May You Litigate in Interesting Times: Specific Performance, Mitigation, and Valuation Issues in a Rising (or Falling) Market

Abstract

This article provides practical insight and strategic guidance regarding how to properly structure the prosecution or defence of a claim in a rising and falling market, and what expert and fact evidence is necessary. First, the article discusses the threshold required to be awarded specific performance and how courts have interpreted Semelhago’s “uniqueness” test, especially in the context of property purchased for commercial investment purposes. Next, if specific performance is not awarded, the valuation date must be chosen. The authors propose a new “hybrid approach” for assessing damages whereby the loss based on actual cash follow up to the date of trial is measured (and a risk adjustment applied to reflect that revenues are never earned risk-free). The net present value of remaining cash flow is then calculated on the basis of the most recent data available at the date of trial. The proposed hybrid approach allows the plaintiff to receive the value of land less the cost to acquire it, plus in every claim month the plaintiff receives the cash it would have earned, but also assumes the risk of operating the land as of that time. Finally, in considering Southcott the authors address some strategic and practical considerations regarding mitigation and the needed evidentiary burden to consider.