Court of Appeal Decision of the Week

Employment Law: “Express Oral Terms”; Standard of Review

Case: Aubrey v. Teck Highland Valley Copper Partnership, 2017 BCCA 144 (CanLII)

Keywords: Employment Contract; Oral Term; Severance Package; Objective Assessment

Synopsis:

The Appellant, Teck Highland Valley Copper Partnership (“HVC”), operates a large copper mine near Logan Lake, Brit111ish Columbia. In 1993, the Respondent, Mr. Aubrey is hired in a staff position as supervisor. Following a discussion with HVC’s human resources department, Mr. Aubrey understands that, upon retirement, he is entitled to receive one month’s pay for every year of service up to a maximum of 18 months.

Mr. Aubrey retires in July 2012 and HVC refuses to provide the package. An action is brought for damages for breach of the employment contract. The Trial Judge allows the claim, awarding damages of $176,250. For the Trial Judge, Mr. Aubrey’s understanding/recollection of the discussion with HVC’s human resources department provided evidence of an express oral term in the employment agreement.

On appeal, HVC does not challenge Mr. Aubrey’s credibility (saying there is no material conflict in the evidence provided by HVC’s human resources department and the Respondent). The question at issue: whether there is truly evidence to support the Trial Judge’s finding that an express oral term was included to pay Mr. Aubrey a “package” upon retirement. The Court of Appeal determines there is no such evidence. The appeal is allowed; the Trial Judge’s order is set aside.

Importance:

Standard of Review

Citing Lacey v. Weyerhaeuser Company Limited, 2013 BCCA 252 (CanLII) at para. 40, the Court of Appeal noted the question in issue concerned contract formation – as distinct from contract interpretation. As such, the existence of an express oral term paying Mr. Aubrey on retirement was a question of fact, reviewable only for palpable and overriding error (see Housen v. Nikolaisen, 2002 SCC 33 (CanLII) at paras. 1, 5, 10, 20–23; Benhaim v. StGermain, 2016 SCC 48 (CanLII) at paras. 36-39). The Court of Appeal was also careful to point out that to make a finding of fact for which there is no evidence is an error of law per se. (See para. 22).

Subjective Contractual Interpretation: There Must be Some Misunderstanding

HVC argued, based upon the testimony of Mr. Aubrey and Mr. Matthews (HVC’s human resources representative), that human resources had merely promised a “severance” package – there was never an express promise any payment would be made on retirement. (See para. 36). Mr. Aubrey’s contention was that the words “severance” and “retirement” were used interchangeably during the discussion and without regard to any particular legal definition. (See para. 26). For both the Respondent and the Trial Judge below, regardless of the particular words that may have been used, HVC and Mr. Aubrey had an agreement, a meeting of the minds regarding what Mr. Aubrey was entitled to upon retirement. (See paras. 27-32).

The Court of Appeal affirmed, following the Federal Court of Appeal’s decision in Apotex Inc. v. Allergan Inc., 2016 FCA 155, that “Evidence of the actual state of mind or subjective intention of the parties is irrelevant to the existence of a valid contract and its terms” (See para. 35). For the Court of Appeal, to establish that the words “severance” or “separation” meant leaving voluntarily upon requirement, something more was required:

“…Accepting that was Mr. Aubrey’s understanding does not mean there was a meeting of the minds as regards the alleged term. I am of the view the evidence does not support the term alleged by Mr. Aubrey and found by the trial judge.” (See para. 34).

Signaling a strong preference for objectivity, the Court of Appeal stated, “The focus with respect to contested contractual terms is on the actual communications between the parties, not their understandings. This is because determining contractual formation and terms is an exercise based on objective assessment” (See para. 48).

Counsel for the Appellant: Andrew Nathanson and Keri Bennett (Fasken Martineau DuMoulin LLP, Vancouver)

Counsel for the Respondent: Elizabeth Harris and Chris Ross (Morelli Chertkow LLP, Kamloops)

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Posted: Wednesday, April 19, 2017