Summary

Keywords

Contracts - Commercial contracts - Performance - Duty of honest performance - Active non-disclosure - Whether the condos’ active non-disclosure breached a duty of good faith - For what damages could the respondents be held liable - Bhasin v Hrynew, 2014 SCC 71.

Summary

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C.M. Callow Inc. (owned and operated by Christopher Callow) provided maintenance services to ten condominium corporations. Those combined corporations formed a Joint Use Committee (JUC) to make decisions regarding joint and shared assets of the corporations and, in April 2012, entered into two two-year maintenance contracts with Mr. Callow. One contract covered summer maintenance work and the other covered winter maintenance. The winter contract, which ran from November 2012 to April 2014, contained a provision allowing for early termination by the JUC on 10 days’ notice. In March or April of 2013, the JUC decided to terminate the winter contract, but did not provide Mr. Callow with notice of termination. During the summer of 2013 Mr. Callow, of his own volition, performed extra “freebie” landscaping work in the hope that this would act as an incentive for the JUC to renew the contracts. In September of 2013 the JUC gave notice it intended to terminate the contracts. Mr. Callow sued for breach of contract. The Ontario Superior Court of Justice determined that the JUC breached their contractual duty of honest performance by acting in bad faith. The Court of Appeal allowed the appeal and determined that the trial judge improperly expanded the duty of honest performance. Relying on Bhasin v Hrynew, 2014 SCC 71, the Court of Appeal found that the JUC owed Mr. Callow nothing beyond the 10-day formal notice period and that failure to provide notice on a more timely basis was not in itself evidence of bad faith. The Court of Appeal emphasized that there is no unilateral duty to disclose.

Lower Court Rulings