Bunn v Peace River (Town), 2017 ABQB 398

Court of Queen’s Bench of Alberta Citation: Bunn v Peace River (Town), 2017 ABQB 398 Date: 20170623 Docket: 1503 09479 Registry: Edmonton Between: Kelly Bunn and Avant-Garde Inc. Appellants (Plaintiffs) - and - Town of Peace River Respondent (Defendant) _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice D.C. Read _______________________________________________________ Background: [ 1 ] The individual Plaintiff, Mr.

Bunn was an employee of the corporate Plaintiff Avant-Garde Inc. who contracted with the Defendant Town of Peace River (“Town”), by written agreement (“Agreement”), to provide Mr. Bunn services as chief administrative officer (“CAO”) of the Town. [ 2 ] The Town purported to dismiss Mr. Bunn from his position without cause but refused to pay the compensation on termination provided for in the Agreement . Avant-Garde and Mr. Bunn sued to recover compensation payable under the Agreement then sought

summary judgment before a Master in Chambers . The Town argued on several bases that the compensation was not payable and that the matter was not suitable for disposition on

summary judgment.

[ 3 ] The Master denied the application without providing substantive reasons. [ 4 ] Mr. Bunn and Avant-Garde appealed this decision arguing that there are no genuine issues for trial: the contract is clear and all of the issues raised by the Town respecting who the parties to the contract are -- whether the contract is void, whether it is ultra vires the Town, whether it was, in fact, terminated or whether the termination clause is enforceable -- can be determined without a trial. Facts: [ 5 ] Some of the terms of the Agreement are important to mention. [ 6 ] The Agreement is dated January 15, 2013 .

The named parties are the Town of Peace River, Avant-Garde Inc., (“Avant- Garde”), defined in the Agreement as the “Contractor” and Kelly Bunn (“Mr. Bunn”) defined in the Agreement as the “Contractor’s Employee” [ 7 ] Under the terms of the Agreement, Avant-Garde agreed “to provide Mr. Bunn to provide” “services” to the Town . “Services” are defined as those set out in

Schedule A to the Agreement, the main one being: The performance in a competent and professional manner and acting in the best interests of the Town of the duties of the Chief Administrative Officer as provided for in the Municipal Government Act , as the same may be amended from time to time, and as set out in the position description for the Chief Administrative Officer as established by Town of Peace River Bylaw 1762, as amended (attached) and forming part of this Schedule. [ 8 ] Clause 17.1 of the Agreement permits the Town in its discretion to terminate “this Agreement” by notice in writing to Avant- Garde . [ 9 ] Clause 19.3 is the termination clause that the Appellants claim compensation under .

The relevant portion reads as follows: If this Agreement is terminated on the basis of termination without cause pursuant to

Article 17, ...then [Avant-Garde] shall be entitled additional compensation for termination in an amount equivalent to the annual base rate established pursuant to

Schedule “B” which is in effect at the date of termination, multiplied by two. [ 10 ]

Schedule B sets out a base rate of $250,000 per year plus GST, subject to annual adjustment, following annual performance evaluation of Mr.

Bunn “at the same rate of general economic increase as provided to the senior management staff of the Town”. [ 11 ] The term of the Agreement is from February 4, 2013 to April 30, 2022. [ 12 ] At a Town Council meeting on January 14, 2013, Town Council passed two motions: firstly, to approve the Agreement and authorize the Mayor to execute the Agreement on the Town’s behalf; and secondly that Avant-Garde’s employee be appointed the Chief Administrative Officer of the Town effective February 4, 2013, subject to execution of the Agreement.

