SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 126/09(SIM)

DATE: 2014-09-08

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

David Free

Plaintiff

– and –

Municipality of Magnetawan

Defendant

G. Sheppard, for the Plaintiff

I. St. John, for the Defendant

The Honourable Mr. Justice D.J. Gordon

HEARD: March 24, 25, and 26, 2014

reasons for decision

[1] David Free claims damages against the Municipality of Magnetawan (“Magnetawan”) for wrongful dismissal.

Background

[2] In early March, 2009, Earl Evans informed the Mayor and Councillors of Magnetawan of his resignation as Chief Administrative Officer/Clerk (“CAO/Clerk”). He had just been appointed as the Deputy Clerk of the City of Brampton. Council directed MR. Evans to advertise for his replacement.

[3] Mr. Free and Mr. Evans made contact. Their discussion led to an informal meeting with Richard Smith, then Mayor to Magenetawan on March 23, 2009. Thereafter, Mr. Free attended a Council meeting on March 30, 2009. A discussion took place in closed session. Immediately following Mr. Free was appointed Deputy Clerk in open session.

[4] Mr. Evans left Magnetawan in early April, 2009. On April 8, 2009, Mr. Free was appointed Acting CAO/Clerk.

[5] Council continued to advertise for a permanent replacement for Mr. Evans. Mark Urbanski attended a Council meeting on May 27, 2009 for this purpose. He would later be appointed to position in July, 2009.

[6] Mr. Free had been invoicing Magnetawan for his services through his consulting company, D. R. Free & Associates, a division of Quality Management Systems Inc. On June 10, 2009, Council passed a resolution terminating the services of this company. By-laws would subsequently be passed to repeal the earlier by-law that had appointed Mr. Free.

[7] Mr. Free commenced this action in July 2009.

Dispute

[8] The primary dispute between the parties is the nature of Mr. Free’s appointment; that is, as a temporary or acting CAO/Clerk or on a permanent basis. Mr. Free says he was offered and accepted a three year contract. Magnetawan’s position is that the appointment was temporary and only to cover the time period until a permanent replacement for Mr. Evans was found.

[9] A secondary dispute is whether it was Mr. Free or his consulting company that was retained to provide services to Magnetawan.

Litigation

[10] The Statement of Claim was issued on July 13, 2009. Pursuant to an Order, granted by Flynn J. on October 9, 2009, a fresh, as amended Statement of Claim was served. In this pleading, Mr. Free sued Magnetawan along with the mayor, Richard Smith, two councillors, Kris Nicholls and Patti Paul, and Mr. Urbanski. Damages were claimed for wrongful dismissal and defamation.

[11] In a separate action, Mr. Free also sued the Municipality of Meaford, his former employer, and others. There was a third action issued in Toronto, the details of which were not provided. By Order granted by Ramsay J. on September 10, 2010 the three actions were to be tried together in Simcoe, unless otherwise directed by the trial judge.

[12] On February 21, 2014, I granted an Order, on consent, dismissing the within action against the personal defendants.

[13] At the commencement of trial, counsel reported that all claims in the consolidated action, save for the wrongful dismissal claim against Magnetawan, had been resolved.

The Pleadings

[14] A brief review of the pleadings is necessary given the plaintiff’s oral motion at the end of trial seeking to amend his Statement of Claim.

[15] In the fresh, as amended, Statement of Claim, Mr. Free claimed damages of $180,000.00 for wrongful dismissal. The pleading was prepared by Mr. Free’s former counsel, now retired. It is a long and rambling document of 117 paragraphs, much being related to the defamation claim. The pleading is poorly drafted, containing impermissible statements of evidence.

[16] In any event, the essential allegations of Mr. Free are as follows:

a) he was appointed Deputy Clerk on March 30, 2009;

b) he was appointed CAO/Clerk on April 8, 2009;

c) the position of Clerk is a statutory public office; and

d) his employment was improperly terminated, without notice or cause, on June 10, 2009.

The logical interpretation of the claim is one based on notice. The motion to amend seeks to make it based on contract of a fixed term.

[17] The Statement of Defence of Magnetawan, dated January 22, 2010 denies the allegation that Mr. Free was an employee. Rather, Magnetawan alleges that, at the request of Mr. Free, D.R. Free & Associates were retained to provide the services. Further, the defendant asserts the appointing by-law is for an office, not employment.

[18] Magnetawan also alleges the understanding between the parties was that their relationship was intended to be brief and temporary, that D.R. Free & Associates would provide services on an interim basis until a permanent CAO/Clerk was appointed. Termination, it says, on June 10, 2009 was lawful and expected, no notice or reason being required.

The Evidence

i) Documents

[19] In a case involving a municipality, a full and complete documentary record is expected. For reasons not fully given, or explored by counsel, the relevant documents, including most by-laws, resolutions and minutes of meetings, are missing from the municipal office.

[20] The accuracy or legitimacy of other documents is in dispute. Of particular interest, in this regard, are computer generated documents. A forensic examination, again for reasons not provided, has not occurred.

