update : August 19 2022 The PM's office has announced the nomination to the Supreme Court of Canada - of East Region Ontario Superior Court's Madam Justice Michelle O'Bonsawin. If confirmed she will replace the ( Sep 1/22 ) retiring Justice Michael Moldaver. Her original trial level decision for snow contractor CALLOW would go all the way into the highest court of the land & is worth the read . . .

* *

Not legal advice as usual

1 - In November 2017 an otherwise routine-looking Sep 2013 SNOWPLOW CONTRACT TERMINATION was ruled IN BREACH OF IMPLIED "DUTY OF HONESTY" arising from "a general organizing principle of GOOD FAITH that underlies many facets of contract law".

( Relations between condo owners & their corporations are STATUTORY relationships, not "CONTRACTUAL" interactions as involved here. Looking over the fence, condo owners & directors should count their comparative blessings in that their Building Scheme counterparts are "inter-relationed" instead by hybrid contracts disputedly running with title; see 160 years of 100 legal judgments with almost no statute applicable. No Florida chapter 720 folks ! )

But for condos & Building Schemes alike this is a heads-up about terminating contracts with suppliers, servicers or so-called "self-employed contractors" ( ? always more cost-effective than employees ? ).

AND particularly where clients' condo Directors - maybe with TOO MUCH TIME ON THEIR HANDS BUT TOO FEW SKILLSETS - are directly dealing with the contractor . . . Even ( as actually held here ) holding direct discussions about contract extensions with that contractor. Too many cooks spoiling the broth ? DUBIOUS E-MAILS get dragged to the surface !

With the management company silent during a critical period, the plaintiff contractor looks not only effectively BLINDSIDED but is here held 'ACTIVELY DECEIVED'. That's instead of being promptly alerted of any irrevocable "Terminate" decision & held able to timelier mitigate or act alternatively etc . . .

This decision is judicial recognition of an alleged civil wrong of "active deception" or "misleading" IF - IF - able to get credibly argued by a complainant later willing & able to track down the clients' internal communications.

Think today's e-mails automatically disappear ?

And where that complainant is FURTHER NOW able to join as SEPARATE defendants, individual managers, management companies, individual client Directors etc so as to be able to compel their presence & submission to depositions . . . . better be especially careful ! ( That's instead of individuals - whose exposed roles may now critically undermine a defence - now slipping away into the shadows of "We cannot find them. So their inputs are at best anecdotal through what we wish to channel . . . " )

It may be especially worth thinking about this, respectfully, where there are imbalances of power and/or of sophistication etc. For example eg an "adhesion-type" take-it-or-leave-it service contract imposed on a desperate bidder.

AND SO THUSLY has swept onto Ontario's condo universe - like a giant diesel John Deere with frontbucket & rear snowblower - a somewhat overlooked 2014 Supreme Court of Canada decision.

That topcourt decision was rendered 14 months AFTER the Ottawa snowplow contract was terminated on the verge of the second year of 2 year contracted snow clearing.


2 - That 2014 Supreme Court of CANADA decision - targetting what was held "active deception" against a plaintiff Alberta retail seller of investment products by his RENEWAL-WITHHOLDING wholesaler in arguable collusion with the plaintiff's competitor - is Bhasin v Hrynew 2014 SCC 71 issued Nov 13 2014 http://canlii.ca/t/gf84s

In Bhasin ( 2014 ) for a unanimous topcourt panel SCC's Mr Justice Thomas Cromwell ( now retired ) repeatedly clarified - AS NOW IMPLIED INTO CONTRACTS DESPITE THEIR ACTUAL WORDINGS - the following :

quote: ". . .[93] A summary of the principles is in order:

(1) There is a general organizing principle of good faith that underlies many facets of contract law.

(2) In general, the particular implications of the broad principle for particular cases are determined by resorting to the body of doctrine that has developed which gives effect to aspects of that principle in particular types of situations and relationships.

(3) It is appropriate to recognize a new common law duty that applies to all contracts as a manifestation of the general organizing PRINCIPLE OF GOOD FAITH : a DUTY OF HONEST PERFORMANCE, which requires the parties to be honest with each other in relation to the performance of their contractual obligations. . . " - unquote

ACCOMPANYING BUT NOT NECESSARILY PART of the 2014 S.C.C. text, the unattributed Case Summary prologuing the decision itself states that :

quote : “ . . . It is appropriate to recognize a new common law duty that applies to all contracts as a manifestation of the general organizing principle of good faith : a duty of honest performance, which requires the parties to be honest with each other in relation to the performance of their contractual obligations.

Under this new general duty of honesty in contractual performance, parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract.

This does not impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract; it is a simple requirement not to lie or mislead the other party about one’s contractual performance.

Recognizing a duty of honest performance flowing directly from the common law organizing principle of good faith is a modest, incremental step.

This new duty of honest performance is a general doctrine of contract law that imposes as a contractual duty a minimum standard of honesty in contractual performance. It operates irrespective of the intentions of the parties, and is to this extent analogous to equitable doctrines which impose limits on the freedom of contract, such as the doctrine of unconscionability.

However, the precise content of honest performance will vary with context and the parties should be free in some contexts to relax the requirements of the doctrine so long as they respect its minimum core requirements. " unquote

3 - In 2014 attention within the condo governance universe was quickly alerted to the then-new topcourt decision by Guelph condo lawyer Michelle Kelly.

Nov 14 2014 “New Duty of Honest Performance of Contracts” by Michelle Kelly LLB (Sutherland Kelly LLP Guelph )

https://ontcondolaw.com/2014/11/14/new-duty-of-honest-performance-of-contracts/

Implications for charities & NFPs were soon drawn by an article of lawyer Nicole K. D’Aoust.

