In 2014, the Supreme Court of Canada delivered a seminal
decision, Bhasin v Hrynew
(Bhasin), on common law duties of
contractual performance. Earlier discussions on the case can be
found here and here. In the Bhasin decision, the
Court established a general obligation of good faith in the
performance of contracts, and a duty of "honest
performance", which applies to all contracts and requires
parties to act honestly with one another in relation to the
performance of their contractual obligations.
In a more recent case, Lavrijsen Campgrounds Ltd. v Reville
(Lavrijsen), the Ontario Superior Court
of Justice held that parties should exercise caution when they
choose to withhold certain information in the context of
contractual performance. In Lavrijsen, a decision which
concerned the sale of campground property and operation, the
parties entered into a share purchase agreement whereby the vendor
provided a warranty to prepaid rentals and deposits and agreed to
credit the purchaser post closing if the actual number of prepaid
deposits fell below the warranty. The transaction closed and an
adjustment was made upon closing for prepaid deposits. The document
provided by the vendor was inadequate and did not disclose enough
information for the purchaser to compute the adjustment accurately.
It was not until a year after the closing, upon closer review of
the company data that the purchaser realized she was entitled to a
much higher adjustment than credited based on the warranty.
At trial, the vendor admitted that he had withheld customer
balance details to the purchaser, but claimed that he would have
disclosed the pertinent information had the purchaser asked.
Counsel for the defendant vendor argued that this is not a case of
Relying on the principles established in Bhasin,
Justice Kent found that the active non-disclosure of the vendor to
be intentional misrepresentation and thus the vendor breached the
duty of honesty.
Lavrijsen arguably extended the duty of honesty
established under Bhasin; when carrying out contractual
obligations, parties must not withhold material information or
selectively disclose information on top of their obligations not to
lie or knowingly mislead each other.
The author would like to thank Lucy Lui, articling student,
for her assistance in preparing this legal update.
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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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