Tag Archives: appeal

The Supreme Court of Canada Reiterates the Duty of Good Faith Contractual Performance

Posted on by

If the Supreme Court releases a decision and no one follows it, is it still the law?

Six years ago, the Supreme Court of Canada released a case that was meant to clarify the law of contract.  The case was called Bhasin v Hrynew and, at the time, it was viewed as a bombshell in Canadian law.  Everyone in the legal industry was talking about this landmark case.  And then, something very peculiar happened: just as quickly, everyone stopped talking about.  They went back to carrying on as though this case had never been released.  No one seemed to notice that a case, which everybody agreed was a game-changer when it was released, was not changing any games.

The Supreme Court must have been frustrated that the Bhasin case was not having the impact that was intended.  So frustrated, that they decided to hand down the same judgment a second time, just to drive the point home.  The most recent case released by the Supreme Court is called C. M. Callow Inc. v Zollinger, but it might as well be called Bhasin: Redux.

The similarities between Bhasin and Zollinger are striking and the differences inconsequential.  Both cases involved a small business which had a contract with a larger entity.  In both cases, the larger entity could terminate the contract early by giving written notice (six months’ notice in the Bhasin case, ten days’ notice in the Zollinger case). 

In both cases, the larger entity misled the small business about its intention to terminate the contract.  In both cases, the small business was led to believe that the contract would be continued, and even renewed, when that was not so.  And in both cases, the larger entity terminated the contract by giving the required written notice in accordance with the terms of the contract. 

Bhasin

In Bhasin, the Court set out to resolve an ambiguity in the common law.  They stated for the first time, clearly and unequivocally, that there was, in Canadian law, a duty of good faith contractual performance.  This duty of good faith means that parties to a contract cannot lie or actively mislead each other about matters directly linked to the performance of the contract.  This duty applies whether it is written as a term of the contract or not.  The parties cannot mutually agree that this duty does not apply to their contract.  They held that the larger entity had breached the duty of good faith contractual performance when it misled Mr. Bhasin into thinking his contract would be renewed, when in fact they had already decided to terminate it. 

The Court described this duty as “a general duty of honesty in contractual performance.”  This case made a big splash when it was released, but in the years following, it didn’t really change the way the lower courts decided contract disputes.  It turned into the legal equivalent of the waffle iron you got for your wedding: you were really excited when you got it, and you even talk about it from time to time, but you never really use it. 

Zollinger at the Ontario Court of Appeal

The Zollinger case came up from the Ontario Court of Appeal.  The plaintiff provided maintenance services for a condominium complex.  Just like in Bhasin, the plaintiff’s contract had a term which allowed for early termination on notice. 

The condo complex decided in the Spring that they were not going to renew the contract, but they didn’t tell the plaintiff until September.  At trial, the Superior Court found that they had basically misled the plaintiff about the renewal so that it would do extra work outside the scope of the contract for free over the summer, to try and convince the condo complex to renew the contract. 

The Court of Appeal considered Zollinger in light of Bhasin.  And yet, the Court of Appeal still held that the condo complex’s actions did not constitute a breach of the duty of good faith contractual performance.  They distinguished Zollinger by pointing out that Bhasin dealt with a contract that was set to renew automatically unless cancelled, while the contract in Zollinger did not automatically renew.  By granting leave, and the appeal, the Supreme Court seems to be saying that the similarities between these two cases were far more important than their differences. 

Zollinger at the Supreme Court of Canada

It seems that the Supreme Court granted leave to appeal in this case at least in part because they were frustrated with the way that the Ontario Court of Appeal applied the Bhasin precedent.  They took this case to send the message that the lower courts have not been taking the Bhasin precedent seriously enough. 

The Supreme Court’s legal analysis in Zollinger is, in large part, a repetition of the analysis from Bhasin.  The decision is not written as though it is meant to expand the law in the area: more like it is meant to remind the bar and the lower courts of the law.  The Supreme Court concluded that the condo complex had the right to terminate the contract on notice, but that it was not permitted to be dishonest in the way that it exercised that right.  In other words, the exact same conclusion they reached in the Bhasin case.

There is no legal innovation in Zollinger: just a restatement of a previous precedent which, it seems, the Supreme Court would like to see applied more rigorously.  We didn’t see a major change in the jurisprudence after Bhasin – maybe Zollinger will end up having that effect.

Sprayed in the Face with a Fire Extinguisher at Wal-Mart

Posted on by

Wal-Mart gets involved in a lot of litigation in Ontario, usually not by choice.  The most recent lawsuit against Wal-Mart to make it through the courts is a doozy.

It was brought by a guy name Kim Manos who was accidentally sprayed with a fire extinguisher by an employee at the Waterdown Wal-Mart.  This is amazing to me for a few reasons.  First, how does a fire extinguisher go off accidentally anyway?  Second, what employee thinks it is a good idea to handle a fire extinguisher within spraying-distance of a customer?  And, of course, what are the chances you are going to hit the customer who already has respiratory problems?

I’m also fascinated by this case because I used to live in Waterdown and the Waterdown Wal-Mart is the Wal-Mart I have visited more than any other.  From a customer’s perspective, it was a really well-run store.  It was clean, safe, and well-organised.  My personal experience would be that it was one of the better-run Wal-Mart stores I have seen.  It is unlikely to make an appearance on the “People of Wal-Mart” blog.  (The Wal-Mart here in Stratford, on the other hand . . .)

