In its recent decision in Burquitlam Care Society v Fraser Health Authority,
2015 BCSC 1343, the British Columbia Supreme Court may have
expanded the potential use of the common law duty to act honestly
as a means for contracting parties to seek legal recourse against
public bodies outside the scope of their contractual rights.
(See this November 17, 2014
BHT Newsletter for a more detailed discussion of the duty to
act honestly, as articulated by the Supreme Court of Canada in
Bhasin v Hrynew)
In Burquitlam, the application of Bhasin was
considered by Mr. Justice Macintosh in the context of an
application for an injunction to prevent Fraser Health Authority
("FHA") from terminating an affiliation agreement with
the Burquitlam Care Society ("Burquitlam") which related
to the operation of a residential care facility in Coquitlam, BC
FHA is a regional health authority which operates pursuant to
the BC Health Authorities Act for the purpose of
developing and implementing a regional health plan, developing
policies, setting priorities and allocating resources for the
delivery of health services in the Fraser Health region.
Under the Agreement, Burquitlam was required to provide,
among other things, certain residential care services with respect
to 76 approved residents using the funding supplied by FHA.
As well, both parties could terminate the Agreement without cause
upon 365 days' written notice to the other party. When
FHA informed Burquitlam it intended to issue its 365 day notice to
terminate the Agreement and stop the related funding, Burquitlam
commenced a legal action against FHA and sought, among other
things, an injunction to prevent FHA from terminating the
No serious question to be tried
In seeking an injunction, the applicant must demonstrate that
(a) there is a serious question to be tried; and (b) that the
balance of convenience favors granting the injunction. The
threshold for proving there is a serious question to be tried is
In this case, Burquitlam alleged that FHA had offended its
common law duty to act honestly in the performance of its
Unusually, Mr. Justice Macintosh held that Burquitlam's
application for injunctive relief must fail at the first stage of
the analysis, finding there was no evidence to suggest that FHA had
lied or knowingly misled Burquitlam in their dealings leading up to
the delivery of the notice of the intended termination.
Without such evidence, there was no serious question to be tried
warranting protection of the status quo, or otherwise
supporting an injunction being granted by the Court.
However, the Court left open the possibility that, in
circumstances where the facts could reasonably give rise to the
conclusion that one contracting party lied or knowingly misled the
other party in matters directly linked to the performance of
contractual obligations, or in the exercise of contractual rights,
such evidence could give rise to a serious question to be tried
which would weigh in favour of granting injunctive
This case highlights the practical implications of not adhering
to the duty of honesty described in Bhasin.
Dishonest behavior may give rise to legal consequences in the
context of contractual performance, even if the offending
party's acts are not offside their rights and obligations
contained in the contract itself. Such behaviour may fall
short of lying. Knowingly misleading the other party to a
contract may suffice.
Implications for BC's health authorities
Although FHA was not found to have done anything wrong, the
Burquitlam case highlights the importance of how health
authorities, just as any other contracting party, exercise their
contractual rights. In exercising those rights, parties to a
contract must ensure, for example, that their ongoing
communications do not mislead the other side, such that they breach
the duty articulated in Bhasin above. In doing so, a
contracting party could lose certain rights otherwise available in
Had Burquitlam successfully demonstrated there was a serious
question to be tried, Justice Macintosh was clear that he would
have granted the injunction, and FHA would have been prevented in
the interim from exercising its contractual right to terminate the
Agreement until the trial of the matter determined the
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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