Five Need-to-Know Decisions in Commercial Litigation

Recent decisions from Canadian courts will impact businesses in various industries. Below are five takeaways from commercial cases across the country to help your business stay ahead of litigation risk:

1. Rights of First Refusal. In TotalEnergies EP Canada Ltd. v. Suncor Energy Inc., the Court of King’s Bench of Alberta reinforced that a party seeking to invalidate a right of first refusal (ROFR) notice must prove that there was bad faith on a balance of probabilities. The decision provides guidance for interpreting and enforcing ROFR clauses in contracts.
2. Breach of Honest Performance. In Bhatnagar v. Cresco Labs Inc., the Ontario Court of Appeal addressed whether a presumption of damages follows from a court’s finding that a party has breached its contractual duty of honest performance. The Court of Appeal held that there is a burden on the claimant to show some evidence on which the court can find that the breach of the duty of honest performance resulted in a lost opportunity before any damages may be presumed. 
3. Duty to Inform. In Ponce v. Société d’investissements Rhéaume ltée, the Supreme Court of Canada addressed the implied duty of good faith in contractual relationships, specifically the duty to inform. The court ruled that parties may be obligated — even if not explicitly stated in the contract — to disclose information that their counterparties need to make informed decisions and cannot easily obtain otherwise.
4. Stagnant Litigation. In Giacomini Consulting Canada Inc. v. The Owners, Strata Plan EPS 3173, the B.C. Court of Appeal addressed delays and increasing costs in litigation. The court revised the test for dismissing actions for want of prosecution, seeking to simplify the process for disposing of slow-moving litigation. However, the court also stated that a defendant’s inaction in the face of lengthy delay by a plaintiff may weigh against dismissal of the action.
5. Declaratory Relief. In Bacanora Minerals Ltd. v. Orr-Ewing (Estate), the Alberta Court of Appeal addressed the application of the Limitations Act in a contractual dispute about royalty rights. The court emphasized that the substance of a claim, rather than its label, determines whether limitations apply. The decision provides guidance on declaratory proceedings when a party is faced with limitations and underscores the potential usefulness of seeking declaratory relief in longstanding contractual disputes.

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