Benfield Corporate Risk Canada Ltd. v. Beaufort International Insurance Inc. et al., 2013 ABCA 200

• Judge: Côté, Conrad and Watson, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: January 16, 2013
• Citations: 2013 ABCA 200;(2013), 553 A.R. 204

Benfield Corporate Risk Can. v. Beaufort Intl. Insurance (2013), 553 A.R. 204; 583 W.A.C. 204 (CA)

MLB headnote and full text

Temp. Cite: [2013] A.R. TBEd. JN.061

Benfield Corporate Risk Canada Limited (respondent/applicant) v. Beaufort International Insurance Inc. and Beaufort Insurance Services Inc. (appellants/respondents)

(1201-0095-AC; 2013 ABCA 200)

Indexed As: Benfield Corporate Risk Canada Ltd. v. Beaufort International Insurance Inc. et al.

Alberta Court of Appeal

Côté, Conrad and Watson, JJ.A.

June 13, 2013.

Summary:

Beaufort (vendors) entered into an asset purchase agreement to sell their assets to Benfield (purchaser). Pursuant to the asset purchase agreement, a bonus payment was to be paid, contingent upon the vendors' key employee, Simpson, being employed by the purchaser for two years. The purchaser entered into a contract with Simpson to that effect (ancillary employment agreement). However, before the expiry of the two year fixed term, the purchaser terminated Simpson's employment with full pay in lieu of salary and relied upon the termination to refuse final payment to the vendors. Simpson accepted his settlement and signed a release. The purchaser interpleaded the bonus payment into court and applied to have it paid out to it, together with interest and costs. The vendors claimed that Simpson could not be terminated in the first two years and that the purchaser could not use the termination to its benefit.

The Alberta Court of Queen's Bench, in a decision reported [2011] A.R. Uned. 690, ruled that the funds should be paid out to the purchaser. In arriving at that decision, the chambers judge concluded that the ancillary employment agreement did not inform the interpretation of the asset purchase agreement because it involved a different party. Alternatively, if he was wrong, the chambers judge concluded that the purchaser did not guarantee two years of employment. The vendors appealed.

The Alberta Court of Appeal, Conrad, J.A., dissenting, dismissed the appeal.

Contracts - Topic 1165

Formation of contract - Privity of contract - What constitutes - [See Contracts - Topic 3524 ].

Contracts - Topic 2051

Terms - Implied terms - General - The Alberta Court of Appeal discussed when a term would be implied in a contract - See paragraphs 104 to 118 - The court stated that "We cannot find any good authority in common-law Canada to import into contracts generally a duty to act in good faith, independent of the express terms, and where there is no question of eviscerating the main objectives of the contract ... Even if one considers the relevant contract here to be an employment contract, or a melded contract including an employment contract, that does not help the plaintiff. Wallace v United Grain Growers, supra, and Keays v Honda Canada, 2008 SCC 39 ..., are inconsistent with employment contracts generally being contracts of good faith in all respects. Bell v Lever Brothers, supra, ... expressly rejects the notion ..." - See paragraph 120.

Contracts - Topic 3524

Performance or breach - Breach - Bad faith - Vendors entered into an asset purchase agreement (APA) to sell their assets to Benfield (purchaser) - The APA provided for a bonus payment, contingent upon the vendors' key employee, Simpson, being employed by the purchaser for two years - The purchaser contracted with Simpson to that effect (ancillary employment agreement) - However, the purchaser prematurely terminated Simpson's employment with full pay in lieu of salary and relied upon the termination to refuse paying the bonus payment - Simpson accepted his settlement and signed a release - The purchaser and vendors claimed entitlement to the bonus payment which had been interpleaded into court - The trial judge ruled in the purchaser's favour, holding that the ancillary employment agreement did not inform the interpretation of the asset purchase agreement because it involved a different party - Alternatively, the purchaser did not guarantee two years of employment - The vendors appealed - The Alberta Court of Appeal dismissed the appeal - The trial judge did not err - Inter alia, privity issues precluded the vendors' claim - There was no evidence of unconscionability or bad faith - See paragraphs 1 to 143.

Contracts - Topic 7417

Interpretation - General principles - Conditional obligations - [See Contracts - Topic 3524 ].

