Bhasin v. Hrynew et al., (2014) 584 A.R. 6

JudgeMcLachlin, C.J.C., LeBel, Abella, Rothstein, Cromwell, Karakatsanis and Wagner, JJ.
CourtSupreme Court (Canada)
Case DateFebruary 12, 2014
JurisdictionCanada (Federal)
Citations(2014), 584 A.R. 6;2014 SCC 71

Bhasin v. Hrynew (2014), 584 A.R. 6; 623 W.A.C. 6 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

.........................

Temp. Cite: [2014] A.R. TBEd. NO.123

Harish Bhasin, carrying on business as Bhasin & Associates (appellant) v. Larry Hrynew and Heritage Education Funds Inc. (formerly known as Allianz Education Funds Inc., formerly known as Canadian American Financial Corp. (Canada) Limited)

(respondents)

(35380; 2014 SCC 71; 2014 CSC 71)

Indexed As: Bhasin v. Hrynew et al.

Supreme Court of Canada

McLachlin, C.J.C., LeBel, Abella, Rothstein, Cromwell, Karakatsanis and Wagner, JJ.

November 13, 2014.

Summary:

Canadian American Financial Corp. (Can-Am) was in the business of selling education savings plans. To do so, it contracted with "Enrollment Directors" across the country, two of whom were Bhasin and Hrynew, a competitor of Bhasin. The term of the contract between Can-Am and Bhasin was three years. Clause 3.3 provided that the contract would automatically renew at the end of the three-year term unless one of the parties gave six months' written notice to the contrary. Can-Am gave such notice to Bhasin. Bhasin sued Can-Am and Hrynew, claiming several causes of action, including breach of contract.

The Alberta Court of Queen's Bench, in a decision reported at (2011), 526 A.R. 1, found that it was an implied term of the contract that decisions about whether to renew the contract would be made in good faith. The court held that Can-Am was in breach of the implied term of good faith, that Hrynew had intentionally induced breach of contract, and that both were liable for civil conspiracy. The court determined Bhasin's claim for loss of income and loss of his business. Can-Am and Hrynew appealed.

The Alberta Court of Appeal, in a decision reported at (2013), 544 A.R. 28; 567 W.A.C. 28, allowed the appeal and dismissed Bhasin's lawsuit. The court found his pleadings to be insufficient and held that the lower court erred by implying a term of good faith in the context of an unambiguous contract containing an entire agreement clause. Bhasin appealed.

The Supreme Court of Canada allowed the appeal with respect to Can-Am and dismissed the appeal with respect to Hrynew. The Court varied the trial judge's assessment of damages. Can-Am was liable for damages calculated on the basis of what Bhasin's economic position would have been had Can-Am fulfilled its duty. If Can-Am had performed the contract honestly, Bhasin would have been able to retain the value of his business, worth $87,000.

Contracts - Topic 2051

Terms - Implied terms - General - [See second Contracts - Topic 3502 ].

Contracts - Topic 2109

Terms - Express terms - Renewal clauses - [See fourth Contracts - Topic 3502 ].

