COURT OF APPEAL FOR BRITISH COLUMBIA
Citation:
Rickards (Estate of) v. Diebold Election Systems Inc.,
2007 BCCA 246
Date: （略）
Docket: CA032410
Between:
Gordon Edgar Rickards as executor of the Will of Clinton Henry Rickards, Deceased
Respondent
(Plaintiff)
And
Diebold Election Systems Inc.
Appellant
(Defendant)
Before:
The Honourable Madam Justice Rowles
The Honourable Madam Justice Ryan
The Honourable Mr. Justice Smith
R. Finlay
Counsel for the Appellant
P.M. Pulver and S.M. Forestall
Counsel for the Respondent
Place and Date of Hearing:
Vancouver, British Columbia
30 January 2006
Place and Date of Judgment:
Vancouver, British Columbia
30 April 2007
Written Reasons by:
The Honourable Mr. Justice Smith
Concurred in by:
The Honourable Madam Justice Rowles
The Honourable Madam Justice Ryan
Reasons for Judgment of the Honourable Mr. Justice Smith:
Introduction
[1] The appellant appeals from an order that it pay damages for breaching an agreement reached with Mr. Clinton Rickards, now deceased, following the termination of his employment by the appellant. The reasons of the trial judge are reported at (2004), 36 C.C.E.L. (3d) 159, [2004] B.C.J. No. 2232 (QL), and may be found at 2004 BCSC 1357.
[2] The appellant is in the business of providing electronic voting machines and technical support for those systems. Mr. Rickards established a business in the same field in 1981, which was subsequently merged with the business of a predecessor of the appellant. He remained an employee of the business for some 21 years until the appellant discharged him effective 25 January 2002. At that time, he was 53 years of age and was the manager of the appellant’s Marketing Division, Investment Relations.
[3] The appellant did not allege that it had cause for Mr. Rickard’s dismissal. It made a gratuitous payment of $19,395.92 (the gross sum of $35,181.63 less statutory deductions and remittances) which it said amounted to three months’ salary.
[4] Mr. Rickards claimed he was entitled to a larger severance payment in lieu of notice of termination and, as a result, the parties entered upon negotiations through their respective solicitors. Through their correspondence, they agreed upon certain terms to settle the claim. However, before they could reduce the terms to a formal contract, Mr. Rickards became ill and, on 16 May 2002, he died.
[5] The respondent, Mr. Rickards’ brother and the executor of his estate, commenced action against the appellant claiming that a settlement agreement had been reached between the solicitors and seeking specific performance of the agreement or damages for its breach. In the alternative, he sought damages for the appellant’s failure to give reasonable notice of termination of Mr. Rickards’ employment. He applied for judgment on a summary trial under Rule 18A of the Rules of Court, B.C. Reg. 221/90.
[6] The trial judge stated the issues as follows:
(1) Is the estate of Clint Rickards entitled to damages from the defendant Diebold for breach of a settlement agreement between Mr. Rickards and Diebold?
(a) Did Mr. Rickards and Diebold conclude a settlement agreement?
(b) If there was an agreement, was it frustrated by the death of Mr. Rickards?
(2) Can the executor maintain an action on behalf of the estate to enforce the settlement agreement in light of s. 59 of the Estate Administration Act, R.S.B.C. 1996, c. 122? If there was no settlement agreement, can the executor maintain an action for damages for wrongful dismissal?
(3) To what damages is the estate entitled:
(a) for breach of the settlement agreement?
(b) for wrongful dismissal?
[7] Applying the principles regarding the formation and enforcement of settlement agreements summarized in Fieguth v. Acklands Ltd. (1989), 37 B.C.L.R. (2d) 62 at pp. 70-72, to the facts of the case as she found them, the trial judge concluded that an enforceable settlement agreement had been reached in the correspondence between the parties’ solicitors. Thus she answered question (1)(a) in the affirmative. Further, she answered question (1)(b) in the negative, holding that Mr. Rickards’ death did not frustrate the settlement agreement. As well, she answered the first question under issue (2) in the affirmative: she concluded that the executor’s action to enforce the settlement agreement was not barred by s. 59 of the Estate Administration Act, R.S.B.C. 1996, c. 122.
