Is replacement cost the proper measure for damages in a breach of contract case?

Chan v. Farrell, 2001 BCCA 92, involved the unlawful seizure and sale of certain equipment. An issue on appeal was the proper measure of damages for the goods unlawfully distrained and sold. Damages were thus assessed for a tort, rather than a breach of contract, and the case is distinguishable on that basis. However, in the course of the decision, Lambert J.A. did comment on the use of the replacement value as the basis for assessing damages. At para. 31, he stated: In my opinion the trial judge erred in law when he took replacement value as the basis for assessing damages in this case. Replacement cost is important, and evidence about replacement cost is relevant, particularly where the property has been replaced. Replacement cost is also important where the owner intends to replace the property, perhaps as soon as he is in receipt of funds from the lawsuit. In that case it is important that evidence be given of the owner’s intention to replace the property, and the trial judge must of course believe that evidence. Where there is no evidence that the property will be replaced, and where the evidence indicates that the replacement of the property cannot be economically justified, and where the property has no specific value other than its economic value, then replacement cost simpliciter cannot be the measure of damages.