Master and Servant - Topic 2611

Duties of master - General - Implied obligation of trust, confidence, honesty and integrity (incl. good faith) - [See Contracts - Topic 2051 ].

Cases Noticed:

Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; 219 N.R. 161; 123 Man.R.(2d) 1; 159 W.A.C. 1; 152 D.L.R.(4th) 1, refd to. [paras. 44, 203].

Globex Foreign Exchange Corp. v. Kelcher et al. (2011), 513 A.R. 101; 530 W.A.C. 101; 2011 ABCA 240, refd to. [para. 44].

Soost v. Merrill Lynch Canada Inc. (2010), 487 A.R. 389; 495 W.A.C. 389; 2010 ABCA 251, refd to. [para. 45].

Turgeon v. Dominion Bank, [1930] S.C.R. 67; [1929] 4 D.L.R. 1028, refd to. [para. 47].

65302 British Columbia Ltd. v. Minister of National Revenue, [1999] 3 S.C.R. 804; 248 N.R. 216, refd to. [para. 47].

R. v. C.K.W. (2005), 376 A.R. 107; 360 W.A.C. 107; 2005 ABCA 446, refd to. [para. 47].

Apex Corp. et al. v. Ceco Developments Ltd. (2008), 429 A.R. 110; 421 W.A.C. 110; 2008 ABCA 125, leave to appeal refused (2008), 391 N.R. 383 (S.C.C.), refd to. [para. 47].

Lethbridge Regional Police Service et al. v. Lethbridge Police Association (2013), 542 A.R. 252; 566 W.A.C. 252; 2013 ABCA 47, refd to. [para. 54].

Smith v. R., [1960] S.C.R. 776; 25 D.L.R.(2d) 225, refd to. [para. 76].

550 Capital Corp. v. Cheetham (David S.) Architect Ltd. et al. (2009), 457 A.R. 83; 457 W.A.C. 83; 2009 ABCA 219, refd to. [para. 76].

Design Services Ltd. et al. v. Canada, [2008] 1 S.C.R. 737; 374 N.R. 77; 2008 SCC 22, refd to. [para. 101].

Greenwood Shopping Plaza Ltd. v. Beattie and Pettipas, [1980] 2 S.C.R. 228; 32 N.R. 163; 39 N.S.R.(2d) 119; 71 A.P.R. 119, refd to. [para. 102].

London Drugs Ltd. v. Brassart and Vanwinkle, [1992] 3 S.C.R. 299; 143 N.R. 1; 18 B.C.A.C. 1; 31 W.A.C. 1, refd to. [para. 102].

Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108; 245 N.R. 88; 127 B.C.A.C. 287; 207 W.A.C. 287, refd to. [para. 102].

Reigate v. Union Manufacturing Co., [1918] 1 K.B. 592; 87 L.J.K.B. 724 (C.A.), refd to. [para. 106].

Shirlaw v. Southern Foundries et al., [1939] 2 K.B. 206; [1939] 2 All E.R. 113 (C.A.), affd. [1940] A.C. 701; [1940] 2 All E.R. 445 (H.L.), refd to. [para. 106].

Luxor (Eastbourne) v. Cooper, [1941] A.C. 108; [1941] 1 All E.R. 33 (H.L.), refd to. [para. 108].

British Movietonews v. London & District Cinemas, [1952] A.C. 166; [1951] 2 All E.R. 617 (H.L.), refd to. [para. 108].

Trollope & Colls v. North West Metropolitan Regional Hospital Board, [1973] 1 W.L.R. 601; [1973] 2 All E.R. 260, refd to. [para. 108].

Liverpool City Council v. Irwin, [1977] A.C. 239; [1976] 2 All E.R. 39, refd to. [para. 108].

Canadian Pacific Hotels Ltd. v. Bank of Montreal, [1987] 1 S.C.R. 711; 77 N.R. 161; 21 O.A.C. 321; 40 D.L.R.(4th) 385, refd to. [para. 108].

Catre Industries Ltd. v. Alberta (1989), 99 A.R. 321; 63 D.L.R.(4th) 74 (C.A.), leave to appeal denied (1990), 108 N.R. 170; 105 A.R. 254 (S.C.C.), refd to. [para. 108].

