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.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.