In result, I am left with an incomplete evidentiary record, thus making determination of the issues more difficult than necessary.

ii) Mr. Evans – Former CAO/Clerk

[21] Reference is made to the former CAO/Clerk of the Magnetawan as part of the background to this case.

[22] Mr. Evans was the CAO/Clerk from August 2007 to early April 2009. He had similar positions with other municipalities prior to moving to Magnetawan.

[23] On August 22, 2007, Council passed By-Law No. 2007-21 appointing Mr. Evans as Acting CAO/Clerk. By-law 2007-26, passed on November 14, 2007, would appoint him as CAO/Clerk, thus removing the “acting” designation.

[24] Mr. Smith and Mr. Evans reported Council’s practice being initially appointing an Acting CAO/Clerk before making a final or permanent appointment. The initial period was treated as an independent contract, Mr. Evans submitting invoices for his time at the prescribed hourly rate, mileage and accommodation expense, but with no benefits.

[25] On being appointed Acting CAO/Clerk, Mr. Evans said he was directed by Council to advertise for a permanent replacement. He did so and, as well, submitted his own application. Mr. Evans was the successful candidate, becoming the permanent CAO/Clerk in November 2007. At this point, Mr. Evans reported being hired as an employee of Magnetawan with the usual benefits, including a pension plan through OMERS.

[26] In late 2008, Mr. Evans decided to move on in his career and applied for the position of Deputy Clerk for the City of Brampton. In early March 2009, he was informed that he was the successful candidate. Mr. Evans advised Mr. Smith and the councillors that he was resigning to commence a new position on April 6, 2009.

[27] Council instructed Mr. Evans to immediately commence the process of searching for his replacement. Mr. Evans placed the usual advertisements in the local newspaper and on the AMCTO website. He also contacted colleagues with other municipalities to inquire as to interest in the position. The closing date for the first advertisement was March 27, 2009.

[28] The process resulted in contact between Mr. Free and Mr. Evans.

iii) Other Candidates

[29] Mr. Evans reported that no applications were received in response to the initial advertisement. However, as a result of contacting colleagues, Mr. Evans spoke to Ms. McRae who held a similar position with the municipality in Simcoe County. A meeting was arranged.

[30] Discussions with Ms. McRae were not successful. Mr. Smith and Mr. Evans advised that the remuneration Ms. McRae expected was more than Magnetawan was prepared to pay.

[31] Mr. Free said he understood there were gender issues with Council.

iv) Preliminary Discussions

[32] Mr. Free and Mr. Evans each say it was the other that made the initial contact. Regardless, they had an initial telephone discussion. They knew each other from their prior positions with different municipalities in the County of Grey. Mr. Free expressed an interest in the position. Mr. Evans invited Mr. Free to meet with the mayor.

[33] On March 23, 2009, Mr. Free met with Mr. Smith and Mr. Evans informally at a restaurant in Huntsville. They had a discussion.

[34] Mr. Free reports being informed by Mr. Smith at this meeting that the position would be permanent and full-time. He says the discussion was about this experience and with current local government issues. Mr. Free felt it was a positive meeting.

[35] Mr. Smith described the meeting as an interview of Mr. Free for the interim position of CAO/Clerk. Mr. Evans said reference was made to the same model used when he started, namely as Acting CAO/Clerk, permanent if and when Council was pleased with the performance.

[36] Mr. Free denied there was any suggestion at this meeting that the position would be temporary.

[37] Mr. Free was invited to attend the Council meeting on March 30, 2009.

v) Council Meeting- March 30, 2009

[38] Council moved into a closed session to have a discussion with Mr. Free at this meeting.

[39] Mr. Free’s recollection is that the Mayor and councillors expressed satisfaction with his qualifications and the discussion involved a three-year contract. He produced minutes of the closed session that were initially prepared by Mr. Evans and altered by himself when converting from Word Perfect to Word. Mr. Evans said the document was not prepared by him and was not an accurate account of the meeting.

[40] These minutes indicate the mayor recommended Mr. Free be hired initially for the position of Deputy Clerk and then CAO/Clerk after the departure of Mr. Evans in April. Mr. Free is recorded as saying he would need time to make sure this was the right move for him in the long term. No reference is made to a three year contract.

[41] The minutes of the open session of this Council meeting were also provided by Mr. Free. There was no challenge to this document. The mayor is recorded as calling the meeting regarding a “temporary replacement” for Mr. Evans. After referring to going into and returning from closed session, the minutes indicate a resolution being passed approving the terms and conditions discussed in Closed Session for hiring Mr. Free as Deputy Clerk. By-law 2009-11 was then passed, appointing Mr. Free as Deputy Clerk. A copy of the by law was tendered in evidence. This document is also not in dispute.

[42] Mr. Evans indicated the purpose of the meeting was for all members of council to meet Mr. Free and to discuss the temporary process. He referred to the prior model on his appointment in 2007 in this regard. The acting or temporary position, he said, was the subject matter being discussed.

