Instructions Specific to This Exam

1. This examination contains one question worth a total of 100 marks.

2. You will be assessed primarily on your knowledge of the relevant cases and remedial principles contained in the assigned Casebook and Texts, together with your ability to identify the appropriate relief, distinguish among competing remedial measures, apply the governing principles to the facts and quantify damages where the facts permit.

3. No marks are awarded for merely reproducing or summarizing the facts. Your answer should identify the remedial issues raised by the facts, state the governing principles and explain how those principles affect the relief realistically available to the parties.

4. Remedies are consequential upon substantive rights. For purposes of this examination, assume that Greyhaven Industrial Properties Ltd. has breached its agreement with Tallis Biologics Inc. and has also breached its contractual duty of honest performance as described below. Do not spend examination time reconsidering liability for those breaches.

5. Do not provide a general essay on damages or equitable remedies. Address the remedies actually raised by the facts.

6. Full case citations are not required for authorities contained in the assigned materials. Cases should nevertheless be identified with sufficient precision where they materially assist the analysis.

7. You are asked to prepare a memorandum of law. You do not need to construct formal memorandum headings such as “To,” “From,” “Date” or “Re.” Marks are awarded for substantive analysis.

8. In addressing monetary relief, distinguish where relevant among:

   • expectation damages;

   • reliance expenditure;

   • consequential loss;

   • mitigation and avoided loss;

   • supervening events;

   • the appropriate date of assessment;

   • common-law damages and equitable damages; and

   • punitive damages.

9. Do not assume that specific performance is available merely because the subject matter is land. Consider whether damages would be an adequate substitute in light of the actual characteristics and intended use of the property.

10. Where specific performance and damages are claimed in the alternative, identify the consequences of each remedy and avoid double recovery. If specific performance is granted, consider whether additional compensation may nevertheless be required for losses caused by delayed performance.

11. In addressing interlocutory relief, distinguish an interlocutory injunction preserving the disputed property from a Mareva order preserving assets potentially available to satisfy a judgment. The requirements and purposes of those remedies are not identical.

12. Assume that the court has jurisdiction over all parties and property described below. Do not address land-registration law, priorities, insolvency, conflict of laws, taxation, corporate-law liability or civil procedure except to the extent that a procedural requirement forms part of the law governing the remedy itself.

13. Where a precise mathematical calculation is possible from the supplied facts, show your reasoning. Where present-value evidence or additional accounting evidence would be required, identify the appropriate measure without performing actuarial calculations.

14. Write a clear and organized answer in complete sentences.

QUESTION

FACTS

Tallis Biologics Inc. (“Tallis”) manufactures sterile diagnostic cartridges used by hospitals and medical laboratories.

Tallis operates its principal Canadian manufacturing plant in Hamilton, Ontario.

The plant occupies approximately seven acres.

Immediately beside it is a 4.6-acre industrial property known as the Foundry Annex.

The Foundry Annex is owned by Greyhaven Industrial Properties Ltd. (“Greyhaven”).

For historical reasons, the two properties are unusually integrated.

The Foundry Annex contains:

• a partially completed clean-manufacturing building;

• an eight-megawatt electrical connection linked to the same substation serving Tallis;

• a private loading road connecting directly to Tallis's existing shipping yard;

• underground process-water connections;

• a secure enclosed corridor that can physically connect the two manufacturing buildings; and

• municipal approvals permitting pharmaceutical and laboratory manufacturing.

No other property adjoins Tallis's existing facility.

In early 2025, Tallis began negotiating with Greyhaven to purchase the Foundry Annex.

Tallis had recently entered into a five-year supply agreement with Quorum Diagnostic Networks Ltd. (“Quorum”).

The agreement contemplated a substantial increase in Tallis's production beginning in February 2026.

Quorum was permitted to terminate if Tallis could not provide specified minimum quantities by June 30, 2026.

During negotiations with Greyhaven, Tallis's president, Celeste Ardin, explained that Tallis wanted the Foundry Annex because integrating new production into its existing Hamilton facility would avoid duplicating:

• sterilization equipment;

• security systems;

• warehouse staff;

• loading infrastructure; and

• quality-control laboratories.

Celeste said:

“There are other industrial buildings in Ontario. There is only one industrial building attached to ours.”

Greyhaven was also given a Tallis planning memorandum estimating that, once the Quorum production line reached full capacity, it would generate approximately $1.25 million in additional annual contribution margin.

The memorandum expressly stated that this was a forecast rather than a guaranteed profit figure.

On May 1, 2025, Tallis and Greyhaven entered into a binding agreement of purchase and sale.

The purchase price was $8.6 million.

Tallis paid a deposit of $860,000.

Closing was scheduled for November 1, 2025.

There was no financing condition.

The agreement did not contain a liquidated-damages clause and did not expressly state that Tallis would be entitled to specific performance following breach.

Following execution, Tallis began preparing the Foundry Annex for integration into its operations.

