


COURT OF APPEAL FOR ONTARIO

CITATION:
Richards v. Rainy
    River Cattlemens Association, 2012 ONCA 260

DATE: 20120424

DOCKET: C53278

Lang, Epstein and Hoy JJ.A.

BETWEEN

Russel Richards

Plaintiff
    (Appellant/                                                                                 Respondent
    by way of cross-appeal)

and

Rainy River Cattlemens
    Association
, Ken McKinnon, Amos
    Brielmann, Shawn Hyatt, Jeff Pollard, Jason
    Teeple, Herb Govier and Aarne Hahkala

Defendants (
Respondent/Appellant by way of cross-appeal
)

Roderick W. Johansen, for the appellant

Bradley A. Smith, for the respondent

Heard: April 4, 2012

On appeal and cross-appeal from the judgment of Justice D.C.
    Shaw of the Superior Court of Justice, dated December 29, 2010.

Lang
    J.A.:

INTRODUCTION

[1]

The appellant appeals the trial judges dismissal of his claim for
    damages for breach of a written contract for services.  The appellant, Russel
    Richards, entered into a contract with the respondent, a non-profit
    organization called the Rainy River Cattlemens Association.   The Association
    conducts cattle auctions two to four times a year.  These auctions give local
    cattle producers the opportunity to sell cattle through the Associations sales
    barn.  The Association does not have regular full-time employees or a regular
    operation.  It has a part-time Secretary-Treasurer and a part-time sales barn manager.

[2]

The appellant held the position of sales barn manager and was
    responsible for organizing and conducting the Associations periodic cattle
    auctions.  In 1997, the appellant and the Association began their relationship
    with an oral agreement.  In 2004, the appellant and the Association entered
    into a written, fixed-term contract that was to run until 2010. The Association
    terminated the contract by notice in writing on May 21, 2007.  The appellant
    sued the Association for breach of contract.  Certain Board members of the
    Association counterclaimed against the appellant for slander.

[3]

The trial judge, Shaw, J., dismissed the appellants action on the basis
    of his conclusion that the appellants conduct, most significantly the conduct
    surrounding his behaviour towards the Associations President, amounted to a
    repudiation of the parties contract. The trial judge allowed the counterclaim
    for slander and awarded modest damages to the respondents Ken McKinnon, the
    President and a director of the Association, and Amos Brielmann, a director. 
    The appellant does not appeal this aspect of the trial judges decision.

[4]

For the reasons that follow, I would dismiss the appeal.

TRIAL JUDGES REASONS

[5]

In comprehensive reasons, the trial judge considered the nature of the
    relationship between the parties and determined that the appellant was a
    dependent contractor.  Since the contract between the parties was for a fixed
    term with no express provision for early termination, the trial judge held
    that, unless the Association had sufficient reason to terminate the contract,
    the appellant would be entitled to all reasonable losses suffered during the
    remainder of the term, subject to his duty to mitigate.

[6]

Virtually all the Associations allegations of misconduct in terms of refusal
    to accept direction from the Board arose from the appellants behaviour during 2006
    which, the trial judge found, accelerated after the re-election of Mr. McKinnon
    as President in 2007 and the election of the Board, which brought in new
    directors.  At that point, the Board wanted to implement changes to the way
    cattle sales were handled.

[7]

Those changes included holding cheques payable to the consignors of the
    cattle until after the buyers cheques had cleared the Associations bank
    account.  They also included matters such as implementing the use of radio
    frequency identification tags, charging higher tagging fees, and keeping
    permanent log books recording the particulars of buyers and sellers.  The
    appellant was resistant to these changes, as he was to the control of the operation
    that the Board expressed an intention to exert.  The appellant wanted to
    continue managing the auctions his way, including the auction scheduled for
    April 28, 2007.

[8]

The trial judge considered allegations that were abandoned or withdrawn
    shortly before trial as part of the background. He then turned to consider a number
    of specific allegations that the Association made at trial and concluded they were
    insufficient to justify the appellants termination.

[9]

One such allegation concerned animals that went missing at auction in
    2006.  One of those animals was left in the Associations pen unattended for
    three weeks.  However, the trial judge concluded, based on the evidence, that
    missing animals were not a marked departure from what appears to have been the
    past experience and did not constitute a breach of contract by the appellant.