[43] Mr. Smith reported the terms discussed at the meeting of Council being the same as at the initial meeting on March 23, 2009, namely a temporary, not permanent, position. He referred to the anticipated role of Mr. Free to assist council in reviewing applications that would be received for the permanent replacement for Mr. Evans.

vi) The Email Exchange

[44] The Council meeting, both open and closed, was recorded as commencing at 1:00 p.m. and adjourning at 1:37 p.m. following passing of By-law 2009-11. Mr. Free returned to his home in Simcoe after the meeting.

[45] At trial, the basis of Mr. Free’s wrongful dismissal claim was said to be based on contract having regard to the following email exchange:

Earl Evans 31, March 2009 3:41 PM To: David Free RE: CAO Position –Magnetawan

Hi David-

Thank you for the email response. This is satisfactory for council and constitutes an agreement on their behalf. On personal note you may want to tidy this up with a formal contract in the future.

Again, congratulations and best of Luck.

I will be in touch.

Earl Evans CAO/Clerk Municipality of Magnetawan

David Free 31 March 2009 10:51 AM

To: Earl Evans

RE: CAO Position- Magnetawan

Hi Earl

Thanks for the phone call, and sorry for not being more specific in my response today.

a. I will commit to a 3 year engagement as the CAO/Clerk for Municipality of Magnetawan

b. Magnetawan commits to a 3 year engagement contract and the municipality shall provide procedural fairness in aspects of employment of David Free in accordance with common law

c. I accept the terms as described in your email pertaining to compensation at $45.00 per hour, 40 hours per week (to be reviewed every 6 months)

d. Time worked to be flexible in light of relocation issues and evening meetings of council

e. I accept the expenses for travel are in accordance with the Hiring Policy bylaw

f. Employment Benefits to be provided in accordance with the Hiring Policy

g. I accept the daily maximum of $125.00 with receipts during relocation period of up to 1 year while moving to the area.

I trust the above will suffice of an official acceptance of the terms of appointment/contract.

D. Free

David Free 31 March 2009 6:33 AM

To: Earl Evans

RE: CAO Position – Magnetawan

Hi Earl

I accept the conditions as described. All of this is best developed within a contract and bylaw but I accept the terms as described below.

D. Free

Earl Evans 30, March 2009 3:48 PM

To: David Free

RE: CAO Position- Magnetawan

Hi David-

I hope you had a good drive home.

I was directed by Council to finalize the compensation details of your appointment as follows:

Position of Chief Administrative Officer and Clerk to be appointed by bylaw April 8, 2009

Full Time Position (contract to be developed)

Remuneration: $45.00 per hour, 40 hours per wee

Benefits to be provided in accordance with Hiring Policy bylaw

Relocation Expenses: Meals and Accommodation as per Hiring Policy with a Daily maximum of $125.00 with receipts. You will have to work out the long-term arrangements with council like I did.

Council also requested a two-year commitment and would prefer a 3 year commitment to the position of CAO/Clerk from yourself.

Annual salary increases based on a positive performance review with possible bonus.

Please let me know ASAP by email that you agree to these terms.

Please accept my congratulations and best wishes in this position

Earl Evans

CAO/Clerk

Municipality of Magnetawan

[46] As hereafter discussed, Mr. Evans denies sending and receiving these emails.

[47] Although Mr. Free said he retrieved the emails from the Magnetawan computer in June 2009, he did not produce or make any reference to them until April 2013. He said they had been “trashed” on his computer at some point. Mr. Free reported retrieving the emails after his examination for discovery in July 2012.

[48] Mr. Free also says the minutes of the Closed Session of the Council meeting on April 8, 2009, prepared by him, confirm a formal contract established by these emails. These minutes were not tendered in evidence by Mr. Free. Rather, his counsel reported such would be done when Mr. Evans testified. However, Mr. Evans could not identify the document as he had left Magnetawan on April 3, 2009 and was not in attendance at the Council meeting on April 8, 2009. In result, the document was not proven.

[49] Mr. Evans acknowledged there was likely an email exchange with Mr. Free following the Council meeting on March 30, 2009 but testified the documents tendered by Mr. Free are not those emails.

[50] Mr. Evans stated he was not involved in any discussions with the Mayor or Councillors as to the terms and conditions of Mr. Free’s appointment outside of the council meeting. He would only communicate with Mr. Free if instructed to do so by council. This, he said, did not occur. Rather, Mr. Evans reported the actual terms and conditions of the temporary appointment of Mr. Free were discussed in the closed session of council when Mr. Free was present.

[51] On reviewing the purported email exchange, Mr. Evans identified the following items he relied on in concluding these emails were not sent by him:

a) the terms of the appointment were discussed in Closed Session;

b) he would not communicate unless instructed by Council to do so and would not make a commitment on behalf of Council by email;

c) he was not instructed by Council to do so;

d) the reference to becoming CAO/Clerk was illogical as the appointment was only as Deputy Clerk;

e) the language used is inconsistent with his practice, for example he would not refer to relocation expenses per hiring policy, possible bonus, constitutes agreement on behalf of Council or add personal comments in an email;

f) the reference to a 40 hour work week was incorrect, it being 37.5 hours;

g) the reference to benefits under the hiring policy was also incorrect as it was the personnel policy that applied;

h) a bonus was not appropriate in a municipal setting; and

i) there are a number of mistakes, such as:

1. the date is on the right- he always puts it on the left;

2. the date has a common after the number- should not happen on an automated email;

3. “Thank you” – always try to be grammatically correct and would not say this;

4. “Luck” – would not capitalize; and

5. “On a personal note” – would not use the phrase in a business email.