Dec 2014 Miller Thomson LLP Dec 2014 newsletter “Supreme Court Says Parties to Contracts Must Act in Good Faith” by lawyer Nicole K. D’Aoust JD LLB tax & NFP specialist http://www.millerthomson.com/en/publications/newsletters/charities-and-not-for-profit-newsletter/ 2014-archives/december-2014/supreme-court-says-parties-to-contracts-must


4 - Some SPECIFICS

The 2013 Ottawa termination itself occurred 14 months BEFORE the SCC's Bhasin v Hyrnew landmark 2014 decision was released.

( Litigated against a lengthy list of separate Ottawa defendants, all could be separately deposed by the terminated contractor. ) The first of the multiple, separately named arms-length defendant is the property manager herself.

( The contract issuing authority may ? technically have been the Ottawa PMC Condominium Management Group, NOT the ten separate lowrise condo corporations said to be acting collectively - maybe informally ? - under some undetailed form of collective Joint Service purchasers. )

The 2017 judgment cites a JUC Joint use Committee collectively serving 10 separate client condo corporations in “Baycrest Gardens” roughly west of the Walkley & Heron Roads triangle . A sort of snowbound Bermuda Triangle.

Other separate defendants included the Ottawa PMC employing her, as well as some of the multiple clients' Directors - sources of Directoral e-mails suggestive ( to the Ottawa judge ) of "active" dishonesty despite management claims to the contrary.

5 - THE DIRECTORAL E-MAILS

And then somehow obtained were the defence-damaging E-MAILS between client Directors whose contents here get construed to trigger the new HONESTY duty.

Imagine if there were UNSEND BUTTONS that could now be magically used to eradicate what the e-mailer clients failed to understand . . . including that such e-mailed interactions could come back to haunt big time.

6 - And so - arriving already at a significant cost to owners and maybe to be appealed - a delayed CONTRACT-TERMINATING decision that was ostensibly simple, maybe harsh & unfair as to timing but ostensibly contract-compliant.

Now it gets held "active" deception & breach of the Supreme Court of Canada's 2014 new honesty duty . . .


7 - Subject to appeal the Nov 2017 Ottawa Superior Court decision applying Bhasin (2014) is

C.M. Callow Inc. v. Tammy Zollinger et al., 2017 ONSC 7095 issued Nov 27/17 http://canlii.ca/t/hp00r

1 - This is NOT legal advice, which condo & Building Scheme Directors & service providers should obtain - AND LISTEN TO - from licensed & insured members of the Law Society of Ontario !

Issued in November 2017 Callow v (Zollinger) CMG et al has NOT appeared on any Top Ten 2017 judgment lists. This is NOT a management-friendly decision.

2 - In litigation that included formal hearings over 8 days, the Ottawa Superior Court decision ( by Madame Justice Michelle O’Bonsawin ) hits a contract termination at a ten corporation grouping of condominium lowrises west of Walkley-Heron Roads.

These client corporations are jointly cited as forming a JUC Joint use Committee collectively serving “Baycrest Gardens” but with a common PMC & a property manager ( unfortunately for her cited topmost within the judgment's citation ).

Against snowplow contractor Callow's claim of Bad Faith contract termination issued by CMG 6 weeks ahead of year 2 of a two year contract, the 'LITERALLY COMPLIANT' Contract Termination here gets held effectively undercut & in bad faith ( ie that what the judge held six months of alleged 'active deception' was an actionable breach of the Supreme Court of Canada's new Honesty Duty ).

Open to potential defence were such as :

Literal Compliance eg : "We lawfully terminated without cause being necessary with no less than the minimum Notice period agreed to freely by the plaintiff Callow" etc. "Callow entered a contract which neither expressly prohibited Termination on the brink of the winter season nor deadlined the Notice".

Entirety of Agreement - is it relevant ? The 2017 Ottawa snowplowing judgment is silent as to any Entirety of Agreement provision in the terminated Agreement , but Canada's Supreme Court decision in Bhasin ( 2014 ) expressly cites & overrides one such in the disputed Alberta renewal dispute.

"We claim inadequate performance by snowplower Callow !" Is that relevant & credible ? : Madame Justice O’Bonsawin also opines that the defendants' performance complaints ( against snowplower Callow ) in this litigation are unsupported. The alleged under-performance would have also occurred at least SIX MONTHS before the September 2013 Termination.

"That it's a huge & unsupported judicial leap to platform alleged bad faith on a mere JUC client recommendation to management . . . What status if any did the JUC motion have as to the literal contract ?"

And even if somehow "active deception", just how much lost income could be attributed where Callow did not perform the second winter & had at least 6 weeks to mitigate by finding other clients ?

If appealed, there could be a lot of such arguments repeated.

3 - Had there been SIX MONTHS of deliberately secreted INTENTION TO TERMINATE the second year of Callow's snowplowing contract until just 6 weeks before snow season ?

( Motive : to avoid disruption to summer landscape activity contracted separately to the plaintiff Callow. )

Would such be even adequate to reasonably constitute "active" deception ?

Xxcrpt from Callow v CMG et al :

quote " . . . [38] The Minutes indicate that “ ( CMG’s individual co-defendant property manager Ms XXX is considering terminating the snow removal contract with CM Callow due to poor workmanship in the 2012-13 winter”.

In fact, the Minutes continue to state that Ms. XXX had reviewed the contract and advised the JUC members that they could terminate the contract with Callow with no financial penalty.

She advised that she would get quotes from other snow removal contractors. In response to Callow’s counsel’s demand letter, Ms. XXX states that the JUC made the determination to terminate Callow’s winter maintenance services contract on March 19, 2013, and it was a unanimous decision. . . .

. . . . [48] On July 17, 2013, there were e-mails between ( client Directors P. and C. ). Counsel for Callow submits that these are very relevant because they are private communications between them.

These two men never expected that they would be disclosed during this proceeding.

I agree with her.