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The Supreme Court of Canada examined whether there was a general duty of good faith contractual performance - "Anglo-Canadian common law has resisted acknowledging any generalized and independent doctrine of good faith performance of contracts. The result is an 'unsettled and incoherent body of law' that has developed 'piecemeal' and which is 'difficult to analyze' ... This approach is out of step with the civil law of Quebec and most jurisdictions in the United States and produces results that are not consistent with the reasonable expectations of commercial parties. In my view, it is time to take two incremental steps in order to make the common law less unsettled and piecemeal, more coherent and more just. The first step is to acknowledge that good faith contractual performance is a general organizing principle of the common law of contract which underpins and informs the various rules in which the common law, in various situations and types of relationships, recognizes obligations of good faith contractual performance. The second is to recognize, as a further manifestation of this organizing principle of good faith, that there is a common law duty which applies to all contracts to act honestly in the performance of contractual obligations. In my view, taking these two steps is perfectly consistent with the Court's responsibility to make incremental changes in the common law when appropriate. Doing so will put in place a duty that is just, that accords with the reasonable expectations of commercial parties and that is sufficiently precise that it will enhance rather than detract from commercial certainty." - See paragraphs 32 to 34.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The Supreme Court of Canada stated that the objection to the corporate defendant's conduct in this case did not fit within any of the existing situations or relationships in which duties of good faith had been found to exist - "The key question before the Court, therefore, is whether we ought to create a new common law duty under the broad umbrella of the organizing principle of good faith performance of contracts. In my view, we should. I would hold that there is a general duty of honesty in contractual performance. This means simply that parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract. ... I am at this point concerned only with a new duty of honest performance and, as I see it, this should not be thought of as an implied term, but a general doctrine of contract law that imposes as a contractual duty a minimum standard of honest contractual performance." - See paragraphs 72 to 74.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The Supreme Court of Canada concluded that "at this point in the development of Canadian common law, adding a general duty of honest contractual performance is an appropriate incremental step, recognizing that the implications of the broader, organizing principle of good faith must be allowed to evolve according to the same incremental judicial approach. A summary of the principles is in order: (1) There is a general organizing principle of good faith that underlies many facets of contract law. (2) In general, the particular implications of the broad principle for particular cases are determined by resorting to the body of doctrine that has developed which gives effect to aspects of that principle in particular types of situations and relationships. (3) It is appropriate to recognize a new common law duty that applies to all contracts as a manifestation of the general organizing principle of good faith: a duty of honest performance, which requires the parties to be honest with each other in relation to the performance of their contractual obligations." - See paragraphs 92 and 93.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The dispute concerned the non-renewal of a contract - The trial judge accepted the plaintiff's position that there was a duty of good faith in this case and that it had been breached by the corporate defendant ("Can-Am") when it failed to act honestly in exercising the non-renewal clause - The Court of Appeal reversed and held that there had been no breach of contract - The Supreme Court of Canada allowed the appeal in part - The dishonesty on the part of Can-Am was directly and intimately connected to its performance of the agreement and its exercise of the non-renewal provision - Can-Am breached the agreement when it failed to act honestly with the plaintiff in exercising the non-renewal clause - In light of that conclusion, the Court agreed with the Court of Appeal's rejection of the claims based on the torts of inducing breach of contract and unlawful means conspiracy - The trial judge found that the defendant Hrynew did not encourage Can-Am to act dishonestly in its dealings with Bhasin and that Can-Am's dishonest conduct was not fairly attributable to Hrynew - It followed that Hrynew did not induce Can-Am's breach of its contractual duty of honest performance - The trial judge held the defendants liable for unlawful means conspiracy - In light of the Court's conclusions, the only relevant unlawful means pertained to Can-Am alone - Accordingly, there could be no liability for civil conspiracy - It followed that the claims against Hrynew were rightly dismissed - See paragraphs 94 to 107.

Contracts - Topic 7415.1

Interpretation - General principles - Good faith - [See all Contracts - Topic 3502 ].

Courts - Topic 587

Judges - Duties - To decide according to evidence and pleadings - The Supreme Court of Canada held that the trial judge did not make a reversible error by adjudicating the issue of good faith - "The allegations in the statement of claim clearly put the questions of improper purpose and dishonesty in issue. These facts are sufficient to put [the defendant's] good faith in issue. The question of whether this conduct amounted to a breach of the duty of good faith is a legal conclusion that did not need to be pleaded separately. The defendants did not move to strike the pleadings or seek particulars of the allegation of wrongful termination in the statement of claim. Good faith was a live issue that was fully canvassed in a lengthy trial ... Written submissions by both parties at trial referred to the good faith issue and even in his opening at trial, [plaintiff's] counsel raised the issue of good faith. The trial judge held that any deficiency in the pleadings did not cause prejudice to the [defendants] ... This is an assessment she was uniquely positioned to make and her conclusion ought to be treated with deference on appeal." - See paragraphs 18 to 21.

Damages - Topic 5715

Contracts - Breach of contract - Loss of business - The Supreme Court of Canada concluded that the corporate defendant's breach of contract consisted of its failure to be honest with the plaintiff about its contractual performance and, in particular, with respect to its settled intentions with respect to renewal - It was therefore liable for damages calculated on the basis of what the plaintiff's economic position would have been had the defendant fulfilled that duty - While the trial judge did not assess damages on that basis, she made findings that permitted the Court to do so - If the defendant had performed the contract honestly, the plaintiff would have been able to retain the value of his business - It was clear from the findings of the trial judge and from the record that the value of the business around the time of non-renewal was $87,000 - The plaintiff was therefore entitled to damages in that amount - See paragraphs 108 to 111.

Practice - Topic 1335

Pleadings - The issues - Issues to be raised must be pleaded - [See Courts - Topic 587 ].

