Home Employment Contracts Ontario Court of Appeal upholds $550,000 award to worker in fixed-term contract dispute

Ontario Court of Appeal upholds $550,000 award to worker in fixed-term contract dispute

by HR Law Canada

A lower court ruling that awarded a worker more than $550,000 because the 72-month fixed-term contract did not have a termination provision has been upheld by the Ontario Court of Appeal.

The ruling resolved the contentious issue of whether the worker was entitled to payments for the remaining term of the contract.

The dispute arose when the employer, Metro Freightliner Hamilton, terminated the services of the respondent — AM — who had been engaged as an independent contractor under a contract that was executed on March 7, 2017, and had a fixed term of 72 months.

The termination occurred on Nov. 22, 2017, prompting the respondent to sue for the payments due for the remaining 65 months of the contract.

Justice Linda Walters, in her original judgment on May 2, 2022, found the contract did not include a termination provision and unambiguously stipulated a fixed term of 72 months. Consequently, she awarded AM a total of $552,500 plus HST, based on the remaining monthly payments due under the contract.

The employer appealed the decision, arguing that the trial judge failed to consider certain email correspondence dated March 1, 2017. They contended this correspondence contained a communication that indicated AM would be paid until the last day of active service.

The employer claimed that the presence of this provision rendered the 72-month term of the contract unnecessary, and it would be unfair to allow AM to rely on it.

However, the Court of Appeal rejected these arguments, stating that the email correspondence in question was ambiguous, while the language of the contract itself was clear and unambiguous.

The contract contained an “entire agreement clause” specifically intended to prevent such disputes. Moreover, the trial judge found no evidence of fraud, misrepresentation, undue influence, mistake, or waiver. The Court of Appeal concluded that there were no errors in these findings that would warrant their intervention.

The employer also raised additional arguments in its written submissions, but the Court found no basis to intervene based on those arguments. The trial judge had been entitled to draw an adverse inference against the employer due to its failure to call the human resource (HR) manager who prepared the contract as a witness.

Another issue raised by the employer related to the trial judge’s decision that AM was not required to mitigate his damages. On this matter, the Court of Appeal accepted the appellants’ submission, asserting that a duty to mitigate arises when a contract is breached, even in the case of independent contractors.

While the trial judge failed to address this issue, the Court of Appeal ruled that the appellants had not met the burden of proving that the respondent had failed to mitigate his damages.

Despite this error by the trial judge, the final outcome remained the same since the appellants were unable to establish that the respondent had not made reasonable efforts to mitigate his losses.

As a result, the appeal was dismissed, and AM was awarded costs in the agreed amount of $17,500, inclusive of all expenses.

For more information, see Monterosso v. Metro Freightliner Hamilton Inc., 2023 ONCA 413 (CanLII)

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