Mr. C e-mailed Mr. P on July 17, 2013, regarding the “freebie” work: “Yeah, I was talking to him about it last week and he was mentioning he was going to do that. He’s basically doing this to try and make sure we keep him for summer grounds, which is fine by me.”

Mr. P then responds: “I figured as much. It’s nice he’s doing it but I am sure it’s an attempt at us keeping him.

Btw, I was talking to him last week and he is under the impression we’re keeping him for winter again.

I didn’t say a word cuz I don’t wanna get involved but I did tell ( Ms XXX ) that Callow thinks we’re keeping him for winter.”

[49] Mr. Callow was only advised by way of e-mail from Ms. XXX on September 12, 2013:

“Please be advised that Baycrest will not be requiring your services for the winter contract for 2013/2014 season, as per section 9 of the contract, Baycrest needs to provide the contractor with 10 days’ notice.”

Mr. Callow testified that immediately after he received the termination notice, he reached out to both Mr. P. and Mr. C. Mr. Callow believed that if there was a problem, he would have expected them to bring it to his attention like they had done in the past.

Callow entered into the contract with CMG under good faith.

Mr. Callow testified: “After reading this, it is pretty obvious that they used me, misled and lied to me.” I agree. . . " unquote

4 - The above Director E-MAILS & March 2013 alleged JUC client Directors decision to terminate the snowplow contract : ARE THEY IRRELEVANT ?

Do both fail to support a finding of "active" concealment by CMG ? What's an "active" misleading, as opposed to lawful silence or prudent desire not to risk collateral retaliation ?

Regardless, IF there is an appeal, will CMG succeed in distancing the actual September 2013 termination from the alleged "active misleading" aspect ?

5 - Xcrpted Madam Justice O'Bomsawin :

quote " . . . [65] In Callow’s case, CMG actively deceived Callow from the time the decision was made to terminate the winter maintenance services contract in either March or April to September 12, 2013.

More specifically, CMG acted in bad faith by

(1) withholding the information to ensure Callow performed the summer maintenance services contract; and

(2) continuing to represent that the contract was not in danger despite CMG’s knowledge that Callow was taking on extra tasks to bolster the chances of renewing the winter maintenance services contract.

[66] CMG argue that on its own, the exercise of the contractual right of termination is not evidence of a breach as there was no positive obligation on CMG to disclose their intention to terminate the contract before the ten days’ notice.

CMG further state that Callow has not successfully provided evidence of bad faith in the decision to delay.

I disagree. There were active communications between the parties between March/April and September 12, 2013, which deceived Callow.

Due to the active deception by CMG, I do not accept the argument that no duty was owed to disclose the decision to terminate the contract before the notice.


[67] CMG did not perform the contract pursuant to the minimum standard of honesty.

CMG’s delay to provide notice to Callow failed to provide a fair opportunity for the latter to protect its interests.

The minimum standard of honesty would have been to address the alleged performance issues, to provide prompt notice, or to refrain from any representations in anticipation of the notice period.

[68] Although the scope of good faith may be broader in the franchise and employment context, principles from these areas provide guidance.

In the employment context, it is recognized that there is a duty to act in good faith when terminating an employee.

In this case, Callow was not an employee. However, as a result of Bhasin, it is arguable that the duty to act in good faith in performing a contract also extends to terminating a contract. . . .

. . . [83] For the reasons noted previously, I order that CMG must pay Callow the amounts as follows:

(a) $64,306.96 for the value of the contract after expenses;

(b) $14,835.14 for the value of one year of the lease of equipment; and

(c) $1,600.00 for the last unpaid invoice. . . " unquote

5 - Footnote :

- This Ottawa judge in Sep 2017 turfed most of a grotesque $20 K award imposed in a Small Claims award against an Ottawa condo owner who lost a $ 2,500 challenge of a charge back SEE http://ontario.cafcor.org/index.php?option=com_fireboard&Itemid=46&func=view&catid=2&id=18830#18830

- from 2017 Superior Court ( East ) appointee Madame Justice Michelle O'Bonsawin 's appointment biography :

Justice O'Bonsawin holds a B.A. (Laurentian University), an LL.B. (University of Ottawa), and an LL.M. (Osgoode Hall), and is currently enrolled in the University of Ottawa's Ph.D. program in law.

She began her legal career with the RCMP Legal Services and later was counsel with Canada Post Corporation, specializing in labour, employment, human rights, and privacy law.

Prior to her appointment, Justice O'Bonsawin was general counsel for the Royal Ottawa Health Care Group, where she developed a specialization in mental health law. She has taught Indigenous law part-time in the University of Ottawa's French common law program.

She serves on the Board of Governors of the University of Ottawa, as well as its Executive Committee.

Justice O'Bonsawin also acts as a mentor in the Canadian Bar Association, Ontario Bar Association, and University of Ottawa mentorship programs.

The judgment's text does NOT list the defendants in their entirety.

The ( abbreviated ) judicial citation unfortunately even cites by name the property manager herself, who I decline to personally identify.

IF - IF - Callow's sole privity of contract is with management company CMG against whom the award is to be paid without successful appeal, can such final burdens be backloaded to the clients / ex-clients ( ?) / management company's insurers ?

OR will the management company have to suck it all up less any business insurer contribution if payable ? This alone may be a biggy . . .

from the text of the Callow termination judgment

"Conclusion

[83] For the reasons noted previously, I order that CMG must pay Callow the amounts as follows

(a) $64,306.96 for the value of the contract after expenses;
(b) $14,835.14 for the value of one year of the lease of equipment; and
(c) $1,600.00 for the last unpaid invoice.