Standard of Review: [ 13 ] An appeal from a Master is a de novo hearing: Southford Development Corporation v. 1491888 Alberta Ltd. 2015 ABQB 457 . The appeal is on the record that was before the Master, although additional evidence is permitted: R. 6.14(3) Analysis: a . The Law: [ 14 ] The law with respect to

summary judgment has changed markedly because of the Supreme Court’s decision in Hryniak v Mauldin , [2014] 1 SCR 87, 2014 SCC 7 , where that Court held that

summary judgment ought to be granted whenever there is no genuine issue requiring trial: "when the judge is able to reach a fair and just determination on the merits on a motion for

summary judgment": para 49. [ 15 ] Since Hryniak the Alberta Court of Appeal has confirmed this test in a number of decisions, most recently in Condominium Corporation No. 0321365 v. Cuthbert , 2016 ABCA 46 . In Cuthbert , that Court set out two considerations for a court in determining whether

summary judgment should be granted: 27 ... With respect to the process, the court must ask, "whether examination of the existing record can lead to an adjudication and disposition that is fair and just to both parties": [citations omitted] . With respect to the substantive issues, the court must ask "whether there is any issue of merit that genuinely requires a trial...

An issue of merit is established when the respondent's (non-moving party) case discloses a "genuine issue of a potentially decisive material fact in the case which cannot be summarily found against the non- moving party on the record revealed by the 'fair and just [summary] process'"... [ 16 ] In Cuthbert , the Court provided further guidance at paragraphs 28 and 29, reiterating that: 28

Summary judgment is not possible if opposing parties' affidavits and evidence conflict on material facts because a chambers judge cannot weigh evidence or credibility on a

summary judgment application [citations omitted] and

29 Complex legal questions may be sufficient to deny

summary judgment. A full trial is required when the

summary record cannot beused to decide legal issues that are unsettled, complex or intertwined with facts: Templanza v Wolfman, 2016 ABCA 1 at para 20; Amackat paras 36-37. A trial is also required when an applications judge is not satisfied she can fairly resolve the dispute on the record beforeher: Templanza at para 20. b. Parties’ Positions: [17] The Town argues that there are material facts regarding the enforceability and validity of the Agreement which cannot befound on the record and that the case involves

interpretation of the Agreement, including whether it is ultra vires and whether thetermination provision is enforceable. As a consequence, they say

summary judgment should not be granted. [18] The Appellants argue that the Agreement is clear, not ultra vires, and is enforceable and they are entitled to an order forsummary judgment in the amount claimed. [19] In my view two of the arguments raised by the Town are dispositive and disable

summary judgment. Both of these raise theissue of whether it was within the power of the municipality to enter into the Agreement and whether the Agreement is, therefore,enforceable. The arguments raise legal questions that are complex and inextricably intertwined with facts, only some of which are beforeme. As a consequence, I am not confident that I can fairly resolve the dispute which requires a more complete evidentiary record. [20] The Agreement is termed “Chief Administrative Officer Services Agreement” and, as indicated above, purports to engage the“services” of Avant-Garde Inc. to “provide [Mr.

Bunn] the Services” as defined by the Agreement. The “services” are defined asperforming the role of Chief Administrative Officer (“CAO”) for the Town. [21] The Town has two arguments in respect to this arrangement, which was put into place by a previous Town Council. Firstly,they argue that appointment of a corporation to act as CAO is contrary to the provisions of the Municipal Government Act, c.

M-26.1, asam (“MGA”). [22] The role of Chief Administrative Officer (“CAO”) in a municipality is unique in that the MGA imposes specific legislativerequirements for his or her appointment in sections 205, 205.1 and 206. Section 205(1) requires that a municipal council establish theposition of CAO by bylaw. Section 205(2) requires a council to appoint “one or more persons” [emphasis added] to carry out thepowers, duties and functions of the position. [23] As required by s. 205, council for Peace River passed bylaws establishing the role of CAO. The one in force at the relevanttime was Bylaw 1762 (the “Bylaw”).

By clause 4 this Bylaw, required Council by resolution to appoint an individual to the position ofchief administrative officer and by agreement [to] establish the terms and conditions of his/her employment.” [24] The Town concedes that a “person” as this term is used in the MGA may include a corporation, as pointed out by theAppellants but says the word “individual” as used in the Bylaw does not include a corporation. [25] Further, they say that the Bylaw requires that the relationship between the individual and the Town be one of employment.Under the terms of the Agreement, Mr.

