Struggling to articulate what exactly is wrong with Cromwell’s good faith in contract, the essential failing is that Cromwell embraces a word: ‘honesty’ which is radically indeterminate and every lawyer knows it’s radically indeterminate.
Cromwell speaks as though ‘honesty’ is not ambiguous. Worse than ambiguity, Cromwell insipidly refuses to acknowledge that ‘honesty’ is meaningless. It is one of those weaponized words which was hitherto frowned upon when deployed in precisely the circumstances that Cromwell now applauds.
1427814 Ontario Ltd. v. 3697584 Canada Inc., [2012] O.J. No. 6733 was an actual good faith in contract case – a valid good faith in contract case – in contrast to Bhasin v Hrynew.
In 142, the mortgagee under power of sale sold a property later determined to be valued at $16M for $12M. In trying to defend its negligent statements to the market about the property, the Mortgagee said this to the judge:
694 Counsel for Réno-Dépôt submitted Marsiglio’s approach was “honest,” used to avoid misleading the reader. I say only that that approach was less than helpful to this Court when trying to compare and analyze the relevant data to arrive at Fair Market Value.
Who cannot see that Sanderson is rightly angered by the Mortgagee’s attempt to plead ‘honesty’ as a defence to a breach of good faith charge!
Isn’t it going to be bitterly ironic when Cromwell’s ‘honesty’ is successfully set up as a defence to a good faith charge. (‘I was only being ‘honest’ in disclosing every last thing I knew about the property; I was only being ‘honest’ when I priced it that low.)
In the new dispensation does the Mortgagee have to tell the market everything? Isn’t that a logical corollary of the wanton deployment of ‘honesty’ in contract?
Or is the common law going to do the ‘honest’ thing: quietly park Bhasin v Hrynew in the archive of SCC mistakes and the everyday common law to manage ‘honesty’ as the radically problematic word that it is.
