Bhasin v. Hrynew et al.,

• Judge: Belzil,C,Paperny
• Neutral Citation: 2013 ABCA 98
• Subject Matter: CONTRACTS,EVIDENCE
• Citation: (2013), 544 A.R. 28,2013 ABCA 98,544 AR 28,(2013), 544 AR 28,544 A.R. 28
• Date: 26 February 2013
• Court: Court of Appeal (Alberta)

Bhasin v. Hrynew (2013), 544 A.R. 28; 567 W.A.C. 28 (CA)

MLB headnote and full text

Temp. Cite: [2013] A.R. TBEd. MR.107

Harish Bhasin, carrying on business as Bhasin & Associates (respondent/plaintiff) v. Larry Hrynew, Canadian American Financial Corp. (Canada) Limited, a subsidiary of Allianz Life Insurance Company of North America, Allianz Education Funds Inc. (appellants/defendants)

(1203-0178-AC; 2013 ABCA 98)

Indexed As: Bhasin v. Hrynew et al.

Alberta Court of Appeal

Côté and Paperny, JJ.A., and Belzil, J.(ad hoc)

March 18, 2013.

Summary:

The defendant "Canadian American" was in the business of selling education savings plans. To do so, it contracted with "Enrollment Directors" across the country, two of whom were the plaintiff Bhasin and the defendant Hrynew. Clause 3.3 of the contract stated that it would expire at the end of three years if either party had given timely notice that it did not want the contract to renew itself automatically. Canadian American gave such notice to Bhasin. He sued, claiming several causes of action, including breach of contract. Much parol evidence was heard.

The Alberta Court of Queen's Bench, in a decision reported at 526 A.R. 1, found that Canadian American breached the contract, finding an implied term of good faith in deciding whether or not to renew the contract. The court awarded Bhasin some $381,000. The defendants appealed.

The Alberta Court of Appeal allowed the appeal and dismissed the lawsuit.

Contracts - Topic 2051

Terms - Implied terms - General - The Alberta Court of Appeal stated that "(a) Courts can imply terms in contracts which are not explicit only when the new term is (i) so obvious that it was not even thought necessary to mention, or (ii) truly necessary to make the contract work at all, not merely reasonable or fair. (b) Mere foresight of a possible happening is not enough; both parties must have intended the term. (c) The law's presumption is against implying terms." - Notwithstanding the foregoing, "a term cannot be implied in a contract which would contradict an express term of that contract." - See paragraph 27.

Contracts - Topic 2068

Terms - Implied terms - Exceptions - Conflict with express terms - The defendant appealed from a trial judgment giving heavy damages for breach of an implied duty of good faith performance, read into a commercial contract - Clause 3.3 of the contract stated that it would expire at the end of three years if either party had given timely notice that it did not want the contract to renew itself automatically - The defendant gave such notice - The trial judge premised liability on finding an implied term in the contract that any decision whether or not to renew the contract had to be carried out in "good faith" - The reasons founded the implied term, to an extent, upon the intention of the parties - The Alberta Court of Appeal stated that "Courts should be especially wary of altering or interpreting creatively formal contracts carefully negotiated and written, with legal advice. ... Courts should not attempt after the fact to rewrite a contract to accord with what the court now thinks, or one party now believes, is more just or more businesslike, especially in the full light of hindsight." - In the end result, the court allowed the appeal and dismissed the lawsuit - The parties did not intend or presume a perpetual contract, as they contracted that either party could unilaterally cause it to expire on any third anniversary - See paragraphs 27 and 32.

Contracts - Topic 2109

Terms - Express terms - Renewal clauses - [See Contracts - Topic 2068 ].

Contracts - Topic 2109

Terms - Express terms - Renewal clauses - The commercial contract between the parties expressly permitted giving a notice barring renewal - The defendant gave such notice - The plaintiff claimed for breach of contract - The trial judgment premised liability on finding an implied term that any decision whether or not to renew the contract had to be carried out in "good faith" - The reasons relied to an extent upon some inequality in bargaining power or sophistication - The Alberta Court of Appeal stated that it could not reconcile that reliance with the authorities cited nor with the applicable legal rule that "Some degree of inequality in bargaining power, need, or knowledge, is not enough to upset or amend the terms of a contract, short of actual unconscionability. (Or a request for equitable remedies to enforce, or statutory duties or rights to rescind.)" - In the end result, the court allowed the defendant's appeal and dismissed the lawsuit - See paragraphs 27 and 34.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The defendants appealed from a trial judgment awarding $381,000 for breach of a broad duty of good faith performance, read into a commercial contract - The Alberta Court of Appeal stated that "There is no duty to perform most contracts in good faith. ... The only duty of good faith in employment contracts is relatively narrow: not to announce or implement their termination in a harsh or demeaning way. That duty does not extend to the reasons for termination, but to the manner of termination." - To the extent the trial reasons founded the implied term of good faith upon operation of law, the court could not reconcile that with the legal rules nor the authorities cited - "Even if employment contracts were contracts of good faith (which they are not), this is clearly not an employment contract in form or substance. And this is a case of non-renewal (expiry), not of termination." - In the end result, the court allowed the appeal and dismissed the lawsuit - See paragraphs 27 and 31.