Cases Noticed:

Aleyn v. Belchier (1758), 1 Eden 132; 28 E.R. 634, refd to. [para. 35].

Mills v. Mills (1938), 60 C.L.R. 150 (Aust. H.C.), refd to. [para. 35].

Mellish v. Motteux (1792), Peake 156; 170 E.R. 113, refd to. [para. 35].

Carter v. Boehm (1766), 3 Burr. 1905; 97 E.R. 1162, refd to. [para. 35].

Herbert v. Mercantile Fire Insurance Co. (1878), 43 U.C.Q.B. 384, refd to. [para. 35].

Gateway Realty Ltd. v. Arton Holdings Ltd. and LaHave Developments Ltd. (1991), 106 N.S.R.(2d) 180; 288 A.P.R. 180 (T.D.), affd. in part (1992), 112 N.S.R.(2d) 180; 307 A.P.R. 180 (C.A.), refd to. [para. 38].

McDonald's Restaurants of Canada Ltd. v. British Columbia (1997), 88 B.C.A.C. 33; 144 W.A.C. 33; 29 B.C.L.R.(3d) 303 (C.A.), refd to. [para. 38].

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Mason v. Freedman, [1958] S.C.R. 483, refd to. [para. 51].

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. 54].

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, refd to. [para. 54].

Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R. 3; 350 N.R. 40; 227 B.C.A.C. 39; 374 W.A.C. 39; 2006 SCC 30, refd to. [para. 55].

702535 Ontario Inc. et al. v. Non-Marine Underwriters, Lloyd's, London et al. (2000), 130 O.A.C. 373; 184 D.L.R.(4th) 687 (C.A.), refd to. [para. 55].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 55].

Andrusiw v. Aetna Life Insurance Co. of Canada (2001), 289 A.R. 1 (Q.B.), refd to. [para. 55].

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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. 56].

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; 457 W.A.C. 245; 2010 SCC 4, refd to. [para. 56].

Yam Seng Pty. Ltd. v. International Trade Corp., [2013] 1 All E.R. 1321; [2013] EWHC 111 (Q.B.), refd to. [para. 57].

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Renard Constructions (M.E.) Pty. Ltd. v. Minister of Public Works (1992), 26 N.S.W.L.R. 234 (C.A.), refd to. [para. 58].

Burger King Corp. v. Hungry Jack's Pty. Ltd., [2001] NSWCA 187, refd to. [para. 58].

R. v. Jones (S.), [1994] 2 S.C.R. 229; 166 N.R. 321; 43 B.C.A.C. 241; 69 W.A.C. 241, refd to. [para. 64].

R. v. Hart (N.L.), [2014] 2 S.C.R. 544; 461 N.R. 1; 353 Nfld. & P.E.I.R. 222; 1099 A.P.R. 222; 2014 SCC 52, refd to. [para. 64].

Peel (Regional Municipality) v. Ontario, [1992] 3 S.C.R. 762; 144 N.R. 1; 59 O.A.C. 81, refd to. [para. 67].

Bram Enterprises Ltd. et al. v. A.I. Enterprises Ltd. et al., [2014] 1 S.C.R. 177; 453 N.R. 273; 416 N.B.R.(2d) 1; 1079 A.P.R. 1; 2014 SCC 12, refd to. [para. 70].

Bank of America Canada v. Mutual Trust Co. et al., [2002] 2 S.C.R. 601; 287 N.R. 171; 159 O.A.C. 1; 2002 SCC 43, refd to. [para. 70].

Greenberg v. Montreal Trust Co., Meffert and Melfi (1985), 9 O.A.C. 69; 50 O.R.(2d) 755 (C.A.), refd to. [para. 73].

Shelanu Inc. v. Print Three Franchising Corp. (2003), 172 O.A.C. 78; 64 O.R.(3d) 533 (C.A.), refd to. [para. 73].

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Banque de Montréal v. Leong, [1989] 3 S.C.R. 429; 100 N.R. 203; 26 Q.A.C. 20, refd to. [para. 83].

Kirke La Shelle Co. v. Armstrong Co. (1933), 263 N.Y. 79, refd to. [para. 85].

Banque Nationale du Canada v. Soucisse, Groulx and Robitaille, [1981] 2 S.C.R. 339; 43 N.R. 283, refd to. [para. 85].

Houle v. Banque Nationale du Canada, [1990] 3 S.C.R. 122; 114 N.R. 161; 35 Q.A.C. 161, refd to. [para. 85].