[10]

The
    appellant allegedly failed to maintain and provide the Board with a log book
    recording buyer and seller information.  However, the trial judge held, even if
    this amounted to a breach of the appellants responsibilities, that it was not
    sufficiently serious to justify his termination.  While the appellant cancelled
    a radio frequency tagging demonstration scheduled for October 2006, the trial
    judge accepted the appellants testimony that he did so for safety reasons.  He
    also noted that the Board never censured the appellant for the cancellation
    and never re-scheduled the demonstration. Finally, the appellant released
    consignors cheques in 2006 even though the buyers cheques had not yet cleared
    the bank.  Although the trial judge called the appellants conduct ill
    advised, he concluded that in releasing the cheques the appellant had followed
    past practice and had not purposely ignored the direction of the Board. The
    trial judge concluded that the appellants refusal to charge the fees was not a
    breach of contract, as the Board had not in fact required the imposition of the
    new fee.

[11]

While
    the trial judge held that these specific incidents did not justify the
    appellants termination, he took a different view of the appellants other
    behaviour, including his refusal to work with the President.  The trial judge
    observed that, on February 1, 2007, the day that Mr. McKinnon resumed the chair
    as President, the appellant delivered to the Board a list of complaints,
    including his written statement that if Mr. McKinnon were the President, he
    would NOT deal with him.

[12]

At
    trial, the appellant explained his inability to work with Mr. McKinnon on the
    basis that the President had tried to start a fight with him in 2006.  However,
    Mr. McKinnon testified that the appellant was the one who tried to start a
    fight. The trial judge concluded that he preferred the evidence of Mr. McKinnon
    on this point.  In arriving at this assessment of credibility, the trial judge compared
    the loud, often rude, and excitable appellant with the quieter, calmer, more
    understated Mr. McKinnon.  The trial judge also pointed out that the appellant
    was both larger and younger.  Mr. McKinnon was approximately 70 at the time and
    the appellant was 57 years of age. Having rejected the explanation of the
    appellant and having considered the conduct at issue, the trial judge concluded
    that his refusal to work with the President could not reasonably be
    tolerated.

[13]

Indeed,
    the trial judge observed that the appellants conduct went well beyond one
    instance of defiance.  He behaved in a generally hostile and aggressive manner
    at the Board meetings.  He also repeatedly referred to the President and the
    Secretary-Treasurer using extremely derogatory descriptors.  The appellant
    employed this contemptuous and vulgar language not only at Board meetings but
    also in discussions with consignors and buyers of cattle.

[14]

In
    addition, the appellant repeatedly and openly accused the President and the
    Secretary-Treasurer of conduct that amounted to theft or fraud and of cooking
    the books.

[15]

Even
    after the auction was held, the appellant attended the May 3 Board meeting,
    uninvited, and again aggressively accused the President of stealing and the
    Secretary-Treasurer of a cover-up.  The trial judge found that these were
    serious and unfounded allegations about underhanded and dishonourable conduct
    made to the Board as well as to outsiders.

[16]

The
    trial judge concluded that the appellants conduct went well beyond any
    reasonable boundaries and amounted to repudiation of his contract.  On May 21,
    2007, the Association delivered its termination letter, which relied on the
    appellants refusal to work with the President, as well as his insubordination
    to the Board.  The trial judge held that the Association was entitled to
    terminate the appellants services.

ANALYSIS

[17]

The
    appellant raises two grounds of appeal, which I will discuss in turn in the
    context of the principles set out by Gillese J.A. in
Dowling v. Ontario
    (Workplace Safety and Insurance Board)
(2004), 192 O.A.C. 126 and in
Roden
    v. The Toronto Humane Society (
2005), 202 O.A.C. 351.  At para. 49 of
Dowling
,
    Gillese J.A. explains that in employment, 
the core question for
    determination is whether an employee has engaged in misconduct that is
    incompatible with the fundamental terms of the employment relationship.  She
    further explains that the sanction imposed for misconduct is to be
    proportional  dismissal is warranted when the misconduct is sufficiently
    serious that it strikes at the heart of the employment relationship.  The
    inquiry is a factual one to be determined by a contextual examination of the
    nature and circumstances of the misconduct.

