Did You Make It Yourself?

I did not blog about Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 495, the Supreme Court’s decision on the role of good faith in the Canadian common law of contract, when it came out. Truth be told, I hadn’t even read it. Just a contracts case, I figured ― no matter how important it is in that area, it’s not my cup of tea. I’ve read it now (for dissertation-writing purposes), and have been reminded any judicial decision can turn out to be very interesting (and that reading as many as one can is a good idea).

From my perspective, the interest of Bhasin lies not so much in its significance for contract law (that issue is, however, extensively canvassed in the CanLII Connects coverage of the case), but rather in what it says about the judges’ views of their role vis-à-vis the common law. The good old “declaratory theory” ― and the more contemporary philosophers whom I have dubbed the “right answer romantics” ― hold that judges do not, in a meaningful sense, “make” the common law. The “declare,” or “discover” its rules; at most, they “offer … ‘new’ statements of the law as improved reports of what the law, properly understood, already is.” (That’s from Dworkin’s Law’s Empire, at p. 6). People whom A.W.B. Simpson called “legal iconoclasts” have long argued that this is nonsense, and that “law is the will of the Justices” ― as Justice Hillary, of the Court of Common Pleas, put it during the deliberations in 1345 case that Simpson described in an article called “Legal Iconoclasts and Legal Ideals”, (1990) 58 U. Cin. L. Rev. 819. As for Justice Cromwell, who wrote the Supreme Court’s unanimous judgment in Bhasin, he seems not to be very sure which it is.

Justice Cromwell starts off with a seeming endorsement of the declaratory theory. “Does Canadian common law,” he asks, “impose a duty on parties to perform their contractual obligations honestly?” [1; emphasis mine here and throughout] The present tense suggests that, if the answer is in the affirmative, as Justice Cromwell says it is, the law already imposes the duty at issue ― it’s not a matter of the court’s will. “Finding that there is a duty to perform contracts honestly,” Justice Cromwell adds, “will make the law more certain, more just and more in tune with reasonable commercial expectations.” [1] Finding, not deciding.

Justice Cromwell begins his analysis in a similar vein, saying that “Anglo-Canadian common law has resisted acknowledging any generalized and independent doctrine of good faith performance of contracts.” [32] Acknowledging something is admitting that it already exists, not deciding that it should. “It is time,” Justice Cromwell continues,

to acknowledge that good faith contractual performance is a general organizing principle of the common law of contract [and] to recognize, as a further manifestation of this organizing principle of good faith, that there is a common law duty which applies to all contracts to act honestly in the performance of contractual obligations. [33]

Again, this is language that suggests that the principle and duty in question are already part of the law, and the court merely “discovers” them. But in the very next paragraph, Justice Cromwell says that this acknowledgement and this recognition are “perfectly consistent with the Court’s responsibility to make incremental changes in the common law when appropriate.” [34] Changes, not discoveries? Yes, indeed, for they “will put in place a duty that is just, that accords with the reasonable expectations of commercial parties and that is sufficiently precise that it will enhance rather than detract from commercial certainty.” [34] The duty, it seems, was not there before, after all ― it’s the Supreme Court’s decision that “will put [it] in place”!

A little later in his reasons, Justice Cromwell describes the good faith doctrine as a “contemplated … development,” [40] not a pre-existing feature of the law. And then, when he speaks of the more specific duty of honesty in contractual dealings, he says (acknowledges? recognizes?) that the appellant’s claim

does not fit within any of the existing situations or relationships in which duties of good faith have been found to exist. … The key question before the Court, therefore, is whether we ought to create a new common law duty under the broad umbrella of the organizing principle of good faith performance of contracts. [72]

Yet having thus admitted, it seems, to judicial creativity, Justice Cromwell reverts, yet again, to speaking of “[r]ecognizing a duty of honesty in contract performance,” [80] as if it had been there all along.

One might be tempted to try to making sense of this confusion by saying that while broad legal principles exist independently of anybody’s will, whether courts’ or the legislature’s, so that courts can only recognize them, specific rules are subject to deliberate creation and modification, whether by legislatures or by courts. But that’s not what Justice Cromwell’s reasons suggest. He speaks of acknowledging a principle as a “change in the common law,” and of the recognition of a specific rule, as well as vice versa, so the distinction does not work. Justice Cromwell, it seems, is simply too confused about the courts’ relationship to the common law to use consistent language to describe it.

Is that a bad thing? Perhaps it is, if we have strong views about the legitimacy of judicial law-making, and need to know whether that’s what is really going on here. But I’m not sure that we actually need to have strong views on this subject. Although that’s a bit of a problem for me personally, since this subject happens to be the topic of my dissertation, in the real world, we can usually get on without figuring out, or indeed having much to say about, philosophical questions that have bedevilled our predecessors these past 700 years. Then again, I’m not sure that this getting on will always get us to the right result. In some difficult cases, a judge’s legal philosophical commitments can make a real difference. (Think of the disagreement between the majority and the dissent on the legal question in the Patriation Reference.) To be honest, I’m as confused as Justice Cromwell.

Author: Leonid Sirota

Law nerd. I teach public law at the University of Reading, in the United Kingdom. I studied law at McGill, clerked at the Federal Court of Canada, and did graduate work at the NYU School of Law. I then taught in New Zealand before taking up my current position at Reading.

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