Agreement silent on issue

Court resolution in favour of the employee

Mark Schacter was the director of group and incentive sales at Uniworld Travel & Tours Inc. from March 1995 until July 1999 when he left with no notice. Prior to his departure, Mr. Schacter received advances against commission earnings. After his departure, Uniworld commenced an action against Mr. Schacter for the return of these advances as well as car and cellphone allowances and personal expenses paid on his behalf.

Mr. Schacter’s employment agreement provided that Uniworld would pay him a monthly advance of $3,000 against commissions earned. The actual commissions earned were calculated monthly and adjusted against the advance. In defending the claim against him, Mr. Schacter argued that the monthly advance was in fact a guaranteed minimum salary.

The Court did not accept that the advance constituted a minimum salary. Unfortunately the employment agreement between the parties did not provide for the possibility of earning commissions less than the agreed advances on average. Nor did it provide for repayment of amounts advanced in the event of Mr. Schacter leaving Uniworld while his commission earnings were less than the advances he had received.

The Court was not prepared to infer a term into the agreement unless the parties’ intention in this regard was clear.

Previous case law has held that “where a contract is silent on an obligation sought to be imposed by an employer on his former employee, cogent proof of such a mutual intention is required.” The Court held that Uniworld did not establish that the parties to the agreement understood at the time they entered into the agreement that Schacter was to repay advances in the event of a deficit.

With respect to the advances for the cellphone, Mr. Schacter acknowledged that he was required to pay the advances in the amount of $600. He also acknowledged that he had used the corporate credit card for personal expenses that Uniworld had paid and was entitled to be reimbursed.

However the amount for personal expenses was disputed. The Court accepted Mr. Schacter’s evidence as to the amounts used for business and personal expenses.

Uniworld should be required to pay the business expenses, except in those situations where they were attributable to a specific group sale, in which case they were properly charged to that sale. There was nothing in the employment agreement that made Mr. Schacter liable for expenses incurred for business promotions in situations where the prospective sale did not take place.

Uniworld was not entitled to judgment against Mr. Schacter for any outstanding advances. Uniworld could only recover against any commissions it owed to Mr. Schacter. The Court did give Uniworld judgment with respect to repayment of the cellphone advances and the personal expenses it had paid on Mr. Schacter’s behalf.

For more information:

Uniworld Travel & Tours Inc. v. Schacter, Ontario Superior Court of Justice, Docket No. 99-CV-176407SR, Sept. 21/01.

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