[52] Mr. Smith had not seen these emails prior to trial. He indicated that the terms and conditions of Mr. Free’s appointment were discussed in the Closed Session of council on March 30, 2009. These emails, he said do not reflect that discussion and further, Mr. Evans would not have communicated an offer of position that council had not approved.

[53] As previously mentioned, a forensic examination of the computers was not arranged. Mr. Free reported his computer being stolen in January 2011. Mr. Evans said his understanding was that Magnetawan was unable to produce emails from five years ago.

vii) Council Meeting- April 8, 2009

[54] At the meeting of Council on April 8, 2009, By-law No. 2009-14 was passed appointing Mr. Free to the position of “Acting” CAO/Clerk.

[55] As previously mentioned, the minutes of Closed Session were to be tendered in the examination of Mr. Evans. While done so, Mr. Evans could not identify the document.

[56] Mr. Free said the reference to “Acting” in the by-law was a mistake. He was present at the meeting but reported the by-law as having been previously prepared by Mr. Evans. He indicated asking Council to remove the term but such was not done.

[57] Mr. Evans acknowledged the possibility he prepared By-law 2009-14 as it was in the style of Magnetawan by-laws. He had left the municipality several days prior to this Council meeting and, therefore, could not comment as to what may have occurred. All that Mr. Evans could say is that the appointment of an Acting CAO/Clerk was consistent with Council’s approach.

[58] Mr. Smith reported the by-law appointing Mr. Free as Acting CAO/Clerk as being accurate. The appointment at this Council meeting, he said, was meant to be temporary and that the intention was for Mr. Free to assist Council in finding a permanent replacement for Mr. Evans.

[59] In cross-examination, Mr. Free was referred to a local newspaper article published April 16, 2009 announcing his being appointed as a temporary replacement for Mr. Evans and quoting him as saying Council was seeking applications for the permanent position. Mr. Free had no recollection of speaking to a newspaper reporter at the time, saying he does not talk to the media as that is the job of members of Council.

viii) Invoicing

[60] Mr. Free incorporated Quality Management Systems Inc. some years ago. He reported establishing a consulting business, D.R. Free & Associates, as a division of the company in 2005. Mr. Free had been an independent contractor on prior occasions.

[61] Throughout the time period Mr. Free was engaged with Magnetawan, he submitted invoices weekly in the corporate name for his services at the agreed upon hourly rate of $45.00 plus travel, accommodation and meal expenses and GST. All regular invoices were paid. The subsequent invoices, dated June 10, 2009 claiming overtime of $6426.00 was not paid.

[62] Mr. Free said he understood he was an employee of Magnetawan. He reported that Mr. Smith instructed him to submit invoices instead. Although he objected, Mr. Free said he did not want to “rock the boat” and felt the situation would be corrected in a few months.

[63] Mr. Free referred to Mr. Smith instructing the Treasurer, Ms. Saunders, as to the invoicing system. He said Ms. Saunders voiced her objection, wanting to pay him as an employee.

[64] Ms. Saunders reported processing the invoices received from Mr. Free and payment of same. She said there was no discussion regarding the process and that Mr. Free never raised the issue as to the manner of payment. Ms. Saunders also advised there was no conversation with Mr. Smith as to the payment system.

[65] Mr. Smith was expecting invoices from Mr. Free as had been the practice with Mr. Evans in 2007. He reported Mr. Free requesting the invoices be presented by his company. Mr. Smith said there was no discussion as to changing the payment system.

ix) Subsequent Events

[66] Mr. Free commenced working at Magnetawan on April 6, 2009. Mr. Evans had left him a list of outstanding matters such as the 2009 budget and various by-laws. In fact, two lists were presented in evidence, dated March 31, 2009 and April 3, 2009, the reason for which is unclear although not contentious. Neither list made reference to the search for a permanent CAO/Clerk.

[67] In March 2009, Mr. Evans had placed two advertisements on the AMCTO website. The first had a closing date of March 27, 2009. The second advertisement had a closing date of April 17, 2009. Mr. Evans advised that no responses had been received prior to his departure. Mr. Free would report to Council on May 26, 2009 that nine applications had been submitted.

[68] Prior to the Council meeting on May 13, 2009 Mr. Smith reported receiving a telephone call from Mr. Urbanski. Mr. Urbanski was one of the applicants but had not received a response from Mr. Free. He inquired of Mr. Smith if his application was being considered or not. In Closed Session, Mr. Smith said he asked Mr. Free about the CAO search and responses to their advertisement.