[8] While it was not necessary to do so in view of her conclusion that there was a binding settlement agreement and that the respondent was entitled to damages for its breach, the trial judge went on to consider, in case she was wrong that there was a concluded settlement, whether the respondent could maintain an action for damages for breach of the employment contract. She rejected the appellant’s submission that employment contracts require personal performance by the employee and cannot be enforced by the employee’s estate, and concluded that the respondent executor could maintain such an action.
[9] As for question (3)(a), the trial judge assessed damages for breach of the settlement agreement in the amount agreed upon, stating that the respondent “is entitled to damages of $20,000 reflecting the loss of the ‘settlement inducement’ payment and in a sum equivalent to seventeen months of salary continuance, less any amounts earned by Mr. Rickards between the date of his dismissal and his death.” On the alternative claim, question (3)(b), she assessed damages in an amount equivalent to 21 months’ notice of termination, which she concluded was reasonable notice in the circumstances.
[10] The appellant asserts on this appeal that the trial judge erred:
(i) in finding that the respondent could seek to enforce the settlement agreement or advance an alternative claim for wrongful dismissal on behalf of the deceased, post mortem;
(ii) in finding that the settlement agreement was not frustrated upon the death of Mr. Rickards;
(iii) in awarding damages on the alternative claim of wrongful dismissal, given that the respondent adduced no evidence of loss.
[11] No issue is taken on the appeal with the trial judge’s conclusion that a settlement agreement had been concluded before Mr. Rickards’ death or with her conclusion that s. 59 of the Estate Administration Act does not bar the executor’s action. In the event this Court concludes, contrary to the appellant’s submissions, that the settlement agreement was enforceable by the executor or was not frustrated by Mr. Rickards’ death, the appellant does not take issue with the amount of the damages awarded.
[12] As I have concluded, for the reasons that follow, that the trial judge erred in concluding that the settlement agreement was not frustrated by Mr. Rickards’ death, I would allow the appeal. Accordingly, I do not find it necessary to address the other grounds of appeal advanced.
[13] In my view, the trial judge made two errors that led her to decide this case incorrectly. First, she erred in her construction of the settlement agreement reached by the parties with the result that she failed to appreciate that Mr. Rickards promised to seek an equivalent, alternate position in which he could provide his services in exchange for salary. Second, and as a result, she erred in concluding that the agreement was not frustrated by his death because, in her view, his executor could perform his contractual obligations.
[14] The trial judge found the agreement in three letters exchanged between the parties’ respective solicitors.
[15] In the first, the appellant’s solicitor wrote to confirm a settlement agreement on specified terms, including,
5. a reporting function and deduction for mitigation earnings through the notice period the particulars of which are to be specified in a written agreement between the parties.
[16] In his reply, Mr. Rickards’ solicitor proposed the following “with respect to item #5”:
Mr. Rickards will conduct a reasonable search for equivalent, alternate employment, and will notify DES in writing if/when he obtains such employment. In this paragraph, “equivalent, alternate employment” means work for which Mr. Rickards earns at least 75% of his total annual income with DES throughout the remainder of the salary continuance period, including employment, contracting, or consulting. If Mr. Rickards obtains equivalent, alternate employment before the end of the salary continuance period on October 18, 2003, DES will pay to him a lump sum of one-half of the remaining salary continuance payments.
[My emphasis.]
[17] The appellant’s solicitor replied, expressing general agreement but raising the following concerns:
1. Deduction for mitigation earnings apply to any sums earned during the notice period, not just those which come through the limited definition of “equivalent, alternate employment” indicated in your suggested language.
2. There is no agreement to pay Mr. Rickards a lump sum of one-half of the remaining salary continuance payments in the event that he obtains new employment. This language should be deleted.
We suggest the following revisions to your draft language:
Mr. Rickards will conduct a reasonable search for equivalent, alternate employment, and will notify DES in writing if/when he obtains such employment. In this paragraph, “equivalent, alternate employment” means work for which Mr. Rickards earns at least 75% of his total annual income with DES throughout the remainder of the salary continuance period, including employment, contracting, or consulting. In addition, Mr. Rickards will notify DES in writing if/when he obtains remuneration, compensation or income as a result of providing services to third parties during the salary continuance period, such services to include active employment, contracting, or consulting (the “Employment Earnings”). DES may thereafter, at its absolute discretion, reduce the amount of salary continuance paid to Mr. Rickards by the amount of any Employment Earnings reported by him.
