Omission Obligation Not Expanded by Court of Appeal

The Ontario Court of Appeal had to consider the application of the Supreme Court of Canada’s decision in Callow v.Zollinger in its case Greta Energy Inc. v. Pembina Pipeline Corporation 17 November 2022.

This was a situation where Greta wished to purchase two wind mill properties, where it already had a “right of first refusal”. Greta exercised its ROFR over one property and brought an application to prevent the sale of the other property.

Ultimately, the Court of Appeal concluded that the Vendors acted appropriately.

Here’s a comment made concerning Callow v. Zollinger:

“[26]       As for disclosing information to the appellants, as the motion judge noted, C.M. Callow Inc. v. Zollinger, 2020 SCC 45, 452 D.L.R. (4th) 44 does not impose a duty of disclosure so long as a party does not knowingly mislead the other party.

However, the motion judge found that Veresen provided all documents requested in the five separate requests for information made by the appellants, and the appellants’ evidence was that they had sufficient information to determine whether or not to waive the ROFR.

The motion judge’s conclusion that the appellants were not misled is supported by the record and is entitled to deference.

In short, this is not a case in which the appellants were precluded from exercising their ROFRs as in GATX; they were able to exercise the ROFRs and did so when they chose to match the BluEarth offer for GV2.”

This would seemingly restrict the application of the Callow case. There, the person in breach of good faith contractual performance needed to be something of a mind reader. Here,

There was no duty of disclosure so long as a party does not knowingly mislead the other party.

As further cases are reported this doctrine of good faith contractual performance will be addressed.

It is noteworthy in this case, that the aggrieved party sought five (5) additional disclosures and received responses to each such request. So, effectively information was sought and answered, consequently, no further disclosures were required.

Brian Madigan LL.B., Broker

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