Bhasin v Hrynew - an innovative expansion of the common law doctrine of good faith.

Posted By: Olugbenga Shoyele

The creation of "a general duty of honesty in contractual performance" by the Supreme Court of Canada in Bhasin v Hrynew, 2014 SCC 71 [Bhasin SCC] simply recognizes that "parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract" (para 73). The highest court in Canada generated this conclusion from the gravamen of Moen, J's seminal decision, which resulted from a trial that spanned the period from May 2 to May 26, 2011 at the Alberta Court of Queen's Bench (Edmonton Judicial Centre). In the case, Mr Bhasin had sued Canadian American Financial Corporation [Can-Am] and one, Mr. Hrynew for, inter alia, breach of an enrollment director's agreement on the marketing of education savings plans to investors, as indexed at: 2011 ABQB 637.

The Supreme Court succinctly captured the background facts to Moen J's findings of dishonesty and breach of the implied term of good faith against Can-Am, when it broadly outlined that:

There were two main interrelated story lines.

The first concerns Mr. Hrynew's persistent attempts to take over Mr. Bhasin's market through a merger--in effect a takeover by him of Mr. Bhasin's agency. The second concerns the difficulties [that] Can-Am was having with the Alberta Securities Commission, which regulated its business and its enrollment directors in Alberta. The Commission insisted that Can-Am appoint a full-time employee to be a [provincial trading officer] PTO responsible for compliance with Alberta securities law. Can-Am ultimately appointed Mr. Hrynew, with the result that he would audit his competitor agencies, including Mr. Bhasin's, and therefore have access to their confidential business information. Mr. Bhasin's refusal to allow Mr. Hrynew access to this information led to the final confrontation with Can-Am and its giving notice of non-renewal in May 2001. Can-Am, for its part, wanted to force a merger of the Bhasin agency under the Hrynew agency, effectively giving Mr. Bhasin's business to Mr. Hrynew. It was in the context of this situation that the trial judge made her findings of dishonesty on the part of Can-Am.

The trial judge concluded that Can-Am acted dishonestly with Mr. Bhasin throughout the period leading up to its exercise of the non-renewal clause, both with respect to its own intentions and with respect to Mr. Hrynew's role as PTO. Her detailed findings amply support this overall conclusion.

At the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT