Supreme Court Expands Upon Bhasin v. Hrynew
The Supreme Court of Canada has had an opportunity to add to its decision in Bhasin v. Hrynew. A breach of the duty of honesty in contractual agreements may involve both:
- direct action, and/or
- inaction.
C.M. Callow was a property maintenance company which had two contracts with “Baycrest” a group of ten condominium corporations. Things were not going well in the summer. Baycrest decided not to renew the winter contract, which could by the way be terminated upon 10 days’ notice.
C.M. Callow went overboard in the summer doing extra work without compensation, all with the expectation that the winter contract was still there. Baycrest led Callow to believe that the winter contract was still in place. Had they not done this, Callow could have found alternative winter contracts.
The Trial Judge concluded that this contravened the duty of honesty and good faith in Bhasin v. Hrynew. The Ontraio Court of Appea allowed the appeal. The Supreme Court of Canada reinstated in the Trial Judge’s decision.
COMMENT
This case is an expansion of the rule in Bhasin v. Hrynew. No longer is “silence golden”. There is a positive duty to speak up and correct any possible misapprehension by the other party to a contract about your words and deeds, actions and inactions.
Yes, this does force you to become somewhat of a “mind reader”, but, that’s precisely what the Supreme Court of Canada wants you to do, from now on.
How will this affect real estate? We will just have to wait and see! However, we must remember that the Supreme Court of Canada changed the rules on 18 December 2020 in C.M. Callow Inc. v. Zollinger.
Brian Madigan LL.B., Broker