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CONTRACT OF EMPLOYMENT - Express terms - Remuneration - Commissions

Tuesday, June 20, 2017 @ 8:50 AM  

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Appeal by the corporate defendant, GWR Resources (GWR), from a $55,000 award in quantum meruit compensating the respondent, Birch, for the role he played in acquiring an investment in the appellant’s mining project. In 2009 or 2010, GWR’s president approached the respondent with respect to finding investors for the mining property. The president said words like: “find us some money and we’ll look after you”. Birch took this statement to mean that he would receive a finder's fee if he introduced investors who made substantial investments in GWR's project. In August 2010, GWR hired Birch as an investment relations consultant on a part-time basis in a month-to-month salaried position. In late 2010 or early 2011, Birch arranged meetings between an investor and GWR’s vice president of exploration. In June 2011, the investor invested $1.8 million in the project. In September 2011, a newly-appointed director of GWR advised Birch that he would not be receiving a finder’s fee in relation to the investment and terminated Birch’s services as an investment relations consultant. Birch sued for breach of the contract to pay a finder's fee or, in the alternative, for damages in quantum meruit. The chambers judge found that the respondent’s efforts had contributed to the investment and that he was not compensated in his role as an investment relations consultant for his work in securing the investment. Accordingly, recovery on the basis of quantum meruit was not precluded on the basis of any contract governing the benefit that was provided by Birch. The appellant argued that the chambers judge erred in making the award because the respondent was paid pursuant to his employment contract for finding the investment and a separate finder’s fee was prohibited by the Securities Act and the policy of the TSX Venture Exchange.

HELD: Appeal dismissed. The chambers judge did not misapprehend the facts. The judge was clearly aware the respondent was paid to be an investment relations consultant and that his compensation as such was not tied to success. The judge found the work he was paid for as an employee did not encompass the attempt to attract funds for private placement in the mining project for which he had been promised a reward by GWR’s president. The appellant did not discharge the onus of establishing that payment of the award would be contrary to the Securities Act or offensive to the public policy embodied in the Act. The judge expressly distinguished the work that resulted in the investment from the work for which the respondent was employed as an investor relations consultant. It was also far from certain that a waiver under the relevant policy would not have been granted by the Exchange in this case. The policy did not apply to agents specifically commissioned to locate, arrange or acquire a benefit for the Issuer which it would not have otherwise obtained. Arguably, the appellant commissioned Birch to engage in locating investors. The commission was offered and the introduction occurred before Birch was employed. As the judge pointed out, the conduct in this case was not "illegal in every circumstance".

Birch v. GWR Resources Inc., [2017] B.C.J. No. 913, British Columbia Court of Appeal, M.V. Newbury, D.M. Smith and P.M. Willcock JJ.A., May 16, 2017. Digest No. TLD-June192017004