COURT OF APPEAL FOR ONTARIO

CITATION: Richards v. Rainy River Cattlemen’s Association, 2012 ONCA 260

DATE: 20120424

DOCKET: C53278

Lang, Epstein and Hoy JJ.A.

BETWEEN

Russel Richards

Plaintiff (Appellant/ Respondent by way of cross-appeal)

and

Rainy River Cattlemen’s Association, Ken McKinnon, Amos Brielmann, Shawn Hyatt, Jeff Pollard, Jason Teeple, Herb Govier and Aarne Hahkala

Defendants (Respondent/ Appellant by way of cross-appeal)

Roderick W. Johansen, for the appellant

Bradley A. Smith, for the respondent

Heard: April 4, 2012

On appeal and cross-appeal from the judgment of Justice D.C. Shaw of the Superior Court of Justice, dated December 29, 2010.

Lang J.A.:

INTRODUCTION

[1] The appellant appeals the trial judge’s dismissal of his claim for damages for breach of a written contract for services. The appellant, Russel Richards, entered into a contract with the respondent, a non-profit organization called the Rainy River Cattlemen’s Association. The Association conducts cattle auctions two to four times a year. These auctions give local cattle producers the opportunity to sell cattle through the Association’s sales barn. The Association does not have regular full-time employees or a regular operation. It has a part-time Secretary-Treasurer and a part-time sales barn manager.

[2] The appellant held the position of sales barn manager and was responsible for organizing and conducting the Association’s periodic cattle auctions. In 1997, the appellant and the Association began their relationship with an oral agreement. In 2004, the appellant and the Association entered into a written, fixed-term contract that was to run until 2010. The Association terminated the contract by notice in writing on May 21, 2007. The appellant sued the Association for breach of contract. Certain Board members of the Association counterclaimed against the appellant for slander.

[3] The trial judge, Shaw, J., dismissed the appellant’s action on the basis of his conclusion that the appellant’s conduct, most significantly the conduct surrounding his behaviour towards the Association’s President, amounted to a repudiation of the parties’ contract. The trial judge allowed the counterclaim for slander and awarded modest damages to the respondents Ken McKinnon, the President and a director of the Association, and Amos Brielmann, a director. The appellant does not appeal this aspect of the trial judge’s decision.

[4] For the reasons that follow, I would dismiss the appeal.

TRIAL JUDGE’S REASONS

[5] In comprehensive reasons, the trial judge considered the nature of the relationship between the parties and determined that the appellant was a dependent contractor. Since the contract between the parties was for a fixed term with no express provision for early termination, the trial judge held that, unless the Association had sufficient reason to terminate the contract, the appellant would be entitled to all reasonable losses suffered during the remainder of the term, subject to his duty to mitigate.

[6] Virtually all the Association’s allegations of misconduct in terms of refusal to accept direction from the Board arose from the appellant’s behaviour during 2006 which, the trial judge found, accelerated after the re-election of Mr. McKinnon as President in 2007 and the election of the Board, which brought in new directors. At that point, the Board “wanted to implement changes to the way cattle sales were handled.”

[7] Those changes included holding cheques payable to the consignors of the cattle until after the buyers’ cheques had cleared the Association’s bank account. They also included matters such as implementing the use of radio frequency identification tags, charging higher tagging fees, and keeping permanent log books recording the particulars of buyers and sellers. The appellant was resistant to these changes, as he was to the control of the operation that the Board expressed an intention to exert. The appellant wanted to continue managing the auctions his way, including the auction scheduled for April 28, 2007.

[8] The trial judge considered allegations that were abandoned or withdrawn shortly before trial as part of the background. He then turned to consider a number of specific allegations that the Association made at trial and concluded they were insufficient to justify the appellant’s termination.

[9] One such allegation concerned animals that went missing at auction in 2006. One of those animals was left in the Association’s pen unattended for three weeks. However, the trial judge concluded, based on the evidence, that missing animals were not “a marked departure from what appears to have been the past experience” and did not constitute a breach of contract by the appellant.

