Duty of Good Faith

Best Lifestyle v. County of Simcoe, 2019 ONSC 6619 (CanLII)

[76] This is clearly a contract of adhesion as referred to in Shelanu at para. 58-59. Further in Shelanu, the court explained the difference between a fiduciary duty and a duty of good faith: [69] There is at least one important difference between the duty of good faith and a fiduciary duty. If, for example, A owes a fiduciary duty to B, A must act only in accordance with B's interests when A exercises its powers or exercises a discretion arising out of the relationship: see York Condominium Corp. No. 167 et al. v. Newrey Holdings Ltd. et al. (1981), 1981 CanLII 1932 (ON CA), 122 D.L.R. (3d) 280 (Ont. C.A.) at 289, leave to appeal to the Supreme Court of Canada refused [1981] 1 S.C.R. xi; Hodgkinson v. Simms, 1994 CanLII 70 (SCC), (1994) 3 S.C.R. 377. If, on the other hand, A owes a duty of good faith to B, A must give consideration to B's interests as well as to its own interests before exercising its power. Thus, if A owes a duty of good faith to B, so long as A deals honestly and reasonably with B, B's interests are not necessarily paramount: see for example Mason v. Freedman, 1958 CanLII 7 (SCC), (1958) S.C.R. 483.

[77] It has also been held by the courts that parties should deal fairly with each other in order “not to nullify the reasonable expectations” that the parties have “fostered”. CivicLife.com Inc. v. Canada (Attorney General), 2006 CanLII 20837 (ON CA), (2006) O.J. No. 2474 (C.A.) para. 18. In CivicLife at para. 52, the court also made it clear that an entire agreement clause does not preclude the expectation that the parties would act in good faith. The court has a discretion to refuse to enforce such a clause where to do so would be “unconscionable, unfair or otherwise contrary to public policy”. See Guarantee Co. of North America v. Cordon Capital Corp. [1993] 3 S.C.R. 423.