The Whalley Trial Part XI: ‘Mysterious Contract’

Editor’s Note: John Whalley, the former Economic Development Manager of the Cape Breton Regional Municipality (CBRM) is suing the CBRM for constructive dismissal. The case finally came to trial from 20-24 August 2018 and the Spectator was there. We’re presenting our coverage in a series of articles because the trial touched on so many issues of interest to CBRM residents. This is Part XI (Read Part I,Part II,Part III,Part IV,Part V, Part VIPart VIIPart VIII, Part IX and Part X)

 

The common law rule in Browne v Dunn states that where a party intends to lead evidence that will contradict or challenge the evidence of an opponent’s witness, it must put that evidence to the witness in cross-examination. It is essentially a rule of fairness—that a witness must not be discredited without having had a chance to comment on or counter the discrediting information. It also gives the other party notice that its witness’ evidence will be contested and further corroboration may be required. – Uniform Evidence Law, Australian Law Reform Commission Report 102, para 5.143.

Blair Mitchell, the lawyer for the plaintiff, John Whalley, lost no time in citing case law during his own summation, but his first citation related not to Canadian labor law or contract law but to Browne v Dunn, a British case dating to 1893 which established the rule noted above.

Mitchell asked that Justice Patrick Murray “instruct himself” in the case and the resulting rule, which he said was meant to insure “fairness for litigants and witnesses in a proceeding.” Tony Mozvik, the lawyer for the CBRM, Mitchell argued, had made a number of “gratuitous” references in his final submission – references to “something untoward” in the proceedings and to the contents of a web site (that is, to former CAO Jerry Ryan’s name on the New Dawn web site, where he was listed as a member of the board of directors) – that were not in keeping with the rule, in Mitchell’s view:

[I]f there is a suggestion of improper action, those questions are to be put to the witness.

Having raised the point (and noted that his “friend” Mozvik had made a number of “gratuitous” remarks throughout his submissions), Mitchell then proposed to discuss first the terms of the Whalley’s contract (particularly with regard to the duty to mitigate) and then the charge of constructive dismissal.

 

Boutcher v. Clearwater

Mitchell’s summation took about two hours and covered these issues in detail far too great for me to attempt to recap (I can hear your collective sigh of relief). Instead I’ve decided to focus on the “authorities” or case law cited with a focus on anything that seemed to contradict assertions made by the defense.

Clearwater logo

Mitchell started by dismissing the “best evidence” rule, evoked by Mozvik in his discussion of Whalley’s “mysterious employment contract.” The best evidence rule, said Mitchell, was:

..devised to be sure that bodies making decisions and courts have before them the most accurate evidence available. It has no application here, it is not a rule of exclusion.

Mitchell then accused Mozvik of citing old case law (I think that’s the legal equivalent of wearing last year’s hemlines). Mozvik had cited Clelland v. eCRM Networks Inc., a 2006 decision by Nova Scotia Associate Chief Justice Deborah Smith, on the subject of mitigation. More precisely, Mozvik had cited Smith citing a 2000 decision from the Ontario Superior Court, Graham v. Marleau, Lemire Securities Inc.

Mitchell argued Clelland “does not represent the current law” which, in Nova Scotia, he argued, is represented by Boutcher v. Clearwater Seafoods Limited Partnership, a 2010 ruling by the Nova Scotia Court of Appeal that reads like a Stan Rogers song.

The plaintiff, Cecil Boutcher, went to sea at 15 and by the age of 25 was a captain. In 2004, he was captaining the Ocean Lady for Clearwater – a 130-foot vessel with a crew of 19.

The Ocean Lady was a wetfish vessel “which ices bags of scallops at sea,” and Clearwater was in the process of replacing the wetfish vessels in its fleet with frozen at sea (FAS) factory trawlers that “shuck[] scallops then freeze[] them individually in a blast freezer.”

Boutcher’s contract stated (in article 19) that Clearwater could terminate the agreement by “giving 30 days’ notice” or paying him $25,000.

In 2004, Clearwater did terminate the contract but argued that Boutcher’s earnings were far higher than $25,000 and that this “actual mitigation” meant he wasn’t entitled to the $25,000. The question, for the court, was:

…whether the $25,000…is even subject to mitigation.

