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Ex-sales rep takes tire companies to small claims court over commissions; court orders audit

by HR Law Canada

In a recent decision by the Small Claims Court of Nova Scotia, a former commercial sales representative claimed that Andy’s Tire, Scotia Tire, and A-1 Tires owed him unpaid commissions.

The case highlighted complexities in contractual language and the challenges faced by self-represented litigants in proving their cases.

The representative, whose contract started in January 2021, was to be paid a 10% commission on new commercial accounts and 2% on existing ones, beyond his base salary and benefits. After his termination nine months into the role, the claimant argued that the contract, written in-house without legal counsel, entitled him to commissions from all commercial accounts, not just those he directly serviced.

The crucial section of the contract read as follows: “You will be paid a commission of 10% of gross profit of all new commercial accounts and 2% of gross profit on all existing commercial accounts.  The bonus will be paid out following the completion of month end statements.  A list of exiting accounts will be provided to you during your onboarding.”

He alleged that during his employment, additional entities were acquired by the named defendants, and transactions with these should be commissionable. The defendants, however, maintained that these additional entities were separate and that their customer referrals did not automatically warrant commissions.

The court, while not finding evidence for the claimant’s assertion that new acquisitions were part of the original contract, did agree that all commercial accounts with the named defendants during the employment period were commissionable. The defendants said in court that based on this interpretation, the claimant was owed $3,885 in commissions, less the amount already paid.

However, they failed to provide documentation to support this calculation, although it was reportedly easily available.

The judge presiding over the case underscored the principle of contra proferentem, which dictates that any ambiguity in a contract should be construed against its drafter — in this case, the defendants. The court further criticized the defendants for withholding information that could substantiate the claimant’s entitlement and exact amount owed, noting that such conduct should not allow them to evade responsibility.

To resolve the matter, the court ordered an audit, directing the defendants to submit a detailed statement of receipts and disbursements and to clarify gross profit on transactions from Jan. 4 to Oct. 4, 2021. The documentation is to include all commercial accounts, with justification provided for why certain accounts should not be deemed commercial.

The entities are required to comply with the order by Dec. 31, 2023, allowing the court to determine the appropriate commissions owed to the claimant.

This ruling underscores the court’s flexibility in dealing with evidentiary challenges, particularly when one party may be disadvantaged due to a lack of legal representation or access to necessary information. The decision also reaffirms the judiciary’s role in interpreting contracts and ensuring just outcomes, even when the documentation is not thoroughly prepared.

For more information, see Carter v. Andy’s Tire Shop et al., 2023 NSSM 69 (CanLII)

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