Contracts Case Briefs + Notes for Midterm #1: Wed, Feb 14, 2018 Remedies p 791
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| Machtinger v HOJ Industries Ltd [1992] SCC
Facts: Machtinger was employed by a used car dealer and making a lot of money. Machtinger’s contract provided for termination of employment upon no notice (in contradiction to the the Employment Standards Act, which requires 4 weeks notice, thus nullifying the contract provision). Machtinger was terminated without cause and given four weeks' salary in lieu of notice. Machtinger commenced an action for damages for wrongful dismissal. The trial judge held that the provisions for notice of termination contained in the employment contract was null and void under s. 3 of the Employment Standards Act [ESA], but that Machtinger was entitled to the common law remedy of damages for wrongful dismissal based on what was a reasonable period of notice. The trial judge held that a reasonable period of notice for Machtinger, seven months. The trial judge awarded damages accordingly. The employer appealed. The Ontario Court of Appeal allowed the appeals. The Court of Appeal agreed that the notice period stipulated in the contracts of employment were invalid under the ESA, but held Machtinger was not entitled to damages for wrongful dismissal on the basis of an implied term that Machtinger should have been given reasonable notice of termination of their employment. The Court of Appeal held that the employee’s benefits in these circumstances were limited to those given under the ESA. Machtinger appealed. The SCC ultimately allowed the appeal and restored the decision of the trial judge. Issues: In the absence in a contract of employment of a legally enforceable term providing for notice on termination, on what basis is a court to imply a notice period, and in particular, to what extent is intention to be taken into account in fixing an implied term of reasonable notice in an employment contract? Holding: The SCC held that if an employment contract contains a termination clause that provides an employee with an entitlement upon termination other than reasonable notice, that entitlement must be at least equal to the employee’s minimum notice and severance entitlements as set out in the ESA. Reasons: If the termination clause provides the employee with less than his or her entitlements pursuant to the ESA, the termination clause will be unenforceable and the court will strike the termination clause from the employment contract and award the employee reasonable notice of dismissal. The court will not rewrite the termination clause to bring it into compliance with the ESA. Reasonable notice in this case was held to be 7 months (for reasons of public policy to give the individual being fired time to find another job.) Reasonable notice requires the employer having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant These considerations determine the appropriate notice period on termination. They do not depend upon contractual intention. Indeed, some of them -- such as the length of service and prospects of employment -- are usually not known at the time the contract is made. Thus the term of notice fixed by the court is a “legal incident” of a particular kind of contractual relationship. Justice McClachlin said the CA was wrong thinking the intention of the parties was important. She said what the parties intended was irrelevant. What is important is the legal duty the employer is under. There are two categories of implied terms: (1) matters of fact [that is, would they have intended these implied terms like good faith or industry standard, had they been directed to them at the time of formation]; and (2) matters of (statutory) law are applied no matter the party’s intentions. Terms implied as a matter of law: legal incidents Test = Is the term “necessary” in the practical (not logical) sense, to the “fair functioning” of the agreement? IE – that a landlord has an obligation to keep common areas in repair. Necessary having regard to: (1) the essential nature of the contract; and (2) relationship between the parties Recall his after class clarification here – the termination term was null and void under statute. However the common law determined the remedy as to what was “reasonable notice, using the above test” Download 61.79 Kb. Share with your friends:
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