Shell Global Solutions Canada In. v. Rice, 2021 ABCA 408
Ms. Rice, a professional accountant, was terminated by Shell Global Solutions Canada Inc. “Shell”, without cause and offered 15 months pay in lieu of notice. Ms. Rice claimed Shell should have paid her the equivalent to 34.5 months, the amount she would have received had she remained employed until the end of the term of her contract. Ms. Rice was not provided with an employment contract and she received only an offer of employment letter that outlined her “assignment length” as four years. The trial judge found that the employment agreement was a hybrid of a traditional fixed-term contract and indefinite contract. The trial judge held that Shell had provided Ms. Rice with a four-year term contract which, at the expiry of the four years, would have been terminated with reasonable notice and if it continued after the four years, would have become an indefinite term contract. Since the contract was terminated prior to the expiry of the four-year term, Ms. Rice was entitled to receive damages equal to the remaining months of a fixed term contract. She was therefore entitled to receive the remaining 34.5 months of the four-year contract.
The Alberta Court of Appeal dismissed Shell’s appeal that the trial judge erred in its characterization of the employment contract and upheld the trial judge’s award that Ms. Rice was entitled to her expectation of a four-year term of work. In its review of contractual interpretation principles and its assessment of the intention of the parties to the contract, the Court of Appeal reiterated that contractual interpretation involves issues of mixed fact and law, and that the intention of the parties must be ascertained and given effect in characterizing the term of the contract. The Court of Appeal referred to the Ontario Court of Appeal case of Ceccol v Ontario Gymnastic Federation, 2001 ONCA 8589, which, although distinguishable on its facts, was an appeal resolved on the basis of the reasonable expectations of the parties. In exploring this, the Court of Appeal posed hypothetical questions such as:
- Did the respondent-employee agree (or can it reasonably be inferred that she agreed) to be terminated on reasonable notice prior to end of her assignment?
- Or, did the appellant-employer reserve the right (or could it be reasonably inferred that it reserved the right) to terminate the respondent on reasonable notice prior to the end of the assignment?
The Court of Appeal determined that, in absence of a termination clause, these questions could both be answered in the negative. It applied the contractual principle that the parties’ intentions to a contract is to be determined at the date the contract was formed. The Court of Appeal agreed with the trial judge’s conclusion that it was not reasonable to assert that, at the time the four-year assignment was offered to her, Ms. Rice, whose job had been recently posted in an open competition, had agreed to being terminated with reasonable notice one year into her assignment.