[84] CMG must pay Callow within 30 days of these Reasons for Decision." unquote

Again this ain't legal advice. Is this where we're heading ? :

Flipside :“the parole rule” (pronounced exactly like interim release after incarceration) judicial interpretation should reject alleged verbal changes of a written agreement, whose "Four Corners" should limit.

aka "INTEGRATION CLAUSE" especially USA or MERGER CLAUSE

xcrpt : Bates, M., Entire Agreement Clauses (UK), accessed 16 January 2018

U.K. Dr Malcolm Bates “Entire agreement clauses”

“ . . . . Entire agreement clauses often form part of the “boiler plate” provisions of commercial contracts and so the temptation may be not to pay them much attention.

. . . Recent case law ( U.K. ) has highlighted that it is important to consider the effect of entire agreement clauses carefully when including them in commercial contracts.

In particular, if a party wishes to exclude liability for any pre-contractual representations, the contract must expressly exclude such liability, although one can never exclude liability for fraudulent pre-contractual representations.

Entire agreement clauses must also be reasonable under the ( UK's ) Unfair Contract Terms Act 1977.

If the parties are both commercial entities and the contract is made in a commercial context, it is unlikely that an entire agreement clause excluding liability for pre-contractual representations would be unreasonable.

This may be the case even where one of the parties is much larger than the other, provided that the smaller party is accustomed to dealing with such agreements.”

Is this where we're heading ?

Almost a year after the above decision, Ontario's Court of Appeal has reversed it. Maybe also a little too much ? Would it chill interactions with service-providers ? Given the typical skill-sets, would it trigger a flood of such claims ? . . .

C.M. Callow Inc. v. Zollinger et al., 2018 ONCA 896 issued Nov 97/18 http://canlii.ca/t/hw0kb

xcrpted

" . . . [8] The appellants ( PMC & governancers etc ) argue that the trial judge erred by improperly expanding the duty of honest performance in a manner that went beyond the terms of the winter contract.

They argue, further, that the trial judge erred in calculating damages.

[9] We agree. Given our conclusion that the contract was not breached, it is not necessary to address the damages issue.

[10] The Supreme Court held in Bhasin v. Hrynew, 2014 SCC 71 (CanLII), [2014] 3 S.C.R. 494, at para. 33, that good faith contractual performance “is a general organizing principle of the common law of contract which underpins and informs the various rules in which the common law, in various situations and types of relationships, recognizes obligations of good faith contractual performance.”
In addition, the Court held that there is a duty of honest performance “which requires the parties to be honest with each other in relation to the performance of their contractual obligations”: at para. 93.

[11] The Court was at pains to emphasize that the concept of good faith was not to be applied so as to undermine longstanding contract law principles, thereby creating commercial uncertainty.

[12] The same is true of the new duty the Court recognized as flowing from the good faith organizing principle, the duty of honesty in contractual performance.

As Cromwell J. explained, at para. 73:

[The duty] means simply that parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract.
This does not impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract; it is a simple requirement not to lie or mislead the other party about one’s contractual performance.

[13] This, he emphasized at para. 73, was a “modest, incremental step” in the development of the law of contract.

. . [16] In our view, these findings may well suggest a failure to act honourably, but they do not rise to the high level required to establish a breach of the duty of honest performance.

[17] It is clear from Bhasin that there is no unilateral duty to disclose information relevant to termination: at para. 73.

Unlike Bhasin, this was not a case in which the contract would renew automatically, nor were the parties required to maintain an ongoing relationship.

The appellants were free to terminate the winter contract with the respondent provided only that they informed him of their intention to do so and gave the required notice.

That is all that the respondent bargained for, and all that he was entitled to.

[18] The duty of honest performance in this case required that the parties be honest with each other concerning matters “directly linked to the performance of the contract” (Bhasin, at para. 73) – that is, linked to the winter contract then in effect.

It did not limit the appellants’ freedom concerning future contracts not yet negotiated or entered into.

Communications between the parties may have led Mr. Callow to believe that there would be a new contract, but those communications did not preclude the appellants from exercising their right to terminate the winter contract then in effect. . . . " unquote

"Can Condos Terminate a Snow Removal Contract Early ?" by Jocelyn Duquette LLB Gowling WLG :

http://condoadviser.ca/2018/11/can-condos-terminate-a-snow-removal-contract-early/condo-law-blog- Ontario

June 27/19 SCC Canada's Supreme Court grants rare leave to appeal sought by Ottawa condo snowplow contractor Callow.

For the governancers in 2018 ONCA Ontario's Court of Appeal had unanimously overturned on appeal the 2017 trial victory of Ottawa condo snowplow contractor Callow.

ONCA had unanimously ruled that the displayed "bad faith" falls short of rising to the level to trigger a Bhasin v Hyrnew remedy for want of honesty in contractual relations. One can suspect judicial fear of the judge-made remedy triggering an avalanche of future claims . . .

S.C.C. usually dismisses at least 95 % of applications to hear a final appeal.

Opening this door for snowplower Callow may be a decision by Canada's highest court to revisit or qualify its 2014 honesty duty ruling.

Callow v Zollinger et al 2019 canlii 58137 (SCC) issued June 27/19 http://canlii.ca/t/j169p

See S.C.C. file # 38463 for upcoming submissions available online

A pair of observant Calgary lawyers have alerted that a S.C.C. HEARING DATE of DECEMBER 6 2019 has been set to jointly consider HONESTY /GOOD FAITH appeals by snowplower CALLOW & concurrently by a B.C. appellant WASTECH.