[69] Mr. Urbanski was invited to the Council meeting on May 27, 2009. He also attended the Council meeting on June 16, 2009 and was subsequently appointed as the CAO/Clerk in July 2009.

[70] Mr. Free did not apply for the position as, he said, he had already been hired as the permanent CAO/Clerk on a three year contract.

[71] According to Mr. Free, there was conflict with the mayor from the outset, including matters pertaining to the appointment of the Fire Chief and negotiations to lease certain property. Mr. Free felt Mr. Smith exceeded his authority. Mr. Smith reported Council having to deal with contentious matters in the Spring of 2009 but did not indicate any particular problems. In cross-examination, Mr. Smith said Mr. Free did a reasonable job for the municipality.

[72] Leading up to the Council meeting on May 27, 2009 Mr. Free prepared a report identified as Council Report #2009-16, dated May 26, 2009. Two different copies of the report were presented in evidence, one produced by Magnetawan, the other by Mr. Free. Both are said to have been written by Mr. Free and they follow the same general format.

[73] The primary difference in the documents is the reference to the status of Mr. Free. In the Magnetawan production, Mr. Free is said to describe his position as “interim CAO/Clerk”. In the production by Mr. Free, the reference is simply “CAO/Clerk”.

[74] In these reports, Mr. Free describes a number of matters dealt with since he commenced his duties on April 6, 2009. He goes on to describe other items that should be addressed and then suggests that once done Magnetawan may not require a “fulltime” CAO/Clerk. He offers several alternatives, such as a part-time or shared CAO/Clerk.

[75] Mr. Free also comments on the CAO/Clerk search, including the qualifications of candidates. He does not recommend any of the candidates.

[76] At trial, Mr. Free said someone must have inserted the term “interim” in the Magnetawan production as it was never in the original report. The purpose of the report, he said, was to report to council on work he had done and offer suggestions for Council to consider.

[77] No minutes of the May 27, 2009 Council meeting were produced by either party. As previously mentioned, part of the Closed Session involved a discussion with Mr. Urbanski.

[78] Mr. Free stated that one Councillor asked him if he would move to Magnetawan. He reported an affirmative response was provided and, further, that he was already the CAO/Clerk for the municipality.

[79] Mr. Smith indicated there was somewhat of a dispute amongst members of Council at the May 27, 2009 meeting. He said Councillor Paul asked Mr. Free if he had considered the permanent position and that Mr. Free’s response was he did not know and that he would have to consult with his wife.

[80] A series of emails followed this meetings, as follows:

a. Councillor Paul to Mr. Free, Mr. Smith and others on June 4, 2009, saying:

Hi David,

Thanks for letting me know you have spoken to your wife about moving to our area. When I heard of your interest in the position of CAO longer term in our Municipality at the meeting last week it was new to me. We had received your report of your feelings about the position being able to be done in a part-time way. I am not convinced about that.

I would like to have another interview with Mark Urbanski and consider the 2 proposals which we now seem to have on the table.

Thanks again.

Patti Paul

b. Mr. Free to all members of Council on June 4, 2009 saying:

Council

I am please accept the offer of the above as discussed during the in-camera session of the May 27th Council.

I have discussed the opportunity presented with my wife and both believe it would be an interesting opportunity.

David Free

c. Mr. Free to all members of Council on June 9, 2009 saying:

Council

In an effort to comply with the resolution from last night’s Council meeting, I have been able to obtain the services of a local qualified Municipal Clerk who would be willing to be present for the above meeting. The individual is not available until Tuesday (any time during the day) June 14th. I have not made any calls other than to secure a qualified municipal clerk knowing tht this might have been the greatest challenge of the resolution passed last night.

The desired meeting date of Thursday June 11th is therefore a challenge if it is an imperative Council’s preference of not having me present at the same.

Please let me know ASAP if Tuesday June 13th is workable so that I can organize the appropriate parties. I surmise that a 1:00 pm meeting would be appropriate based on Mr. Ubanski’s drive time from Brantford to Magnetawan.

For the record, organizing this interview does not change in any form or fashion, my position of having accepted the position as CAO/Clerk last week as offered. I did not expect or surmise that my acceptance of the position would have caused such a great controversy or divide within Council such as witnessed last night. It was honestly believed that the offer was from all of Council not a few.

I am disappointed at the unwarranted allegations and misperceptions given by certain Council members related to my tenure, successes and specific roles and reporting structures within the Magnetawan municipal organization.

David Free

[81] Mr. Smith advised that Council did not offer the permanent position to Mr. Free on May 27, 2009. Rather, he said only one councillor was in favour of so doing. Mr. Smith went on to say he understood Mr. Free to believe that he was accepting an offer from Council.

[82] Another email was referred to by Mr. Free, this one coming from Councillor Tod on June 5, 2009 saying:

David. I could get in trouble for this but this letter was sent to me by mistake by Kris Nicholls. Obviously Dick has a plan in mind regarding you. Keep this to yourself.