Evidence - Topic 6681

Parol evidence rule - Interpretation of a legal act - Contract - General - The commercial contract between the parties expressly permitted giving a notice barring renewal - The defendant gave such notice - The plaintiff claimed for breach of contract - Much parol evidence was heard, including about how the contract was negotiated, and about alleged oral promises - The trial judgment placed heavy emphasis on that evidence and used it to find an implied term of good faith in deciding whether or not to renew - The Alberta Court of Appeal stated that it could not reconcile admitting and relying upon such evidence with the legal rule that "Parol evidence is not to be used directly to interpret a contract (a) if its words are unambiguous, (b) or to look at the actual subjective intent of one or both parties. ... A contract can validly exclude or nullify parol evidence, previous negotiations, representations, terms, promises or conditions, not found in the written document (absent actual fraud)." - Further, the entire-contract clause barred evidence of oral promises, and made such promises inoperative - "This was not context or background knowledge. There were no ambiguous words. This evidence contradicted the contract's clear words." - In the end result, the court allowed the appeal and dismissed the lawsuit - See paragraphs 27 to 30.

Cases Noticed:

Ko v. Hillview Homes Ltd. (2012), 536 A.R. 93; 559 W.A.C. 93; 69 Alta. L.R.(5th) 312; 2012 ABCA 245, refd to. [para. 26].

Transamerica Life Canada Inc. et al. v. ING Canada Inc., [2003] O.A.C. Uned. 565; 68 O.R.(3d) 457 (C.A.), refd to. [para. 27].

Mesa Operating Limited Partnership v. Amoco Canada Resources Ltd. (1994), 149 A.R. 187; 63 W.A.C. 187 (C.A.), refd to. [para. 27].

Klewchuk et al. v. Switzer et al. (2003), 330 A.R. 40; 299 W.A.C. 40; 2003 ABCA 187, refd to. [para. 27].

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. 27].

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. 27].

Bell v. Lever Brothers Ltd., [1932] A.C. 161; [1931] All E.R. Rep. 1; 101 L.J.K.B. 129 (H.L.), refd to. [para. 27].

Cain v. Clarica Life Insurance Co. (2005), 384 A.R. 11; 367 W.A.C. 11; 2005 ABCA 437, refd to. [para. 27].

Alberta v. Alberta Union of Provincial Employees (2008), 433 A.R. 159; 429 W.A.C. 159; 2008 ABCA 258, refd to. [para. 27].

Soost v. Merrill Lynch Canada Inc. (2010), 487 A.R. 389; 495 W.A.C. 389; 2010 ABCA 251, refd to. [para. 27].

Reigate v. Union Manufacturing Co., [1918] 1 K.B. 592; 87 L.J.K.B. 724 (C.A.), refd to. [para. 27].

Shirlaw v. Southern Foundries (1926) Ltd., [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. 27].

Luxor (Eastbourne) Ltd. v. Cooper, [1941] A.C. 108; [1941] 1 All E.R. 33 (H.L.), refd to. [para. 27].

British Movietonews v. London and District Cinemas, [1952] A.C. 166; [1951] 2 All E.R. 617 (H.L.), refd to. [para. 27].

Trollope & Colls Ltd. v. North West Hospital Board, [1973] 1 W.L.R. 601; [1973] 2 All E.R. 260 (H.L.), refd to. [para. 27].

Liverpool City Council v. Irwin, [1977] A.C. 239; [1976] 2 All E.R. 39 (H.L.), refd to. [para. 27].

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. 27].

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. 27].

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. 27].

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. 27].

Grover v. Stirling Bonding Co., [1935] 3 D.L.R. 481 (S.C.C.), refd to. [para. 27].

Kelly v. Battershell, [1949] 2 All E.R. 830 (C.A.), refd to. [para. 27].

BP Refinery (Westernport) Pty. Ltd. v. Hastings (Shire) (1977), 180 C.L.R. 266 (Aust. P.C.), refd to. [para. 27].

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. 27].

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. 27].

Johnstone v. Bloomsbury Health Authority, [1992] Q.B. 333; [1991] 2 All E.R. 293 (C.A.), leave denied [1991] 2 W.L.R. 1376 (H.L.), refd to. [para. 27].

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. 27].

Gainers Inc. v. Pocklington Holdings Inc. (2000), 255 A.R. 373; 220 W.A.C. 373; 2000 ABCA 151, refd to. [para. 27].

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. 27].

Agribrands Purina Canada Inc. v. Kasamekas et al. (2011), 278 O.A.C. 363; 2011 ONCA 460, refd to. [para. 27].

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. 27].

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. 27].

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. 27].

Forest Hill Real Estate Inc. et al. v. Harvey Kalles Real Estate Ltd. et al., [2010] O.A.C. Uned. 713; 2010 CarswellOnt 9679; 2010 ONCA 884, refd to. [para. 27].

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. [para. 27].

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. 27].

Duke of Westminster v. Guild, [1985] Q.B. 688; [1984] 3 All E.R. 144 (C.A.), refd to. [para. 27].

CivicLife.com Inc. v. Canada (Attorney General) (2006), 215 O.A.C. 43 (C.A.), refd to. [para. 29].

Hamilton v. Open Window Bakery Ltd. et al., [2004] 1 S.C.R. 303; 316 N.R. 265; 184 O.A.C. 209; 2004 SCC 9, refd to. [para. 37].

Authors and Works Noticed:

Anson, William R., The Law of Contract (28th Ed. 2002), p. 147 [para. 27].

Chitty on Contracts (31st Ed. 2012), paras. 1-039 to 1-041, 13-008, 13-010 [para. 27].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (6th Ed. 2011), p. 319 [para. 27].

Tiplady, David, The Judicial Control of Contractual Unfairness (1983), 46 Mod. L. Rev. 601, generally [para. 27].

Counsel:

P.G. Asselin, for the respondent/plaintiff;

E.S. Lederman and J.E. Laxer, for the appellants/defendants.

This appeal was heard on February 26, 2013, before Côté and Paperny, JJ.A., and Belzil, J.(ad hoc), of the Alberta Court of Appeal. The Court delivered the following memorandum of decision filed at Edmonton, Alberta, on March 18, 2013.