Court rules apprenticeship agreement not a fixed contract; strikes down $100,000 in punitive damages
The British Columbia Court of Appeal has overturned a $100,000 punitive damages award and ordered a reconsideration of reasonable notice damages after finding a fired apprentice was not on a fixed contract.
Tyler Marchen, 27, signed a four-year apprenticeship agreement in November 2002 with Dams Ford Lincoln Sales in Surrey, B.C., to work in the body shop. The agreement included a specified number of hours of on-the-job training along with in-school technical training, at the end of which Marchen would become an automobile repair journeyman.
However, Marchen was fired in January 2005, just over two years into the agreement, after his brother, who also worked at Dams, stole a car and repainted it in the Dams body shop. Though Dams claimed the termination was because there was no work available, the B.C. Supreme Court found he was wrongfully dismissed because Dams suspected him of criminal activity due to his brother’s misconduct.
The trial court found the apprenticeship agreement was a fixed-term contract and ordered Dams to pay Marchen’s salary for the balance of the agreement, equal to $18,751.73. It also found the dismissal unfairly set back his career and made it difficult to complete his apprenticeship and ordered Dams to pay $25,000 for Marchen’s loss of training and status. In addition, the court found Dams awarded $100,000 in punitive damages and special costs for trying to cover up the real reason for Marchen’s dismissal by saying it was because of downsizing.
The B.C. Court of Appeal found the trial court didn’t properly calculate the reasonable notice because the apprenticeship agreement was not a fixed contract. The dates were approximate and the length was dependent on the availability of work for Marchen to achieve his target on-the-job training hours. The appeal court struck down the wrongful dismissal damages and remitted the matter back to the trial court for a revision of reasonable notice required.
The Court of Appeal agreed with the trial court on the $25,000 award for the damage to Marchen’s career and status but struck down the punitive damages, finding Dams didn’t act unfairly or insensitively at the time of dismissal. However, it did uphold the special costs award for Dams’ attempt to mislead the court.
“In breach of contract cases, punitive damages flow out of egregious conduct of a defendant at the time of the breach. In this case, when dismissing the claim for moral damages, the judge held that the appellant's ‘conduct at the time of termination was not unfair, unfaithful, misleading or unduly insensitive.’ He also held that Mr. Marchen did not suffer undue distress. On these findings of fact, punitive damages are not available.” said the Court of Appeal.
For more information see:
•Marchen v. Dams Ford Lincoln Sales Ltd., 2010 CarswellBC 98 (B.C. C.A.).