At their respective Courts of Appeal both appellants lost arguing that their claims' "factuals" should have triggered HONESTY /GOOD FAITH duty in contractual dealings regardless of some missing protection. ( Wastech's beef apparently is that a sewage authority reduced certain waste treatment loads below the point of Wastech's profitability in treating such at that now-reduced volume; there was no "sliding scale" formula. )

Not many "pure condo" disputes have directly hit Canada's now-congested top court, which is claimed to now refuse to hear well over 90 % of applications. Historic/modern era appeals heard by Canada's topcourt have included Winnipeg C.C.36 v Bird Construction 1995 & the Montreal balcony succahs dispute ( Syndicat Northcrest v. Amselem, 2004 )

SUCH NUMBERS are short of the access arguably given years ago to reach Canada's top court in Pearson v Adams 1914 ( Parkdale lot covenant dispute - " what is the meaning of building restriction limiting to a 'detached dwelling-house' ? " - and Beach of Pines ( Wolf / Alley / Noble etc ) 1950/1 - "why shouldn't we be allowed to merrily enforce against buyers our White Gentiles Only bigotry covenants ? " as overwhelmingly supported amidst the litigation by vote of our Building Scheme owners even including an Ontario judge . . . ! !)

Nov 22/19 Canlii Connects :

“Supreme Court of Canada to Hear Two New Cases on Good Faith in Contract “ by Peter D. Banks & Tiffany Bennett (Borden Ladner Gervais LLP - Calgary ) https://www.canliiconnects.org/en/commentaries/67904

Wastech Services Ltd. v Greater Vancouver Sewerage and Drainage District, Supreme Court of Canada File No. 38601 and C. M. Callow Inc. v Zollinger, Supreme Court of Canada File No. 38463.

not legal advice as usual.

Canada's S.C.C. Supreme Court of Canada has just released an 8:1 decision re-instating the 2017 outcome of a claim won by an Ottawa landscaping contractor that withholding for six months a decision NOT TO RENEW HIS CONTRACT had breached a duty of honesty & good faith.

It was a claim won initially by the contractor against both the collective group of Ottawa condominium corporations involved AS WELL AS AGAINST the PMC property management company !

1 - Noteworthy : : e-mails conveniently showed the multi-corporation group deliberately withheld from the plaintiff contractor for 6 months its decision already taken NOT to renew Callow's winter maintenance contract ! Withholding left him on a critical verge of season start and especially after performing some "freebies' in mistaken reliance during summer duties . . . .

2 - ONCA Ontario's Court of Appeal overturned Callow's victory in 2018.

3 - This ultimate may be a rare remedy to get. BUT LOTS of attention will LIKELY or should be paid by Directors and counsels to its outcome ( and to whatever will result from the parallel but not-yet-released B.C. WASTECH appeal ) .

Frequent dissenter Madam Justice Côté's rationale will be an especially interesting read.

The 8 Justice majority provided two different rationales.

4 - However uncertain will be the implications, this just released is one of a numerically rare group of disputes at Supreme Court level directly involving - as litigants - shared ownership bodies of various sorts : think :

Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29 issued Oct 23 /20 http://canlii.ca/t/jb62z ( CRYSTAL SHARED FACILITY WAR” - arguably a low point in slam-dunking unwary strata buyers http://ontario.cafcor.org/index.php?option=com_fireboard&Itemid=46&func=view&id=18662&catid=11 )

Winnipeg C.C. # 36 v BIRD Construction 1995 1 SCR 85 https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/1215/index.do

balcony succahs : Syndicat Northcrest v. Amselem, 2004 SCC 47 http://canlii.ca/t/1hddh

Pearson v Adams 1914 CanLII 9 (SCC), 50 SCR 204 http://canlii.ca/t/1tsqx Is a multi-unit with single front door in good ole' Parkdale in violation of a covenanted limit to ‘detached . . .dwelling house’ ? Reversals at each successive adjudication . . .

Beach of Pines ( Noble et al. v. Alley, 1950 CanLII 13 (SCC), [1951] SCR 64 ) http://canlii.ca/t/1ttv5 - are bigotry clauses in certain Ontario cottage country property titles technically enforceable ? ( Justice system with exception blissfully ignored repugnant offence to morality; more whacky Building Scheme stuff of an especially dark nature albeit contrary to a prior Toronto area outcome that struck down a new subdivision's bigotry clause )

Galbraith v Madawaska Club Ltd 1961 SCR 639 issued June 26 1961 http://canlii.ca/t/1tvqz : what's 'easily ascertainable ?". How could a cross-covenanting Building Scheme have been established between rootdeed buyers amidst the vagueries of even trying to sort out which Georgian Bay islands had been cross-encumbered or not in the 1880's ? Classic whacky Building Scheme stuff.

( This is not the full list )

5 - today's bombshell :

C.M. Callow Inc. v. Zollinger et al , 2020 SCC 45 issued Dec 18/20 http://canlii.ca/t/jc6vt

Not legal advice, as usual.

1- In 2017 a Superior Court Justice awarded damages against a PMC property management company which terminated mid-contract an Ottawa winter plowing contract on behalf of a consortium of 10 condominium corporations.

Paragraphs 65, 66 70 and 76 made findings of "active deception" which it held made the early termination - otherwise technically compliant - nevertheless "dishonest" and controversially in breach of a "duty of good faith", given the circumstances.

Hearings were held over 8 days and with 9 witnesses. This hinted that the dispute might have legs . . .

By 2021 looks like the costs have far outweighed the amounts at stake originally.

2 - CAN TOTAL SILENCE CONSTITUTE ‘ACTIVE DECEPTION‘ ?

( Despite contracted right to terminate arbitrarily with 10 days notice, is it 'active deception' NOT to correct the other party's mis-belief ? A breach of honesty duty ? )

It's not easy - gob-smacking even - to try to understand or accept that a duty of honesty or good faith can be somehow short-performed by FAILING TO SPEAK OUT to dispel the other party's unilaterally reached MIS-BELIEF ! That's merely when several of the clients manage to record such speculation in e-mails between each other.

Yes it might ? possibly be very callous or even an "abuse of rights" to keep quiet about a client vote for 6 months until the verge of next winter's season with prospective clients usually locked into winter contracts. ( and see footnote # 1 of the just issued S.C.C. decision ).

It's a further leap to impute to the formal contracting authority CMG, whatever may or may not have been allegedly hinted by SOME of the client Directors, none of whom is legally CMG . . .

