DATE: 20060620

DOCKET: C44244

COURT OF APPEAL FOR ONTARIO

RE:

LINSEY FOODS LTD. (Appellant) – and – HAROLD GABER (Respondent)

BEFORE:

SIMMONS, CRONK, AND MACFARLAND JJ.A.

COUNSEL:

Daniel F. Chitiz

for the appellant

Mark A. Klaiman

for the respondent

HEARD & RELEASED ORALLY:

May 31, 2006

On appeal from the order of Justice Ernest Loukidelis of the Superior Court of Justice dated September 7, 2005.

E N D O R S E M E N T

[1] The appellant terminated the respondent’s employment without cause in November 2004. The respondent had worked for the appellant in various capacities since 1991.

[2] Paragraph 9(a) of the Employment Agreement dated May 14, 1999 between the appellant and the respondent provides:

The Company may terminate the employment of the Employee, for any reason whatsoever, on prior written notice equal to the greater of six months or one month for each year of service.

[3] Paragraph 20 of the 1999 Employment Agreement states that:

Any and all previous agreements between the parties relating to the employment of the Employee by the Company are hereby terminated and cancelled.

[4] On the respondent’s summary judgment motion, the motion judge determined that the only reasonable interpretation of paragraph 9(a) of the 1999 Employment Agreement is that it entitles the respondent to one month’s notice for each of his thirteen years of service. Further, while paragraph 20 of the 1999 Employment Agreement cancelled previous agreements, it did not eliminate years of service.

[5] Concerning two outstanding loans owed by the respondent to the appellant, the motion judge concluded that they appeared to stand separate from the respondent’s continuing employment. Rather than grant a set off to the appellant for the amount of the loans, or a declaration in favour of the respondent stating that the appellant is not entitled to a set off, the motion judge held that it would be up to the appellant to prove that the loans are presently due and owing.

[6] Finally, the motion judge concluded that a trial is required to determine the respondent’s claims for cumulative vacation pay.

[7] The appellant raises two main issues on appeal. First, the appellant claims that the motion judge erred in holding that there is only one reasonable interpretation of paragraph 9(a). In particular, the appellant contends that paragraph 9(a) is at least ambiguous. That is because, in light of the respondent’s thirteen years of service, on the motion judge’s interpretation of paragraph 9(a) there could never be any situation in which the six-month notice period would apply. The appellant submits that since the motion judge’s interpretation effectively disregards the reference to six months notice, and because there was conflicting evidence concerning the parties’ intentions regarding the meaning of paragraph 9(a), a trial is required to determine the proper interpretation of that paragraph.

[8] We agree. In addition to the provisions to which we have already referred, we note that paragraph 1 of the 1999 Employment Agreement provides as follows:

The Company hereby continues to employ the Employee and the employee agrees to be so employed on the terms and conditions herein contained [emphasis added].

[9] To achieve the motion judge’s interpretation of the 1999 Employment Agreement, it is necessary to read out the six months period referred to in paragraph 9(a). To achieve the appellant’s interpretation of the 1999 Employment Agreement it is necessary, at least arguably, to read out paragraph 1 and to add language to paragraph 9(a). In our view, a trial is necessary to resolve this conflict.

[10] Second, the appellant submits that the motion judge erred in holding that the outstanding loans stand separate from the respondent’s continuing employment. In that regard, the appellant contends that the language of the loan agreements is so sparse that it does not exclude consideration of conflicting extrinsic evidence.

[11] We disagree. We see no error in the motion judge’s consideration of the set off claim. As noted by the motion judge, it remains for the appellant to establish that the loans are due and owing.

[12] Accordingly, the appeal is allowed in part. Paragraph 1 of the motion judge’s order dated September 7, 2005 is set aside and a trial of the issue of the interpretation of the Employment Agreement as to the applicable notice period and the quantum of any funds owing to the respondent in lieu of notice is directed.

[13] Given that success is divided, there will be no order as to costs of the appeal. Further, the motion judge’s order as to costs is set aside and an order that there be no order as to costs below is substituted in its stead.

“Janet Simmons J.A.”

“E. A. Cronk J.A.”

“J. MacFarland J.A.”