Bunn is not an employee of the Town but is, instead, an employee of Avant-Garde. [26] The Appellants argue that, correctly interpreted, the Agreement does not appoint a corporation as CAO and that the duties ofCAO are, in fact, to be carried out by an individual, Mr. Bunn. They say that the parties clearly intended to comply both with the MGAand the Bylaw and I should prefer an

interpretation of the Agreement that would make the Agreement legal as intended by the parties. [27] However, contractual

interpretation particularly in respect to the objective intention of the parties is not always simply aquestion of interpreting the words of the contract. The decision maker is required to interpret the words of the contract consistently withthe surrounding circumstances known to the parties at the time of formation of the contract: Sattva Capital Corp v. Creston Moly Corp2014 SCC 53 at paras 47, 50. The record before me does not provide anything like a complete record of the background, the context, thecommercial purpose or the genesis of the Agreement.

I am unable to determine the objective intention of the parties on this record. [28] Although the Appellants suggest I can use the doctrine of contra proferentem as an aid to

interpretation, the only evidencebefore me of who drafted the contract is that of Mr. Bunn who says in his affidavit that it was drafted by ‘a solicitor’ and ‘provided’ bythe Town. He does not indicate who the lawyer who drafted the Agreement was acting for and on whose instructions the Agreementwas drafted. I do not know if Mr. Bunn was examined on this evidence; however, no transcript was provided. This is not a sufficientrecord to permit use of the contra proferentem doctrine. [29] They suggest, as well, that I can simply prefer an

interpretation that would make the contract legal. However, the case theyrely on for this proposition is 1298417 Ontario Ltd. v. Lakeshore (Town) 2014 ONCA 802 , 122 O.R. (3d) 401.(Ont C.A.) That case is distinguishable in that the Court of Appeal there was considering what they found to be an erroneous

interpretation of acontract made by a trial judge. The trial judge’s decision was not before me but on the face of the appeal decision, it was made after atrial and, presumably, after a full consideration of the objective intention of the parties. On a

summary judgment application, I do notthink that I can simply assume the intention of the parties without knowing the full factual matrix surrounding the making of thecontract. [30] It is true that in a

summary judgment application, the parties are required to put their best foot forward and it is not an answerto a claim for

summary judgment to say that there may be some other evidence, as yet undiscovered, which would make the case for aparty. That is not the situation here. Neither party swore an affidavit setting out the necessary evidence to enable the objective intentionof the parties making this contract to be determined and I doubt that they could have. To determine the factual matrix surrounding themaking of the contract, it may be necessary to obtain the evidence of non-parties. [31] The Town’s second argument is that the effect of the Agreement is to fetter the discretion of future councils in two ways. The

first is this . By

section 7.1, the Agreement directs that the Town “shall” appoint Avant-Garde’s employee, Mr. Bunn as the CAO. The Town argues that this provision directly fetters the Town’s authority by requiring the appointment of a specific person to the CAO role . In response, the Appellants say that the Agreement was signed only after Town Council resolved to appoint Mr. Bunn as CAO and was effective only upon Council exercising its discretion to appoint Mr. Bunn. [ 32 ] I have difficulty understanding both parties’ positions . As indicated above, two motions were passed by Council on January 14, 2015 .

One approves the form of Agreement and authorizes the Mayor to sign it on behalf of the Town; the other appoints Mr. Bunn as CAO . From the minutes of the meeting as well as from what appears to be the consecutive numbering of the motions, it seems that the motion to approve the Agreement preceded the motion to name Avant-Garde’s employee Mr. Bunn as CAO . That the Agreement was not actually signed until a day later is, in my view, beside the point . However, the Town’s argument that this fetters the discretion of the Town is also difficult to understand .

