DATE: 20030904 DOCKET: C37127
COURT OF APPEAL FOR ONTARIO
WEILER, ABELLA, AND ARMSTRONG JJ.A.
BETWEEN:
ANNE MARIE FOREMAN
Plaintiff/Respondent
- and -
818329 ONTARIO LIMITED, P.H. SUHAN WELDING LTD., CADITH ENTERTAINMENTS LIMITED and FRANK DiMARIA
Defendants/Appellants
Charles L. Mackenzie and Cynthia L. Mackenzie, for the plaintiff/respondent
T. David Little and Tony Van Klink, for the defendants/appellants 818329 Ontario Limited, P.H. Suhan Welding Ltd. and Cadith Entertainments Limited
John Vitulli, for the defendant/appellant Frank DiMaria
Heard: April 15, 2003
On appeal from the judgment of Justice John Brockenshire dated September 21, 2001.
ABELLA J.A.:
[1] The issue in this appeal is whether a clause in an employment contract stating that the employee cannot be dismissed, should be enforced as a contract for life.
FACTS
[2] John Kirby had a 50 per cent interest in P. H. Suhan Welding Ltd. ("Suhan") and 818329 Ontario Limited ("818329"), which owned, respectively, the bingo hall in Stratford and in St. Thomas, Ontario. Mr. Kirby, a lawyer, oversaw the operations of both the Stratford and St. Thomas bingo halls.
[3] Anne Marie Foreman was hired by Mr. Kirby in February 1989 to manage the bingo hall in Stratford, Ontario. At the time, she and Mr. Kirby were romantically involved. Ms. Foreman reported directly to Mr. Kirby and enjoyed a relatively informal employment relationship with him.
[4] Ms. Foreman was a successful bingo hall manager and by April 1990, she was working full-time as a manager and selling lottery tickets, dividing her time between the St. Thomas and Stratford bingo halls. She did not have a written employment contract.
[5] In the spring of 1990, Ms. Foreman learned that Frank DiMaria had agreed to buy Mr. Kirby's shares in Suhan and 818329. Mr. DiMaria owned Cadith Entertainments Ltd. ("Cadith"), which operated bingo halls in Ridgetown and Cobourg, Ontario. Ms. Foreman anticipated that the share sale would result in a change of management and that she would have to report to Mr. DiMaria rather than to Mr. Kirby. Because she had heard that Mr. DiMaria had a reputation for replacing existing employees with friends and family, Ms. Foreman asked Mr. Kirby to arrange for an employment contract which would secure her position as manager.
[6] Mr. DiMaria agreed to provide Ms. Foreman with an employment contract. As a result, Mr. Kirby prepared a contract on Ms. Foreman's behalf which included the following paragraphs:
Anne Marie is an employee of 818329 and Suhan in the capacity of hall manager. Her duties include the day-to-day management of 818329's hall in St. Thomas and the supervision of Suhan's hall in Stratford. She is paid a total of $640.00 per week, is entitled to the exclusive use of the apartment located at the St. Thomas Hall, and is entitled to sell lottery tickets at the St. Thomas hall for her own benefit. Her salary is reviewed annually on March 1st.
818329 and Suhan shall not dismiss Anne Marie.
[7] The lawyer for Cadith returned the contract to Mr. Kirby with a proposed amendment inserting the words "except for cause" at the end of paragraph 5. This suggestion was, however, rejected by Mr. Kirby and the contract was signed on June 25, 1990 with the original language of paragraph 5 intact.
[8] Nine months later, in March 1991, after being manager of the two bingo halls and selling lottery tickets for 26 months, Ms. Foreman was fired by Mr. DiMaria. She commenced an action against Suhan and 818329, as well as against DiMaria and Cadith, who had signed the employment contract as guarantors.
[9] The trial judge found that Ms. Foreman had been dismissed without cause and was therefore entitled to damages. This finding is not under appeal. What is at issue in this appeal is whether the 1990 contract is a contract for life and whether the amount of $712,000 in damages awarded by the trial judge is appropriate.