Frankt

[83] The attachment is said to be correspondence from the mayor to Councillor Paul and Nicholls suggesting a method of getting out of the fulltime arrangement with Mr. Free. The correspondence was not proven as to its truth and contents. Mr. Smith strennously denied ever authoring such a document. He added that Mr. Free was never hired as the permanent CAO/Clerk and suggested someone had created the document and put his name on it.

[84] None of the four Councillors were called to testify at the trial by either party.

[85] Mr. Free’s last day at work was on June 10, 2009. At Council meeting that day, a resolution was passed terminating the services of D.R. Free & Associates effective June 12, 2009. On July 8, 2009 By-law No. 2009-48 was passed by council to repeal By-law 2009-14 that had previously appointed Mr. Free as Acting CAO/Clerk.

[86] Following the termination, Mr. Smith reported Mr. Free to have requested payment of $135,000.00 which was declined. Mr. Free, he said, indicated he would commence litigation and contact the Ombudsman. Mr. Smith also made reference to an investigation by the Ontario Provincial Police over eleven months that exonerated Council.

Damage Claim

[87] In final submissions, Mr. Sheppard presented calculations for the damage claim based on a three year contract less ten weeks of actual service. The total claim for 146 weeks of “salary”, plus interest and pension, was $330,011.30. Mr. St. John did not challenge the amount, only entitlement.

[88] The damage calculation is on the same basis that D.R. Free & Associates had invoiced and been paid, namely $1800 per week plus GST or HST.

Issues

[89] Reference was made at the outset as to the nature of the dispute between the parties. In final submissions, counsel identified the issues requiring determination as involving:

a) amending the Statement of Claim;

b) fixed term contract or temporary position;

c) employee or independent contractor; and

d) damages.

Analysis

[90] There is no dispute regarding applicable legal principles. The case is essentially fact driven.

i) Amending the Statement of Claim

[91] In closing submissions, Mr. Sheppard requested an order, nunc pro tunc, amending the Statement of Claim to conform with the evidence at trial so as to allow the claim to be alleged as based on a three year employment contract and damages of $330,000.00. Mr. St. John opposes, saying he was defending a claim for $180,000.00 as had been pleaded in the fresh as amended Statement of Claim.

[92] Disclosure of the purported emails, on which the contract is said to be based, did not occur until April, 2013. Until then, this was a notice case.

[93] Mr. Sheppard was retained in January 2013. The concept of a fixed term contract was not raised until the pre-trial conference in January 2014. A motion to amend was not served as the case was listed for trial, according to Mr. Sheppard. I disagree, leave of the Court could and should have been sought to amend.

[94] Rule 26, Rules of Civil Procedure, provides that leave to amend a pleading at any stage of an action shall be granted unless prejudice cannot be compensated by costs or adjournment.

[95] Mr. St. John was aware of the allegation of a fixed term contract since production almost a year ago. While the amount of the claim may not have been disclosed, he and his client would have been able to calculate it based on prior payments to D.R. Free & Associates. Notice had been provided by Mr. Sheppard, on March 6, 2014, of the plaintiff’s intention to rely on the emails at trial, as required by the Evidence Act.

[96] Hence, the defendant cannot say it was unaware of the nature of the claim being advanced.

[97] Although I am of the view the amendment should have been requested much earlier, so that the defendant and the Court had a full appreciation of the nature of the claim, I am not persuaded any significant prejudice would result from this late amendment.

[98] Accordingly, the motion is granted. I do so reluctantly. The matter may re-surface on the issue of costs.

ii) Was This a Fixed Term Contract?

[99] The position of Mr. Free is that the email exchange on March 30 and 31, 2009 constitutes an offer and acceptance and, hence, established a three year contract. Magnetawan says the emails did not occur as presented.

[100] Correspondence exchanged between parties is admissible in evidence regarding the issue of formation of a contract. See: Stevenson v. Dandy, 1920 647 (AB CA), [1920] 2 W.W.R. 643 (Alta. C.A.), at paragraph 82, citing Wigmore on Evidence, Can. Ed. Vol. iii, sec 2152. Emails are simply an electronic form of correspondence.

[101] If the emails are accepted as the contract between the parties, the parol evidence rule would apply and extrinsic evidence would not be admissible. See: Eli Lilly & Co. v Noropharm Ltd., 1998 791 (SCC), [1998] 2 S.C.R. 129 (S.C.C.) at paras.54-55.

[102] Mr. Sheppard made known his reliance on the parol evidence rule at the outset of trial. Evidence pertaining to the emails, and indeed, with respect to the employment relationship was tendered. Such evidence is not extrinsic in respect to the terms of the contract at this stage. Rather, the evidence is relevant to the issue of whether the email exchange as presented at trial actually occurred.

[103] The onus is on the plaintiff, on a balance of probabilities, to prove the contract. I am not persuaded he has done so for several reasons:

a) having regard to the documents not in dispute;

b) evidence challenging the emails;

c) inconsistencies and other problems in the evidence of Mr. Free.

a) Other Documents

[104] The Clerk is a mandatory position for a municipality under the Municipal Act.

[105] A CAO has become a permitted position and is now a common practice. Contrary to Mr. Free’s assertion, an “Acting” clerk is allowed on a temporary basis to avoid a vacancy in the office.