From the minutes of the meeting, it seems apparent that the one motion immediately followed the other so it is difficult to see anything more than a momentary fettering of Council’s discretion on this record. [ 33 ] However, the Town’s second argument is more persuasive . They argue that the termination clause in the Agreement is an attempt to bind future councils . [ 34 ] The Agreement is for a term of over nine years .

Article 19.3 of the Agreement requires the Town to pay damages equivalent to two years of payments under the contract in the event that the contract is terminated, whether it is terminated in year one or in year nine . [ 35 ] The Town points to an email exchange between the then mayor and the then CAO as clear evidence of an intention to fetter the discretion of future councils. The email was attached to an affidavit sworn by the current CAO, Christopher Parker .

This affidavit was not evidence that was before the Master . [ 36 ] The Mayor’s words do seem to indicate that his, at least, subjective intention was to fetter the power of future councils.

His comments regarding the potential CAO contract and particularly the termination clause, include the following: “The intent is to provide tenure for the candidate (to retirement age).” “This also provide [sic] continuity for the Town of Peace River Corporation ...(9 years being balance of this term and for next 2 Councils –if new 4 year term invocation in place, or not” “...and if tenure not provided then the buy out/incentive to retain/poison pill/golden parachute...honest calculation of liquidated damages...and ensuring buy out is not too low for last few years to become a “relatively cheaper then option to turf”. “Frankly I have so much invested in this Town...I want protection from any future quorum of socialist, social engineering, spendthrift, wing-nut, tax and burn, study & do nothing, biased “owned”...or other defects elected...that can neither restore our town, meet the expected rapid growth, ...whether I run again or not, whether I win again or not...” [ 37 ] The Mayor appears to be advocating that, at least, the termination clause’s onerous provisions would be a means of discouraging a future council from exercising its right to terminate Mr.

Bunn because of the large cost to the municipality . Again, there is no indication in the materials before me of any cross examination either of the deponent who affixed this email to his affidavit, the former mayor or of the former CAO. [ 38 ] The email has attached a form of contract that is not the same as the Agreement but it appears to cover the same subject matter and has many of the same or similar clauses. It is clear that the contract was intended to be a contract between the Town and another entity who would act as CAO for the Town .

The name of the other entity has been blacked out and neither counsel was able to tell me if the other party to this contract was the Appellants or one of them. This earlier contract may or may not form part of the factual matrix necessary to determine the objective intention of the parties entering into the Agreement. [ 39 ] The Appellants did not address this issue in their written materials . In oral argument they said that Pacific National Investments v.

Victoria (City) 2000 SCC 64 , relied upon by the Respondent for their ultra vires argument, only disables a local authority from restricting their legislative powers and hiring a CAO is not a legislative act but merely a business decision . [ 40 ] Section 206(1) of the Municipal Government Act specifies that the appointment of a person to the position of CAO, or any suspension or revocation of the position can only be done “if the majority of council vote to do so” .

In my view, that provision may well make these acts a legislative function. [ 41 ] The subjective intent of the Mayor does not equate to the objective intent of the Town as a party to the Agreement . It may be that on a complete record, a Court will find no objective intent to fetter the discretion of the future councils. [ 42 ] This is a question of

interpretation of the statute . The question may be novel . It is intertwined with the facts sufficiently to make it a question that is not amenable to

summary disposition. [ 43 ] Although other arguments were raised, in my view, these dealt with above are dispositive. [ 44 ] The application is dismissed. [ 45 ] Costs may be spoken to if required,.

Heard on the 16 th day of June, 2017. Dated at the City of Edmonton, Alberta this 23 rd day of June, 2017. D.C. Read J.C.Q.B.A. Appearances: Matthew Woodley and Sean Ward Reynolds Mirth Richards and Farmer LLP for the Appellants (Plaintiffs) Donald R. Cranston, Q.C. and Matthew D. Riskin Bennett Jones LLP for the Respondent (Defendant)