[10] The trial judge found that paragraph 5 of the employment contract stating that "818329 and Suhan shall not dismiss Anne Marie" provided for a fixed term - life employment - that could only be terminated by Ms. Foreman. The trial judge considered the applicability of s.2 of the Employers and Employees Act, R.S.O. 1990 c.E.12, which limits the term of employment contracts to nine years. The trial judge concluded that Ms. Foreman and her employers waived the limitation period as is permitted for managers under s. 11(2) of the Act.
[11] The measure of damages for the fixed term contract was, the trial judge found, the money payable for the remainder of her life, minus any mitigation on the part of Ms. Foreman. Since he found that Ms. Foreman would probably have chosen to remain employed by her employers until the age of 65, and since she was 32 when she was fired, the trial judge awarded damages in the amount of $192,000, representing 33 years of lost wages plus anticipated profits from the sale of lottery tickets.
[12] In addition, the trial judge found that Ms. Foreman was entitled to further damages arising from her lost opportunity to profit from the sale of "break open" lottery tickets sold by charities, and a different type of lottery tickets from the ones she was already selling. Until February 1993, it was illegal to sell this kind of lottery ticket in bingo halls. The new 1993 regulatory scheme, initiated two years after Ms. Foreman was fired, permitted bingo hall employees to sell the break open tickets if they had the appropriate licence as well as the consent of an association of charities.
[13] The trial judge determined that Ms. Foreman's past experience and business acumen would likely have resulted in her being able to organize and facilitate the sale of break open lottery tickets, and that she would have earned a further profit from them. He estimated these profits to be $520,000, representing one-half of the amount she would have earned from their sale.
[14] Both the $520,000 in damages for the break open tickets and the $192,000 award for lost wages and profits were based on figures prepared by expert accountants and took mitigation into account. The total awarded was $712,000. This appeal by the employers is from that amount.
ANALYSIS
[15] The preamble to the contract states that the consideration for the contract was "the sum of $1.00 and other good and valuable consideration". The first argument by the employers was that there was no evidence that the $1.00 was ever paid, that there was therefore no consideration for the contract, and that in the absence of an enforceable contract, Ms. Foreman's employment was for an indefinite term, entitling her only to reasonable notice. In view of my conclusion about the nature of the employment clause, it is not necessary to address this argument.
[16] The real issue in this appeal, it seems to me, is whether the employment contract in this case operated to guarantee Ms. Foreman a fixed term for her life, entitling her to damages representing 33 years of lost wages and profits, or whether it provided for an employment relationship for an indefinite term, entitling her to damages representing a period of reasonable notice.
[17] There is no doubt that fixed term employment contracts are legal. In Ontario, such contracts are valid, but, as mentioned above, s. 2 of the Employers and Employees Act, limits the enforceable term to nine years. This limitation period can be waived in the case of any manager, officer or superintendent (s. 11(2)).
[18] This court recently considered the issue of fixed-term contracts in Ceccol v. Ontario Gymnastic Federation (2001), 2001 8589 (ON CA), 55 O.R. (3d) 614, where MacPherson J.A. observed at p. 624 that while fixed term contracts are legal and will be enforced if their terms are clear, "the courts require unequivocal and explicit language to establish such a [fixed term] contract…" (citing Professor Geoffrey England, Individual Employment Law (Toronto: Irwin Law, 2000) at p. 222).
[19] It is also possible to have a fixed term contract for the life of an employee. Lifetime employment, while legal, and in some cases even desirable, nonetheless requires even clearer articulation, given the profound financial responsibility of such a guarantee. The Manitoba Court of Appeal affirmed the need for this linguistic clarity in Wallace v. United Grain Growers (1996), 1995 6262 (MB CA), 14 C.C.E.L. (2d) 41, rev'd in part on other grounds 1997 332 (SCC), [1997] 3 S.C.R. 701 and in Pelletier v. Caisse Populaire LaSalle Sudbury Ltée. (1984), 5 C.C.E.L. 1 (Ontario H.C.J.); aff'd on other grounds (1986), 1986 2545 (ON CA), 56 O.R. (2d) 784 (C.A.), where the contract stated a fixed retirement age.