[106] By-law No. 2009-14, passed on April 8, 2009 appointed Mr. Free to the position of Acting CAO/Clerk. The by-law is a clear representation of the intentions of Council. The by-law was never amended. It was only repealed, by By-law No. 2009-48 on July 8, 2009, after Mr. Free had left Magnetawan.

[107] By-law No. 2009-48 supports the conclusion Mr. Free’s appointment was temporary. Further support for that proposition is found in the by-laws passed in 2007 when Mr. Evans was likewise appointed Acting CAO/Clerk and then as CAO/Clerk.

[108] The appointment of an Acting or temporary CAO/Clerk is also a logical decision. The municipality had to deal with the resignation of Mr. Evans. A vacancy in the office of Clerk is not permitted. The hiring process for such a position takes time. A temporary appointment allows such to occur with minimal disruption.

b) Evidence Challenging The Emails

[109] Mr. Smith stated that Council did not authorize or direct Mr. Evans to communicate an offer of employment to Mr. Free. There are no Council minutes requiring any communication, the terms having been discussed in Closed Session. However, the critical evidence on this issue comes from Mr. Evans.

[110] Mr. Evans denied the email exchange occurring as presented in evidence by Mr. Free. More importantly, he articulated a number of reasons, including the lack of direction from Council.

[111] The detailed examination of the emails by Mr. Evans was most persuasive as it went beyond a mere denial. He identified a number of items in the documents, such as language he would not use, mistakes including the location of the date and grammatical errors. My impression of Mr. Smith’s manner of communicating is that he is most attentive to detail and formality in a business email.

[112] I accept Mr. Evan’s evidence that a comma should not appear in the date on an automated email. I also accept his evidence that he always put the date on the left. Indeed, I note with some interest that the dates on all other emails tendered in evidence, including those from Mr. Free, are on the left side.

[113] Mr. Evans acknowledged there was likely an email exchange but such would not have involved an offer of employment. Otherwise, cross-examination did not weaken his evidence.

[114] Mr. Evans has no interest in this case other than his professional reputation. His evidence, in my view, was credible and reliable. The attention to detail, as opposed to generic denial, was most helpful in resultant analysis.

c) The Evidence of Mr. Free

[115] Mr. Free’s explanation for the late disclosure of the emails is troubling. He commenced this action in July 2009, within a month of termination. No doubt, his then counsel would have informed him of the necessity of disclosure and production of all relevant documents. Other documents in this time period of lesser importance, such as the email from Mr. Tod, were disclosed. Yet these emails were not. Surely, having retrieved the emails from the Magnetawan computer in June 2009, as he testified, would have resulted in them being fresh in his mind a month later.

[116] An attempt was made to rely on documents not proven in evidence as to the truth of their contents, including the Minutes of Closed Session on April 8, 2009 and the attachment to Mr. Tod’s email dated June 5, 2009

[117] Of some interest, the Minutes of Closed Session on March 30, 2009 were initially prepared by Mr. Evans but altered by Mr. Free. Nevertheless, there was no mention of a fixed term contract even though this event preceded the purported emails. Mr. Free is recorded as saying he needed time to make sure this was the right move for the long term. This is inconsistent with his evidence at trial. Mr. Free would have prepared those minutes in April 2009.

[118] There is an obvious concern with the two different Council Reports dated May 26, 2009. They should be the same. Mr. Free claims the Magnetawan production was altered by inserting “interim” in describing the CAO/Clerk position. No evidence was tendered to support his belief. I find Magnetawan production to be accurate as it is consistent with By-law No. 2009-14 and related evidence.

[119] Regardless, even in Mr. Free’s production there was no reference to a three year contract, saying only that his position was “permanent”. Yet in his report, Mr. Free is commenting on the applications recently received and is making suggestions for Council to consider regarding the future of the position of CAO/Clerk.

[120] Mr. Free attempted to draw Ms. Saunders into the debate with reference to invoicing and the mayor’s involvement. She declined to do so and, indeed clearly stated there were no such discussions as Mr. Free alleged. Ms. Saunders was a most credible witness. She had no interest in this lawsuit and was not challenged in cross-examination.

[121] Lastly, throughout the litigation process Mr. Free has taken a number of different positions, all inconsistent with the claim of a fixed term contract.

[122] The fresh as amended Statement of Claim indicates this was a notice case, with Mr. Free, in essence, being an employee of indefinite duration. He also relied on the purported offer from Mr. Smith on March 23, 2009 of a permanent position. Mr. Free then communicates, on June 6, 2009 the acceptance of Council’s offer on May 27, 2009 but at trial said he had already accepted the offer on March 31, 2009. Further, in the prior motion for summary judgment Mr. Free sought damages equivalent to four months of notice, made no reference to a fixed term contract but reported an offer from Council of 22 months to the end of its term.

[123] Mr. Free blames his former counsel for the documentation on the summary judgment motion. These many inconsistencies are troubling, particularly when numerous documents are referred to in the affidavits on the motion, yet no mention was made of the email exchange.