Kim Manos sued Wal-Mart and the matter went to trial.  Wal-Mart retained medical experts who disputed the Plaintiff’s contention that he had developed a particular respiratory condition.  Wal-Mart’s experts also opined that, even if the Plaintiff did have that respiratory condition, it wasn’t caused by the fire extinguisher accidentally discharging in his face in the Waterdown Wal-Mart.  (It sounds more and more ridiculous each time I say it.)

The Plaintiff won at trial.  In addition to compensation for his actual monetary losses, the trial judge also awarded him $225,000.00 in general damages for his pain and suffering which, for sure, is on the high end for this kind of injury.

Insufficiency of Reasons

In giving his reasons, the trial judge accepted the evidence of the Plaintiff’s medical experts and did not accept the evidence of Wal-Mart’s medical experts.  The problem was that he never explained in his reasons why he was rejecting the evidence of Wal-Mart’s expert witnesses. 

Wal-Mart appealed.  The Court of Appeal granted the appeal and ordered a new trial.  The Court of Appeal’s rationale was that the trial judge failed to give adequate reasons for rejecting the expert evidence put forward by the Defendant.  The Court of Appeal confirmed that the trial judge was entitled to reject the Defendant’s expert evidence if he wanted to, but he had to give intelligible reasons for doing so.  By giving no reasons at all, he made it impossible for the Defendant to know why it had lost and made his decision incapable of meaningful appellate review. 

This is another reason why I find this case so fascinating because the very first appeal I ever argued, way back in my law school days, was successful for the very same reason.  In that case, we were appealing a decision of the Discipline Committee of the College of Physicians and Surgeons of Ontario.  The Committee had a report from an independent assessor which was critical of the doctor in question.  In its decision, the Committee did not accept the conclusions of the report, but neither did it give any reasons for rejecting the report’s conclusions.  In the appeal to the Health Professions Appeal and Review Board we argued that this was unreasonable, and the Board agreed.  The Board held, “The Committee is not bound to accept the report of an independent assessor, but it is incumbent on the Committee to offer cogent reasons if it chooses to reject or discount the opinion of an assessor.”

That case was sent back to the Committee for re-consideration, just like the Manos case was sent back for a new trial. 

Appeal to the Supreme Court of Canada?

So when will the Manos case be re-tried?  Not any time soon, because (plot twist!) Mr. Manos has sought leave to appeal to the Supreme Court of Canada.

The overwhelming majority of applications for leave to appeal to the Supreme Court of Canada are dismissed, and my money would be on this application for leave being dismissed as well. 

So why would the Plaintiff seek leave when the chance of getting it is so low?  Well, one reason might be because the pay-off would be very much worth it in the unlikely event that that leave (and the subsequent appeal) are granted.  Success at the Supreme Court could mean that the Plaintiff gets to keep his $225,000.00 general damages award and would not have to put in the time and expense of a re-trial (which he might not even win, and which could also be appealed . . .).  I suspect that the Plaintiff knows very well that, even if he wins the re-trial, his is not going to get anywhere near the $225,000.00 he got the first time, because that really is on the high end of damages for the type of injury which he allegedly suffered.  If he can get the Supreme Court to overturn the Court of Appeal’s ruling the $225,000.00 damages award will stand and he will almost certainly be better off than he would be after winning the re-trial. 

I will keep a close eye on this fascinating case and provide an update once the application for leave to appeal is decided by the Supreme Court.

An 11-Year Long Employment Case

Posted on by

Civil litigation clients often ask, “How long will this case take?” People who have never been involved in a civil court proceeding may be surprised to learn that civil matters are usually measured in years, not weeks. But how long can a lawsuit go on for? An employment law case released by the Ontario Court of Appeal this past year shows just how long a lawsuit in Ontario could take.

On January 31st, 2019, the Court of Appeal heard an appeal of a case which had been argued in 2016 and decided in 2017. The Court of Appeal was remarkably efficient, releasing its decision just six (6) weeks after the appeal was argued.

The interesting date in this case, however, is not the date on which the judgment at first instance was handed down, or the date on which the case was argued, but the date on which the case was commenced – 2008.

Most people understand that even after you go to court there is a right of appeal, and they understand that an appeal will add some time to the length of your legal matter. In this case, the time between judgment and appeal (less than two (2) years) was a drop in the bucket compared to the time between the commencement of the lawsuit and the argument at first instance, which took a staggering eight (8) years.

What we do not learn from the reported decision is whether or not there were valid reasons for the eight (8) years which transpired between the employment law case being commenced and it being argued at court. Extraordinary delays sometimes happen in civil litigation, but there are usually extraordinary events behind those delays, such as one of the lawyers being removed from the case due to illness, retirement, or death, for example.

A new rule came into effect in Ontario in 2012 with the goal of trying to prevent these sorts of extraordinary delays. Rule 48.14 of the Rules of Civil Procedure now requires the Registrar of the court to automatically dismiss every lawsuit which has not been set down for trial after the five-year anniversary of it having been commenced. This rule does not mean that a lawsuit has to go to trial within five (5) years, only that it has to be ready to go to trial within five (5) years. It seeks to strike a balance between giving parties and their lawyers enough time to prepare their lawsuit, while at the same time eliminating totally unreasonable delays.

And of course, this particular case is an outlier. Rarely will a relatively uncomplicated employment law case drag on for years, let alone eleven (11) years. But this case nevertheless stands as a marker of just how long, in some circumstances, a civil lawsuit can actually take.