[Emphasis by underlining in original;
emphasis by italicizing is mine.]
[18] The trial judge concluded at ? 38 of her reasons “that it was an implied term of the agreement (flowing from the use of the term ‘mitigation earnings’) that Mr. Rickards would make reasonable efforts to seek other sources of income.” Contrary to that conclusion, however, the passages that I have italicized in the letters record an express agreement, as I will explain, (1) that Mr. Rickards would seek “equivalent, alternate employment”, (2) on the meaning of that phrase, and (3) that he would notify the appellant if and when he should obtain such employment. As well, the letters reflect an agreement that Mr. Rickards’ earnings from any new employment could be credited to the appellant. The parties differed only over how his earnings from such employment would affect the amounts that the appellant promised to pay him over the term of the agreement. The trial judge found that the method of calculating these amounts was not material and that there was therefore an enforceable contract despite their failure to agree in this term. The appellant does not challenge that finding.
[19] Accordingly, in my view, the appeal turns on the appellant’s submission that the contract was frustrated by Mr. Rickards’ death. This submission requires, at the outset, a review of the trial judge’s construction of the contract and an examination of the promises made by the parties.
[20] The proper approach to contractual interpretation was described by Cumming J.A. (Seaton and Southin JJ.A. concurring) in MacMillan Bloedel Ltd. v. B.C. Hydro & Power Authority (1992), 72 B.C.L.R. (2d) 273, [1993] 2 W.W.R. 127, (1992), 98 D.L.R. (4th) 492 (C.A.) as follows:
[30] In the absence of ambiguity, words in a contract are to be given their literal meaning: North Eastern Railway Co. v. Lord Hastings, [1900] A.C. 260 (H.L.). Words of ordinary use in a contract must be construed in their ordinary and natural sense: Matsqui (Municipality) v. Western Power Co., [1934] A.C. 322, [1934] 1 W.W.R. 483, [1934] 2 D.L.R. 81 (P.C.). The paramount test of the meaning of words in a contract is the intention of the parties: Grand Trunk Pacific Coast Steamship Co. v. Victoria-Vancouver Stevedoring Co., 57 S.C.R. 124, [1918] 3 W.W.R. 450, 43 D.L.R. 231. The intention of the parties is to be determined in the objective sense by reference to the surrounding circumstances at the time of signing the contract: Wenzoski v. Klos, [1940] 1 W.W.R. 523, [1940] 2 D.L.R. 195 (Man. C.A.).
[21] The reason the surrounding circumstances must be considered was stated by Lord Blackburn in River Wear Comrs v. Adamson, [1877] 2 A.C. 743 at 763, [1874-80] All E.R. Rep. 1 as follows:
In all cases the object is to see what is the intention expressed by the words used. But, from the imperfection of language, it is impossible to know what that intention is without inquiring further, and seeing what the circumstances were with reference to which the words were used, and what was the object appearing from those circumstances which the person using them had in view, for the meaning of words varies according to the circumstances with respect to which they were used.
This approach is well-established: see Prenn v. Simmonds, [1971] 3 All E.R. 237, [1971] 1 W.L.R. 1381 (H.L.); Irly Distributors Ltd. v. Powell River Town Centre Ltd., [2007] B.C.J. No. 363 (QL), 2007 BCCA 124 at ?? 11, 12.
[22] Further, words must be given their primary meaning where that meaning “is unambiguous, and … is not excluded by the context, and is sensible with reference to the extrinsic circumstances in which the writer was placed at the time of writing”: per Coleridge J. in Shore v. Wilson (1842), 9 Cl & Fin 355 at 525, 8 E.R. 450, adopted in Black Swan Gold Mines Ltd. v. Goldbelt Resources Ltd. (1996), 25 B.C.L.R. (3d) 285, 78 B.C.A.C. 193, 128 W.A.C. 193, [1997] 1 W.W.R. 605 (C.A.) at ? 23.
