Justice John Menzies' decision in the Yvon Dumont case!

Tansi/Good Day Folks:

Since Justice Menzies decision is 22 pages (63 paragraphs) we've highlighted in blue those which are the most important.

Sincerely,
Clare L. Pieuk
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COURT OF QUEEN'S BENCH OF MANITOBA

BETWEEN: Metis National Council Secretariat Inc. and Clement Chartier on behalf of the Metis National Council and the Metis National Council - Murray N. Trachtenberg for the Plaintiffs

and

W. Yvon Dumont - Anders Bruun and Jeff Niederhoffer for the Defendant

JUDGMENT DELIVERED: JULY 5, 2006

MENZIES, J.

[1] The Plaintiffs bring an action against the Defendant for breach of a restrictive covenant in his employment contract and for damages as a result.

THE PLAINTIFFS

[2] The Plaintiff Clement Chartier is the President of the Metis National Council having been elected to that position in October 2003. The Metis National Council (MNC) is the governing body for various Metis organizations serving the Metis people residing from Ontario to British Columbia. The MNC is run by a Board of Governors which consists of the Presidents of the five provincial bodies namely: Metis Nation of Alberta (MNA), the Metis Nation of Saskatchewan (MNS), the Manitoba Metis Federation (MMF), [the three founding members], the Metis Nation of Ontario (MNO) and the Metis Provincial Council of British Columbia (MPCBC). In addition to these five Members, there is also a President elected for three year terms by a vote held at an Annual General Assembly of the MNC. The Metis Sceretariat Inc. is a Corporation set up by the Metis National Council to carry on their affairs.

BACKGROUND

[3] In 1999, the Board of Governors of MNC decided to create the position of Governor. The position was to be a ceremonial position similar to the Governor General of Canada. The person filling this role was to preside over ceremonial events as well as promote Metis culture and history.

[4] The Defendant Yvon Dumont was a prominent Metis individual active in Metis culture and politics. Dumont had been appointed and served as the Lieutenant Governor of Manitoba from March 1993 March of 1999. The Members of the Board of Governors of MNC felt that Dumont's background made him an obvious choice for the position of Governor and, therefore, offered him the position. Dumont accepted the offer and was sworn in as Governor at the MNC Annual General Assembly held in 1999.

[5] Although the position of Governor had been created by MNC and filled by Dumont, no terms of reference for this position had been created. It was understood the terms of reference would be agreed upon at a later date.

[6] In June 2001 an election for President of MNC was scheduled for the Annual General Assembly. The incumbent President Gerald Morin who came from Saskatchewan was running for re-election. At the Assembly, Dumont was nominated to run for the position of President and agreed to let his name stand. Morin won the election.

[7] Dumont's candidacy for President evoked an angry reaction from the MNS which passed a resolution refusing to recognize Dumont as the Governor of MNC.

[8] At the December 2001 Board of Governors meeting, the President of MNS introduced proposed terms of reference for the position of Governor. After heated discussion, the Board, of Governors adopted a terms of reference which provided as follows:

"GOVERNOR METIS NATION

TERMS OF REFERENCE

The Metis National Council may appoint a Governor of the Metis Nation. The Governor so appointed shall fulfill a ceremonial and advisory role to the President, Board of Governors, Metis National Cabinet and General Assembly of the Metis Nation.

Qualifications: The person selected as Governor must have a proven record of service to the Metis Nation, and be respected by the citizens of the Metis Nation.

Process of Selection: The Board of Governors shall select a person from a list of nominees submitted by the President and/or Governing Members, which selection shall be subject to ratification by the General Assembly.

Terms of Appointment: The Governor shall be appointed for a period of five (5) years with elibibility for a further five (5) year appointment.

Resignation: The Governor may resign such position upon written notification to the Presidnet of the Metis National Council.

Remuneration: The Governor may be remunerated based on a yearly stipend, or by honorarium for events requested to attend.

Travel Expenses: The Governor shall be reimbursed travel costs for events to which the Governor has been invited to attend by the President of the Metis National Council.

Politics: The Governor shall not take part in the politics of the Metis Nation. Any person who serves as Governor shall not be eligible to seek or hold political office in the Metis National Council (or any of its Governing Members) for a period of two years from the date that the person ceases to be the Governor.