Banque de Montréal et autre v. Hydro-Québec et autres, [1992] 2 S.C.R. 554; 138 N.R. 185; 48 Q.A.C. 241, refd to. [para. 85].

Banque de Montréal v. Bail Ltée - see Banque de Montréal et autre v. Hydro-Québec et autres.

United Roasters Inc. v. Colgate-Palmolive Co. (1981), 649 F.2d 985 (4th Cir.), refd to. [para. 87].

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Counsel:

Neil Finkelstein, Brandon Kain, John McCamus and Stephen Moreau, for the appellant;

Eli S. Lederman, Jon Laxer and Constanza Pauchulo, for the respondents.

Solicitors of Record:

McCarthy Tétrault, Toronto, Ontario, for the appellant;

Lenczner Slaght Royce Smith Griffin, Toronto, Ontario, for the respondents.

This appeal was heard on February 12, 2014, before McLachlin, C.J.C., LeBel, Abella, Rothstein, Cromwell, Karakatsanis and Wagner, JJ., of the Supreme Court of Canada. The following judgment of the Court was delivered by Cromwell, J., on November 13, 2014.

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    • Supreme Court (Canada)
    • July 24, 2020
    ...Inc., 2011 BCCA 44 , 14 B.C.L.R. (4th) 48 ; Whiten v. Pilot Insurance Co., 2002 SCC 18 , [2002] 1 S.C.R. 595 ; Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494 ; Hollick v. Toronto (City), 2001 SCC 68 , [2001] 3 S.C.R. 158 . By Karakatsanis J. (dissenting in part) R. v. Imperial To......
  • Chandos Construction Ltd. v. Deloitte Restructuring Inc., 2020 SCC 25
    • Canada
    • Supreme Court (Canada)
    • October 2, 2020
    ...2015 SCC 51, [2015] 3 S.C.R. 327; Husky Oil Operations Ltd. v. Minister of National Revenue, [1995] 3 S.C.R. 453; Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494; Watkins v. Olafson, [1989] 2 S.C.R. 750; Borland’s Trustee v. Steel Brothers & Co., Limited, [1901] 1 Ch. 279; Holt v. Te......
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472 cases
  • Bhasin v. Hrynew, [2014] 3 SCR 494
    • Canada
    • Supreme Court (Canada)
    • November 13, 2014
    ...data-vids="">222 cases , 18 other sources SUPREME COURT OF CANADA Citation: Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494 Date: Docket: 35380 Between: Harish Bhasin, carrying on business as Bhasin & Associates Appellant and Larry Hrynew and Heritage Education Funds Inc. (former......
  • Uber Technologies Inc. v. Heller, 2020 SCC 16
    • Canada
    • Supreme Court (Canada)
    • June 26, 2020
    ...377 ; Hunter Engineering Co. v. Syncrude Canada Ltd., [1989] 1 S.C.R. 426 ; Norberg v. Wynrib, [1992] 2 S.C.R. 226 ; Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494 ; Douez v. Facebook, Inc., 2017 SCC 33 , [2017] 1 S.C.R. 751 ; Loychuk v. Cougar Mountain Adventures Ltd., 2012 BCCA ......
  • Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19
    • Canada
    • Supreme Court (Canada)
    • July 24, 2020
    ...Inc., 2011 BCCA 44 , 14 B.C.L.R. (4th) 48 ; Whiten v. Pilot Insurance Co., 2002 SCC 18 , [2002] 1 S.C.R. 595 ; Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494 ; Hollick v. Toronto (City), 2001 SCC 68 , [2001] 3 S.C.R. 158 . By Karakatsanis J. (dissenting in part) R. v. Imperial To......
  • Chandos Construction Ltd. v. Deloitte Restructuring Inc., 2020 SCC 25
    • Canada
    • Supreme Court (Canada)
    • October 2, 2020
    ...2015 SCC 51, [2015] 3 S.C.R. 327; Husky Oil Operations Ltd. v. Minister of National Revenue, [1995] 3 S.C.R. 453; Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494; Watkins v. Olafson, [1989] 2 S.C.R. 750; Borland’s Trustee v. Steel Brothers & Co., Limited, [1901] 1 Ch. 279; Holt v. Te......
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267 firm's commentaries