[124] Mr. Free was an experienced municipal Clerk and would understand the importance of documents. To suggest he was unaware of the relevance of the emails for four years is simply not believable. I reject his evidence in this regard.

d) Summary

[125] For the foregoing reasons, I do not accept Mr. Free’s assertion as to the accuracy of the emails. I do accept Mr. Evan’s evidence that no offer of permanent employment was presented.

[126] Accordingly, I reject the claim of Mr. Free regarding a fixed term contract of three years.

[127] What, then, was the agreement?

iii) The Agreement

[128] There being no document accepted as establishing a contract of employment as claimed, it becomes necessary to make the determination based on the evidence tendered. The question now becomes whether the agreement was for an indefinite or temporary position.

[129] Having rejected the purported email exchange, the evidence, in my view was overwhelming.

[130] As previously stated, By-law No. 2009-14 clearly indicated Council’s intention to appoint Mr. Free as Acting or Temporary CAO/Clerk. The closing date for the second advertisement was April 17, 2009. Mr. Free reviewed the nine applications received in response to the advertisement. Council net with Mr. Urbanski on several occasions. Mr. Free did not apply for the permanent position. The established practice of Magnetawan was to appoint an Acting CAO/Clerk before making a permanent appointment.

[131] On all of the evidence, I conclude the appointment of Mr. Free was temporary, to expire once a decision was made for a permanent replacement. While By-law 2009-48, repealing Mr. Free’s appointment, was not passed until July 8, 2009, the entitlement to compensation for Mr. Free’s services came to an end with the resolution passed on June 10, 2009. Given the temporary nature of the position, and the expectation it would be brief, I conclude no notice of termination was required.

iv) Employee or Independent Contractor

[132] The appointment to the position of CAO/Clerk, either temporary or permanent, does not create an employment relationship. The negotiations for the provision of services is what is determinative. Here, there is no dispute such was to be $45.00 per hour and certain expenses.

[133] There was dispute as to whether it was Mr. Free or Mr. Smith who directed payment for services on invoices presented. Regardless, only Mr. Free could direct payment to his company.

[134] In Mr. Free’s Request to Admit, dated February 28, 2014, he asserts:

The parties agreed that remuneration would be made payable to a private company controlled by the plaintiff, rather than to the plaintiff personally.

[135] In Magnetawan’s response, it simply says “admits”.

[136] While not determinative, the invoicing system was consistent with Magnetawan’s practice. As long as he was the Acting CAO/Clerk, I find that Mr. Free, or his company, was an independent contractor. He never was an employee.

v) Damages

[137] In the event my analysis is incorrect on the above issues, I propose to briefly comment on damages.

[138] The now amended claim seeks a damage award of $330,0111.30, as follows:

a) salary $ 289,044.00

b) prejudgment interest $ 7, 892.30

c) OMERS contribution $ 33,075.00

[139] The salary is calculated for 146 weeks, being the remainder of the purported three year contract, plus GST or HST.

[140] Mr. St. John did not address the calculation of damages in his submissions, other than to oppose the amendment of the Statement of Claim.

[141] Mr. Sheppard submits damages resulting from the termination of a fixed term contract of employment are to be assessed for the balance of the term. In general, I agree. See: Spark v Generex Pharmaceuticals Inc., 1999 14873 (ON SC), 1999 Carswell Ont 3893 (Ont. S.C.J.) at paras 34 and 35, citing E.E. Mole & M.J. Stendon, eds., Butterworths’ Wrongful Dismissal Practice Manual, looseleaf (Markam: Butterworths, 1999); and Professor Waddams, The Law of Damages, 3rd ed. (Auror: Canada Law Book, Inc. 1997).

[142] The plaintiff has a duty to mitigate even where the contract for employment is for a fixed term. See: Spark, supra, at para. 37. However, Magnetawan did not plead mitigation, presented no evidence on the topic and did not cross-examine Mr. Free on his efforts to obtain further employment. Hence, mitigation is not a factor requiring determination.

[143] I have concluded the position was temporary and there can be no damage award.

[144] If the position was of an indefinite nature, in the circumstances of this case a damage award equivalent to four months notice, or $31,000.00 (rounded), would not be unreasonable.

[145] If the position was for a fixed term of three years, the damage award would be the equivalent of the salary for 146 weeks, or $262,800.00. GST and HST would be added if the contract is based on the prior invoicing, although that would be inconsistent with the purported emails. There was no evidence as to the calculation of the pension contribution but the amount was not challenged and is likely reasonable.

[146] For the foregoing reasons, the action is dismissed. If the parties are unable to agree on the issue of costs, brief written submissions are to be delivered to my chambers in Cayuga within 30 days of the release of this decision.

The Honourable Mr. Justice D.J. Gordon

Released: September 8, 2014

COURT FILE NO.: 126/09(SIM)

DATE: 2014-09-08

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

David Free

Plaintiff

and –

Municipality of Magnetawan

Defendant

REASONS FOR JUDGMENT

Released: September 8, 2014