2021 NLCA 4, 2021 NLCA 4

North Atlantic Marine Supplies & Services Inc., now known as North Atlantic Offshore Inc. (appellant) v. Louise Hickey (respondent) (19/101) Indexed As: North Atlantic Marine Supplies & Services Inc. v. Hickey 2021 NLCA 4 6 C.A.N.L.R. 338 Court of Appeal of Newfoundland and Labrador Fry C.J.N.L., Welsh and Goodridge JJ.A. January 11, 2021

Summary: After the respondent’s employment with the appellant company was terminated, the parties began negotiations respecting payment of damages and pay in lieu of notice. The question at trial was whether the parties, through the course of negotiations, had reached an agreement to address the respondent’s claim. The trial judge found that a binding agreement had been reached and that all essential terms of the agreement had been decided.

North Atlantic appealed that decision on the basis that an agreement had not been reached with respect to the timing and method of payment of the respondent’s claim, which was an essential element of the agreement. Held: Appeal allowed. Welsh J.A.: (Fry C.J.N.L. and Goodridge J.A. concurring): The matter properly proceeded by way of

summary trial pursuant to rule 17A of the Rules of the Supreme Court, 1986 (paragraph 3). The correspondence between counsel for the appellant and counsel for the respondent indicated that the parties had not reached an agreement as to the timing and method of payment. Counsel for the appellant indicated only a hope that an agreement would be reached pending an asset sale. Any expectation that the respondent had that she would be paid after the asset sale did not amount to consensus ad idem .

It could not be said that the settlement was complete before the timing and method of payment had been determined (paragraphs 18-27). The judge erred in determining that the timing and method of payment was not an essential term of the agreement. The parties had not reached consensus ad idem on that issue. The appeal was allowed (paragraphs 28-29). Cases cited: Donovan Homes Ltd. v. Modern Paving Ltd. , 2011 NLCA 39 , 308 Nfld. & P.E.I.R. 180 ___________________________________ Leave to appeal to SCC refused, 39663 (October 7, 2021) Rules considered: Rules of the Supreme Court, 1986 , rule 17A

Counsel: Sarah Fitzgerald, for the appellant; Peter O’Flaherty Q.C., for the respondent. The appeal was heard on November 18, 2020 before Fry C.J.N.L, Welsh and Goodridge JJ.A. The following judgment was filed on January 11, 2021 by Welsh J.A. for the Court. _____________________________________________________________ Welsh J.A.: [ 1 ] When Louise Hickey’s employment with North Atlantic Marine Supplies and Services Inc. was terminated, she entered into negotiations with the company for the purpose of obtaining damages and pay in lieu of notice.

The question before the judge at trial was whether an agreement had been reached between the parties to address Ms. Hickey’s claim. In concluding that there was a binding agreement, the judge found that all the essential elements or terms of the agreement had been decided. [ 2 ] North Atlantic appeals that decision on the basis that an agreement had not been concluded regarding the timing and method of payment of Ms. Hickey’s claim, and that this issue was an essential element of the agreement. BACKGROUND [ 3 ] The matter proceeded by way of

summary trial pursuant to rule 17A of the Rules of the Supreme Court, 1986 . Herbert Breau, on behalf of North Atlantic (the “Company”), and Ms. Hickey provided affidavits and were cross-examined. Ms. Hickey appended to her affidavit copies of relevant correspondence between her counsel and counsel for the Company. The trial judge concluded that there was a genuine issue for trial which could be determined appropriately by means of a

summary trial. He was satisfied that there was a sufficient evidentiary basis, the issue was not complex, and there were no issues of credibility of witnesses. [ 4 ] On August 10, 2017, after approximately eighteen years working for the Company, Ms. Hickey’s employment was terminated. Negotiations between counsel for the parties continued over several weeks and are summarized in the decision of the trial judge ( 2019 NLSC 194 ). Eventually, on November 10, 2017, counsel for the Company wrote to Ms.

Hickey’s counsel “agreeing to the amount of the claim ($135,562.55), but not the method of payment”, and proposing an alternate payment method (decision of the trial judge, at paragraph 17). On November 15 th , counsel for Ms. Hickey responded “rejecting the method of payment” and indicating that Ms. Hickey intended to issue and serve a statement of claim (decision of the trial judge, at paragraph 19). [ 5 ] On December 5, 2017, counsel for Ms. Hickey advised that he would recommend to his client a payment

schedule over fourteen months commencing August 10, 2017. On December 6 th , counsel for the Company confirmed the quantum of the settlement, but proposed payment over fourteen months commencing January 2018. [ 6 ] On December 11, 2017, counsel for Ms. Hickey rejected the Company’s payment

schedule and offered an alternate

schedule with Ms.

