Executive Summary: Key Legal and Evidentiary Issues

• Motion judge erred by allowing the dispute resolution claim to proceed despite a lawful termination.

• Dispute Resolution Clause was not engaged since no “dispute” was referred for resolution prior to termination.

• Termination under Section 8.3 was validly executed with proper notice; no breach occurred.

• Fowlie never attempted arbitration or invoked the Arbitration Act, undermining his reliance on Section 9.8.

• Court found no contractual right for Fowlie to “clear his name” post-termination.

• Appeal granted; entire claim struck without leave to amend, with costs awarded to WCL.

Facts of the Case

Dr. Frank Fowlie, a professional in sports dispute resolution, along with his corporation 63215941 Canada Limited, entered into a contract with Wrestling Canada Lutte (WCL) in September 2020. Under this agreement, Fowlie’s corporation would serve as WCL’s Complaints and Appeal Officer for three years. The role involved screening complaints to determine whether they were frivolous, and forwarding valid ones for further investigation.

The contract contained:

• Section 8.3, which allowed either party to terminate the agreement with at least 30 days’ written notice for any reason.

• Section 9.8, a Dispute Resolution Clause requiring the parties to attempt amicable resolution of disputes, failing which the matter could be resolved through arbitration.

On September 16, 2021, WCL terminated the contract by providing 30 days’ written notice, relying on Section 8.3. Fowlie later sued WCL on April 8, 2022, alleging breach of contract. He claimed that WCL ignored complaints he made about a campaign to damage his professional reputation and wrongfully terminated the contract without first engaging in dispute resolution.

WCL moved under Rule 21 of the Rules of Civil Procedure to strike the claim, arguing:

• The contract was lawfully terminated according to its terms.

• There was no obligation to initiate dispute resolution prior to termination.

• No damages flowed from any alleged failure to engage in dispute resolution.

The motion judge struck the claims related to wrongful termination and against the individual defendants but allowed the claim regarding the alleged failure to engage in dispute resolution to proceed, with amendments.

The Appeal and Decision

WCL appealed the motion judge’s decision, specifically the part allowing the dispute resolution claim to continue. The Divisional Court overturned the motion judge’s ruling, concluding that she had committed a palpable and overriding error in interpreting the contract.

Key findings included:

• Section 8.3 clearly permitted termination without cause, provided proper notice was given.

• The Dispute Resolution Clause in Section 9.8 applies only when a “dispute arises” and is referred by the parties. Lawful termination does not constitute a dispute.

• Fowlie admitted in the statement of claim that WCL gave 30 days’ notice, confirming lawful termination.

• Fowlie did not attempt to trigger dispute resolution procedures or refer the matter to arbitration before filing suit.

• No term in the contract guaranteed Fowlie the right to clear his name through arbitration, nor did the contract require dispute resolution prior to exercising the right of termination under Section 8.3.

• Recognizing an obligation to arbitrate post-termination would nullify the without-cause termination provision and create an untenable contractual interpretation.

The court emphasized that both the termination and dispute resolution clauses must be interpreted in harmony and within the context of the entire agreement. As Section 8.3 allowed termination for any reason with notice, and there was no active dispute at the time, the Dispute Resolution Clause was never engaged.

Outcome

• The appeal was allowed.

• The motion judge’s order was set aside.

• The entire statement of claim was struck without leave to amend.

• WCL was awarded $17,000 in agreed-upon costs, payable by Fowlie and his corporation forthwith.

The decision confirms that where a contract expressly allows for termination without cause, a party’s failure to invoke a dispute resolution mechanism before exercising that right does not constitute a breach, particularly where the clause is contingent upon the existence of a referred dispute.