In 2018 did ONCA's overturning the Callow victory instead really get things right ?

Also how easy will it really be for typical skillsets in the condo governance universe to understand & apply this conceptual duty in practice ?

The just “re-instated” 2017 ONSC judgment ( for the snowplower ) arguably left a number of loose ends :

A - undiscussed ( including not within the S.C.C. appeal decision ) : had there been an Entirety of Agreement clause within the contract agreed by the snowplower ? No matter how vulnerable might be such covenant, it would be relevant and respectfully should at least have been addressed.

One of course finds plenty written about clarifying Bhasin and drawing from Quebec civil law remedies as to 'abuse of ( contractual ) rights' . . .

B - Was it a valid conclusion that the FACTS claimed solely by the plaintiff snowplower to constitute ‘active deception’, appear to have been lacking in much if any hardcopy confirmation ?

Nor does the 2017 text specify exactly what specific words ( s ) or specific concrete actions are otherwise alleged to constitute or support ‘active deception’ ? Strange, because there’s certainly plenty of other details in the 2017 text. . .

C - Regardless of the trial judge’s right to compare credibility of testimony at the 2017 Hearings, OVER THE DEFENCE’S EIGHT WITNESSES ( 7 being volunteers ) was it valid to prioritize snowplower Callow’s testimony about factuality & content ?

Didn’t Callow bear the over-riding onus of proof ?

Were all eight defence witness lying, unprepared or confused ?

Did snowplower Callow simply - whether even merely subjectively or uniquely - interpret lawful silence to mean : ‘your contract is not in question’ ? What message would the 8 defence witnesses have intended if at all ?

D - The witness property manager : It would be beyond belief that the co-defendant property manager would support snowplower Callow ‘s version other than possibly testifying :

“Nothing at all was said even indirectly to snowplower Callow"! "Nor why would we have to say anything ?"

Was it some sort of miraculous silence meaning ‘ we are waiving our unfettered right to terminate anytime “ ? That looks like a leap without clear support within the 2017 text . . . .

3 - In 2018 ONCA the Ontario Court of Appeal overturned the 2017 ruling as NOT supported by a relevant 2014 S.C.C. decision recognizing a duty of good faith.

4 - On December 18 2020 S.C.C. the Supreme Court of Canada upheld the snowplower appeal and re-instated the 2017 outcome overturned by ONCA. This was one of several appeals ( from unrelated disputes ) allowed to be heard to clarify or develop the 2014 Bhasin decision, one of which is still pending.

By an 8 : 1 majority S.C.C. ruled that a breach of honesty duty in contractual performance could be held for less than flat outright lies. That in fact a right to compensation for an adequately proven claim of dishonest contractual performance, could be established by sufficient evidence of lesser ”knowingly misleading”.

2017 ONSC : C.M. Callow Inc. v. Tammy Zollinger et al., 2017 ONSC 7095 issued Nov 27/17 http://canlii.ca/t/hp00r

2018 ONCA : C.M. Callow Inc. v. Zollinger et al., 2018 ONCA 896 issued Nov 97/18 http://canlii.ca/t/hw0kb

2020 SCC C.M. Callow Inc. v. Zollinger et al 2020 S.C.C. 45 issued Dec 18/20 https://decisions.scc-csc.ca/scc-csc/scc-csc/en/item/18613/index.do

5 - The S.C.C. website itself has posted an arguably questionable summary by ”communications staff”. It safely generalizes : ” Even when someone is allowed to put an end to a contract, this has to be done in an honest way, the Supreme Court has decided.”

6 - Amongst the media articles now appearing :

Dec 19/20 Globe & Mail “Supreme Court rules contractual honesty is more than just not telling lies” by Sean Fine – Justice Reporter https://www.theglobeandmail.com/canada/article-supreme-court-rules-contractual-honesty-is-more-than- just-not-telling/

Not legal advice, as usual. And I ain't defending dishonesty if that's really what could be described here . . .

1 - ( a ) At Canada's topcourt, did the larger & lesser majorities ( for Calllow ) misunderstand or miss what looks like a significant gap in the 'factuals' found by the trial judge ?

Writing for the larger sub-majority of 5 Mr Justice Kasirer in para 96 cites that ONSC found active misrepresentation or active deception expressed in the trial decision's paras 23 and 40-43. ( And thus triggering a duty to speak out to dispel Callow's mis-belief )

Trouble is : that is not what can be found expressed in para 23. And at best the holding is dubious in 40-43.

( b ) Within her dissent at para 190 & 210 sole dissenter Madam Justice Côté finds zero misleading nor even any duty to dispel a mis-belief by Callow. She respectfully speculates the majority mixed up Callow “thought” with Callow “was told”. And that ONSC made errors about the critical facts. She also thinks the trial judgment went astray.

2 - Regardless of # 1, applying an "honesty duty" to expressly dispel another party's unilateral mis-belief, looks like an extra slippery slope. And tough for simple folks (like me) to try to understand & apply. Wonder how it will tend to play out in a condo / strata/ Building Scheme contracting scene ?

3 - The S.C.C. majority incidentally looks for a "comprehension" tool sorta on loan from "abuse of rights" remedy more at home in Quebec's Civil Code.. ( Canada's newest Supreme is ex-dean from McGill )

The decision's Footnoted reference to what may ? be "The English Rule", cites an 1895 House of Lords property law decision with dicta about MOTIVATIONS seen sharply contrary to the ambiguous "abuse of rights" remedy. ( A dictum in an apparently overlooked 1979 S.C.C. decision already disclaimed this 1895 approach as to subsurface nuisance damage claims - N.C.C. et al. v. Pugliese et al. )

Bradford v Pickles 1895 http://www.uniset.ca/other/cs5/1895AC587.html Arguably - If its legal there’s no recourse for alleged victims of defendant’s altering percolated water flow totally below the surface of his own boundary. That despite claims of malicious property nuisance etc by plaintiffs, motive was found irrelevant in this English landmark where no law held broken.

