The Supreme Court of Canada has made it clear: parties must
perform their contractual obligations honestly. In Bhasin v.
Hyrnew1the Court protected Mr. Bhasin
("Mr. B"). He was the little guy. He was a dealer for
Canadian American Financial Corp. ("Can-Am"). Can-Am
sells education savings plans ("ESPs") through people
like Mr. B. Over the course of ten years Mr. B. built his sales
force and became one of Can-Am's top enrollment directors. Mr.
Hrynew ("Mr. H") also sold for Can-am and competed with
Mr. B for sales of Can-Am ESPs.
Mr. H wanted Mr. B's sales and market. He tried to persuade
Mr. B to merge with him and then to persuade Can-Am to make Mr. B
merge. Mr. B refused the "hostile takeover" proposed by
Mr. H. Can-Am was pressured by Mr. H and worried that its business
might suffer without a merger. Can-Am lied to Mr. B so as to help
advance Mr. H's merger plan. Ultimately, Can-Am terminated Mr.
B as a dealer. Mr. B sued.
Mr. B won at trial. The judge found that Can-Am had acted
dishonestly, misled Mr. B about the Mr. H merger plans, and did not
tell him that Can-Am was working with Mr. H to make his the main
agency in Alberta. The appellate court overturned the trial judge
and the matter went to the Supreme Court.
The Court clarified the common law to make it "less
piecemeal and unsettled, more coherent and more just." It
stated that "good faith contractual performance is a general
organizing principle of ...contract and that there is a common law
duty applicable to "all contracts to act honestly in the
performance of contractual obligations"2. That
means that parties to a contract must perform their duties
"honestly and reasonably and not capriciously or
The Court recognized that it was making new law: Mr. B's
contract had an expiry date; in theory he had agreed that Can-Am
could terminate his services. The Court said that parties could not
"lie or knowingly mislead each other" about one's
"contractual performance".4 Can-Am acted
dishonestly when it refused to renew its agreement with Mr. B. Mr.
H was held blameless.
Thirteen years later the little guy won. Mr. B was awarded
$87,000.00, the value of his business at the time (2001), plus
interest, and his costs throughout the litigation.
Thank you Mr. B. and his legal team: liars and cheaters have had
1 2014 SCC 71
2 Supra, at para. 33
3 Supra, at para. 63
4 Supra, at para. 73
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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