The untimely passing of George Michael and the corresponding ubiquitous airplay of his hit “Faith” may seem a curious segway to legal developments, but we don’t like our readers getting unexpectedly ‘whammed’ by subtle yet powerful trending in the law.
Faith — good faith — has forever been a subtle, oft-unstated influencer to all laws. Arguably all laws reflect the notion that parties should act in good faith. A strong example of such mandated faithful behaviour is the law governing the C-Suite and boardrooms of companies.
Fresh advances in ‘faith-based’ legal prescription suggest that the doctrine of good faith per se has taken not only the front seat but arguably the driver’s seat in Canadian modern commercial and employment law.
Let’s revisit two such decisions, now fixtures in those respective areas. In Bhasin (Bhasin v. Hrynew), Canada’s highest Court ‘dumbed it down’: all contracts must be informed by good faith. Seems ho-hum, right? Well not so much, as our laws historically eschewed such an implication, favouring the arm’s length approach of dog-eat-dog unless displaced by a ‘term of endearment’.
But the Supreme Court has a different notion of contractual fairness:
good faith contractual performance is a general organizing principle of the law of contract which underpins and informs the various rules in which the law, in various situations and types of relationships, recognizes obligations of good faith contractual performance….there is a duty to act honestly in the performance of contractual obligations which applies to all contracts. [Court endorsed head-notation, emphasis mine]
What the Court said was go forth and behave nicely. And while many commentators predicted “the end of the world as we know it” (sorry REM), frankly the advent of good faith dealings in contract — now enforceably so — has simply made Canadian common law consistent with European Economic Community laws, the Quebec Civil Code, and the American Restatement of Contract.
Of course, the employment relationship is a commercial contract, albeit most don’t recognize it as such. And ironically most would argue that by default it is a contract of good faith. Except that it wasn’t. Well, until the Supreme Court stated in Wallace (Wallace v. United Grain Growers Ltd.): where a termination is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive”, such lack of good faith in the employment relationship is compensable in additional damages. The Court:“an employer’s right to terminate on reasonable notice must be exercised within the framework of an employer’s general obligations of good faith and fair dealing”.
As of January 2017, Bhasin has been followed by our Courts country-wide 230 times with approval; Wallace 1,252 times. Meaning that any party to any contract, and especially “close” contracts like employment, had better anticipate the exercise of good faith towards the parties to that contract in execution, performance and cessation. Good faith now expressly informs Canadian contractual relations.
Because George, you were right: “Maybe you mean every word you say; cause you gotta have faith”. All good.