COURT OF APPEAL FOR ONTARIO

CITATION: 1670002 Ontario Limited (Canadian Professional Recruiters) v. Redtree Contract Carriers Ltd., 2014 ONCA 501

DATE: 20140627

DOCKET: C56390

Laskin, Rouleau and Epstein JJ.A.

BETWEEN

1670002 Ontario Limited operating as Canadian Professional Recruiters

Plaintiff (Appellant)

and

Redtree Contract Carriers Ltd., Wilson Logistics Inc., and Wilson Transportation and Leasing Group (Canada) Inc.

Defendants (Respondents)

Raymond Colautti and Anita Landry, for the appellant

Christine Kilby and Andrea Campbell, for the respondents

Heard: June 3, 2014

On appeal from the judgment of Justice Bruce G. Thomas of the Superior Court of Justice, dated December 10, 2012.

By the Court:

A. Background

[1] The events that gave rise to this litigation took place between 2003 and 2005. At the time, the respondent Wilson Transportation was in the business of trucking and leasing trucks in Ontario. Its subsidiary, the respondent Wilson Logistics[^1], had a contract with the City of Toronto to transport waste from Toronto to Michigan. Redtree, another Wilson Transportation subsidiary, was to implement the waste contract. To do so, Redtree needed qualified drivers.

[2] In the spring of 2003, Redtree approached the appellant Canadian Professional Recruiters (“CPR”), a driver recruitment agency, to obtain drivers for the waste contract. In May 2003, CPR and Redtree entered into an oral agreement under which CPR would recruit drivers for Redtree in return for a fee.

[3] In late 2004, the City of Toronto put pressure on Redtree to reduce the costs of the waste contract. In response, Redtree decided to phase out the services of CPR and hire its own drivers. In February 2005, one of the vice-presidents of Wilson Transportation told CPR that its contract with Redtree was terminated.

[4] CPR then sued Redtree, Wilson Transportation and Wilson Logistics for damages for breach of contract, interference with economic relations and inducing breach of CPR’s employment agreements.

B. The trial

[5] The action was tried before Abbey J. over 11 days in 2009. He prepared lengthy draft reasons, but before finalizing them, he died. In his draft reasons, Abbey J. found that Redtree ought to have given CPR six months’ notice of termination. He did not quantify the amount of damages, nor did he deal with interest and costs. And he made no findings of liability against Wilson.

[6] In November 2010, Redtree went bankrupt.

[7] Following Abbey J.’s death, Thomas J. reviewed the draft reasons and adopted them. Thomas J. confirmed liability against Redtree only and, to account for the six-month notice period, awarded CPR damages of $73,093.00 plus interest. He also awarded CPR its costs against Redtree, but then awarded Wilson its costs against CPR. His reasons were released on November 13, 2012, but his formal judgment was not entered until December 10, 2012. However, on January 10, 2013, Thomas J. made a “Sanderson order” requiring Wilson to seek its trial costs against Redtree.

C. The appeal and the cross-appeal

[8] CPR makes two submissions on its appeal:

(1) The trial judge erred by failing to take account of Wilson’s participation in the contract between CPR and Redtree. In particular, CPR submits that Wilson is liable for inducing the breach of the contract between CPR and Redtree.

(2) Under the common employer doctrine, Wilson is liable for breach of CPR’s contract with Redtree.

[9] Wilson cross-appeals against Thomas J.’s Sanderson order. It submits that Thomas J. had no jurisdiction to make the order because it was made after his formal judgment was issued and entered. Alternatively, Wilson submits that the order is not supported by the evidence.

[10] We called on Wilson only on CPR’s first ground of appeal. And we did not call on CPR to respond to Wilson’s cross-appeal.

D. Discussion

(1) Is Wilson liable for inducing the breach of the contract between CPR and Redtree?

[11] CPR submits that the trial judge erred by failing to find that Wilson induced the breach of the contract between CPR and Redtree. In support of its submission, CPR points out that it was a Wilson executive, James Cockburn, who advised CPR in February 2005 that the contract had been terminated. CPR relies on para. 52 of Abbey J.’s reasons, in which he said:

While the contrary position was argued on behalf of the defendants, in my opinion, the purpose and effect of what was said by Cockburn in this telephone call amounted to a termination of the contract between the plaintiff and Redtree.

[12] Wilson’s position is that we should not even entertain CPR’s argument because the issue was not raised either at trial or before Thomas J., and thus is being raised for the first time on appeal. Alternatively, Wilson maintains that on the trial record the tort has not been made out.

[13] Wilson’s contention that this issue was not raised in the trial proceedings has merit. Although CPR claimed that Wilson induced the breach of CPR’s employment contracts, CPR never alleged that Wilson induced the breach of the contract between CPR and Redtree. A claim for inducing the breach of the CPR/Redtree contract was not advanced in the pleadings, in counsel’s opening submissions at trial, or in the original notice of appeal.

