Harish Bhasin, carrying on business as Bhasin & Associates v. Larry Hrynew, et al.

(Alberta) (Civil) (By Leave)


Contracts - Interpretation, Parole, Breach, Termination.


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Contracts - Interpretation - Parol Evidence - Breach - Termination - Sufficiency of pleadings - Corporate respondent giving notice that appellant’s contract would not be renewed upon its expiration - Did the corporate respondent owe the appellant a duty of good faith under the agreement - Did the corporate respondent breach its duty of good faith - Was the corporate respondent’s breach of the duty of good faith adequately pleaded - Is the corporate respondent liable to the appellant for damages.

Heritage Education Funds Inc., known at the relevant time as Canadian American Financial Corp. (Canada) Limited, (the “corporate respondent”) markets registered education savings plans for parent-investors through retail dealers such as the appellant and the individual respondent. After many years, the corporate respondent changed the wording of its standard contract with input from dealers, and the appellant executed the new contract. A new renewal clause stated that either party could trigger non renewal of the contract by giving timely notice before the expiry of a term.

When the corporate respondent sought to have the individual respondent audit the appellant’s business, the latter refused to give Mr. Hrynew access to his confidential information. Mr. Hrynew was a competitor and was interested in merging with the appellant’s business. The corporate respondent subsequently gave notice to the appellant that it would not be renewing his contract. The appellant brought a lawsuit against the corporate respondent and Mr. Hrynew. The Court of Queen’s Bench of Alberta found that it was an implied term of the contract that decisions of whether to renew the contract would be carried out in good faith. The Court held that the corporate respondent was in breach of the implied term of good faith, Mr. Hrynew had intentionally induced breach of contract, and the respondents were liable for civil conspiracy. The Court of Appeal of Alberta allowed an appeal and dismissed the appellant’s lawsuit. The Court found the appellant’s pleadings to be insufficient and held that the lower court erred by implying a term of good faith in the context of an unambiguous contract containing an entire agreement clause.