[18]

Dowling

describes the trial judges task as follows:

1.       determining
    the nature and extent of the misconduct;

2.       considering
    the surrounding circumstances; and,

3.       deciding
    whether dismissal is warranted (i.e. whether dismissal is a proportional
    response).

[19]

In
Dowling
, at para. 72, Mr. Dowling was
    found to have repudiated his employment contract by repeatedly engaging in
    dishonest conduct that was incompatible with that contract.
In
Roden,
two employees were dismissed for their unequivocal refusal to perform their
    assigned duties.  Gillese J.A. explains that their refusal amounted to
    repudiation and at para. 46 that the employer is entitled to accept the
    repudiation and treat the employment relationship as terminated because the
    parties no longer agree on the fundamental terms of the contract.

[20]

Mindful
    of these principles, which apply equally to dependant contractors such as the
    appellant, I turn to his grounds of appeal.

[21]

In
    his first ground, the appellant argues that the trial judge erred in coming to
    the conclusion that the appellants conduct amounted to a repudiation of the
    contractual relationship, in particular because the trial judge failed to
    consider the misconduct in context and the proportionality of the sanction
    imposed.  I do not accept this argument.

[22]

The
    trial judge both expressly and implicitly referred to the context of the
    appellants behaviour, including the fact that the appellant was working for a
    cattlemens association.  He also specifically noted that some latitude must
    be allowed for disputes between parties and that language should be viewed in
    the context of the workplace.  Moreover, the trial judge considered whether
    the appellants conduct was objectively reasonable. The trial judges
    contextual approach is evident from a reading of his extensive and thorough
    reasons considering the circumstances of the appellants conduct.

[23]

The
    trial judge properly identified the appellants misconduct, considered the
    surrounding circumstances and decided that his termination was warranted.  I would
    not give effect to this ground of appeal.

[24]

Second,
    the appellant argues that the trial judge failed to consider the Associations
    duty to warn.  The appellant is correct that the trial judge did not separately
    address this issue.  In my view, that is because the issue was not
    contentious.  If the Association was entitled to dismiss the appellant for
    repudiation of the contract, the appellant was not entitled to warning.  The
    contract was at an end.

[25]

The
    trial judge knew there was a duty to warn in certain circumstances.  For
    example, when he considered the issue of the cancellation of the tagging demonstration,
    the trial judge expressly noted that the Board never censured the appellant
    about this issue.

[26]

However,
    the conduct that the trial judge found justified the appellants termination
    was of a different class.  It was an outright refusal to work with the
    President of this small organization. Working with the President was an
    essential part of the job.  Another essential part of the job was not to make
    unsupported allegations about the President and the Secretary-Treasurer
    stealing and manipulating the books.

[27]

The
    appellant had to have known his conduct was unacceptable.  At the February 28,
    2007 meeting, the appellant threatened to walk from his contract and one of
    the directors, Amos Brielmann, asked him not to hold the board hostage.  The April
    28 sale had to go on.  One of the directors pointed out that the Association
    needed representation at the sale and a Sales Barn Committee was struck to
    deal with some of these issues of conflict pending the auction.

[28]

Once
    the auction was over, the appellants vitriol only increased.  At the very next
    Board meeting, the appellant attended uninvited and stated aggressively that he
    did not want to put up with the President. Moreover, he reiterated his
    unfounded allegations of fraud and cover-up against the President and the
    Secretary-Treasurer.

[29]

A
    fair reading of the trial judges reasons supports his conclusion that the
    appellant was not entitled to any warning in light of his conduct in
    repudiating the contract.

[30]

I
    would not give effect to this ground of appeal.

RESULT

[31]

Accordingly,
    I would dismiss the appeal, which makes it unnecessary to deal with the
    cross-appeal regarding mitigation and damages.

[32]

I
    would award the respondent costs fixed in the amount of $10,000, inclusive of
    disbursements and applicable taxes.

Released: Apr. 24, 2012                                                  S.E.
    Lang J.A.

SEL                                                                  I
    agree G.J. Epstein J.A.

I
    agree Alexandra Hoy J.A.