Oath of Office: The Governor shall be sworn-in, and sign an Oath of Office based on these terms of reference."

[9] These terms of reference were given to Dumont for his consideration the same day they were adopted by the Board of Governors. Dumont had misgivings about the terms of reference. Nevertheless, on January 22, 2002, Dumont wrote to the President of the MNC advising tht he accepted the terms.

[10] Despite Dumont having indicated his acceptance to the terms of reference, the Motion made by MNS refusing to recognize Dumont as the Governor was not rescinded.

[11] On January 17, 2003 Dumont wrote to the President of MNC tendering his resignation as Governor of MNC. Shortly thereafter, he declared his intention to run for the postion of President of the Manitoba Metis Federation against the incumbent, David Chartrand in the election to be held in June.

[12] On January 27, 2003 Chartrand wrote to the Board of Governors of MNC complaining of Dumont's actions.

[13] The Board of Governors considered what actions should be taken as a result of Dumont's apparent breach of the terms of reference. The MNC had a long standing policy that the national governing body should not interfere in provincial Metis politics. The Board of Governors decided they would not take any action to prevent Dumont from running for President of the MMF. They did, however, write to Dumont requesting the return of all remuneration paid to him since the acceptance of the terms of reference based on his apparent breach of contract.

[14] Dumont was not successful in his bid to become the President of the MMF. MNC brought an action to recover the salary paid under the terms of reference.

TERMS OF REFERENCE

[15] Dumont argues the terms of reference adopted by the Board of Governors of MNC do not form part of his contract with MNC.

[16] Dumont argues he did not agree to the terms of reference. Dumont testified he approached President Morin in January of 2002, who agreed that the "Politics" clause of the terms of reference would be amended and did not apply to him.

[17] The evidence does not support this contention.

[18] Morin admitted he was undergoing personal difficulties at the relevant time but denies he ever argued the "Politics" clause would be amended or would not apply to Dumont.

[19] By way of a letter dated January 22nd 2002, Dumont advised Morin he would accept the terms of reference adopted by the Board of Governors. In that letter Dumont wrote:

"Although acceptance of the offer as it stands, means that I must remove myself from the possibility of holding political office anywhere in the Metis Nation," but that in order to be effective and to have the appearance of being completely politically neutral in the postion, it is necessary."

[20] Dumont acknowledged he was aware this letter would be presented to the Board of Governors at their next meeting.

[21] Dumont admitted he did not mention any agreement to amend the "Politics" clause in his letter of acceptance of January 22, 2002, his letter of resignation from the position of Governor of January 23, 2003, or in a letter Dumont addressed to Anthony Belcourt, the President of MNO, in response to the letter of complaint that had been forwarded to the Board of Governors by Chartrand.

[22] Dumont's actions in accepting the terms of reference by way of the letter of January 22, 2002, and his failure to raise the issue of an agreement with Morin in later discussions with the MNC do not support his contention there was an agreement to circumvent the "Politics" clause of the terms of reference. The reference as adopted by the Bard of Governors and I so find.

[23] Dumont also argues the "Politics" clause is void for being too restrictive and, therefore, against public policy. The "Politics" clause is in the nature of a restrictive covenant. As such the clause constitutes an interference with Dumont's individual liberty to participate in Metis politics despite the termination of any contractual relationship between Dumont and the MNC.

[24] A restrictive covenant may be justifiable in the circumstances of any particular case if it is reasonable as between the Parties and within the interests of the public interest. Although discussing a covenant in the restraint of trade, the comments from Dickson J. (as he then was) in Elsley v. J. G. Collins Insurance, [1978] 2 S. C. R. 916 at page 923 are instructive:

"A covenant in restraint of trade is enforceable only if it is reasonable between the Parties and with reference to the public interests.... In assessing the opposing interests the word one finds repeated throughout the cases is the word "reasonable." The test of reasonableness can be applied, however, only to the particular circumstances of the particular case. Circumstances are of infinite variety. Other cases may help in enunciating broad general principles but are otherwise of little assistance."