  • Court Of Appeal Summaries (August 30 ' September 3, 2021)
    • Canada
    • Mondaq Canada
    • September 7, 2021
    ...Sale, Personal Property Security Act R.S.O. 1990, C. P. 10, ss. 62, 63 and 67, Rules of Civil Procedure, Rule 60.07(18), Bhasin v. Hrynew, 2014 SCC 71, C.M. Callow Inc. v. Zollinger, 2020 SCC 45, Lloyds Bank Canada v. Transfirst Inc., 71 O.R. (2d) 481 (Ont. H.C.), AJM Leasing v. Brown (2002......
  • Court Of Appeal Summaries (December 6-10 And 13-17, 2021)
    • Canada
    • Mondaq Canada
    • December 23, 2021
    ...2007 ONCA 205, Charter Building Company v. 1540957 Ontario Inc. (Mademoiselle Women's Fitness & Day Spa), 2011 ONCA 487, Bhasin v. Hrynew, 2014 SCC 71, C.M. Callow Inc. v. Zollinger, 2020 SCC 45, Wastech Services Ltd. v. Greater Vancouver Sewage and Drainage District, 2021 SCC 7, Tercon Con......
  • Court Of Appeal Summaries (March 7 ' 11, 2022)
    • Canada
    • Mondaq Canada
    • March 16, 2022
    ...Construction Ltd. v. Deloitte Restructuring Inc., 2020 SCC 25, Bulut v. Brampton (City), 48 O.R. (3d) 108 (C.A.), Bhasin v. Hrynew, 2014 SCC 71, C.M. Callow Inc. v. Zollinger, 2020 SCC 45, CWB Maxium Financial Inc v. 2026998 Alberta Ltd, 2021 ABQB 137, Hutchingame Growth Capital Corporation......
  • Court Of Appeal Summaries (August 22, 2022 ' August 26, 2022)
    • Canada
    • Mondaq Canada
    • August 29, 2022
    ...Ltd., [1991] O.J. No. 1394 (C.A.), Wawrzkiewicz v. Integrated Distribution Systems Limited Partnership, 2017 ONSC 1664, Bhasin v. Hrynew, 2014 SCC 71 Short Civil Decisions Divitaris v. Gerstel, 2022 ONCA 605 Keywords: Civil Procedure, Litigation Guardians, Appeals, Jurisdiction, Final or In......
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57 books & journal articles
  • Class Settlement Releases Under Siege
    • Canada
    • Irwin Books The Canadian Class Action Review Nbr. 17-1, August 2021
    • August 1, 2021
    ...a release is as follows: 6 Creston Moly Corp v Sattva Capital Corp, 2014 SCC 53 at para 47 [Sattva Capital]. 7 See Bhasin v Hrynew, 2014 SCC 71 at para 45 and CM Callow Inc v Zollinger, 2020 SCC 45 at para 44. The organizing principle of good faith recognized in Bhasin is not a freestanding......
  • Introduction
    • Canada
    • Irwin Books The Canadian Class Action Review Nbr. 13-2, March 2018
    • March 1, 2018
    ...and Fall of Freedom of Contract (Oxford: Clarendon Press, 1979). 20 For a recent judicial affirmation of this fact, see Bhasin v Hrynew, 2014 SCC 71 at para 79 [Bhasin]. This affirmation of freedom of contract’s centrality to contract law is all the more striking in light of the fact that B......
  • The Short End of the Stick: Bolstering Legal Protections for Short Sellers in Ontario’s Secondary Market
    • Canada
    • Irwin Books The Canadian Class Action Review Nbr. 17-1, August 2021
    • August 1, 2021
    ...a release is as follows: 6 Creston Moly Corp v Sattva Capital Corp, 2014 SCC 53 at para 47 [Sattva Capital]. 7 See Bhasin v Hrynew, 2014 SCC 71 at para 45 and CM Callow Inc v Zollinger, 2020 SCC 45 at para 44. The organizing principle of good faith recognized in Bhasin is not a freestanding......
  • Digest: Input Capital Corp. v Gustafson, 2018 SKQB 154
    • Canada
    • Saskatchewan Law Society Case Digests
    • May 18, 2018
    ...33 CBR (NS) 291, 10 BLR 209 B.B.J. Enterprises Ltd. v Wendy�s Restaurants of Canada Inc., 2004 NSSC 37, 222 NSR (2d) 52 Bhasin v Hrynew, 2014 SCC 71, [2014] 3 SCR 494 Boulding v Hall, 1999 SKQB 264, 191 Sask R 119 British Columbia (Minister of Forests) v Okanagan Indian Band, 2003 SCC 71, [......
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