Little white salary lies

Islip v. Coldmatic Refrigeration of Canada Ltd. (2002), 100 B.C.L.R. (3d) 234 (B.C.C.A.)

After unsuccessful attempts to purchase the business of a competitor, Coldmatic decided to try and lure away one of the competitor’s key employees, Islip. After several discussions, Islip prepared a written proposal which set out terms of employment.

He stated that his current salary was $75,000 per year but, in fact, his salary was $61,000 plus bonuses. Islip and Coldmatic reached an agreement which included a salary of $75,000. After Islip resigned his old position, some difficulties arose with the terms of the employment contract. Islip took the position that Coldmatic had repudiated the contract as a result of its failure to comply with the stated terms. Coldmatic’s actions were found to constitute a constructive dismissal.

The main issue before the court was whether Islip’s false representation with respect to the amount of his previous salary was sufficient grounds to avoid the contract or to justify a termination for cause. The appeal court upheld the trial judge’s decision that the false statement did not induce Coldmatic to enter into the contract.

The court limited the amount of damages to one year’s salary as opposed to the full two-year term of the contract, on the basis of a written term which provided that the agreement would be null and void if a $2 million sales target was not met in the first year.

The evidence demonstrated that Islip would not have been able to meet this target since he became ill shortly after his employment began, worked part-time four months and then went on disability leave. Thus, the appeal court held the contract would have been terminated by this clause and the trial judge’s award of damages on the basis of the two-year term was in error.

Latest stories