Court File and Parties

Court of Appeal for Ontario Date: 20230614 Docket: C70723

Lauwers, Huscroft and Zarnett JJ.A.

Between:

Antonio Monterosso o/a Truck Leasing Canada Plaintiff (Respondent)

And:

Metro Freightliner Hamilton Inc., Metro Truck Niagara Inc. and Metro Collision Services Inc. Defendants (Appellants)

Counsel: Greg McGinnis and Stephanie Ramsay, for the appellants Bradley J. Troup, for the respondent

Heard: June 1, 2023

On appeal from the judgment of Justice Linda M. Walters of the Superior Court of Justice, dated May 2, 2022.

Reasons for Decision

[1] The appellants engaged the respondent as an independent contractor. The contract was executed on March 7, 2017 and provided for a 72-month term. The appellants terminated the respondent’s services without cause on November 22, 2017. The respondent sued for the payments due for the remaining 65 months of the contract. The trial judge found that the contract did not have a termination provision and that it clearly and unambiguously provided for a 72-month fixed term. She awarded the respondent $552,500 plus HST calculated on the basis of the remaining monthly payments due under the contract.

[2] The appellants argue that the trial judge made numerous errors but focus on what they say is her failure to consider and address email correspondence dated March 1, 2017, an internal communication that they say demonstrates that a provision (Article 4.03(j)) was added to the contract to ensure that the respondent would be paid up until the last day of active service. This provision, they say, would be superfluous if the 72-month term of the contract were guaranteed. The appellants also submit that the email message was seen by the respondent and that in these circumstances it would be inequitable to allow him to rely on the 72-month term.

[3] These arguments must be rejected.

[4] It is not clear that these arguments were made before the trial judge, but they fail in any event. The email correspondence on which the appellants rely is ambiguous. In contrast, as the trial judge found, the language of the contract is clear and unambiguous. The contract contains an “entire agreement clause”, a clause plainly designed to avoid the sort of argument raised here. Moreover, the trial judge found no evidence of fraud, misrepresentation, undue influence, mistake, or waiver, and found that this was not a case for rectification. We see no error in these findings, still less a palpable and overriding error that would permit this court to intervene.

[5] Nor is there any basis to intervene based on any of the additional arguments advanced in the appellants’ written submissions. The trial judge was entitled to draw an adverse inference against the appellants because of their failure to call the human resource manager who prepared the contract as a witness.

[6] The appellants say that the trial judge erred by resolving ambiguity in favour of the respondent; however, the trial judge found that the contract is clear and unambiguous. The trial judge’s findings are supported on the record that was before her and are entitled to deference.

[7] Next, the appellants submit that the trial judge erred in holding that the respondent was not required to mitigate his damages. We accept this submission.

[8] The trial judge erred by conflating the situation of independent contractors with that of employees working under fixed-term contracts. Although this court held in Howard v. Benson Group Inc., 2016 ONCA 256, 129 O.R. (3d) 677, leave to appeal refused, [2016] S.C.C.A. No. 240, that employees under fixed-term contracts are entitled to damages equal to the loss of remuneration for the balance of the fixed term, without a duty to mitigate, this court has never held that independent contractors do not have a duty to mitigate following breach of a fixed-term contract. Mohamed v. Information Systems Architects Inc., 2018 ONCA 428, 423 D.L.R. (4th) 174, at para. 26, expressly left open the question whether the Benson principle applies to fixed-term contracts of independent contractors. The Mohamed panel held only that there was no duty to mitigate in the specific circumstances of that case because the parties intended compensation for the fixed term to be the consequence for failing to terminate the contract in good faith – effectively, a liquidated damages agreement: Mohamed, at para. 29.

[9] A duty to mitigate arises when a contract is breached, including contracts with independent contractors. Of course, the terms of a contract may provide otherwise. However, nothing in this case takes it outside the normal circumstances in which mitigation is required. For example, the respondent was not in an exclusive, employee-like relationship with the appellants, nor was he dependent on the appellants; the terms of the contract permitted the respondent to perform services for other parties. The matter was not argued fully before us, but for purposes of this appeal it suffices to say there was no basis for the trial judge to conclude that the respondent was not required to mitigate.

[10] Although the trial judge made no findings on the mitigation issue, this court can determine the matter. The burden was on the appellants to establish that the respondent failed in his duty to mitigate and they did not meet that burden. The respondent filed extensive evidence detailing his unsuccessful job search efforts. The appellants acknowledge this evidence but assert that the respondent was looking for work that was beyond the scope of his experience and qualifications. There is no basis in the evidence on which to accept this assertion. The appellants led no evidence to establish that there were jobs the respondent could have taken. Thus, despite the trial judge’s error in failing to require mitigation, the result is the same, for the appellants have not met their burden of proving that the respondent failed to mitigate his damages.

[11] Accordingly, the appeal is dismissed. The respondent is entitled to costs in the agreed amount of $17,500, all inclusive.

“P. Lauwers J.A.”

“Grant Huscroft J.A.”

“B. Zarnett J.A.”