Hickey receiving “her pay in lieu of notice from 16 September 2017 up to the date of closing, with the balance paid as salary continuance thereafter” (decision of the trial judge, at paragraph 26). [ 7 ] On December 18 th , counsel for the Company “countered with an alternate payment schedule, one which would continue to see the pay in lieu of notice commence in January 2018, without the requirement to mitigate, but with double payments being made in July and August” (decision of the trial judge, at paragraph 24). [ 8 ] The trial judge concluded that, as of December 18, 2017, the parties were “gridlocked on the timing of the payment” to Ms.

Hickey (decision of the trial judge, at paragraph 25). [ 9 ] On December 20, 2017, counsel for Ms. Hickey provided counsel for the Company with the statement of claim, as issued, and reiterated the offer of December 11 th . The Company did not respond. In the meantime, to address a cash flow problem, the Company was undertaking negotiations for the sale of some of its assets. The trial judge explained: [28] In December 2017 Ms. Hickey was advised by an employee of North Atlantic that it had reached an agreement to sell the assets of its fishing division. Ms.

Hickey was also informed by this employee that her claim had been settled and funds would be exchanged once the asset sale transaction closed. This latter comment was hearsay, however, coming from an employee without authority to bind North Atlantic, who had been told by someone else that the claim was settled. I am unable to give it any weight in deciding whether or not an agreement was reached. [29] According to Mr. Breau [on behalf of the Company], at the time North Atlantic was facing a cash flow crunch and in an effort to remain solvent was engaged in the sale of some of it assets.

In fact, it was this cash flow problem which had prompted North Atlantic to resist a lump sum payment to Ms. Hickey.

[ 10 ] On January 8, 2018, counsel for Ms. Hickey sought an update from counsel for the Company. The trial judge explained: [33] Counsel for North Atlantic responded by email later that same day to say: Our client’s asset sale transaction has been delayed. Our client is ready to close but is waiting on the Purchaser to tender, which was expected to occur last week and now this week. I am hopeful once that occurs that we can reach a settlement . [Emphasis in the original.] [ 11 ] In response to a further inquiry by counsel for Ms.

Hickey, on January 12, 2018, counsel for the Company advised (decision of the trial judge, at paragraph 35): … I can confirm settlement of the amount owing and in my last email to you should have simply stated that I was hopeful that the matter could be fully resolved (ie: manner and

schedule of payment.) ... [ 12 ] Further emails were exchanged by counsel, and, on January 19, 2018, counsel for the Company advised that she had not been able to obtain instructions from her client, and that she would be filing a statement of defence “to safeguard our client’s interests” (decision of the trial judge, at paragraph 39). [ 13 ] In early February 2018, counsel for the Company advised counsel for Ms. Hickey that the asset sale had been completed, but that she was unable to obtain instructions regarding Ms. Hickey’s claim. There followed a change of solicitors when the Company transferred Ms.

Hickey’s file to the solicitor who handled the asset sale. At that time, “North Atlantic then adopted the position that as the payment

schedule for the pay in lieu of notice had not been finalized, it did not have a binding agreement with Ms. Hickey” (decision of the trial judge, at paragraph 43). In March 2018, counsel for the Company submitted a new offer to settle at a lower amount than previously agreed. [ 14 ] At trial, counsel for the Company took the position that there had been no agreement on the method and timing of payment of Ms. Hickey’s claim, and that this was an essential term of any agreement between the parties.

Counsel submitted that “there was no consensus ad idem on this term”, and that, therefore, there could be no binding agreement (decision of the trial judge, at paragraph 4). [ 15 ] Counsel for Ms. Hickey submitted that the manner of payment was not an essential term of the agreement because it related “to the execution (final resolution) of the settlement, rather than its formation” (decision of the trial judge, at paragraph 5). [ 16 ] The trial judge concluded that the method of payment of the claim was not an essential condition of the agreement, and that, in fact, Ms.

Hickey and the Company had reached a binding agreement which was subsequently repudiated by the Company. ISSUES [ 17 ] At issue in this appeal is whether the trial judge erred in concluding that the timing and method of payment of Ms. Hickey’s claim did not constitute an essential term of the agreement. ANALYSIS [ 18 ] The principle that, to be binding, an agreement must be settled and complete is discussed in Donovan Homes Ltd. v.

Modern Paving Ltd. , 2011 NLCA 39 , 308 Nfld. & P.E.I.R. 180 : [35] May and Butcher [ [1934] 2 K.B. 17 (U.K.H.L.) ] is often relied on for the principle of completeness in contract law, which is an issue arising in this case. In Lord Buckmaster’s concurring judgment, he stated: “It has long been a well recognized principle of contract law that an agreement between two parties to enter into an agreement in which some critical part of the contract matter is left undetermined is no contract at all” (my emphasis).

