In Bhatnagar v. Cresco Labs Inc., 2023 ONCA 401, the Ontario Court of Appeal made a worthy elucidation of the Supreme Court’s decision in C.M. Callow Inc. v. Zollinger, 2020 SCC 45 (“Callow”). The court expressly clarified that a breach of the contractual duty of honest performance does not automatically lead to a presumption of loss, thus arguably limiting potential damages awarded for good faith violations. [Read the Full Text]
Proving loss under such circumstances, as per the court ruling, demands supporting evidence and cannot be assumed. The notable part of the verdict is its emphasis on the requirement of proof for loss of opportunity, which provides the ground for an award for damages. By implication, the inability to show the efficacy of such an opportunity could potentially shield parties from liability for asserted good faith violations.
This decision impacts a considerable number of legal professionals, not least those working diligently to protect the interests of their corporate clients. Consequently, a careful understanding and application of this clarification—its implications and boundaries—should reflect in their strategic litigations and business negotiations.
The court ruling acts as a guide in shaping potential tactics to either emphasize or diminish the relevance of opportunity losses in the face of good faith violation claims. It also provides further latitude in presenting supporting evidence to justify such losses—an essential aspect of claims and defences.
Throughout the years, case outcomes like this one continue to ensure further clarity and consistency in contract laws, bolstering a more transparent and predictable legal environment—which is in all parties’ best interests.