In the recent decision of Mac's Convenience Stores Inc. v Basyal, 2025 BCCA 284 ("Basyal"), the British Columbia Court of Appeal reconfirmed that, in British Columbia, employees are required to mitigate their losses following the early termination of a fixed-term contract unless the employment contract contains a term to the contrary.
A majority of the Court of Appeal also provided a powerful reminder on the requirements for a common law relationship of agency based on actual or apparent authority. There is a difference between a colloquial agency and an agency at common law, which binds and renders a principal vicariously liable for the wrongful acts of its agent. That relationship, the majority held, was not present here. Arif Chowdhury, Kaleigh Milinazzo, Tom Posyniak, and Paige Mueller successfully represented Mac's in this appeal.
Background Facts
The plaintiffs in this certified class proceeding are migrant workers who came to Canada under the federal government's Temporary Foreign Workers Program (the "Program").
Mac's had retained an immigration consultant to assist with filling positions at its convenience stores in Western Canada. A subclass of plaintiffs (the "Subclass Members") claim that they entered into employment contracts with Mac's but found when they came to Canada that the jobs did not exist or the hours were not consistent with the terms of their contracts.
The parties agreed to hold a summary trial to decide certain common issues in advance of the full trial. The judge concluded among other things that Subclass Members had no duty to mitigate when their fixed-term contracts were terminated, and that the immigration consultant was Mac's agent based on actual and apparent authority. As a result, Mac's could be vicariously liable for the immigration consultant's alleged breach of fiduciary duty, even though no fiduciary duty was claimed against it. Mac's appealed.
The Court allows the appeal on the duty to mitigate losses upon termination of a fixed-term employment contract.
All three members of the Court allowed the appeal from the judge's conclusion that there was no duty to mitigate on the part of Subclass Members.
The Court agreed with the judge's conclusion that, absent a term to the contrary, an employee under a fixed-term contract has a duty to mitigate, following established law in British Columbia. However, the Court disagreed with the judge that the contracts must be read as impliedly ousting the duty to mitigate, noting that terms cannot be implied into a contract merely because it seems fair or convenient. Critically, the employment contracts did not expressly require Mac's to pay the Subclass Members to the end of the fixed-term upon termination. Moreover, the contracts included a term contemplating the possibility of the Subclass Members being hired by a new employer under the Program if their employment with Mac's was terminated.
We note that the law in British Columbia regarding mitigation of fixed-term contracts differs from the law in Ontario. In Howard v Benson Group Inc., 2016 ONCA 256, the Ontario Court of Appeal held that where a contract is for a fixed-term and does not provide expressly for payment of the balance of the term upon termination, a liquidated damages clause is implied, obliging the employer to pay the employee to the end of the fixed-term with no duty to mitigate.
A majority of the Court concluded that the judge erred in finding an agency.
An individual is only an agent at law if they have actual or apparent authority to contractually bind the principal. A majority of the Court found that although the judge correctly stated the legal test for agency, the judge wrongly assumed that the agreement between Mac's and the immigration consultant created such a relationship without confirming that the immigration consultant had authority to contractually bind Mac's.
The Court found that Mac's had not granted actual authority, and actions like allowing the immigration consultant to forward signed contracts or assuming liability for its conduct did not amount to such authority. Apparent authority was also rejected, as the plaintiffs were unaware of Mac's involvement until after the alleged misconduct, meaning Mac's could not have led the plaintiffs to believe that the immigration consultant was its agent. As a result, no agency relationship existed, and Mac's could not be held vicariously liable for the immigration consultant's actions.
Having found no agency relationship, the Court declined to address whether a non-fiduciary principal could be liable for its agent's breach of fiduciary duty.
Implications and Key Takeaways
The decision in Basyal offers important clarification on the duty to mitigate in the context of fixed-term employment contracts in British Columbia. The Court of Appeal confirmed that, unless expressly excluded by contract, employees are expected to mitigate their losses following early termination.
Basyal is also a critical reminder that a person who agrees to act on behalf of another is not always their agent at common law. The requirements for an agency relationship, on which vicarious liability follows, have bite: there must be actual authority to bind another or representations made to the plaintiff that the alleged agent has such authority.
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