( Lord Watson : “ no use of property, which would be legal if due to a proper motive, can become illegal because it was prompted by a motive which is improper or even malicious”. Lord Halsbury : “ . . . If it was a lawful act, however ill the motive might be, he had a right to do it. If it was an unlawful act, however good his motive might be, he would have no right to do it. Motives and intentions in such a question as is now before your Lordships seem to me to be absolutely irrelevant. . ." )

At least, that is easier to understand .

Unrelated nuisance or not, the 1895 principle was one alternative, exempting howsoever selfish or sociopathic or whatever a motive behind what was at that time a FULLY LAWFUL action by the defendant landowner. Respectfully, it wasn't the defendant's job to make his greedy neighbours dance for joy !

4 - Still unreleased will be the accompanying WASTECH appeal. And any comment forthcoming if any from CMG's counsels.

Will be relevant reading.

updates as analysis appears :

Jan 7/21 “ . . . . Whether a party has knowingly misled its counterparty is a highly fact-specific determination that can include lies, half-truths, omissions and even silence, depending on the circumstances. Highly fact-specific determinations that depend on the circumstances often give rise to litigation.
Parties will want to reduce this risk through careful drafting and managing expectations in advance of exercising contractual rights that may have significant, adverse effects on a counterparty, such as early termination rights.” - unquote https://www.canliiconnects.org/en/commentaries/73049

Not legal advice.

Wastech Feb 5/21 Supreme Court of Canada joins Callow

Directors would be wise to review with counsel just what these most recent pair of clarifications ( from Canada's topcourt ) mean as to how contracts should be worded & performed.

That includes whether a duty of honesty / principle of good faith as an "organizing principle" can be reasonably expected or even understood or explained or attempted over-riden. Basic understanding & applying such doesn't look easy at all. Cited as NOT determinant : a severely adverse outcome hits one party as long as such unilateral outcome was a reasonably-contemplatible but ignored risk like a termination just as the snow season starts up ).

( And a corollary just for starters :

some reviews advise that as a "principle" to be judicially written into contracts regardless what the terminology appears to agree, it means that "escape clauses" like Entirety of Agreement or merger clauses cannot override the "principle".

And exactly how easy is it for simple folks to understand how the parties' "reasonable expectations" of performance can be understood to delineate what's dishonest from what's not. )

Callow Dec 18/20 https://canlii.ca/t/jc6vt : ONSC - reversed in ONCA - but restored in SCC : 8:1 majority. Literally unfettered discretion power was held used in bad faith / held breach of honesty principle by PMC et al for held-dishonesty of silence or failure to correct mis-belief. 9 of 13 judges held some sorta dishonest silence / failure to speak up to correct snow removal contractor Callow's misbelief !

CONTRASTING OUTCOME - Wastech Feb 5/21 :

Every judge after initial arbitrator has rejected Wastech’s claim of dishonest bad faith ! Now ruled 9:0 albeit with dissenting reasons by 3, this is a cleaner-looking statement than Callow even though written by same Supreme Court Justice.

After a B.C. municipal agency exercised its waste-destination discretion with resulting damage to ( waste-hauling contractor ) Wastech’s operational profitability, Wastech’s claim is unanimously rejected in BCSC, BCCA & 9:0 at SCC.

Despite adverse impact on claimant Wastech by Metro Vancouver agency’s unfettered discretionary choice, it's held that the choices had come within parties’ reasonable expectations of the municipal agency’s discretionary scope of allowable ( destination ) choices & ruled did NOT trigger any breach of good faith principle. Apparently such outcome was a reasonably discernible mutually-intended purpose of the contract , even though claimant had exposed itself to the risk . .

( But didn't snowplower Callow expose himself to such risk, even though maybe NOT to have a March termination decision "sat on" for 6 months until the eve of snowplow season ? doing freebies etc . . . failing until the 11th hour to be able to realize that he desperately needed to arrange emergency replacement contracts . . . . . . . )

Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7 issued Feb 5/21 https://canlii.ca/t/jd1d6 SCC Docket 38601 https://www.canlii.org/en/ca/scc/doc/2021/2021scc7/2021scc7.html

Not legal advice, as usual.

1 - It is NOT EASY to fit the Callow "factuals" - as found at trial & construed there ultimately by 8 of 9 judges at Canada's topcourt - into dishonesty or some sorta "active deception".

It is far easier to consider as grossly unethical or almost sociopathic hard-ball , sitting for SIX MONTHS on a decision to terminate a winter snowcontrol contract !

That's sitting on it until so late in the autumn that replacement contracts may be tough to line up.

By that time in the Ottawa area most arrangements have been made.

It's a BAD eight-ball to stick a possibly unsophisticated winter contractor behind just before October !

I know that because I negotiated & issued several such during condo management between retirements. ( thankfully not with this outcome )

2 - BUT the recent Wastech decision may lend itself more persuasively to Supreme Court thinking :

that "reasonableness criteria" can be construed by a judicial reviewer from the ( parties' discernible ) contractual "purposes".

That's without regard to one party's "harm suffered".

Wastech : Was the discretion as actually outcomed a reasonable outcome capable of being contemplated from the "purposes" of the contract ( if such can be credibly construed by a judicial reviewer ) ?

3 - A just released legal article issues a strong challenge to the Callow "factuals". And raises concerns about what they may mean in other scenarios .

It goes much further than the sole dissent at Canada's Supreme Court ( by Madame Justice Côté ).

“Honesty' in contract : what exactly was the 'active deception' in Callow ?” by Ottawa lawyer Edward Conway https://www.canliiconnects.org/en/commentaries/73589

2 Borden Ladner Gervais LLP lawyers deconstruct Wastech ( & Callow ) for simpler folks

Worthwhile review to address questions like :

Can the contract be written to genuinely create an enforceable discretion to make an arbitrary decision that is unreasonable in light of the bargain the parties made ?

