Judgments

Decision Information

Decision Content

T-589-80
Gestion Michel Senecal Inc., Michel Senecal (Plaintiffs)
v.
The Queen (Defendant)
Trial Division, Decary J.—Montreal, December 21, 1980; Ottawa, June 29, 1981.
Crown — Contracts — Individual plaintiffs contract for personal services was terminated by the defendant prior to the expiry date of the contract, and after the date for notice of an intention not to renew the contract for a second term — Contract was subject to General Conditions DSS 1026 and Supplemental General Conditions DSS 1036 although they were not attached to the contract — Contract stated that both parties could terminate the contract by mutual agreement provided they gave 90 days' written notice — Whether the provisions of the contract take precedence over the General Conditions — Action is allowed.
ACTION. COUNSEL:
Paul Leduc for plaintiffs.
Jean-Claude Ruelland, Q.C. for defendant.
SOLICITORS:
Trudeau, Leduc, Duranceau & Lavoie, Laval, for plaintiffs.
Deputy Attorney General of Canada for defendant.
The following is the English version of the reasons for judgment rendered by
DECARY J.: The question is whether plaintiffs are entitled to claim from the defendant an amount of $46,998.40 allegedly due as a result of the unilateral termination of a contract between the parties.
A contract was signed between the parties on February 16, 1979 stating that the plaintiff, Michel Senécal, would act as "program director for French Canada" on Canada Day, 1979. He would be paid $45,000, at the rate of $3,750 a month for the period from December 1, 1978 to November 30, 1979. The termination, by telegram dated September 18, 1979, took effect on October
14, 1979. On September 18, 1979, the date of the notice of termination, the contract had already been renewed for a second term, until November
30, 1980.
Clause 2 of the signed contract reads:
2. LENGTH OF CONTRACT
The contract applies to the period from December 1, 1978 to November 30, 1979, with an option to renew for the 1980 Canada Day celebration. If either party does not wish to exercise this option, it shall give notice in writing before May
31, 1979.
Clause 8 of the signed contract provides:
8. GENERAL CONDITIONS
It is hereby agreed that any contract based on the amounts stated in this document shall be subject to the General Condi tions DSS 1036 (copies attached). These conditions shall form an integral part of any contract concluded by the Department of Supply and Services, to the extent that they apply to the type of services referred to in this document.
Clause 15 of the contract reads:
15. TERMINATION
It is hereby agreed that both parties may terminate this con tract by mutual agreement provided they give prior written notice ninety days before the date it expires.
Plaintiff Michel Senécal signed the contract on February 16, 1979, when the General Conditions DSS 1026, and the Supplemental General Condi tions DSS 1036, which are printed and which are referred to in clause 8 of the contract, had not been attached to the typed portion of the contract. Whether or not this fact is relevant, it remains true that plaintiff Michel Senécal was therefore not aware of the provisions of the General Conditions when he signed the contract on February 16, 1979, but he knew of the existence of conditions described as "general" by defendant herself. The part of the contract which he did not know the contents of was in the nature of a standard form contract.
Counsel for the Crown emphasized the fact that clause 15, providing for termination by mutual consent, was a futile clause, and that it was clause 26(1) of the General Conditions which governed the method of termination.
It is quite clear that the parties to any contract may terminate it by consent, and I would share his
view in so far as the parties have agreed to termi nation and to the manner of termination.
However, the provisions of clause 15 in my opinion confer two rights on the plaintiffs or the defendant when a request for termination is made: first, the right to refuse termination, and in that case there is no termination; and then, if there is consent, the right to a ninety-day period, unless this period has been waived. A party cannot be required to accept termination or a term less than ninety days.
It is my considered opinion that in the case at bar these provisions of clause 15 were not included in the contract to be without effect on the method of termination, by limiting the effect thereof as a result of general provisions such as those of clause 26(1) of the General Conditions:
26. Termination
(1) Notwithstanding anything in the contract contained the Minister may, by giving notice to the Contractor (hereinafter sometimes referred to as a "termination notice") terminate the contract as regards all or any part or parts of the work not theretofore completed. Upon a termination notice being given, the Contractor shall cease work (including the manufacturing and procuring of materials for the fulfilment of the contract) in accordance with and to the extent specified in such notice. The Minister may, at any time or from time to time, give one or more additional termination notices with respect to any or all parts of the work not terminated by any previous termination notice.
In my opinion, clause 15 provided for a ninety- day period after mutual consent to the termination precisely because the intention was to create an exception to these provisions of clause 26(1) of the General Conditions. If it had not been for clause 15, the provisions of clause 26(1) of the General Conditions, because of the provision in clause 8 of the contract, would have been effective as to the discretion given to defendant, not only regarding the nature of the termination but also the time when the termination would become effective.
By clause 15, the termination is not effective at the will of defendant, as in clause 26 of the General Conditions, but only after a period or term of 90 days, unless this right to the 90-day period has been waived so that the termination will apply.
In the case at bar, there was no consent to the termination and the provisions of clause 15 are the law of the parties. It would be arbitrary on the
part of the defendant, and it is inconceivable that such should be the case, for a change of govern ment to be regarded as consent on the part of plaintiffs.
The phrase "dans la mesure où" [to the extent that] in clause 8 of the contract is defined in Le petit Robert, French dictionary, as [TRANSLA- TION] "in proportion as; in so far as", which in my opinion means that the scope of clause 26 of the General Conditions cannot affect a contract for services which provided for a method of termina tion that was not left entirely to the defendant's discretion. The method provided for in clause 15 presupposes cancellation of the unlimited discre tion contained in the General Conditions, other wise there would be no reason for its presence in the contract.
Further, clause 26(1) of the General Conditions is a standard form clause made in favour of the defendant, in view of the complete discretion, whereas clause 15 is a clause giving each party the right to prior notice of 90 days.
If we consider the circumstances surrounding this agreement, it can be seen that clause 8 is typed, that is, it is specifically adapted to the purpose of the contract, and second that on sign ing, the General Conditions, even if they are referred to as forming part of the contract, are provisions which do not have a specific purpose like the typed portion of the contract, but a pur pose which might apply to any contract.
Additionally, a meaning must be given to the limited scope of the General Conditions provided for in clause 8: "to the extent that they apply to the type of services referred to in this document". In my view, the General Conditions, in view of the nature of the services and their purpose, personal services provided through a company for Canada Day, are not a reasonable application compared with that of the conditions of clause 15 of the typed portion of the contract. The conditions of clause 15 of the contract are reasonable in the case of personal services, as in the case at bar, but would not be reasonable for, let us say, the supply of materials. The transfer of the contract from Senécal to the company has no relevance in this civil proceeding.
In the case at bar, therefore, I conclude that the provisions of clause 15 have priority over those of clause 26 of the General Conditions, because it is those of clause 15 which can be reasonably applied in the case at bar.
Since there was no consent to termination and the defendant did not give notice that the contract would not be renewed for a further period of twelve months for Canada Day 1980, it follows that the termination is void and that the plaintiffs are entitled to the sum of $10,500 owed for the balance of the first year of the contract, as the plaintiffs had received an amount of $34,500 out of the anticipated sum of $45,000; and are further entitled to an amount of $36,498.40 as damages for the second year of the contract, from which must be deducted $8,501.60 which the plaintiffs earned elsewhere during that year; the whole making a total of $46,998.40.
Defendant is ordered to pay the plaintiffs the sum of $46,998.40 FORTY-SIX THOUSAND NINE HUNDRED AND NINETY-EIGHT dollars AND FORTY cents), the whole with interest and costs.
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