![]() ![]() ![]() The Court, however, held that a breach of the duty of good faith nonetheless occurred, despite the fact that the appellant was not motivated by personal gain in making its misrepresentations.Ĭiting Bhasin v. The Court of Appeal characterized the appellant’s intentions as “paternalistic”. The appellant argued that it had previously concluded that no action should be taken on the mortgages because of the respondent’s limited equity in the secured property and because of the high costs of foreclosure. On appeal, the appellant argued that the trial judge erred in finding that the appellant had breached its duty of good faith under the contract because, although the representations it made to the respondent were intentional, they were not made for personal gain. Proof of the Defendant’s Personal Gain Not Required On appeal to the Alberta Court of Appeal, the Court affirmed. The trial judge held that the appellant’s misrepresentations were intentional, deliberate, and amounted to a breach of the duty of honest contractual performance and good faith. ![]() The respondent therefore commenced an action against the appellant for its losses.Īt trial, the trial judge dismissed three of the respondent’s four claims, but awarded judgment in favour of the respondent for damages of $25,000 in relation to one of the mortgages. ![]() Second, the appellant told the respondent that another party intended to buy out a second mortgage – this information was not correct and the buyout did not in fact take place.Īs a result of these misrepresentations, the respondent was unable to make an informed decision about whether to foreclose on one of its mortgages, to obtain its own appraisals, and to offer to buy out another mortgagee. The appellant made what the trial judge characterized as two intentional misrepresentations to the respondent in the performance of the agreement.įirst, the appellant told the respondent that one of its mortgages had been placed into foreclosure when the appellant learned that foreclosure was in relation to another mortgage, owned by a third party, the appellant did nothing to correct this information to the respondent. The contract included an exclusion of liability clause which purported to limit the appellant’s liability for any errors or omissions in administering the mortgages:ĭue to the nature of the mortgage business and the surrounding environment of notices and information from a variety of sources, the will strive to attend to all aspects of the mortgage interests, but cannot therefore be held liable for any oversight, errors or omissions related to the mortgage interests included under this agreement. Under the contract, the appellant was hired to administer the respondent’s mortgages. Capital Direct Lending Corp., 2021 ABCA 115, addresses both these issues head on.Ĭanlanka involved an agreement between the appellant mortgage broker and the respondent who had purchased second mortgages from the appellant as an investment. Known as the duty of good faith and honest contractual performance, the doctrine applies to all Canadian contracts, regardless of the parties’ intentions.īut in order for a plaintiff to successfully sue their co-contracting party for breach of honest contractual performance, do they have to show that the defendant lied or misled to their own personal advantage? Moreover, can an exclusion of liability clause render the defendant immune from an action for breach of good faith?Ī recent decision of the Alberta Court of Appeal, Canlanka Ventures Ltd. In 2020, the Supreme Court of Canada reaffirmed that parties to a contract have a duty not to “lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract”: CM Callow Inc. ![]()
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