[20] In this appeal, however, there is no explicit language unequivocally stating that the fixed term is for life or until retirement age. The evidence discloses that what the parties intended was to protect Ms. Foreman from dismissal through the change in management and not for the rest of her life. Ms. Foreman, on whose behalf the contract was drafted, testified that the intention was protection from arbitrary removal in favour of Mr. DiMaria's family and friends, not employment for the rest of her life. The failure to include the words "except for cause" does not detract from this conclusion. As Ms. Foreman stated at trial:
I was concerned about my job being secure with [DiMaria's group] if they were the purchasers of his interest. They have a history and a reputation of firing and letting go employees for no apparent reason. Generally it would be to replace them with family and friends. …[I]t's the big guys move in and they come in and they just take over the hall and you go out the door. They escort you and you're gone.
[21] The contract was drawn up on behalf of Ms. Foreman by Mr. Kirby, who left the term of the contract ambiguous. In the absence of the requisite clarity for finding that this is a contract for a fixed life term, I would interpret the ambiguity against Ms. Foreman's assertions but in accordance with her evidence, and conclude that the employment contract provision insulates Ms. Foreman from dismissal indefinitely, but not for the rest of her life.
[22] Because this is a contract for an indefinite term, Ms. Foreman is entitled to reasonable notice. Given the importance of her job and the length of time she performed it, I am of the opinion that she is entitled to twelve months' notice.
[23] This means, among other things, that the period of reasonable notice would have ended before the "break open" lottery tickets became legal in bingo halls, and before Ms. Foreman would have been able to implement their sale. Moreover, in light of the fact that they were not legal for sale in bingo halls until two years after Ms. Foreman was wrongfully dismissed, they are so remote that it is difficult to see how these damages could be included in the damage award.
[24] At trial, the parties agreed upon figures prepared by two accountants for the purpose of calculating Ms. Foreman's damages, which the trial judge used in arriving at the amount of $192,000 for lost wages and lost profits on lottery ticket sales. Using these same figures, the amount for twelve months' notice according to the parties' own calculations, excluding lost profit for "break open" lottery tickets, is $30,800.
[25] Accordingly, I would allow the appeal, set aside the order of the trial judge, and order that Ms. Foreman be entitled to a period of damages representing twelve months' notice.
[26] In view of the fact that there has been mixed success on this appeal, I would not award costs.
RELEASED: "SEP 04 2003"
"R.S. Abella J.A." "I agree K. Weiler J.A."
ARMSTRONG J.A. (Dissenting):
[27] I have read the reasons of my colleague Abella J.A. With respect, I am unable to agree with her conclusions.
[28] The trial judge found that the agreement between Ms. Foreman and her employers was in effect a contract for life. The issue as to whether the parties intended a contract for life was clearly dependent upon the trial judge's assessment of the parol evidence, the admissibility of which was not in issue.
[29] While I might well have come to a different conclusion than the trial judge, I am not satisfied that he committed a palpable and over-riding error. See Housen v. Rural Municipality of Shellbrook, 2002 SCC 33, [2002] 2 S.C.R. 235.
[30] There was evidence before the trial judge from which he could conclude that the parties intended that the employment agreement was a contract for life. Mr. DiMaria, who was, in effect, Ms. Foreman's employer and one of the signatories to the contract testified in cross-examination:
Q: But short of someone stealing you blind or destroying your property, your agreement is you've got a job for life?
A: As long as you're doing your job, yes….
Q: You promised, you covenant [sic], you agreed to hire Anne Marie for as long as she wanted?
A: Yes.
[31] Ms. Foreman testified that she had a lifetime employment contract as long as she wanted to work. The trial judge concluded that she would work until age 65.
[32] I also accept the trial judge's finding that there was consideration for the employment contract.
[33] I do, however, believe that the trial judge committed reversible error in his assessment of damages. In my view, the evidence does not support a finding that Ms. Foreman would be entitled to damages for the lost opportunity to profit from the sale of "break open lottery tickets". At the time the contract was made, there was no contemplation of the parties that break open lottery tickets would be sold in the bingo halls by Ms. Foreman. Indeed at that time, it was not legally possible to sell such tickets. At the time the contract was signed, Ms. Foreman was selling a different kind of lottery ticket in the bingo halls. Ms. Foreman's damages are therefore limited to $192,000.
[34] In the result, I would allow the appeal in respect of damages and reduce the damages award to $192,000.
"Robert P. Armstrong J.A."