[14] Even if we were to accept that CPR’s claim is not a new issue on appeal, the evidence at trial does not make out this claim. To prove Wilson is liable for inducing a breach of contract, CPR had to meet the four-part test in Correia v. Canac Kitchens, 2008 ONCA 506, 91 O.R. (3d) 353, at para. 99:

(1) Wilson had knowledge of the contract between CPR and Redtree;

(2) Wilson intended to procure a breach of that contract;

(3) Wilson’s conduct caused Redtree to breach the contract; and

(4) CPR suffered damages due to the breach.

[15] CPR does not meet the second element of this four-part test. It cannot show Wilson had the required intent. The contract between CPR and Redtree was an oral contract. The parties made no provision for notice if either side terminated the contract. Abbey J. found that “[t]he decision of Redtree to terminate the contractual arrangement was driven, not by greed or malice, but by economic necessity.” In the light of these considerations, it cannot be said that Wilson intended to procure a breach of the contract.

[16] The most CPR can say is that Wilson participated in the termination of the contract, a termination that the trial judge later concluded required six months’ notice. That conclusion, however, was far from obvious at the time the contract was terminated. As Lord Hoffman said in OBG Ltd. v. Allan, 2007 UKHL 21, [2008] 1 A.C. 1, at para. 39[^2]: “to be liable for inducing breach of contract, you must know that you are inducing a breach of contract.” The record does not show that Wilson knew it was inducing a breach of the contract between CPR and Redtree.

[17] For these reasons, CPR’s first ground of appeal fails.

(2) Are the Wilson companies liable under the common employer doctrine?

[18] CPR argued at trial that under the common employer doctrine, Redtree and both Wilson companies were liable for breach of contract: see Downtown Eatery (1993) Ltd. v. Ontario (1993), 2001 CanLII 8538 (ON CA), 54 O.R. (3d) 161 (C.A.), leave to appeal to S.C.C. refused, [2001] S.C.C.A. No. 397.

[19] Abbey J. accepted that “in some circumstances, an employee may have more than one employer.” But he rejected the doctrine’s application to CPR’s contract with Redtree. Instead he found, at paras. 43-45 of his reasons:

In short, none of the documents to which I was directed during the course of the trial contain any reference to any defendant other than the defendant Redtree.

This is not a case in which the plaintiff supplied services to the defendants generally without regard to the precise entity with whom it was bound in contract. It is, I believe, rather clear that those individuals representing the interests of the plaintiff considered that the plaintiff’s services were being provided to the defendant Redtree which, in turn, was supplying labor to meet the obligations of the Toronto contract held by Wilson Logistics.

[20] We need not decide whether the common employer doctrine could ever apply to a contract such as the one entered into between CPR and Redtree. Abbey J.’s finding that CPR contracted only with Redtree is fully supported by the record at trial. Although Wilson executives later dealt with aspects of the contract, the contract itself was entered into at a meeting in May 2003 at which only CPR representatives and three representatives of Redtree were present. Moreover, Mr. Snobelen, the Operations Manager of CPR, admitted at trial that he understood he was contracting with Redtree.

[21] Accordingly, we decline to give effect to this ground of appeal.

(3) The cross-appeal: should the Sanderson order for costs be set aside?

[22] Wilson submits that Thomas J.’s Sanderson order should be set aside because he had no jurisdiction to make it and because it was not supported by the evidence. We do not agree with either branch of this argument.

[23] The Sanderson order was made after the formal judgment awarding Wilson costs against CPR had been issued and entered. The final costs order was, however, an accidental slip, correctable under Rule 59.06(1) of the Rules of Civil Procedure.

[24] As we have said, Thomas J.’s judgment was entered on December 10, 2012. A month earlier, on November 14, one day after Thomas J. had released his reasons, counsel for CPR asked if he could make submissions on the Sanderson order. On November 20, 2012, Thomas J. advised the parties that he would entertain submissions on the appropriateness of the Sanderson order. On November 26, Wilson filed its submissions on the Sanderson order. All of this correspondence took place well before the formal judgment had been entered.

[25] Wilson did not raise before Thomas J. his jurisdiction to make a Sanderson order. And we have no doubt had it done so, Thomas J. would have concluded the costs order in his judgment as issued and entered was an accidental slip and that he would have corrected it. Accordingly, Wilson’s jurisdiction argument must fail.

[26] The Sanderson order itself was supported by the evidence and was reasonable. CPR acted sensibly in joining the two Wilson companies as defendants in the light of their involvement in the performance of the contract and the overlapping responsibilities of some of the key employees. Additionally, all three defendants were represented at trial by the same counsel.

[27] As Thomas J. pointed out, the real issue was who should bear the burden of Redtree’s bankruptcy. Thomas J. concluded it was fair and just that Wilson bear this burden. He did not err in that conclusion. Accordingly, we dismiss the cross-appeal.

E. Conclusion

[28] We dismiss both the appeal and the cross-appeal. Having regard to the results of the appeal and the cross-appeal, we award Wilson costs of the appeal proceedings in the amount of $15,000 inclusive of disbursements and applicable taxes.

Released: June 27, 2014 (“J.L.”)

“John Laskin J.A.”

“Paul Rouleau J.A.”

“Gloria Epstein J.A.”

[^1]: In these reasons we refer to Wilson Transportation and Wilson Logistics collectively as “Wilson”. [^2]: Lord Hoffman’s test was adopted in Canac Kitchens