Practical Implications Of Bhasin: Good Faith In Exercising Discretionary Power

Since Bhasin v Hrynew, 2014 SCC 71, courts have been applying the "organizing principle" of good faith in all contractual relationships thereby delinating its scope in different circumtances. One recent decision applying this principle addressess the circumstances where an employer excercises a discretionary contractual right to effectively deny an employee his compensation under a benefits plan.

In Styles v Alberta Investment Management Corporation, 2015 ABQB 621, the Plaintiff employee received a offer of employment where (i) the Defendant employer could terminate the employee without cause and (ii) the employee would be entitlted to participate in a long term incentive plan (the "LTIP") i.e., performance based compensation. For unknown reasons, the employer choose to excercise it's discretionary authority to terminate the employee without cause but refused to make payment to the employee under the LTIP, on the grounds that the employee was terminated before the