement with the plaintiff? (3 marks) Explain 2. If you think the defendant did breach the contract, what kind of breach would you classify this as? (3 marks) 3. Calculate what you believe would be a reasonable dollar amount of pecuniary damages that might be awarded to the plaintiff. 4. What other damages pecuniary or non-pecuniary damages might the 5. Discuss the impact of this case of the email referred to in discovery p.[10] (i). 6. What would be the position of Axiom Real Estate should the court find the defendant's breach a breach of warranty only? Discuss. 7. What defense might the defendant offer? Discuss.