Canadian Lawyer

w w w . C a n a D I a n L a w y e r m a g . c o m J a n u a r y 2 0 1 5 15 that is the foundation for more specific duties. (This is the type of distinction for which lawyers, and maybe some artists too, are notorious.) In any event, relying on this newly recognized organizing principle and the proposition that all commercial activity rests on a basic level of honesty and trust, the SCC developed a new common law duty of honesty in contractual performance. Predictably, the duty of honest perfor- mance is not that straightforward: the new duty is limited and contextual. It is not meant to encroach unreasonably on par- ties' freedom to bind themselves and, once bound, to pursue their self-interest. Impor- tantly, a duty of honest performance does not include a duty of loyalty or of disclosure; a contracting party does not have to show its cards at the negotiating table or during the contract's term (unless the contract requires it to do so). Rather, there is simply a duty not to lie or mislead the counterparty in con- nection with performance of the contract. It is notable, too, that contracting parties are free to agree in writing what the doctrine will consist of in the specific context of their agreement (though they cannot exclude the duty to act honestly entirely). The facts of Bhasin involve a three-year contract between the appellant, Harish Bhasin, and Canadian American Financial Corp. (Canada) Ltd., under which Bhasin was entitled to sell CAF's RESPs through sales agents. Larry Hrynew, a competitor of Bhasin's interested in capturing Bhasin's lucrative market share, proposed a merger, but Bhasin refused. It was clear from CAF's discussions with regulators that it planned to restruc- ture its relationships, and specifically that it intended for Bhasin to end up working for Hrynew. CAF proceeded to repeatedly mislead Bhasin (for example, by encourag- ing Bhasin to make his confidential infor- mation available to Hrynew in the latter's capacity as provincial trading officer on the basis that Hrynew would have an obliga- tion to maintain the confidentiality of that information, which was not the case) and by not responding truthfully when asked by Bhasin about CAF's plans. Ultimately, CAF gave notice of termination, the contract terminated, and Bhasin's sales agents began working for Hrynew. The court found CAF acted dishonestly leading up to the contract non-renewal and, importantly, had it acted honestly, Bhasin could have retained his agency's value. The decision is expected to have implica- tions beyond the cutthroat world of educa- tion savings plans. The possibility of more litigation is one, as well as more record- keeping and lawyer involvement in con- tractual performance. Perhaps the most entertaining consequence is the prospect of commercial parties negotiating with each other about how honest they are required to be in the performance of their contrac- tual commitments. It will be a complicated quagmire of signalling, contract drafting, and negotiating. Engaging in this exercise ("When does my client have to be honest, and just what do we mean here by honest?") will serve as good rebuttal when my parents introduce my artist sister as "the only cre- ative one." Not that I'm bitter; honestly. Neill May is a partner at Goodmans LLP in Toronto focusing on securities law. The opinions expressed in this article are the author's alone. NEW EDITION ANNUAL REVIEW OF CIVIL LITIGATION 2014 EditEd by thE honourablE Mr. JusticE todd l. archibald and thE latE honourablE Mr. JusticE randall scott Echlin Get the title regularly cited by appellate courts, including the supreme court of canada. this authoritative text has provided unique, leading edge coverage of topical civil litigation issues for more than 10 years. TOpICs COVEREd the art and science of Persuasion – impactful opening statements abrogating the Witness immunity rule settlement Privilege Vertical stare decisis securities litigation defamation law anton Piller orders auditors' liability for negligent Misrepresentation summary Judgment oppression remedy Exclusion clauses Public interest Jurisdiction of securities commissions civil contempt Privacy law also included in this edition is a consolidated table of contents, which provides a summary of all articles published in the Annual Review of Civil Litigation since its inception in 2001. AvAIlAblE RIsk-FREE FOR 30 DAys Order online: www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 ORdER # 986103-65203 $168 hardcover approx. 560 pages november 2014 978-0-7798-6103-3 annual volumes supplied on standing order subscription Multiple copy discounts available 00223QZ-a46398 UNIQUE COVERAGE OF NEW TRENDS THAT WILL SHAPE THE FUTURE OF THE CANADIAN JUSTICE SYSTEM

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