[23] Giving the words “Mr. Rickards will conduct a reasonable search for equivalent, alternate employment” their literal or primary meaning, I conclude that Mr. Rickards made a positive promise that he would do so.
[24] There is nothing ambiguous about these words seen in their immediate context, which is the correspondence itemizing the terms on which the parties had agreed. The phrase is contained, in both letters in which it appears, in a clause that sets out contractual language clearly intended to be used “in a written agreement between the parties”, as specified in item 5 of the first letter in the exchange. Viewed objectively, the phrase was intended to express an obligation. The only other purpose it could have served in the proposed written agreement would be to recite Mr. Rickards’ intention to seek such employment as a background fact inserted for interpretive purposes. However, the phrase is couched in lawyers’ language of obligation, not in the language one would expect if it were a mere statement of fact. Moreover, a recital of a clear intention that a party should do certain acts supports the inference of a covenant to do such acts: see Dukart v. District of Surrey, [1978] 2 S.C.R. 1039 at 1054-55, [1978] 4 W.W.R. 1. If it were necessary, I would draw such an inference in this case.
[25] Further, the primary meaning of these words is not excluded by their external context. Indeed, it is consistent with the circumstances, viewed objectively, in which the contract was made. Absent an agreement, the parties faced a lawsuit for damages for breach of the term requiring reasonable notice of termination implied in their employment contract, with all the uncertainties as to result and amount that are inherent in such lawsuits.
[26] For its part, the appellant faced the prospect of being ordered to pay damages in a lump sum, mitigated perhaps if it could prove that Mr. Rickards failed to take reasonable steps to find substitute employment and thereby to reduce his loss. It was in the appellant’s interest to minimize the amount of its potential liability by reducing the risk that Mr. Rickards might not find alternate employment within the notice period. It could do this by spreading payments to Mr. Rickards over time and by obtaining an express promise from him that he would seek other work, with earnings therefrom to be credited against what it had agreed to pay him.
[27] On his side, Mr. Rickards was faced with the expense and uncertainty of a lawsuit and a lengthy pre-trial period during which he might have no income if he were unable to find alternate employment. It was in Mr. Rickards’ interest to avoid this risk by securing a periodic income that would sustain him during his transition to new employment. Accordingly, he could avoid the risk by promising to seek other employment in exchange for a promise by the appellant to make the periodic payments, subject to deduction for amounts he might earn in his new employment.
[28] It follows that to characterize the phrase “Mr. Rickards will conduct a reasonable search for equivalent, alternate employment” as a contractual promise is not inconsistent with the object of the parties as gleaned from an objective appraisal of the circumstances in which they made their agreement.
[29] Moreover, Mr. Rickards’ promise to seek alternate work was fundamental to the settlement agreement because, together with the release of his common law claim for damages for breach of the employment contract, it constituted the consideration for the appellant’s promise to make the salary continuance payments.
[30] The concept of consideration is captured neatly in a phrase in Fridman, The Law of Contract In Canada, 5th ed. (Toronto: Thompson Carswell, 2006) at 83, where the author said, “The act or promise of one party is, as it were, ‘bought’ or ’bargained for’ by the act or promise of the other; each party exchanges something of value.” That is what occurred here.
[31] It is clear from the correspondence that formed the contract that the appellant insisted, and Mr. Rickards agreed, upon a provision for crediting earnings from other employment against the salary continuance payments. As the trial judge noted (at ? 35), the appellant submitted that this provision “could make a difference in the order of tens of thousands of dollars if Mr. Rickards did find alternate employment during the notice period”. Thus, the promise by the appellant to make the periodic payments was “bought” by the promises of Mr. Rickards to seek equivalent, alternate employment, to account for his earnings from such employment, and to release his common law claim for damages.
[32] Accordingly, the primary meaning of the words “Mr. Rickards will conduct a reasonable search for equivalent, alternate employment” must prevail and, on a proper construction of the agreement, Mr. Rickards made a contractual promise that he would look for such employment.
[33] The trial judge’s error was in relying on the context in which the contract was made to the exclusion of the words of the contract. She said,
[61] The reporting/mitigation term bore only on the calculation of damages payable for Diebold’s past breach of the employment contract, allowing Diebold to benefit if Mr. Rickards managed to avoid losses during the notice period.