It paid approximately $380,000 to engineers, architects and regulatory consultants.

Approximately $240,000 of that work concerned building configurations and utility connections specific to the Foundry Annex.

The remaining work could be adapted to another expansion facility.

Tallis also placed orders for specialized clean-manufacturing equipment.

Those orders did not depend entirely upon Tallis acquiring the Foundry Annex, but cancellation or relocation would result in approximately $350,000 in non-refundable cancellation, redesign and reinstallation costs.

In July 2025, Alpenglow Data Infrastructure Ltd. (“Alpenglow”) approached Greyhaven.

Alpenglow wanted the Foundry Annex for a new data centre.

It offered $12.4 million.

Greyhaven's directors concluded that breaching the Tallis agreement and selling to Alpenglow would be substantially more profitable even after paying damages.

An internal board memorandum dated August 7 stated:

“Economically, Tallis's contract is badly under market. We should preserve the Alpenglow opportunity and manage Tallis's reaction once Alpenglow's commitment is secure.”

Greyhaven's president, Ronan Keir, was concerned that Tallis might immediately seek an injunction preventing a sale to Alpenglow.

On August 12, Celeste emailed Ronan after hearing rumours that Greyhaven was speaking to another buyer.

She asked:

“Please confirm there is no issue with our November closing before we authorize the final integration package.”

Ronan replied:

“There is no issue. Greyhaven intends to complete the Tallis transaction exactly as agreed. You should continue preparing for closing.”

At the time Ronan sent the email, Greyhaven had already decided that it would accept Alpenglow's offer if Alpenglow completed its final due diligence.

Tallis relied on Ronan's email.

Over the following three weeks, it incurred an additional $310,000 in engineering, electrical-design and regulatory expenses.

Approximately $260,000 of that work is now useless unless Tallis acquires the Foundry Annex.

On September 3, Alpenglow waived its final due-diligence condition.

Greyhaven immediately informed Tallis that it would not complete the November sale.

It offered to return Tallis's deposit and pay an additional $300,000.

Tallis rejected the offer.

Greyhaven subsequently paid the $860,000 deposit into trust pending resolution of the dispute.

For purposes of this examination, assume that Greyhaven's refusal to close constitutes a breach of contract and that its August 12 representation to Tallis constitutes a breach of the duty of honest performance.

On September 5, Tallis commenced an action seeking:

• specific performance;

• damages in the alternative;

• compensation for losses caused by delayed acquisition of the property; and

• punitive damages.

Tallis also learned that Greyhaven and Alpenglow were attempting to complete their transaction within three weeks.

Tallis obtained a short interim order preventing Greyhaven from transferring the Foundry Annex until the return of its motion for an interlocutory injunction.

Tallis has offered the usual undertaking to compensate Greyhaven for damages caused by the interlocutory order if Tallis ultimately fails.

Greyhaven argues that the injunction should be dissolved.

It says Tallis's alleged losses can be quantified in money.

Greyhaven also says that Alpenglow's $12.4 million offer will expire if the transaction cannot close within 30 days.

If that occurs, Greyhaven says it may lose millions of dollars.

Tallis responds that, if the property is sold, the very asset it seeks through specific performance will disappear from Greyhaven's hands.

For purposes of this examination, assume that a sale to Alpenglow would create substantial legal and practical obstacles to obtaining the Foundry Annex itself and that Tallis cannot safely assume the property could later be recovered from Alpenglow.

Several alternative industrial sites became relevant after Greyhaven's repudiation.

The first, Harbour Works, was offered to Tallis on September 10 for $7.6 million.

It is approximately 12 kilometres from Tallis's existing plant.

It could have been acquired by October 15.

Tallis's engineers concluded that Harbour Works could accommodate approximately 65% of the planned expansion.

However, Tallis would have needed:

• approximately $1.4 million in additional building modifications;

• a separate sterilization system;

• a second warehouse team; and

• approximately seven additional months before full production.

Tallis declined to purchase it.

The second property, Larkin Yard, became available in January 2026.

It is approximately four kilometres from Tallis's plant.

Its purchase price was $9 million.

It would have required approximately $700,000 in additional fit-out costs.

Tallis estimates that full operations could have begun there approximately four months later than they could have begun at the Foundry Annex.

Unlike Harbour Works, Larkin Yard could eventually have accommodated approximately 90% of Tallis's planned expansion.

Tallis also declined to purchase Larkin Yard.

Celeste explains:

“We had one acquisition facility from our bank. If we used it to buy another property, we could not also close the Foundry Annex if the court ordered specific performance. And neither alternative gave us the integrated operation we bargained for.”

Greyhaven responds that Tallis deliberately refused commercially reasonable substitutes in order to increase its damages claim.

Following the breach, Tallis arranged temporary outsourced manufacturing so that it could continue supplying Quorum.

The outsourcing arrangement cost approximately $220,000 per month more than Tallis estimated internal production at the Foundry Annex would have cost.