Should we now expect enforcement of any drafting attempting to purportedly give a totally unfettered discretion to act unfairly ?

March 3/21 CanLiiConnects “Trash Talk: Supreme Court considers contractual discretion in good faith” by lawyers Ewa Krajewska & Graham Splawski - Borden Ladner Gervais LLP https://canliiconnects.org/en/summaries/73621

* *
UPDATE of interest NOV 14 /21 ( CAN TOTAL SILENCE CONSTITUTE ‘ACTIVE DECEPTION ?) :

Oct 12 2021 ``Revisiting Misleading Silence in C.M. Callow Inc v Zollinger : Did the Supreme Court Make the Right Decision ?` by Harman Mann - lawyer in training http://www.thecourt.ca/revisiting-misleading-silence-in-c-m-callow-inc-v-zollinger-did-the-supreme- court-make-the-right-decision/

including : "Misleading Silence: Good or Bad ?" & professionally promising insight from pure common law of contract " . . . Smith v Hughes (1871) LR 6 QB 597, from the English court where the seller of oates does not have to worry about the buyer’s private assumptions of whether they are ‘old oates’ . . . "
At Wikipedia not at bailii.org : 1871 court ordered Brit commercial customer to pay for load of horsefeed he had wrongly chosen after inspecting identical sample ; vendor had not SILENTLY mislead. Presumably did not bother telling him : "those oats ain't right for horses like yours, stupid ! " ( but modern consumer law may divurge . .)

See also comment several postings above from S.C.C. about about a 19th century LAND USAGE dispute - not contract : Bradford v Pickles 1895 http://www.uniset.ca/other/cs5/1895AC587.html

Servicing a type of client corporation within what it wants to pay, can be a minefield. Rarely might any mines explode. . . . But by whatever coincidences they had managed to do so here in December 2020.

And now the legal bills ( of a defence fought all the way into Canada's Supreme Court where lost bigtime ) have generated Special Assessments.

And presumably there are questions about governancers' choices and whatever is in the management contracts.

ONCAT Ontario's Condominium Authority Tribunal has upheld a records denial complaint by a unit owner of a 24 unit condo corporation - a member of the group that ultimately lost the Callow "unfair play" litigation in December 2020.

Ironically the respondent is defended by the original property manager.

And the Adjudicator finds & also orders an end to other Act-defying governance. Such includes Board transactioning by non-concurrent e-mails in defiance of concurrency required by Ontario's Condominium Act 1998. And such is unrecorded by Minutes, to go along with records withholding.

A separate cafcor item may or may not get created . .

update - see cafcor General item "TRIBUNAL orders DISGORGEMENT of records/ remedies for Act violations- COMTOIS v OSCC # 783"
https://ontario.cafcor.org/index.php?option=com_fireboard&Itemid=46&func=view&catid=2&id=19293#19293

Comtois v. O.S.C.C # 783( 2021 ) ONCAT 100 issued Oct 28/21 https://canlii.ca/t/jk2c8

Not legal advice, as usual,

. . . . but a year ago four lawyers WELL discussed ( in The Toronto Law Journal Jan 27 2021 ) some implications of the then-fresh Supreme Court of Canada decision in Callow.

Particularly in pages 7 to 10 ( subsection entitled "Callow and Moral Incrementalism" ) of that VERY interesting paper, they kicked around what corporate players might accordingly be well advised to look into afresh.

That's : not just condo governancers / managers like the defendants in Callow .

Their urgings include that "a new compliance lens be used in dealing with common business practices. Compliance training in organizations should include discussion of the philosophical reasons underlying truth telling and the dangers of moral incrementalism ".

But what's "moral incrementalism" ? To clarify for us common folks they pose a starting point of a "little white lie" that snowballs. It's a lie - they note - within a context of substantial imbalance of power.

Not talking about possible 'little white lie' of answering your Mom that her new dress doesn't make her look her age.

Nor that hope should be discussed as ever given up by a palliative care patient in something tragically far less than good health. Those ain't self-serving.

( compare : mystical active deception in CALLOW appears to have been not more than getting caught in Litigation Discovery process knowingly keeping the plaintiff "in the dark" for at least five months until the brink of next winter's approach . . . . far beyond other than desperation ELEVENTH HOUR search for replacement clients. And at minimal cost blissfully performing summer landscaping for what he thought were his satisfied ONGOING clients . . . . ! )

The attorneys further cited the danger that "Group dynamics may . . . " - MAY but don't have to - "also enhance lying". And that de-personalized communication - not face-to-face - may also so tend.

AND what corporations would be well advised to consider in light of Callow. Worthwhile reading for some condo or Building Scheme environments . . .

My final kick at the can : Ask what should one expect after CHOOSING for five months or more, to materially leave a seasonal contractor high & dry / unfairly "in the dark" until the absolute brink of next winter season ! !

“Viewing the Supreme Court of Canada’s Decision in Callow Through a Compliance Lens” by attorneys Ian Spiegel, Kenneth Jull, James R.G. Cook and Jonathan James Nehmetallah Gardiner Roberts LLP

https://tlaonline.ca/uploaded/web/TLA%20Journal/2021/Viewing%20The%20Supreme%20Court%20of%20Canadas% 20Decision%20in%20Callow%20Through%20a%20Compliance%20Lens.pdf

update : August 19 2022 The PM's office has announced the nomination to the Supreme Court of Canada - of East Region Ontario Superior Court's Madam Justice Michelle O'Bonsawin. If confirmed she will replace the ( Sep 1/22 ) retiring Justice Michael Moldaver. Her original trial level decision for snow contractor CALLOW would go all the way into the highest court of the land & is worth the read . . .