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Phrase of the Week - "Best Efforts"

BEST EFFORTS

 

Federal











The Court adopts the law on “best efforts” as set out in another decision of the same Court as follows [at p. 267]:



Atmospheric Diving Systems Inc. v. International Hard Suits Inc. (1994), 89 B.C.L.R. (2d) 356 [, 1994 CarswellBC 158 (B.C. S.C.)], usefully summarizes the law on “best efforts” (at p. 373):







2. “Best efforts” means taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logical conclusion and leaving no stone unturned.



3. “Best efforts” includes doing everything known to be usual, necessary and proper for ensuring the success of the endeavour.



4. The meaning of “best efforts” is “ not boundless. It must be approached in light of the particular contract, the parties to it and the contract's overall purpose as reflected in its language.







Royal Oak Mines Inc. v. C.A.W., Local 2304
  (WestlawNext Canada)



1997 CarswellNat 3092 (Canada Arbitration) at para. 36  (Westlaw Canada)



Bird (Member)











 ... I would agree that it is a rather general term but our task here is to discover ... what the parties intended by it. It was the view of the learned trial Judge that it is an equivalent term to “best endeavours” as interpreted in the case of Sheffield Dist. Ry. Co. v. Great Central Ry. Co. (1911), 27 T.L.R. 451 where A.T. Lawrence J. ... stated (at p. 452) that, subject to certain qualifications, the term, broadly speaking, meant “leave no stone unturned” ... the construction of the term “best efforts” must be approached in the light of the contract itself, the parties to it and its overall purpose as reflected in the langauge it contains. It created a broad obligation to secure for the respondent aircraft repair and overhaul work up to the limit it lays down.



This did not mean ... that it required the government to disregard any existing contractual obligation or, certainly, to neglect the public interest. To the extent that that interest required work to be done by persons other than the respondent, there could be no valid complaint that the contract would thereby be breached.







CAE Industries Ltd. v. R.  (WestlawNext Canada)



1985 CarswellNat 79 (Fed. C.A.) at para. 63, 64   (Westlaw Canada)



Stone J.







An equivalent term, “use their best endeavours”, was interpreted by A. T. Lawrence J., sitting on the Railway and Canal Commission, in Sheffield District Railway Company v. Great Central Railway Company [(1911), T.L.R. 451 (Rail and Canal Com.)]:



... “best endeavours” means what the words say; they do not mean second-best endeavours ... they cannot be construed to mean that the [defendant] must give half or any specific proportion of its trade to the [plaintiff]. They do not mean that the [defendant] must so conduct its business as to offend its traders and drive them to competing routes. They do not mean that the limits of reason must be overstepped with regard to the cost of the service, but short of these qualifications the words mean that the [defendant] must, broadly speaking, leave no stone unturned to develop traffic on the [plaintiff's] line.







CAE Industries Ltd. v. R.  (WestlawNext Canada)



1982 CarswellNat 136F (Fed. T.D.) at para. 87  Westlaw Canada)



Collier J.











The arrangements ... negotiated ... was a “best efforts” underwriting rather than a firm underwriting. It is my understanding of a “best efforts” underwriting, that the underwriter does not purchase an inventory of shares, but exercises his “best efforts” to place as many shares as possible and when sufficient money is available to draw down shares from the Treasury to satisfy orders.







Leveque v. Minister of National Revenue



1968 CarswellNat 274 (Can. Ex. Ct.) at para. 70



Cattanach J.











British Columbia











The plaintiff argues that he was required to take “reasonable steps” to assist the defendant in acquiring the approval of the strata council to alter the parkade and did so, thereby discharging his obligation under the Lease. But the express language set out in Clause 1 of Rider A clearly states that the plaintiff must use his “best efforts” to obtain the strata council's approval ...



It is now well established in law that a party who contracts to use their “best efforts” faces a more onerous obligation than a person who contracts to use “reasonable efforts”. In [Atmospheric Diving Systems Inc. v. International Hard Suits Inc., [1994] 5 W.W.R. 719, 89 B.C.L.R. (2d) 356, 1994 CarswellBC 158 (B.C. S.C.)] at paras. 71-72, Madam Justice Dorgan concisely summarizes the law on the meaning of “best efforts”:







[71] In summary, the principles extracted from the cases on the issue of “best efforts” are:







1. “Best efforts” imposes a higher obligation than a “reasonable effort”.



2. “Best efforts” means taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logical conclusion and leaving no stone unturned.



3. “Best efforts” includes doing everything known to be usual, necessary and proper for ensuring the success of the endeavour.



4. The meaning of “best efforts” is, however, not boundless. It must be approached in the light of the particular contract, the parties to it and the contract's overall purpose as reflected in its language.



5. While “best efforts” of the defendant must be subject to such overriding obligations as honesty and fair dealing, it is not necessary for the plaintiff to prove that the defendant acted in bad faith.



6. Evidence of “inevitable failure” is relevant to the issue of causation of damage but not to the issue of liability. The onus to show that failure was inevitable regardless of whether the defendant made “best efforts” rests on the defendant.



7. Evidence that the defendant, had it acted diligently, could have satisfied the “best efforts” test, is relevant evidence that the defendant did not use its best efforts.







[72] The “no stone unturned” test has been applied to contracts relating to a wide variety of subject matter. Further, courts routinely imply a term in contracts that the parties will make reasonable efforts to fulfil their respective contractual obligations. Where the parties include a “best efforts” clause in a contract, as they did in the case at bar, they must surely intend that something more than “reasonable efforts” be used.



[Emphasis added.]