[25] When Dumont was offered the position of Governor in 1999, terms of reference for the position had not been established. In 2001, Dumont ran against Morin for the position of President of MNC. The President of MNA Audrey Poitras, the President of MMF David Chartrand and the President of MNO Belcourt had urged Dumont to contest the election. None of these prominent Metis politicians saw difficulty in Dumont's running for office while holding the Office of Governor.

[26] In contrast, the reaction from MNS was dramatic. MNS passed a Motion refusing to recognize Dumont as the Governor. There was no evidence tendered to show this Motion was ever withdrawn or Dumont subsequently recognized by MNS. Chartier as President of MNS proposed terms of reference which would have required Dumont to promise not to run for political office in MNC or any of its founding Members for 5 years. In discussion, the Board of Governors reduced that covenant to 2 years. The amended terms of reference were presented to Dumont for acceptance.

[27] Bearing in mind the goal to keep the position of Governor of the MNC apolitical, I am satisfied the restrictive covenant was reasonable as between the Parties to the contract so long as Dumont continued to hold the position of Governor. The profile of the position of Governor is considerable and certainly would represent an unfair advantage for any candidate. However, once the postion is vacatated, the rationale of the two year waiting period is less clear. However, the terms of reference were agreed upon and the waiting period is not overly onerous on the Party vacating the position. I would not be prepared to find that the clause was unreasonable in this situation.

[28] In accordance with the reasoning contained in the Elsley decision, supra, once the restrictive covenant is found to be reasonable, the onus then falls to the Party attacking it to prove it is contrary to public interest.

[29] There is considerable evidence on the issue of public interest. From the viewpoint of Metis politics, the restrictive covenant preventing Dumont from participating in Metis political activity for two years was a contentious matter from its initial introduction by the President of MNS.

[30] While giving their evidence surrounding the circumstances of Dumont contesting the election for President of MNC in 2001, three Members of the MNC Board of Governors, Belcourt, Poitras and Chartrand indicated they saw no irregularity with Dumont running for President of MNC while holding the Office of Governor on the understanding he would resign if he won. The negative reaction came from the MNS.

[31] As a result of heated debate at the Board of Governors meeting of December 2001, the new terms of reference were adopted.

[32] In 2003 Dumont resigned and declared his candidacy for the position of President of MMF. This apparent breach of the restrictive covenant was brought to the attention of the Board of Governors of MNC. The Board of Governors decided no action would be taken to prevent Dumont from participating in the election. The Court heard from four witnesses who were Members of the Board of Governors involved in that decision. Their evidence provided an interesting insight into the political philosophy of the Metis leadership. Chartier, Poitras, Chartrand and Belcourt testified there was long standing policy within the MNC not to interfere in the elections held at the provincial level. They all declared that it was policy that the voting Members of the provincial bodies had the sole right to decide who their elected representatives would be. Their testimony was MNC would respect the results of the provincial elections even if it was Dumont who won. Belcourt stated it was contrary to Metis policy to restrict someone from running for Office:

[33] In the MNC's letter of February 11, 2003 as authored by Poitras, the following passage is found:

"As you know, the principle of democracy is paramount to our Nation and our people; therefore, to interfere in the MMF's ongoing elections and attempt to stop your candidacy would be inconsistent with our collective values. It is the position of the majority of the MNC Board of Governors that only the Metis people of Manitoba have the right to choose who can honourably, honestly and fairly lead them. This position was echoed by the President of the MMF in the discussion. I want to affirm that the MNC will not interfere in the MMF's democratic process in any way."

[34] As it is a policy of the Metis people not to interfere with political elections and to let local memberships decide who their elected leaders will be, the propriety of the restrictive clause should be considered in light of that policy. The restrictive covenant prohibiting Dumont from running for political office within the Metis Nation is contrary to the political philosophy of the Metis people. In order to enforce the restrictive clause, the MNC would have to contravene a basic political belief of the Metis people. In light of the public interest to let the Metis people choose their own leader without interference from the MNC, the restrictive covenant cannot stand. I find the clause is unenforceable as being against the public interest.

[35] However, if I am wrong in that decision, I will decide the other issues that have been raised in this matter.

