Contract's fixed term revision takes precedence over earlier reference

Employee thought three years was minimum term, employer thought it was the maximum

A British Columbia company’s contract with a dismissed employee may have had ambiguous language regarding the contract term, but the intention of the parties was clear through their negotiations and revisions, the B.C. Court of Appeal has ruled.

Talius, a producer of retractable screens and shutters based in Salmon Arm, B.C., offered Randall Alsip employment as the company’s director of sales on July 23, 2012. The offer stated was for a “full-time and permanent” position. At the time of the offer, Alsip was a sales manager for another B.C. company in the consumer packaged goods industry, where he had worked for 30 years.

Alsip rejected the initial offer of employment, saying he wanted a higher salary and the inclusion of a term giving him a three-year employment contract, as he was concerned about leaving a secure job without job security in his new position.

Talius agreed to the changes and revised the employment offer with a higher salary and three-year employment contract without changing the initial description of full-time and permanent employment. There was no discussion of what the three-year contract meant, but Talius believed it meant Alsip’s employment would be for a maximum of three years, subject to earlier termination for cause or with reasonable notice.

Alsip accepted the offer and Talius drew up an employment contract. The contract set out Alsip’s salary, bonus incentives, benefits, and expense allowances. The compensation package indicated that it included a “three-year employment contract,” though the offer letter retained the “full-time and permanent” description.

Eight months later, Talius terminated Alsip’s employment without cause and provided him pay in lieu of notice. Alsip argued he had a three-year fixed-term contract and sued Alsip for the balance of the term.

The B.C. Supreme Court noted that while the contract may have had some apparent ambiguity due to the revision of the employment offer to include reference to a three-year term while maintaining the “full-time and permanent” description, it found that it was clear Alsip and Talius intended to create a three-year term through their negotiations, making the word “permanent” lose significance. After the revisions  the meaning was that the employment would be full-time until it was concluded for at least three years, said the trial court.

Due to the clarity on the intention of the parties to the contract, the trial court found no need to determine which reference in the contract — “full-time and permanent” or the three-year term — took precedence.

The trial court found that by the end of their negotiations, Alsip and Talius clearly intended to create a three-year fixed-term contract. Talius was ordered to pay Alsip damages for the balance of the contract, minus what he had earned in replacement employment had found — $141,500.

Talius appealed the decision, claiming the trial court didn’ t consider the fact Alsip wanted a contract similar to that of his previous position, which didn’t have a fixed term, as well as Alsip’s unfamiliarity with Talius’ business.

The B.C. Court of Appeal upheld the trial court’s decision, finding there was no need to consider every fact in evidence when all that needed to be decided was the intention of Alsip and Talius in creating the employment contract.

“These considerations, all of which are peripheral to the ascertainment of the intention of the parties, cannot obscure this simple fact — Mr. Alsip insisted on the inclusion of a three-year employment contract term and (Talius) accommodated that request in the redraft,” said the Court of Appeal. “In these circumstances, it was open to the trial judge to conclude that the parties clearly intended to create a fixed-term, three-year employment contract.”

The appeal court dismissed Talius’ appeal. See Alsip v. Top Rollshutters Inc., 2016 CarswellBC 1659 (B.C. C.A.).

Latest stories