As noted by Justice Dorgan, where a contract includes the term “best efforts”, the court will impute intent to the parties that something more than “reasonable efforts” was required ... the bar the plaintiff was required to meet in discharging its obligation under the Lease was higher than merely taking “reasonable steps” to assist the defendant in obtaining the strata council's approval; rather, he had to make his best efforts to do so. This is an onerous burden which required the plaintiff to take all reasonable steps as well as to leave “no stone unturned.” (Atmospheric Diving at para. 72)







Diamond Robinson Building Ltd. v. Conn



2010 CarswellBC 115 (B.C. S.C.) at para. 81, 82, 83



Brown J.











... the principles extracted from the cases on the issue of “best efforts” are:



1. “Best efforts” imposes a higher obligation than a “reasonable effort”.



2. “Best efforts” means taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logical conclusion and leaving no stone unturned.



3. “Best efforts” includes doing everything known to be usual, necessary and proper for ensuring the success of the endeavour.



4. The meaning of “best efforts” is ... not boundless. It must be approached in the light of the particular contract, the parties to it and the contract's overall purpose as reflected in its language.



5. While “best efforts” of the defendant must be subject to such overriding obligations as honesty and fair dealing, it is not necessary for the plaintiff to prove that the defendant acted in bad faith.



6. Evidence of “inevitable failure” is relevant to the issue of causation of damage but not to the issue of liability. The onus to show that failure was inevitable regardless of whether the defendant made “best efforts” rests on the defendant.



7. Evidence that the defendant, had it acted diligently, could have satisfied the “best efforts” test, is relevant evidence that the defendant did not use its best efforts.







Atmospheric Diving Systems Inc. v. International Hard Suits



1994 CarswellBC 158 (B.C. S.C.) at para. 75



Dorgan J.















Best efforts [to obtain Court approval of an offer] must mean to proceed to Court with dispatch and to ensure that everything, both procedural and substantive, was done in order that the plaintiff's offer would be approved by the Court.







No. 269 Sail View Ventures v. Angell



1994 CarswellBC 475 (B.C. C.A.) at para. 24



Cumming J.A.







New Brunswick







Insofar as the general definition [of “best efforts”] is concerned, each case refers to best efforts as being first class efforts but not such as to require the party making them to sacrifice its own economic interest.







Campobello Fisheries Ltd. v. Jackson Brothers Ltd.



1992 CarswellNB 192 (N.B. Q.B.) at para. 95



Jones J.







Nova Scotia







“Best efforts” is not an unusual term in business agreements. The term was accepted to be sufficiently precise in CAE Industries Ltd. and CAE Aircraft Ltd. v. The Queen [1983] 2 F.C. 616 (T.D.), where Collier J., equated it to using one's “best endeavours” and meaning “leave no stone unturned”. The learned judge then referred to a number of other authorities to support his interpretation ...



. . . . .



I accept these summaries of a “best efforts” standard applicable to these circumstances.







Gateway Realty Ltd. v. Arton Holdings Ltd.



1991 CarswellNS 320 (N.S. T.D.) at para. 85, 87



Kelly J.







Ontario







... best efforts or best endeavours are analogous to good faith. In Bruce v. Waterloo Swim Club (1990), 1990 CarswellOnt 779 (Ont. H.C.), Lane J. defined best efforts to mean “taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logical conclusion and leaving ‘no stone unturned’.”



It follows ... that an agreement to use best efforts to negotiate, like good faith, is similarly unenforceable.







Georgian Windpower Corp. v. Stelco Inc.



2012 CarswellOnt 16465 (Ont. S.C.J. [Commercial List]) at para. 170, 171



Pattillo J.











... best efforts means taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logical conclusion, and “leaving no stone unturned” ... A contract requiring “best endeavours” imports a duty to do all that can be reasonably be done in the circumstances ...







Bruce v. Waterloo Swim Club



1990 CarswellOnt 779 (Ont. H.C.) at para. 40



Lane J.







The agreement between [plaintiff] and [defendant], as stated, required [the defendant] to use its “best efforts fully to satisfy” all conditions and agreements leading to the registration of a plan of subdivision by December 31, 1987, at the latest ...



The plaintiff contends that the phrase “best efforts” has been authoritatively defined in CAE Industries Ltd. v. R., [1983] 2 F.C. 616 (T.D.) ... There, Mr. Justice Collier, at p. 639, defined “best efforts” not to mean second-best efforts but to require the requisite party to leave no reasonable stone unturned to discharge its duty. I accept that definition, which, as I understand it, requires first-class, as opposed to second-class, efforts. However, I qualify that duty as not requiring the party to sacrifice itself totally to the economic interests of the party to whom the duty is owed, although the interests of the other party must predominate.







The plaintiff further contends that “best efforts” is an objective and not a subjective standard, as contended by the defendant. I accept the plaintiff's submission and find support for it in BEM Enterprises Ltd. v. Campeau Corp. (1980), 24 B.C.L.R. 244 ... (S.C.), per Toy. J. ...







I also reject the defendant's submission that it discharged its best efforts in pursuing the registration of the plan of subdivision by hiring qualified experts to pursue that objective. That submission is patently simplistic. The defendant is obviously responsible for the conduct of its senior agents to whom it had delegated the task of obtaining registration.







Eastwalsh Homes Ltd. v. Anatal Development Ltd.




1990 CarswellOnt 532 (Ont. H.C.) at para. 42, 43, 44, 45



Ewaschuk J.











The description of the undertaking as “best efforts” is a misnomer. The plaintiff need only undertake reasonable efforts to obtain the clinical notes. A letter of request to the doctor with a follow up letter or phone call would be sufficient. If the notes are still not forthcoming, the plaintiff should provide the defendant with details of his efforts ... thereby placing the defendant in a position to move under r. 30.10 [of the Ontario Rules of Civil Procedure] if so advised.







Schultz v. Galvin




1988 CarswellOnt 411 (Ont. H.C.) at para. 8



Kurisko L.J.S.C.











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