M.J.B. Enterprises Ltd. v. Defence Construction (1951) Co. et al., [1999] 1 S.C.R. 619; 237 N.R. 334; 232 A.R. 360; 195 W.A.C. 360, refd to. [para. 108].

Panorama Public & Industrial Communications Ltd. et al. v. Highwood Distillers Ltd. (2005), 363 A.R. 239; 343 W.A.C. 239; 2005 ABCA 107, refd to. [para. 108].

The Moorcock, [1886-1890] All E.R. Rep. 530; 58 L.J.P. 73; 14 P.D. 64, refd to. [para. 109].

Bell v. Lever Brothers, [1932] A.C. 161; [1931] All E.R. Rep. 1; 101 L.J.K.B. 129 (H.L.), refd to. [para. 110].

Jedfro Investments (U.S.A.) Ltd. et al. v. Jacyk Estate et al., [2007] 3 S.C.R. 679; 369 N.R. 329; 232 O.A.C. 385; 2007 SCC 55, refd to. [para. 110].

Pacific National Investments Ltd. v. Victoria (City), [2004] 3 S.C.R. 575; 327 N.R. 100; 206 B.C.A.C. 99; 338 W.A.C. 99; 2004 SCC 75, refd to. [para. 110].

Grover v. Stirling Bonding Co., [1935] 3 D.L.R. 481 (S.C.C.), refd to. [para. 111].

Kelly v. Battershell, [1949] 2 All E.R 830 (C.A.), refd to. [para. 112].

Duke of Westminster v. Guild, [1985] Q.B. 688 (C.A.), refd to. [para. 113].

Sullivan v. Newsome (1987), 78 A.R. 297; 38 D.L.R.(4th) 1 (C.A.), leave to appeal denied (1988), 87 N.R. 74; 85 A.R. 238 (S.C.C.), refd to. [para. 113].

BP Refinery (Westernport) Pty v. Hastings (Shire) (1977), 180 C.L.R. 266 (P.C. Aust.), refd to. [para. 115].

Carman Construction Ltd. v. Canadian Pacific Railway Co. and C.P. Rail, [1982] 1 S.C.R. 958; 42 N.R. 147; 136 D.L.R.(3d) 193, refd to. [para. 115].

Johnstone v. Bloomsbury Health Authority, [1991] 2 All E.R. 293; [1992] Q.B. 333 (C.A.), leave to appeal denied, [1991] 2 W.L.R. 1376 (H.L.), refd to. [para. 115].

Canadian National Railway Co. v. Volker Stevin Contracting Ltd. et al. (1991), 120 A.R. 39; 8 W.A.C. 39 (C.A.), refd to. [para. 115].

Gainers Inc. v. Pocklington Holdings Inc. (2000), 255 A.R. 373; 220 W.A.C. 373; 2000 ABCA 151, refd to. [para. 115].

Greater Vancouver Water District v. North American Pipe & Steel Ltd. et al. (2012), 327 B.C.A.C. 22; 556 W.A.C. 22; 2012 BCCA 337, refd to. [para. 115].

Moon Ex p Dawes, Re (1886), 17 Q.B.D. 275, refd to. [para. 118].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201; 161 D.L.R.(4th) 1, refd to. [paras. 119, 175].

Dow Chemical Canada Inc. v. Shell Chemicals Canada Ltd. et al. (2010), 477 A.R. 112; 483 W.A.C. 112; 2010 ABCA 126, refd to. [para. 119].

Ko v. Hillview Homes Ltd. (2012), 536 A.R. 93; 559 W.A.C. 93; 2012 CarswellAlta 1759; 2012 ABCA 245, leave to appeal denied (2013), 446 N.R. 395 (S.C.C.), refd to. [para. 119].

Keays v. Honda Canada Inc., [2008] 2 S.C.R. 362; 376 N.R. 196; 239 O.A.C. 299; 2008 SCC 39, refd to. [para. 120].

Alberta v. Alberta Union of Provincial Employees (2008), 433 A.R. 159; 429 W.A.C. 159; 2008 ABCA 258, refd to. [para. 120].

