Amacon Alaska Development Partnership v. ARC Digital Canada Corp.

(British Columbia) (Civil) (By Leave)


Contracts — Leases — Commercial contracts — Validity — Performance — Breach — How should Canadian courts reconcile the law of good faith and other principles of Canadian contract law — Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494.


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When the applicant purchased the premises in which the respondent was leasing space, the two parties negotiated the terms of a lease modification agreement. In return for the respondent agreeing to vacate the premises early and give up an option to renew, the applicant was to pay an amount of $290,000 upon the execution of the agreement by the respondent and another $290,000 when the premises were vacated. When the respondent waited to execute the agreement until it had negotiated a new lease for alternative premises one month later, the applicant refused to sign the agreement and did not pay the initial $290,000. Without having budgeted money to make a phased move, the respondent did not vacate by the earlier agreed dated. The applicant then signed the agreement and paid the initial $290,000 but refused to pay the second amount on the basis that the respondent had not vacated the premises as agreed. It also sought to charge the respondent double rent for the overholding period. The respondent brought an action for a declaration that the agreement was valid and binding and had been breached by the applicant. Applying the principles of good faith set out in Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, the court found that the circumstances overwhelmingly established that the applicant acted dishonestly towards the respondent. The court awarded damages to the respondent in the amount of $369,260 and dismissed the applicant’s counterclaim. The Court of Appeal for British Columbia dismissed the applicant’s appeal.

Lower Court Rulings

August 17, 2021
Supreme Court of British Columbia

2021 BCSC 1612, S194760
Respondent awarded damages in the amount of $369,260; applicant’s counterclaim dismissed.
January 20, 2023
Court of Appeal for British Columbia (Vancouver)

2023 BCCA 34, CA47757
Appeal dismissed.