[36] Dumont argues that the terms of reference are unenforceable as there has been no consideration flowing to him for accepting these new terms of Office. It was clearly understood by Dumont that if he did not accept the terms of reference, his employment was in jeopardy. By accepting the new terms, he was promised a fixed term of five years as Governor of MNC with the possibility of another five year term. It has been held by other courts that a continuation of employment is sufficient consideration to suppport a restrictive covenant in a contract. See Pearless Laundry & Cleaners Ltd. v. Neal, [1953] 2 D. L. R. 494 (Man. C. A.); Skeans v. Hampton, (1914), O. L. R. 424 (Ont. C. A.); P. C. O. Services Ltd. v. Rumelski, (1963) 38 D. L. R. (2d) 390 (Ont. H. C.). Accordingly, I find there was consideration for the acceptance of the terms of reference and upon acceptance they became binding between MNC and Dumont.

BREACH OF CONTRACT

[37] There can be little doubt that by running for the Office of President of the MMF in June of 2003, Dumont breached the "Politics" clause of the terms reference. If the "Politics" clause were an enforceable clause of the contract, he clearly breached the clause.

WAIVER

[38] Dumont argues MNC has waived any reliance on the "Politics" clause by allowing him to run for the position of President of MMF without taking steps to prevent his candidacy. This position is contradicted by the evidence before the Court. It is true the MNC decided not to enjoin Dumont from running in the MMF election, but at all times the MNC maintained they would be seeking redress by way of damages for breaching the "Politics" clause. There is no evidence before the Court to show MNC waived its right to sue for breach of contract.

DAMAGES

[39] Presuming the Plaintiffs had been successful in establishing a breach of contract, they have demanded damages in the amount of $47,047.52 plus interest since January 17, 2003 for breach of the terms of the employment contract. This represents the salary and benefits paid to Dumont from the date of his acceptance of the terms of reference to his resignation. In the alternative, the Plaintiffs claim the same amount under the principle of unjust enrichment. The Plaintiffs also claim general damages for the damage done to the position of Governor by Dumont's actions.

UNJUST ENRICHMENT

[40] The principles of unjust enrichment have been clearly delineated by the Supreme Court of Canada in Rathwell v. Rathwell (1976) 1 R. F. L. (2d) 1, Becker v. Pettkus (1980), 19 R. F. L. 165, Sorochan v. Sorochan (1986) 2 R. F. L. (3d) 225 and Peter v. Beblow (1993), 44 R. F. L. (3d) 329. Those principles are:

"1) one party must be enriched;

2) there must be a corresponding deprivation to a second party;

3) there is an absence of juristic reason for the enrichment to the first party.

[41] There is little question of an enrichment flowing to Dumont in this case as he received his salary as Governor throughout his term of Office.

[42] The evidence does not establish a deprivation to the MNC. It is true that MNC paid the salary but in return Dumont provided the contracted for services to the benefit of the MNC in his position as Governor. By all accounts, Dumont carried out his responsibilities as Governor in an exemplary fashion, the benefit of which flowed to the MNC. Accordingly, I do not find the evidence establishes a deprivation to the MNC.

[43] Finally, there was a juristic reason for Dumont to be enriched. That reason was the agreement between Dumont and MNC to pay him a salary for acting as the Governor of MNC.

[44] There is not legal or factual basis for a claim of damages based on the doctrine of unjust enrichment in this case.

DAMAGES FOR BREACH OF CONTRACT

[45] If a breach of contract has been found in this matter, the Court would have to determine the damages flowing from that breach. Calculation of damages for the breach of the covenant not to run for political office in this case poses greater difficulty. Counsel for MNC referred to The law of Contract in Canada by Fridman, 3rd ed. (Carswell) at page 751:

"The fact that it may be difficult, if not virtually impossible, to assess or measure accurately and with definition the value of the loss suffered by the plaintiff - which is attributable to, and not too remote a consequence of the defendant's breach or contract - is not in itself an answer to a claim for damages. The Court must and will make an award. As was stated by Duff J in Kohler v. Thorold Natural Gas Co., [1916), 52 S. C. R. 514 at 530]

'as against a wrongdoer, and especially when the wrong is of such a character that in itself it is calculated to make and does make the exact ascertainment of damages impossible or extremely difficult and embarrassing, all reasonable presumptions are to be made.'

'The Court must do the best it can and make a reasonable estimate of the plaintiff's loss."'

