From: Stéphane Sérafin <Stephane.Serafin@uottawa.ca>
To: David Cheifetz <dcheifetz@gmail.com>
Date: 07/02/2021 01:05:36
Subject: RE: SCC on good faith exercise of contractual discretion

Hi David,

 

To be clear, I’m not suggesting that a notion of good faith of some kind is alien to the common law, nor am I suggesting that we should relitigate Bhasin – though I still tend to view the duty of honest performance it recognized as more analogous to a tort like deceit than to a proper contractual term.

 

In any event, my issue with this case is that the majority yet again draws heavily on the CCQ in the course of its argument. It seems to me that we have in effect gone from an “organizing principle” of good faith to something like a doctrine of good faith (complete with apparent references to subjective and objective cause…?) in three decisions. That large portions of those reasons read like they were lifted from the CCQ-governed claim in Churchill Falls is, to me, also a cause for concern.

 

That said, it appears that a large part of the reason we ended up here is because the plaintiff chose to make its case by drawing on the CCQ, if only by analogy. So to the extent that the case rejected that claim, it is a good thing. But we’re still stuck with all the obiter, and that may be bad enough.

 

Best,

 

Stéphane

 

 

 

From: David Cheifetz <dcheifetz@gmail.com>
Sent: February 6, 2021 7:28 PM
To: Stéphane Sérafin <Stephane.Serafin@uottawa.ca>
Cc: Obligations <obligations@uwo.ca>
Subject: Re: SCC on good faith exercise of contractual discretion

 

Attention : courriel externe | external email

 

Dear  Stéphane

 

The claim, at least as I understand it and as I read the reasons, was rooted in the common law tradition, notwithstanding it came out of BC (where some judges sometimes have an odd view of what Canadian common law is,). Have I misunderstood your intent?

 

Best regards,

 

 

David Cheifetz

 

 

On Sat, 6 Feb 2021 at 17:47, Stéphane Sérafin <Stephane.Serafin@uottawa.ca> wrote:

I’m not sure I’d qualify the good faith issue here as minor, especially since it’s pretty clear, as in Callow, that the majority did not need to go down the route it did. Still, I suppose I’m hopeful that the failure of the good faith claim here means that parties will once again start making arguments that are actually rooted in the common law tradition, rather than asking the courts to apply the CCQ to fix their problems.

 

Anyway, that’s all I really have to say for the moment.

 

Best,

 

Stéphane Sérafin

 

From: Jack Enman-Beech <jenmanbeech@gmail.com>
Sent: February 6, 2021 1:45 PM
To: Obligations <obligations@uwo.ca>
Subject: SCC on good faith exercise of contractual discretion

 

Attention : courriel externe | external email

The Supreme Court of Canada has just released its decision in Wastech v Greater Vancouver Sewerage and Drainage District. Wastech contracted to send Vancouver's waste to any of three locations, to be allocated by the District. The District and Wastech knew that Wastech's profits would depend on how much waste went to each location, but the allocation was left up to the District's discretion. Court found that the discretion had to be exercised "reasonably" in order to meet the requirements of good faith. Reasonably means in accordance with the purposes for which the discretion was bargained for in the first place. The purpose of the discretion is to be interpreted out of the contract, even where the discretion is stated to be unfettered. In this case, the discretion was assigned to the District so that it could allocate waste efficiently, and so it was not unreasonable for the District to ignore Wastech's profits in deciding how to proceed: no breach. A nice clarification of the notion of reasonableness in this context.

 

This case was not a hard one because Wastech was still running a profit even with the unfavourable waste allocation. A trickier case would arise if the District's discretionary choice gave it a small benefit at great expense to Wastech. In such a situation, one wonders whether the court would still find that the District was permitted to entirely ignore Wastech's profits; the court might rather get creative in interpreting the purpose behind the discretion to avoid the perceived unfairness.

 

In a concurrence, Brown and Rowe JJ joined by Côté J address several minor issues. Their primary disagreement with regard to good faith is that where contractual discretion is "unfettered on its face" they do not think it is possible (or perhaps wise?) to determine the purpose behind it and to require that it be exercised in accordance with that purpose.

 

Yours truly &c.,

John Enman-Beech

SJD Candidate, University of Toronto Faculty of Law