Viscount Dunedin, in his concurring judgment, expressed the principle more fully: To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties. Of course, it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties. ... As a matter of the general law, of course, all the essentials have to be settled.

What are the essentials may vary according to the particular contract under consideration. ... ... [39] [The trial judge] went on in subsequent paragraphs to identify certainty of terms and completeness of the contract as live issues necessary to be decided. He considered whether the terms already negotiated were clear enough to give effect to the reasonable expectations of the parties and whether the allegedly “missing” terms were so “critical” or “essential” to the operation of the contract that their absence would void it.

He therefore correctly established the legal principles or standards to be applied to the found facts. ... [ 19 ] In this case, the trial judge accepted that the “timing and method of payment was a contentious issue from the very beginning of the negotiations and remained so in December 2017” (decision of the trial judge, at paragraph 48).

The judge explained that, as of that date, he would have concluded “that the method of payment was an essential term of the settlement, and as there was no consensus, there could be no agreement” (decision of the trial judge, at paragraph 49). [ 20 ] However, the judge went on to conclude that the method of payment was no longer an essential term of the agreement once the Company had completed the asset sale and had funds available. He asked, “Why then did North Atlantic string Ms.

Hickey along for over a month, with the expectation that once the asset sale closed she would get her money?” (decision of the trial judge, at paragraph 59). The judge concluded:

[62] It was entirely reasonable for Ms. Hickey to conclude as she did, that upon completion of North Atlantic’s asset sale she would receive the proceeds of her settlement, including pay in lieu of notice from 16 September 2017 to that date, with the balance of the pay in lieu of notice to be paid out over the notice time remaining. Viewed objectively, such in my view is a reasonable

interpretation of North Atlantic’s response to Ms. Hickey’s last claim demand, in its repeated requests to postpone the final resolution until after the asset sale. If North Atlantic was rejecting Ms. Hickey’s proposal on the manner of payment, it could simply have said so. It did not. [ 21 ] In reaching this conclusion, the trial judge overlooked several relevant considerations. First, while there was no immediate response to Ms.

Hickey’s proposal of December 20, 2017, the Company made it clear in January 2018 that it did not consider that an agreement had been reached, even though the quantum of the settlement was not an issue. During January, counsel for the Company used language indicating “hope” that an agreement would be reached. For example, on January 8, 2018, while the asset sale negotiations were underway, counsel for the Company wrote to Ms.

Hickey’s counsel indicating that it was expected that the asset sale would close within the week, and that, in her words, “I am hopeful once that occurs [the asset sale], that we can reach a settlement” (see paragraph 10, above). [ 22 ] Further, on January 12 th , counsel for the Company confirmed agreement on the quantum, but clarified that she should simply have stated, “that I was hopeful that the matter could be fully resolved (ie: manner and

schedule of payment.)” (paragraph 11, above). Counsel for the Company at that time also told counsel for Ms. Hickey that she had been unable to obtain instructions from her client. [ 23 ] The above language does not amount to silence, nor does it suggest that the Company considered the agreement to be binding without a determination regarding the timing and method of payment. In fact, it indicates the opposite, that is, that the agreement was incomplete. [ 24 ] Further, Ms.

Hickey’s “expectation” that she would be paid in accordance with her December 11, 2017 offer cannot be said to be indicative of a consensus ad idem . Consensus requires agreement by both parties. The question of timing and method of payment of Ms. Hickey’s claim had been a matter of considerable and continuing debate between the parties. Counsel for the Company had indicated only a hope that an agreement would be reached. [ 25 ] In addition, the trial judge seems to have assumed that the sale of assets would have resulted in a situation of solvency permitting Ms. Hickey’s claim to be paid as requested by Ms.

Hickey in the December 11, 2017 communication. There was no indication that this was, in fact, the result. The Company may have had other obligations that took priority over Ms. Hickey’s claim. Indeed, after the sale, the Company made a further counter-offer reducing the quantum of the settlement. [ 26 ] In light of the above, it cannot be said that the settlement was complete before the timing and method of payment had been determined. Both parties, including Ms. Hickey had the opportunity to close the settlement negotiations before December 20, 2017. Ms. Hickey could have accepted any one of several offers.

She did not. [ 27 ] It follows that the trial judge erred in concluding that there was a binding agreement between the parties regarding the payment of Ms. Hickey’s claim.

SUMMARY AND DISPOSITION [ 28 ] The trial judge erred in determining that the timing and method of payment of Ms. Hickey’s claim was not an essential term of the agreement. It is clear that there was no consensus ad idem on that issue. [ 29 ] Accordingly, I would allow the appeal. The Company is entitled to its costs of the appeal under column 3 of the scale of costs in the Court of Appeal Rules . Costs in the court appealed from were not requested. Appeal allowed.