'(At page 753). Thus, truly speculative loss is never recoverable, since it is not loss that can be traced to the defendant's breach of contract, nor, is it necessarily loss which the plaintiff has suffered. Loss that is difficult to assess or calculate is nonetheless definitely loss suffered by the plaintiff attributable to the wrongdoing of the defendant."

[46] There is also comment on the calculation of damages made by Conrad J. in Marigold Holdings Ltd. v. Morem Construction Ltd., (1988) 60 Alta. L. R. (2d) 289, 31 C. L. R. 51, 89 A. R. 81 [1988] 5 W. W. R. 710 (Alta. Q. B.) at paragraph 266:

"The general rule is that general damages which are uncertain, contingent or speculative cannot be made a basis for recovery. That rule is directed against uncertainty as to cause rather than as to extent or measure of damages. (Krantz v. Hicks [1911] 2K. B. 786, [1911-1913] All E. R. 224 (C. A.); Sapwell v. Bass [1910] 2 K. B. 486; and Wood v. Grant Valley Ry. Co. (1915) 51 S. C. R. 283, 22 D. L. R. 614."

[47] The Manitoba Court of Appeal has also had the opportunity to comment on the calculation of damages in the recent decision of Campeau v. Desjardins Financial Security Life Assurance Co. (2005) MBCA 148. Freedman J. A. commented on the general principles for the determination of damages for breach of contract beginning at para 26:

"An award of general damages may be made for a breach of contract but damages must be proved even if the plaintiff is not able to quantify precisely all aspects of the claim. See D. R. Harris, ed., Chitty on Contracts, 27th ed. (London: Sweet and Maxwell, 1994) at 1199-1200, para. 26-002.

The purpose of a damages award in contract cases is, so far as possible, to put the injured party in the position he or she would have been in, had there been no breach (BG Checo at pp. 16, 37, and Asamera Oil Corporation Ltd. v. Seal Oil General Corporation et al., 1978 Can LII 16 (S. C. C.), [1979] 1 S. C. R. 633 at 645). It will be apparent that, to arrive at a damages award one must decide what that position would have been. One must determine so far as possible, the benefits which would have accrued to the injured party, had there been no breach. In my opinion, to understand the real consequences to the plaintiff of the breach of contract, one must understand the bargain made by the parties.'

'(para. 29) In BG Checo, the Supreme Court said (see p. 40) that breach of contract normally is concerned with "expectation" damages while tort claims raise "reliance" damages (see L. L. Fuller and W. R. Perdue, "The Reliance Interest in Contract Damages" (1936-37) Yale L. J., 52 and 373). Contract promises can normally expect to recover what they have lost by the failure of the promisor to abide by the contract. So far as possible, this will be consistent with the fundamental principle applicable to measuring breach of contract damages, of "restitutio in integrum" (see e.g. Bowlay Logging Ltd. v. Dontar Ltd. (1978), 87 D. L. R. (3d) 325, at 335 (B. C. S. C.), aff'd (1982), 135 D. L. R. (3d) 179 (B. C. C. A.). This principle ensures, as Berger J. said at trial in Bowlay (at p. 335), that the law of contract compensates for the consequences of the breach, not for the consequences of entering into the contract"

[48] The manitoba Court of Appeal also quoted with approval the following excerpt from Martin v. Goldfarb et al., 1998 CanLII 4150 (Ont. C. A.), (1998), 41 O. R. (3d) 161 at page 187:

" .... it is a well established principle that where damages in a particular case are by their inherent nature difficult to assess, the court must do the best it can in the circumstances. That is not to say, however, that a litigant is relieved of his or her duty to prove the facts upon which the damages are estimated. The distinction drawn in the various authorities, as I see it, is that where the assessment is difficult because of the nature of the damages proved, the difficulty of assessment is no ground for refusing substantial damages even to the point of resorting to guess work. However, where the abaence of evidence makes it impossible to assess damages, the litigant is entitled to nominal damages at best."