Cain v. Clarica Life Insurance Co. (2005), 384 A.R. 11; 367 W.A.C. 11; 2005 ABCA 437, refd to. [para. 125].

Syncrude Canada Ltd. et al. v. Hunter Engineering Co. and Allis-Chalmers Canada Ltd. et al., [1989] 1 S.C.R. 426; 92 N.R. 1, refd to. [para. 126].

Cheall v. APEX, [1983] 2 A.C. 180 (H.L.), refd to. [para. 132].

Thomson v. ASDA-MFI Group, [1988] Ch. 241, refd to. [para. 132].

Spartacus Holdings Ltd. v. Building 400 Ltd. et al. (2011), 515 A.R. 1; 532 W.A.C. 1; 2011 ABCA 18, refd to. [para. 174].

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488, refd to. [para. 175].

Tercon Contractors Ltd. v. British Columbia (Minister of Transportation and Highways), [2010] 1 S.C.R. 69; 397 N.R. 331; 281 B.C.A.C. 245; 475 W.A.C. 245; 2010 SCC 4, refd to. [para. 176].

BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R. 12; 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241; 99 D.L.R.(4th) 577, refd to. [para. 177].

Dumbrell v. Regional Group of Companies Inc. et al. (2007), 220 O.A.C. 64; 85 O.R.(3d) 616; 279 D.L.R.(4th) 201 (C.A.), refd to. [para. 179].

3869130 Canada Inc. et al. v. I.C.B. Distribution Inc. et al. (2008), 239 O.A.C. 137; 2008 ONCA 396, refd to. [para. 180].

Gainers Inc. v. Pocklington Holdings Inc. (2000), 271 A.R. 280; 234 W.A.C. 280; 2000 ABCA 307, refd to. [para. 188].

369413 Alberta Ltd. v. Pocklington - see Gainers Inc. v. Pocklington.

Love v. Acuity Investment Management Inc. et al. (2011), 277 O.A.C. 15; 2011 ONCA 130, refd to. [para. 196].

McGill University Health Centre (Montreal General Hospital) v. Syndicat des employés de l'Hôpital général de Montréal et al., [2007] 1 S.C.R. 161; 356 N.R. 177; 2007 SCC 4, refd to. [para. 198].

Toronto (City) v. WH Hotel Ltd., [1966] S.C.R. 434, refd to. [para. 200].

Canadian Ice Machine Co. v. Sinclair, [1955] S.C.R. 777, refd to. [para. 202].

Farber v. Compagnie Trust Royal, [1997] 1 S.C.R. 846; 210 N.R. 161; 145 D.L.R.(4th) 1, refd to. [para. 203].

Authors and Works Noticed:

Anson's Law of Contract (28th Ed. 2002), pp. 147 [para. 107]; 527 to 528 [para. 130].

Burrows, Interpretation of Documents (2nd Ed. 1946), p. 79 [para. 47].

Chitty on Contracts (31st Ed. 2012), paras. 1-039 to 1-041 [para. 110]; 12-066 [para. 118]; 12-082 [para. 130]; 13-008 [paras. 106, 112]; 13-010 [paras. 108, 115].

Fridman, Gerald, Law of Contract in Canada (6th Ed. 2011), p. 391 [para. 126].

Halsbury's Laws of England (4th Ed. 2012), p. 252, para. 383 [para. 47].

Halsbury's Laws of England (5th Ed. 2012), pp. 281 to 283, paras. 418 to 419 [para. 118].

Harris, David, Wrongful Dismissal (Loose-leaf), vol. 3, c. 9, § 9.7 [para. 202].

McCamus, John D., The Law of Contracts (2005), p. 715 [para. 180].

Counsel:

M.E. Mestinsek and A. Rennebohm, for the respondent/applicant;

J.G. Shea and R. Wizbicki, for the appellants/respondents.

This appeal was heard on January 16, 2013, before Côté, Conrad and Watson, JJ.A., of the Alberta Court of Appeal. The following memorandum of judgment was filed in Calgary, Alberta, on June 13, 2013, including the following opinions:

Majority (Côté and Watson, JJ.A.) - see paragraphs 1 to 143;

Conrad, J.A., dissenting - see paragraphs 144 to 209.