Case information

None.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Contracts – Breach of terms – Respondent terminating agreement with applicants for failure to meet certain specified deadlines – Applicants suing respondent for breach of contract – Respondent relying on exclusion of liability clause – Whether the Court of Appeal erred in enforcing an exclusion of liability provision to the benefit of the party that unlawfully terminated the contract – Whether the Court of Appeal erred in failing to engage in a proper analysis of what constitutes a relevant imbalance in bargaining power sufficient to render an exclusion of liability clause unenforceable – Whether the Court of Appeal erred in failing to properly characterize the true nature of the respondent’s conduct at the time it ended the contract to determine whether it was a repudiation of the contract rather than a termination – Whether, had the Court of Appeal below undertaken this necessary analysis and found that the respondent repudiated the contract, the result would have been that the exclusion of liability provision was not engaged and the first step of this Court’s analysis in Tercon Contractors Ltd. v. British Columbia, [2010] 1 S.C.R. 69 (“Tercon”) not met – Whether the Court of Appeal erred in applying Tercon in a rigid, narrow and formalistic manner, incapable of evolving and adapting to circumstances not contemplated or addressed in Tercon – Whether the Court of Appeal erred in declining to re-open the appeal to consider the argument raised in grounds three and four above, the repudiation/termination issue having been raised by the trial judge and being a necessary, integral and indispensable component of step one of the Tercon analysis which was the threshold issue at trial and on appeal – Whether the decision of the Court of Appeal raises questions of national importance.

In 2003, the applicants, Dr. Sylvester Chuang and various corporations under his control (collectively, “Dr. Chuang”), entered into an agreement with the respondent Toyota Canada Inc. to build and operate a Lexus dealership in Toronto. The agreement provided for certain deadlines. Dr. Chuang was not able to meet these deadlines due to issues such as municipal approvals and soil remediation. He sought to extend the agreement. Toyota agreed to an extension but demanded amendments that included a termination clause in its favour and an exclusion clause limiting Toyota’s liability in the event of termination. In addition, Toyota requested that Dr. Chuang supply a certificate of Independent Legal Advice. Dr. Chuang suggested changes in those proposals, but Toyota did not agree to them. Dr. Chuang eventually agreed to the amendments and provided Toyota with the certificate of Independent Legal Advice

In 2005, Toyota terminated the agreement. It took the position that Dr. Chuang once again failed to meet certain specified deadlines, and that as a result, Dr. Chuang is unlikely to be able to meet some, if not all, of the other conditions set out in the agreement. Dr. Chuang sued Toyota, initially claiming specific performance of the agreement and damages. By the time of trial, Dr. Chuang had opened a different dealership on the site and limited his claim to damages for wrongful termination of the agreement.