[49] With these principles in mind, the Court must assess the reasonable expectations of the Parties at the time of the breach. Clearly the Plaintiffs did not expect Dumont would run for political office in the MMF at the time of his resignation. It became evident shortly after his resignation that Dumont would run for President of the MMF. At this time the Plaintiffs could have applied for an injunction to prevent Dumont from entering the MMF election. They elected not to do so. If the Plaintiffs had been successful in obtaining an injunction, any damages caused by the breach would have been nominal at best.

[50] Having not taken steps to prevent Dumont from entering the election, the Plaintiffs ask the Court to award damages equal to the last year of salary in compensation for the breach of contract. I agree with the Plaintiffs to an award of damages inflicted by a breach of contract. However, the failure to move for an injunction does not entitle the Plaintiffs to ask for the Court to award a higher quantum of damages than those damages which flow form the breach of the contract to obtain an award.

[51] The Court should look to put the Parties back in the position they would have been had there been no breach of the contract.

[52] It is true that had there been no breach of contract, Dumont would not have run for the position of President of the MMF. The fact of the matter is that Dumont lost that election and, therefore, to that extent the Parties were in the same position they would have been had he not let his name stand in that election.

[53] The Plaintiffs claim that by running in the MMF elections, Dumont has so tainted the position of Governor, that it can no longer be occupied. The position of MNC is that the politicization of the post of Governor has irreparably damaged the position, ending its usefulness for the MNC and damages should be awarded.

[54] The evidence does not support this position.

[55] The position of Governor was created to fulfill a ceremonial role for the MNC. The Governor was to be an official representative of the Metis people at public functions, to promote Metis history and culture. Every witness who was asked agreed that Dumont did an exemplary job as Governor throughout his tenure.

[56] Two of the witnesses for the Plaintiffs who claim Dumont tainted the position of Governor by running for office in the MMF were Audrey Poitras and David Chartrand. These same two people encouraged Dumont to run for the position of President of the MNC in 2001 while occupying the office of Governor. Both of these Members of the Board of Governors of MNC testified there was nothing wrong with Dumont letting his name stand for election in 2001 so long as he resigned if he won. The third Member of the Board of Governors also encouraged Dumont to run for office in 2001. He did not feel that Dumont's actions were inappropriate.

[57] In her testimony, Poitras testified that the real cause of the harm was creating the position of Governor without agreeing to terms of reference in the first place. I agree. As Chartrand admitted, the election of 2001 created a rift within the MNS which did not heal. If the position of Governor was tainted, it was already tainted in 2001 prior to the terms of reference coming into being.

[58] The position of Governor has not been filled since Dumont vacated it, but I am not satisfied the vacancy is related to effects of Dumont breaching the terms of reference. The real difficulty with filling this position lies with trying to prevent the office holder from being politically active while respecting the Metis philosophy of not interfering with the right of the electorate to decide who their leaders will be in a democratic fashion.

[59] There is no correlation between the $47,047.52 claimed and the breach of the terms of reference. To award that sum would be to pick a sum out or the air without any evidentiary basis to base the determination.

[60] In addition, I do not believe there is any evidence upon which to base any other quantum of damages and to do so would be pure speculation on my part. I refuse to speculate on damages. In my opinion, even if I had found the Plaintiffs had proved a breach of contract, they have failed to prove any damages resulting from the breach as alleged.

[61] The Plaintiffs had two remedies available to them upon the breach of the terms of reference. The first was to try and enjoin Dumont from running in the MMF election. As is their right, they elected not to. Their second remedy was to ask for an award of damages as a result of the breach. This is also their right. However, where a Party elects not to pursue one remedy, the Party is then saddled with the onus of proving their entitlement pursuant to the other remedy. The Court will not award damages to compensate a plaintiff for their election not to pursue other forms of relief.

[62] In summation, I find that the clause restricting the Defendant Dumont from running for political office for a period of two years after leaving the office of Governor of the MNC is unenforceable for violating public interest. I further find that even if the restriction was valid, the Plaintiffsw have failed to prove any damage flowing from the breach of the restriction by Dumont.

[63] The action against Dumont is, therefore, dismissed. if the Parties cannot agree as to costs, the matter can be scheduled before me for a determination of entitlement and quantum. I would expect Counsel requesting an Order of Costs to provide me with the particulars of the costs being requested prior to any Hearing so that I may review the request prior to argument.

(Signature)

Justice John Menzies