Writing for the majority, Justice Joel E. Fichaud said:

In my view, it is not. The $25,000 was fixed by contract, and is not diminishable by the employee’s later earnings.

Justice Murray at this point asked Mitchell if, at the risk of oversimplifying the matter, he could say that Whalley’s was a claim “for liquidated demand and therefore mitigation does not apply?”

Mitchell replied, “That’s exactly what it is.”

 

Bowes v. Goss

Mitchell cited a number of other recent Canadian precedents, but the most important one – the one that seems to be cited most frequently in discussions of mitigation – was Bowes v. Goss Power Products, so that’s the one I’ll tell you a little bit about it.

The original case was heard by Justice Kevin W. Whitaker of the Ontario Superior Court and concerned one Peter Bowes who was hired as a VP of sales and marketing by Goss Power Products in 2007 and terminated without cause on 13 April 2011.

Bowes’ contract stated that he could be terminated without cause provided he was given six months’ notice or six months’ pay in lieu of notice. His contract said nothing about the need to mitigate. His letter of termination said he would be paid six months’ salary but would be required to search for work and to keep Goss apprised of his efforts.

Bowes ended up starting a new job on 25 April 2011. Goss Power Products argued that his salary loss was therefore 12 days.

But Bowes argued he was entitled to his six months’ severance.

Chief Justice Warren Winkler (Source: Law Society of Ontario Gazette http://www.lawsocietygazette.ca/news/opening-courts-2013/)

Chief Justice Warren Winkler (Source: Law Society of Ontario Gazette)

The lower court agreed with Goss, finding that Bowes had a duty to mitigate his losses and had, in fact, mitigated his losses. In his decision, Justice Whitaker cited the same case Mozvik had in his summation – Graham v. Marleau, Lemire Securities Inc.

But Bowes appealed the ruling and in 2012, the Ontario Court of Appeal reversed Whitaker’s decision.

Chief Justice Warren K. Winkler held that the duty to mitigate doesn’t apply when an employment contract contains a severance cause spelling out the employee’s entitlement in the case of termination without cause. (The decision specified that the duty to mitigate remained if it was expressly stated in the contract.)

Winkler explained that mitigation isn’t an issue because the court isn’t assessing damages for a breach of contract – it is simply enforcing the contract, causing the employee to be paid a fixed some s/he is entitled to “irrespective of the actual damage suffered by the employee.”

(Interestingly, Winkler actually cited Boutcher v. Clearwater in his decision.)

 

Applicability

So what does all this mean for the Whalley case? Well, Mitchell argued that as these newer cases represent the current law, and as Whalley had a contract (like that of former CAO Jerry Ryan) that entitled him to 18 months’ severance in the case of wrongful dismissal, and as he was wrongfully (or constructively) dismissed, he was therefore entitled to 18 months’ severance with no requirement to mitigate.

In other words: Whalley was entitled to 18 months’ severance even though his actually salary loss was only one month, as he went to work for New Dawn four weeks after leaving the CBRM.

Obviously, the big question here is did Whalley, in fact, have a contract with a fixed-term severance clause? Mozvik argued he didn’t, but Mitchell insisted he did and that even if he didn’t have a signed contract spelling out severance, he was still entitled to it because Jerry Ryan’s oral assurances that he had severance, coupled with Whalley’s belief that he had severance (a belief so strong he never attempted to negotiate severance even when he felt his employment to be in jeopardy – as when Mayor Cecil Clarke first took office in 2012) provided “ample evidence” that severance had been agreed between the two parties.

Finally, Mitchell said that should the court find no evidence of a contract with a fixed-term severance clause and decide to treat the case as “just a common-law claim for wrongful dismissal,” Whalley would be entitled to 18 to 20 months’ salary in damages, but he admits he mitigated the loss and would therefore claim only one month’s salary (representing the month between his resigning from the CBRM and his starting work with New Dawn) or $6,088.50.

I am very curious to see how Justice Murray will rule on this.

Featured image of contract by Blogtrepreneur, CC BY 2.0, via Wikimedia Commons

 

 

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