Repudiation Upheld Thus Valid Termination Clause of No Effect:

In Klyn v Pentax Canada Inc., 2024 BCSC 372. Justice Edelman had a situation where the Defendant failed to honour their own termination clause. The result was that the Defendant could not rely on their otherwise enforceable termination clause and thus the Plaintiff was entitled to common law reasonable notice. This is what the Judge said :

[6]       The parties agree on the applicable law. Repudiation is a breach of contract by one party giving rise to the right of the other party to terminate the contract and pursue the available remedies for the breach. A breach is a repudiation of the contract if it is a breach of a contractual condition or of some other sufficiently important term of the contract so that there is a substantial failure of performance (see Potter v. New Brunswick (Legal Aid Services Commission), 2015 SCC 10 at paras. 144-145).

[7]       Mr. Klyn alleges a number of breaches of the contract upon his termination. Although Pentax made some payments to him between April and July, the payments only included salary and not commissions as required by the contract. Pentax has not provided a satisfactory explanation for the failure to pay commissions during that period, simply making a rather vague statement that there was a disagreement about the amount owed. I fail to understand why Pentax wouldn’t have at least paid the amount it considered to be required under the contract, in compliance with its understanding of its own obligations. The failure to comply with its own understanding of its obligations appears to me to be a clear breach of the contract.

[8]       In any event, the payments ceased completely in July 2022, presumably because Mr. Klyn did not comply with the demand to report mitigation efforts to Pentax. In submissions, counsel for Pentax conceded that although a duty to mitigate was part of the employment contract, the reporting requirement imposed by Pentax was not. Pentax does not take issue with Mr. Klyn’s efforts to mitigate. He found alternate employment, in what is a rather specialized field, starting in February 2023. I find the failure to make the payments required under the termination clause to be a clear and unequivocal breach of a central term of the contract. I find the employment contract was repudiated by Pentax.

[9]       The damages owed to Mr. Klyn will therefore be calculated based on the common law.

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