Tallis used the arrangement for eight months.

The arrangement allowed Tallis to meet Quorum's minimum supply obligations during that period.

Tallis says that entering into the temporary arrangement substantially reduced what would otherwise have been a much larger claim for lost sales.

Greyhaven agrees that the outsourcing arrangement was commercially reasonable but says any avoided losses must be reflected in the final damages calculation.

The Quorum agreement subsequently encountered an unrelated problem.

A significant portion of Quorum's purchases was funded by a provincial medical-reimbursement program.

In May 2026, the provincial government unexpectedly announced that the relevant reimbursement program would end on August 31, 2026.

Quorum's demand for Tallis products fell sharply.

Quorum exercised a contractual right to terminate its supply agreement effective September 1, 2026.

Nothing Greyhaven did caused the government decision or Quorum's termination.

Before the reimbursement announcement, Tallis's experts had projected that the Quorum agreement would generate approximately $1.25 million in annual contribution margin through 2030.

Tallis now accepts that it could not have earned profits under that particular agreement after August 31, 2026 even if Greyhaven had completed the land sale.

Greyhaven argues that any damages calculation must take the actual termination into account.

Tallis responds that contractual damages are normally assessed as of the date of breach and that the government's later decision was wholly unforeseeable in September 2025.

The value of the Foundry Annex has also changed significantly.

Expert evidence indicates that its fair market value on November 1, 2025, the contractual closing date, was approximately $10.5 million.

In February 2026, the City adopted a new employment-zone plan encouraging life-sciences and high-density technology development around the area.

By August 2026, the Foundry Annex had an estimated market value of approximately $15.2 million.

Neither Tallis nor Greyhaven knew in May 2025 that the zoning initiative would occur.

Tallis maintains its claim for specific performance.

It says that, if specific performance is refused, damages assessed merely by comparing the contract price with the November 2025 market value would substantially undercompensate it.

It argues that the proper alternative equitable award should reflect the much higher value of the Foundry Annex at the time the court finally determines the case.

Greyhaven responds:

“Tallis contracted to buy an $8.6 million property. It did not buy a lottery ticket entitling it to every increase in land value until trial.”

Greyhaven says ordinary contract damages should be assessed by reference to the value of the property when the transaction should have closed.

A further issue concerns Greyhaven's assets.

Greyhaven is a special-purpose property company.

Shortly after Tallis commenced its action, Greyhaven sold an unrelated warehouse for approximately $7 million.

Within ten days of receiving the sale proceeds, it transferred approximately $5.8 million to its corporate parent outside Canada as a shareholder distribution.

An internal email from Greyhaven's chief financial officer stated:

“Once Foundry is dealt with, Greyhaven should not be sitting on excess Canadian cash while Tallis is trying to turn this into a giant damages case. Keep enough here for normal liabilities.”

Approximately $900,000 remains in Greyhaven's Canadian bank accounts.

Greyhaven says the transfer was an ordinary corporate distribution following the sale of a mature investment property.

It also emphasizes that it still owns the Foundry Annex, presently worth far more than Tallis's likely damages.

Tallis seeks a Mareva order preventing Greyhaven from transferring further assets outside the ordinary course of business and, if the Foundry Annex is eventually sold, preventing removal of the sale proceeds from the jurisdiction pending judgment.

Greyhaven says Tallis is attempting to obtain prejudgment security merely because it fears being an unsecured judgment creditor.

Tallis also seeks $2 million in punitive damages.

It relies on:

• Greyhaven's deliberate decision to breach for profit;

• Ronan's knowingly false August 12 assurance;

• the board's plan to delay Tallis's reaction until Alpenglow was committed; and

• the later movement of substantial corporate assets after litigation began.

Greyhaven responds that punitive damages are exceptional.

It accepts that Ronan acted dishonestly but says the ordinary compensatory claim already includes the additional $260,000 of useless work Tallis performed because of the August 12 assurance.

Greyhaven argues:

“Contract damages exist to compensate, not to punish a company for taking a more profitable commercial opportunity.”

Greyhaven also says the $5.8 million corporate distribution was lawful and cannot transform a contract case into punitive litigation.

Tallis has retained your firm.

It wants advice before the interlocutory motions are heard and before deciding whether it should continue insisting on specific performance rather than attempting to acquire another facility.

QUESTION

The senior partner asks you to prepare a brief but comprehensive memorandum advising Tallis on the significant remedial issues arising from Greyhaven's breach.

Your memorandum should address the final relief realistically available to Tallis, including specific performance and monetary remedies, the proper treatment of mitigation and subsequent events, the appropriate date or dates for assessing damages, the possibility of punitive damages, and the interlocutory relief Tallis presently seeks.

Where two remedies are alternatives rather than cumulative, explain the distinction.

Where monetary recovery can reasonably be estimated from the supplied facts, identify the appropriate calculation and any adjustments required to prevent overcompensation.

100 MARKS