. . .
[63] The reporting/mitigation term simply corresponded to the principle that a plaintiff will not receive compensation if he or she has failed to act reasonably to avoid losses. It did not somehow reinstate Mr. Rickards as an employee of Diebold or constitute a contract for his provision of services to Diebold.
[34] Thus, she conflated the previous contract of employment with the settlement agreement in her analysis and allowed the words used in the settlement agreement to be “overwhelmed by a contextual analysis”: see Black Swan Gold Corp., supra, at ? 19. The employment agreement and the settlement agreement were discrete contracts. The settlement agreement was not intended to “reinstate Mr. Rickards as an employee” of the appellant or to “constitute a contract for his provision of services” to the appellant. Damages for breach of the employment agreement were no longer an issue. The principle that a claimant of damages at common law will act reasonably to avoid losses was therefore irrelevant. The settlement agreement resolved those issues conclusively and forever. That is apparent from the terms of the release, which was delivered by the appellant’s solicitor with the final letter in the exchange that constituted the agreement:
In consideration of payment made to me by Diebold … of 20 months salary continuation (less statutory deductions), I, Clinton Rickards, do for myself and my heirs, executors, administrators and assigns, (hereinafter collectively referred to as “I”) forever release, remise and discharge Diebold Election Systems Inc, its parent companies, subsidiaries, and affiliates, and all of its officers, directors, employees, agents, insurers, successors and assigns … from any and all actions, causes of action, contracts, (whether express or implied), claims and demands for damages, loss or injury, suits, debts, sums of money, … and claims of any and every kind and nature … against the Company which I have, or may hereafter have by reason of or existing out of any causes whatsoever existing up to and inclusive of the date of this Release, including but without limiting the generality of the foregoing: (a) my employment with the Company; (b) the termination of my employment with the Company; and (c) any and all claims for damages, salary, wages, termination pay, severance pay, vacation pay, commissions, bonuses, expenses, allowances, incentive payments, insurance or any other benefits (except pension benefits) arising out of my employment with the Company.
[My emphasis]
[35] Thus, the terms of the release make it clear that all vestiges of the previous employment agreement were gone and that the parties’ legal relationship was to be governed thereafter by the settlement agreement. That agreement, as I have explained, contained an express promise by Mr. Rickards that he would seek substitute employment.
[36] I turn now to whether the agreement was frustrated and brought to an end by Mr. Rickards’ death.
[37] The doctrine of frustration was described by Binnie J., writing for the court, in Naylor Group Inc. v. Ellis-Don Construction Ltd., [2001] 2 S.C.R. 943, 2001 SCC 58:
53 Frustration occurs when a situation has arisen for which the parties made no provision in the contract and performance of the contract becomes “a thing radically different from that which was undertaken in the contract”: Peter Kiewit Sons Co. of Canada v. Eakins Construction Ltd., [1960] S.C.R. 361 (S.C.C.), per Judson J., at p. 368, quoting Davis Contractors Ltd. v. Fareham Urban District Council, [1956] A.C. 696 (U.K. H.L.), at p. 729.
. . .
55 . . . The court is asked to intervene . . . to relieve the parties of their bargain because a supervening event . . . has occurred without the fault of either party.
[38] In Davis Contractors Ltd. v. Fareham Urban District Council, [1956] A.C. 696 at 721, [1956] 2 All E.R. 145 (H.L.), which was cited by Binnie J. at ? 53, Lord Reid posed the critical question in these terms:
The question is whether the contract . . . is, on its true construction, wide enough to apply to the new situation: if it is not, then it is at an end.
[39] Under the settlement agreement, the appellant’s only obligation was the financial one of making the salary continuance payments, the amount of which hinged on whether Mr. Rickards was able to obtain substitute employment. The inability of Mr. Rickards to find substitute work would not have been a supervening event since the agreement provided only that he would conduct a reasonable search for such work, not that he would obtain it. Accordingly, although it would have constituted a loss of advantage to the appellant if Mr. Rickards were unable to find work, that event would not have frustrated the contract. However, Mr. Rickards’ death was, to use the words of Waddams, The Law of Contracts, 5th ed. (Toronto: Canada Law Book Inc., 2005) at ? 363, “outside the range of risks that the agreement allocates”. Since his death deprived the appellant of a substantial part of the consideration for which it had bargained and since it thereby altered the consequences of the appellant’s only obligation, the contract was not wide enough to apply to this new situation. Performance became not only a thing radically different from that which the contract contemplated, it became impossible because it depended on the personal performance of Mr. Rickards.