[10] The appellant allegedly failed to maintain and provide the Board with a log book recording buyer and seller information. However, the trial judge held, even if this amounted to a breach of the appellant’s responsibilities, that it was not sufficiently serious to justify his termination. While the appellant cancelled a radio frequency tagging demonstration scheduled for October 2006, the trial judge accepted the appellant’s testimony that he did so for safety reasons. He also noted that the Board “never censured” the appellant for the cancellation and never re-scheduled the demonstration. Finally, the appellant released consignors’ cheques in 2006 even though the buyers’ cheques had not yet cleared the bank. Although the trial judge called the appellant’s conduct “ill advised”, he concluded that in releasing the cheques the appellant had followed past practice and had not purposely ignored the direction of the Board. The trial judge concluded that the appellant’s refusal to charge the fees was not a breach of contract, as the Board had not in fact required the imposition of the new fee.

[11] While the trial judge held that these specific incidents did not justify the appellant’s termination, he took a different view of the appellant’s other behaviour, including his refusal to work with the President. The trial judge observed that, on February 1, 2007, the day that Mr. McKinnon resumed the chair as President, the appellant delivered to the Board a list of complaints, including his written statement that if Mr. McKinnon were the President, he would “NOT” deal with him.

[12] At trial, the appellant explained his inability to work with Mr. McKinnon on the basis that the President had tried to start a fight with him in 2006. However, Mr. McKinnon testified that the appellant was the one who tried to start a fight. The trial judge concluded that he preferred the evidence of Mr. McKinnon on this point. In arriving at this assessment of credibility, the trial judge compared the “loud, often rude, and excitable” appellant with the “quieter, calmer, more understated” Mr. McKinnon. The trial judge also pointed out that the appellant was both larger and younger. Mr. McKinnon was approximately 70 at the time and the appellant was 57 years of age. Having rejected the explanation of the appellant and having considered the conduct at issue, the trial judge concluded that his refusal to work with the President “could not reasonably be tolerated.”

[13] Indeed, the trial judge observed that the appellant’s conduct went “well beyond” one instance of defiance. He behaved in a generally hostile and aggressive manner at the Board meetings. He also repeatedly referred to the President and the Secretary-Treasurer using extremely derogatory descriptors. The appellant employed this “contemptuous and vulgar language” not only at Board meetings but also in discussions with consignors and buyers of cattle.

[14] In addition, the appellant repeatedly and openly accused the President and the Secretary-Treasurer of conduct that amounted to theft or fraud and of “cooking the books.”

[15] Even after the auction was held, the appellant attended the May 3 Board meeting, uninvited, and again aggressively accused the President of stealing and the Secretary-Treasurer of a cover-up. The trial judge found that these were “serious and unfounded allegations about underhanded and dishonourable conduct” made to the Board as well as to outsiders.

[16] The trial judge concluded that the appellant’s “conduct went well beyond any reasonable boundaries and amounted to repudiation of his contract.” On May 21, 2007, the Association delivered its termination letter, which relied on the appellant’s refusal to work with the President, as well as his insubordination to the Board. The trial judge held that the Association was entitled to terminate the appellant’s services.

ANALYSIS

[17] The appellant raises two grounds of appeal, which I will discuss in turn in the context of the principles set out by Gillese J.A. in Dowling v. Ontario (Workplace Safety and Insurance Board) (2004), 2004 CanLII 43692 (ON CA), 192 O.A.C. 126 and in Roden v. The Toronto Humane Society (2005), 2005 CanLII 33578 (ON CA), 202 O.A.C. 351. At para. 49 of Dowling, Gillese J.A. explains that in employment, “the core question for determination is whether an employee has engaged in misconduct that is incompatible with the fundamental terms of the employment relationship.” She further explains that “the sanction imposed for misconduct is to be proportional – dismissal is warranted when the misconduct is sufficiently serious that it strikes at the heart of the employment relationship.” The inquiry is a factual one “to be determined by a contextual examination of the nature and circumstances of the misconduct.”

