Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1470131
20 www.lexpert.ca Feature it to dispose of the waste. e contract gave Greater Vancouver absolute discretion to allocate the waste. Greater Vancouver reallocated the waste in a way that ate away at Wastech's profit, and the company alleged Greater Vancouver had breached the contract. First, an arbi- trator found a duty of good faith applied, and Greater Vancouver had violated it. But when the case reached the SCC, it ruled in Greater Vancouver's favour, finding it had not breached the duty. Good faith requires that parties exercise contractual discretion reasonably, the court said. at exercise is unreasonable when unconnected to the purposes for which the parties had contracted. e Wastech case limits the duty of good faith in finding that each party is not required to look aer the other side's commercial interests, says Martin. She says that lawyers do not know yet what compliance with the duty will mean on big infrastructure projects. e case leaves lawyers with a "continuum of conduct," in which it is unclear what will amount to a breach of the good-faith duty. "I think we are in very interesting times, and we are going to see disputes. And we're going to see cases going to court … to try to get some direction from the court as to what exactly this means for infrastructure projects. It's very important." Annibale says parties are claiming breach of good-faith duty too frequently and not exer- cising enough caution over the toll the allega- tion could take on the business relationship. "I would encourage parties to think strate- gically about whether it makes sense to levy such an allegation, given what you might be able to secure in a dispute as against the impact of the long-term relationship that you may have with your counterpart." One of the "lingering questions" surrounding the duty of good faith is what kinds of remedies or damages it will produce, says Andrew Konopelny at MLT Aikins in Regina. "Especially in construction infrastructure, where you have larger projects, you usually have very sophisticated contracts that have been carefully draed, that oen have a lot of remedies and obligations and duties. So where this fits into that, in terms of what you get in the end result if there's a dispute, I think that's something that remains to be seen." DUTY OF GOOD FAITH CASE LAW DEVELOPMENT • Bhasin v. Hrynew Established good-faith contractual performance as a general organizing principle of the common law of contract • C.M. Callow Inc. v. Zollinger Good faith requires that parties not knowingly mislead counterparties by not correcting misconceptions • Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District Good faith requires that parties exercise contractual discretion reasonably; that exercise is unreasonable when used in a manner unconnected to the purposes for which the parties had contracted "WHENEVER WE'RE HELPING OUR CLIENTS WITH CONTRACTS THAT ARE IN PLACE … WE ACTUALLY ALSO NEED TO ASK ABOUT OUR CLIENT'S CONDUCT" David Little BENNETT JONES LLP