PERFORMANCE AND DISCHARGE – Performance - Good faith

Law360 Canada (February 5, 2021, 2:12 PM EST) -- Appeal by Wastech Services Ltd. (Wastech) from a judgment of the British Columbia Court of Appeal that dismissed its appeal from a decision that set aside an arbitration award in its favour. Wastech and the respondent, the Greater Vancouver Sewerage and Drainage District (Metro) entered into a contract for waste disposal in 1996 with a 20-year term. The contract contemplated the removal and transportation of waste by Wastech to three disposal facilities. The contract did not provide a guarantee that Wastech would achieve a certain level of profit in any given year. Wastech was paid lower rates for short-haul disposal to the Vancouver Landfill than long-haul disposal to the Cache Creek Landfill. The contract gave Metro the absolute discretion to determine and amend the minimum amount of waste to be transported to the facilities. In 2010, Metro reallocated waste from the Cache Creek Landfill to the Vancouver Landfill, which resulted in a reduced profit for Wastech. Wastech referred the dispute to arbitration. The arbitrator found in favour of Wastech on the basis that Metro had breached its duty of good faith performance of the contract. On appeal, the chambers judge set aside the arbitrator’s award, finding that the arbitrator had effectively ignored the terms of the contract. The Court of Appeal dismissed Wastech’s appeal. It found the arbitrator erred in law in applying the wrong legal test in determining whether Metro breached a duty of good faith....
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