[18] Dowling describes the trial judge’s task as follows:

1. determining the nature and extent of the misconduct;

2. considering the surrounding circumstances; and,

3. deciding whether dismissal is warranted (i.e. whether dismissal is a proportional response).

[19] In Dowling, at para. 72, Mr. Dowling was found to have repudiated his employment contract by repeatedly engaging in dishonest conduct that was incompatible with that contract. In Roden, two employees were dismissed for their unequivocal refusal to perform their assigned duties. Gillese J.A. explains that their refusal amounted to repudiation and at para. 46 that “the employer is entitled to accept the repudiation and treat the employment relationship as terminated because the parties no longer agree on the fundamental terms of the contract.”

[20] Mindful of these principles, which apply equally to dependant contractors such as the appellant, I turn to his grounds of appeal.

[21] In his first ground, the appellant argues that the trial judge erred in coming to the conclusion that the appellant’s conduct amounted to a repudiation of the contractual relationship, in particular because the trial judge failed to consider the misconduct in context and the proportionality of the sanction imposed. I do not accept this argument.

[22] The trial judge both expressly and implicitly referred to the context of the appellant’s behaviour, including the fact that the appellant was working for a cattlemen’s association. He also specifically noted that “some latitude must be allowed for disputes between parties and that language should be viewed in the context of the workplace.” Moreover, the trial judge considered whether the appellant’s conduct was objectively “reasonable”. The trial judge’s contextual approach is evident from a reading of his extensive and thorough reasons considering the circumstances of the appellant’s conduct.

[23] The trial judge properly identified the appellant’s misconduct, considered the surrounding circumstances and decided that his termination was warranted. I would not give effect to this ground of appeal.

[24] Second, the appellant argues that the trial judge failed to consider the Association’s duty to warn. The appellant is correct that the trial judge did not separately address this issue. In my view, that is because the issue was not contentious. If the Association was entitled to dismiss the appellant for repudiation of the contract, the appellant was not entitled to warning. The contract was at an end.

[25] The trial judge knew there was a duty to warn in certain circumstances. For example, when he considered the issue of the cancellation of the tagging demonstration, the trial judge expressly noted that the Board “never censured” the appellant about this issue.

[26] However, the conduct that the trial judge found justified the appellant’s termination was of a different class. It was an outright refusal to work with the President of this small organization. Working with the President was an essential part of the job. Another essential part of the job was not to make unsupported allegations about the President and the Secretary-Treasurer stealing and manipulating the books.

[27] The appellant had to have known his conduct was unacceptable. At the February 28, 2007 meeting, the appellant threatened to “walk” from his contract and one of the directors, Amos Brielmann, asked him not to “hold the board hostage”. The April 28 sale had to go on. One of the directors pointed out that the Association needed “representation at the sale” and a Sales Barn Committee was struck to “deal with some of these issues” of conflict pending the auction.

[28] Once the auction was over, the appellant’s vitriol only increased. At the very next Board meeting, the appellant attended uninvited and stated aggressively that he did “not want to put up with” the President. Moreover, he reiterated his unfounded allegations of fraud and cover-up against the President and the Secretary-Treasurer.

[29] A fair reading of the trial judge’s reasons supports his conclusion that the appellant was not entitled to any warning in light of his conduct in repudiating the contract.

[30] I would not give effect to this ground of appeal.

RESULT

[31] Accordingly, I would dismiss the appeal, which makes it unnecessary to deal with the cross-appeal regarding mitigation and damages.

[32] I would award the respondent costs fixed in the amount of $10,000, inclusive of disbursements and applicable taxes.

Released: Apr. 24, 2012 “S.E. Lang J.A.”

“SEL” “I agree G.J. Epstein J.A.”

“I agree Alexandra Hoy J.A.”