Contractor and employer disputed language outlining notice required when contract was terminated early
This instalment of You Make the Call features a contractor who disputed the terms under which his contract was terminated.
Kerry Lynch signed a contract to be the graphics and web officer for the 2014 Halifax Commonwealth Games Candidate City Society, which prepared Halifax’s bid to host the 2014 Commonwealth Games. The contract was for a fixed term from Jan. 8, 2007 to Nov. 15, 2007. The end date was supposed to coincide with the selection of the winning bid for the games. If the bid succeeded, there was a possibility of a position with the administration of the games.
The contract allowed for the termination of Lynch’s employment if he failed to perform “at a superior level” and didn’t immediately improve after one warning. A subclause of the termination provision entitled Lynch to two months’ notice or pay in lieu of notice if terminated without cause.
In March 2007, the Nova Scotia government and the City of Halifax withdrew their financial support of the games, which effectively ended the bid shortly thereafter. The society gave Lynch two months’ working notice his contract would be terminated early, at the end of June 2007, as a result.
Lynch claimed because there were no performance issues, the termination without cause was effectively buying out his contract and he was entitled to the balance of the contract. The society argued the two months’ notice was specified in the contract and, alternatively, the withdrawal of support for the bid frustrated the contract and relieved it of any obligations under the contract.
You Make the Call
Was Lynch entitled to be paid for the balance of the contract?
OR
Did the contract specify he was only entitled to two months’ notice?
If you said Lynch was entitled to be paid for the balance of the contract, you’re right. The court found the termination provisions specifying a two-month notice period fell under the clause dealing with performance issues (which was the title of the clause) and in the absence of any performance concerns, the society could not rely on those provisions.
“(The termination clause) of the contract has an integrity about it, related to the issue of performance,” the court said. “It is a code unto itself. As such, I find that the contract does not allow for a two-month termination without cause for reasons unrelated to performance.”
The court said the society could have bought out the contract for its full value at any time, but ending it with two months’ notice was an exception to Lynch’s expectation of employment for the term and could only be used for the exact reason specified. The court also could not find there was a frustration of the contract. Lynch was hired as part of the society’s preparation for the bid, for which funding was already provided. The financing withdrawn was for the games themselves, which effectively ended the bid. It noted after the bid ended, there was still work to do to wrap things up, which provided Lynch with two months employment before he was terminated.
The court ruled Lynch was entitled to payment for the balance of his contract from July 1, 2007 to November 15, 2007. Because of his skills and the likelihood he would be able to find work before November, the amount was reduced to 65 per cent of what he would have earned with the society, or $11,866.66.
For more information see:
• Lynch v. 2014 Halifax Commonwealth Games Candidate City Society, 2007 CarswellNS 357 (N.S. Small Claims Ct.).
Kerry Lynch signed a contract to be the graphics and web officer for the 2014 Halifax Commonwealth Games Candidate City Society, which prepared Halifax’s bid to host the 2014 Commonwealth Games. The contract was for a fixed term from Jan. 8, 2007 to Nov. 15, 2007. The end date was supposed to coincide with the selection of the winning bid for the games. If the bid succeeded, there was a possibility of a position with the administration of the games.
The contract allowed for the termination of Lynch’s employment if he failed to perform “at a superior level” and didn’t immediately improve after one warning. A subclause of the termination provision entitled Lynch to two months’ notice or pay in lieu of notice if terminated without cause.
In March 2007, the Nova Scotia government and the City of Halifax withdrew their financial support of the games, which effectively ended the bid shortly thereafter. The society gave Lynch two months’ working notice his contract would be terminated early, at the end of June 2007, as a result.
Lynch claimed because there were no performance issues, the termination without cause was effectively buying out his contract and he was entitled to the balance of the contract. The society argued the two months’ notice was specified in the contract and, alternatively, the withdrawal of support for the bid frustrated the contract and relieved it of any obligations under the contract.
You Make the Call
Was Lynch entitled to be paid for the balance of the contract?
OR
Did the contract specify he was only entitled to two months’ notice?
If you said Lynch was entitled to be paid for the balance of the contract, you’re right. The court found the termination provisions specifying a two-month notice period fell under the clause dealing with performance issues (which was the title of the clause) and in the absence of any performance concerns, the society could not rely on those provisions.
“(The termination clause) of the contract has an integrity about it, related to the issue of performance,” the court said. “It is a code unto itself. As such, I find that the contract does not allow for a two-month termination without cause for reasons unrelated to performance.”
The court said the society could have bought out the contract for its full value at any time, but ending it with two months’ notice was an exception to Lynch’s expectation of employment for the term and could only be used for the exact reason specified. The court also could not find there was a frustration of the contract. Lynch was hired as part of the society’s preparation for the bid, for which funding was already provided. The financing withdrawn was for the games themselves, which effectively ended the bid. It noted after the bid ended, there was still work to do to wrap things up, which provided Lynch with two months employment before he was terminated.
The court ruled Lynch was entitled to payment for the balance of his contract from July 1, 2007 to November 15, 2007. Because of his skills and the likelihood he would be able to find work before November, the amount was reduced to 65 per cent of what he would have earned with the society, or $11,866.66.
For more information see:
• Lynch v. 2014 Halifax Commonwealth Games Candidate City Society, 2007 CarswellNS 357 (N.S. Small Claims Ct.).
