In order to justify a wholesale application of ‘good faith’ to contract in Bhasin v. Hrynew, [2014] 3 SCR 494, 2014 SCC 71 (CanLII) Cromwell J. has to go find ‘good faith’ in common law contract history.
Cromwell’s pretends that once, there were judges, who tried and tried, to erect ‘good faith’ in contract but ‘detractors’ brought the heroes low. If only those historical trend-setters had been listened to.
Cromwell’s use of citation in this effort cannot even pass a cursory examination of what those cases actually stand for. His indifferent use of citation to support what is in effect a supreme court fiction, (‘[40]…[that there is a need] to bring greater certainty and coherence to a complex and troublesome area of the common law.’), should be determined for what it is and the supreme court climb-down should get underway.
Cromwell says:
[35] The doctrine of good faith traces its history to Roman law and found acceptance in early English contract law. For example, Lord Northington wrote in Aleyn v. Belchier (1758), 1 Eden 132, 28 E.R. 634, at p. 637, cited in Mills v. Mills (1938), 60 C.L.R. 150 (H.C.A.), at p. 185, that “[n]o point is better established than that, a person having a power, must execute it bona fide for the end designed, otherwise it is corrupt and void.”
The inappropriate use of Aleyn v Belchier, used by Cromwell to stand for the proposed general application of good faith in contract, is obvious from the words quoted from the case: ‘no point is better established than that a person having a power must execute it bona fide for the end designed otherwise it is corrupt and void.’ (emphasis added)
Aleyn is a case where one of the parties has a ‘power’. We know what this means in law, it means things like trust relations, police action, state action. It definitively does not mean contract relations. Despite Cromwell’s improper attempt to make it seem so, Aleyn v. Belchier is not a contract case, it is an estate case. Being an estate case we are all immediately familiar with the ‘good faith’ requirement.
Cromwell makes it seem as those this general contract rule arising in Aleyn v. Belchier was irrationally and inexplicably narrowed by ‘detractors’ as common law time evolved.
So what does Aleyn v. Belchier (1758), 1 Eden 132 actually say?
Reverend Thomas Aleyn owned an estate in Essex. In his will Thomas conveyed the estate to his executor to first pay the debts of the estate, then to provide a life estate to Thomas’s wife.
Thomas’s will then said that upon the wife’s death the property was to be conveyed to Thomas’s nephew (Edmund) for life.
Thomas was worried about Edmund’s prospects and so allowed in the will, that Edmund had the power to grant a life estate to any wife that Edmund might find to marry him.
Any experienced lawyer sees that Edmund was, what we call a trustee of the estate, having only a life interest, and then passing the estate on to the next person Thomas names in his will.
Edmund decides to play dirty with the estate. He married and gives a life interest to that wife who immediately gives the future proceeds of that life interest (540 pounds per year) over to Edmund’s creditors, thereby destroying the value that Edmund was supposed to be trustee over for the remainder-men.
Every experienced lawyer can see that this is a trustee case not a contract case. The Cromwell citation properly belongs within the domain of estate trustee law where it properly lives today without any need for ‘renovation’ from the supreme court.
In other words, Aleyn v. Belchier never enunciated any good faith contract rule. It was always a trust case. Cromwell’s unstated importation of trust principles into a theory that the common law once believed in ‘good faith’ in contract, is lawyer-move that would have been frowned upon, to say the least, in any court in Canada.