[40] That the death of a party brings to an end a contract requiring personal performance is a venerable principle of the common law. In Hyde v. Dean & Canons of Windsor (1597), Cro. Eliz. 552, 78 E.R. 798, it was held that “a covenant lies against an executor in every case, although he be not named; unless it be such a covenant as is to be performed by the person of the testator, which they cannot perform.” And in Farrow v. Wilson (1869), L.R. 4 C.P. 744, [1861-73] All E.R. Rep. 846, Willes J. stated, “The general rule of law is that, in the case of a contract for personal service, the death of either party puts an end to the contract unless there is a stipulation, express or implied, to the contrary.”
[41] The trial judge appears to have considered the element of personal performance in the agreement to be insignificant, if not immaterial. She said (at ? 51) that “some element of personal services in a contract does not automatically lead to the conclusion that the contract is frustrated by the death or disability” and (at ? 60), “This was not, in essence, an agreement for the provision of personal services. It was a settlement agreement”. She relied on Butterfield v. Todd Estate (1996), 12 E.T.R. (2d) 318, 76 B.C.A.C. 158 in support of this conclusion. However, that case did not deal with personal services. Rather, the obligation that the estate was held bound by in Butterfield was to pay the deceased’s share of the purchase price of property and to share mortgage payments and maintenance costs. That was a financial obligation that could be performed by the estate; it was not an obligation that only the deceased could perform personally.
[42] Similarly, in Re Witwicki (1979), 101 D.L.R. (3d) 430, [1979] 5 W.W.R. 242 (Man. C.A.), to which the trial judge also referred, a parent who transferred property to her son in return for his promise to provide her and her husband with the necessaries of life was entitled to enforce the agreement against his estate because his promise was financial and could be performed by his estate.
[43] Similarly, as well, in Lawson v. Poirier Estate (1997), 187 N.B.R. (2d) 161, 143 D.L.R. (4th) 660 (C.A.), from which the trial judge quoted extensively, the estate could not escape the deceased’s agreement with another shareholder that he would not sell his shares without the consent of the other and that he would vote his shares in concert with the other because the deceased’s presence was not essential for performance – the contract was not based on his personal considerations, skill, or confidence.
[44] In explaining why, in her view, Mr. Rickards’ death did not make further performance of the contract impossible, the trial judge said,
[70] Mr. Rickards’s death did not make it impossible for the parties to perform the terms of the settlement agreement because the personal presence of Mr. Rickards is not essential to the performance of the agreement. Diebold could make the payments described in items (1) and (2) to the estate. Item (3) refers to continuation of benefits during the notice period and seems unproblematic in this context. The defendant could co-operate with the estate in limiting the tax consequences (item (4)). As for item (5), the plaintiff executor could enter into a written reporting/mitigation agreement, and could report on earnings of Mr. Rickards during the notice period prior to his death. The plaintiff executor could execute a release (item (6)).
[My emphasis.]
[45] In my view, the trial judge erred in the underlined passage. Mr. Rickards’ promise was to seek a position in which he could provide his services to a new employer in exchange for salary. The estate could not perform that promise in substitution for Mr. Rickards. That the estate could report any monies Mr. Rickards might have earned before his death is beside the point.
[46] In the result, the agreement contained a fundamental promise that only Mr. Rickards could perform. Accordingly, the contract was frustrated and brought to an end by his death.
[47] For those reasons, I would allow the appeal, set aside the judgment below, and dismiss the action.
“The Honourable Mr. Justice Smith”
I agree:
“The Honourable Madam Justice Rowles”
I agree:
“The Honourable Madam Justice Ryan”
==========================================================================================
为尽量避免给当事人造成不良影响，经当事人本人申请110.com将对文章内容进行技术处理，点击查看详情。
==========================================================================================
