The recent Superior Court decision of McCready v. De Dwa Dehs
Nyes provides interesting observations about the rights of
independent contractors upon termination.
In this case, the Plaintiff was a social worker with years of
experience working with aboriginal communities.
The Defendant was a non-profit organization providing health
care and related services to aboriginal people.
In 2009, the Defendant obtained funding for a six-month research
project to collect information relating to aboriginal health care
issues. The Defendant was referred to the Plaintiff in September,
2009 as a person who might be able to supervise the project. In one
single phone call, the Plaintiff and a representative of the
Defendant discussed the project and the Defendant hired the
Plaintiff as an independent consultant for the six month timeframe
in which the project was to be completed. A total fee for the
Plaintiff's work was also agreed on.
Both parties agreed that the consulting contract would
ultimately be put into writing. In the telephone call, however,
they agreed that the Plaintiff would start work with a training
session at the Defendant's premises on October 1st and that the
written contract would follow at a later date.
A key fact to note was that the consulting contract was
non-exclusive. In other words, the Plaintiff was free to take on
other consulting work during the six months that the project was
anticipated to last.
The Plaintiff started his training on October 1st as planned. By
the end of the week, on October 8th the Defendant had made the
decision that the position actually required a full-time research
co-ordinator, and the Plaintiff was fired.
The Plaintiff then sued for the entire amount that would have
been payable to him for the six months' worth of work. The
Defendant responded by insisting that no firm contract had been
entered into since whatever had been discussed on the telephone was
never reduced to writing and signed.
The Court had little difficulty dispensing with the
Defendant's argument, and found that a binding agreement for a
non-exclusive consulting arrangement had been made on the telephone
and was enforceable.
However, in response to the Plaintiff's argument that given
that there was a contract for a fixed term with a fixed price, and
that in the absence of any termination provision, he was entitled
to have the contract price paid in full, the judge responded by
analogizing the situation to that of a lawyer.
Where a lawyer is retained, even if it is for a specific task or
term, no one would expect the lawyer to get paid for work expected
to be done but not yet reached if the lawyer's retainer is
terminated before the task has been completed. As far as the Court
was concerned, this is a function of the fact that typically,
lawyers are engaged by clients on the basis that they are at
liberty to work for other clients at the same time, i.e., on a
In this case, the Court concluded that as the Plaintiff had been
hired on a non-exclusive basis only, he was not entitled to the
full contract price. He was entitled only to the value of the time
he actually spent on the project prior to termination.
As a result, the Plaintiff's damages were fairly
However, and as an aside, the Court did wish to express its
disapproval for what it considered to be the disrespectful way in
which the Plaintiff was treated. Accordingly, punitive damages in
the amount of $15,000 were awarded. This may not seem like a
significant amount but the fact is that punitive damages are only
rarely awarded in breach of contract cases.
The Plaintiff was also awarded a substantial amount for costs.
In fact, the costs award was roughly eight times the amount of the
damages awarded. Presumably, this was also a reflection of the
judge's distaste for the Defendant's conduct.
The important point to be taken in this case, of course, has to
do with the nature of the consulting agreement. The fact that a
consulting agreement is non-exclusive in nature will have a very
dramatic effect on the damages that might be claimed by a
consultant in the event of early termination.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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