Wastech and limits on contractual discretion

In Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7, the Supreme Court examined the good-faith exercise of contractual discretion. Metro changed waste allocations in a way that reduced Wastech's expected profitability. The Court concluded that the discretion had not been exercised contrary to its contractual purpose.

Wastech's remuneration depended partly on where waste was transported, and the agreement gave Metro discretion over allocation among disposal facilities. Reallocation reduced the company's ability to achieve its expected financial target. The Supreme Court explained that contractual discretion must be exercised consistently with the purpose for which the agreement granted it. The disappointed expectation was not enough: the analysis did not authorize a court to supply a profitability guarantee the parties had not included in their bargain.

Good faith does not guarantee a party its hoped-for financial result or rewrite the commercial bargain. The purpose and limits of the contractual power matter. In an Ontario business dispute, identify the particular discretion, the wording granting it, and the reason it was exercised. Preserve records showing the decision and its effects. A practical complaint needs more than proof that the other party's permitted choice made the agreement less profitable.

For an Ontario business, identify the clause granting the power before alleging misuse. Is the dispute about allocating work, approving an expense, selecting a supplier, or another decision? Keep records explaining the contractual purpose, decision, and effect. Separate evidence of an unfavourable outcome from evidence that the power was used for a purpose inconsistent with the agreement. A focused assessment can then compare the actual wording and conduct. Good-faith arguments are more useful when tied to a defined contractual obligation than when presented as a general request to improve a difficult commercial result.

Sources

• Wastech Services Ltd v Greater Vancouver Sewerage and Drainage District 2021 SCC 7
• Bhasin v Hrynew 2014 SCC 71

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General Ontario legal information, not legal advice for your matter, and reading it does not create a retainer. Sources checked 15 October 2026: check the current law, forms and dates before you act.

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This article is general information for people in Ontario, not legal advice. Rules, forms and deadlines change, and every situation is different. Check the current rule or speak to a licensed legal professional before you act.