Case In Point
BC Court of Appeal Upholds Fixed-Term Employment Commitment in Business Acquisition
Date: July 22, 2026
In Facility Condition Assessment Portfolio Experts Ontario Ltd. v. Bouchard, the Court of Appeal of British Columbia confirmed that agreements arising from a single transaction will be read harmoniously and as a cohesive whole to give effect to the parties’ overall bargain. Employers should ensure such agreements are drafted as a consistent suite of documents, as their alignment can be critical to achieving their intended commercial objectives.
The decision considered how three related agreements from a single business acquisition, an Asset Purchase Agreement (APA), an Employment Contract, and a Non-Solicitation and Confidentiality Agreement, should be interpreted together. The Court upheld the lower court’s conclusions that the parties intended the vendor’s principal (Bouchard) to be employed for a minimum three-year fixed term and that, following his without-cause termination after 21 months, he was entitled to compensation for the balance of that term. The Employment Contract’s early termination provisions were superseded by the APA’s three-year employment commitment.
Background
The dispute arose from the acquisition by Facility Condition Assessment Portfolio Experts Ontario Ltd. (FCAPX), of the business of 0935079 BC Ltd., formerly Ally Engineering Ltd. (Ally), pursuant to three integrated transaction documents: the APA, the Employment Contract, and the Non-Solicitation and Confidentiality Agreement. At trial, the parties agreed that these agreements were governed by Ontario law.
The APA contemplated that Bouchard would enter into an employment contract for no less than three years, while the Employment Contract provided that his employment could be terminated without cause on notice or pay in lieu, plus any severance required under the Employment Standards Act, 2000. Schedule A provided that “any conditions in the APA were to supersede any related/relevant clause within the Employment Contract.” As part of the transaction, Bouchard also agreed to a three-year restrictive covenant under the APA prohibiting competition with FCAPX within a 100-kilometre radius.
FCAPX terminated Bouchard’s employment 21 months after the business acquisition closed with only minimum statutory entitlements. It also withheld the final installment of the purchase price, asserting that certain transaction documents had not been delivered. In the litigation that followed, Bouchard asserted that the APA conferred a guaranteed minimum three-year term of employment, while FCAPX counterclaimed for breach of the non-compete covenants and for conversion relating to the withheld documents.
Lower Court Decision
In Bouchard v. Facility Condition Assessment Portfolio Experts Ontario Ltd., the trial judge held that the APA’s three-year employment commitment superseded the inconsistent termination provisions in the Employment Contract, and awarded damages for the balance of the term without mitigation. The court further held that the APA’s non-competition covenant prevailed in the event of inconsistency and was enforceable as a restraint arising in a commercial transaction; having found a breach, the judge awarded damages to FCAPX. Finally, the judge ordered FCAPX to pay the outstanding $5,000 installment of the purchase price, plus 6.5% contractual interest.
Decision of Court of Appeal
Both FCAPX and Bouchard appealed. The Court of Appeal dismissed both appeals.
FCAPX’s Appeal
Interpretation
The Court emphasized, citing prior authority, that where multiple agreements form part of a single transaction, they must be interpreted harmoniously and in light of one another to give effect to the parties’ overall intention.
Termination Provisions
The Court held that the trial judge had properly concluded that the Employment Contract’s termination provisions were superseded by the APA, reflecting the parties’ intention to establish a three-year employment arrangement. The Court reasoned that Bouchard would not have agreed to a three-year restrictive covenant without a corresponding commitment to employ him for the same minimum period.
Damages and Mitigation
The Court found that because Ontario law governed the agreements, it was bound under principles of horizontal stare decisis to apply the Ontario approach in Howard v. Benson Group Inc., which entitled Bouchard to full payment for the balance of the term without any deduction for mitigation. The Court added that the outcome “would not necessarily be different” under British Columbia’s approach in Neilson v. Vancouver Hockey Club Ltd., confirmed in Quach v. Mitrux Services Ltd. This was not a stand-alone fixed-term employment dispute, but one involving interrelated contracts for the sale of a business coupled with the purchaser’s employment of Bouchard under a three-year fixed term — an arrangement that, critically, also bound the vendor to a reciprocal three-year non-competition covenant. In that context, it would be incongruous to allow a mitigation deduction while simultaneously holding Bouchard to the non-compete.
Interest
The Court dismissed FCAPX’s appeal of the order requiring it to pay contractual interest on the outstanding $5,000 installment under the APA.
Bouchard’s Appeal
Non-Competition Covenant
The Court upheld the finding that the non-competition covenant had been breached as firmly grounded in the record: Bouchard acknowledged performing work for FCAPX clients after his termination, and documentary evidence confirmed he was compensated for those services. FCAPX was awarded the profits it lost from three clients that Bouchard serviced.
Key Takeaways for Employers
- Related commercial transaction documents will be interpreted as a cohesive whole to give effect to the parties’ overall intentions. It benefits employers when related agreements operate consistently and reflect their intention regarding the nature of the employment arrangement and when it may be terminated.
- A superseding provision in one transaction document may override inconsistent provisions in a related agreement, with significant consequences for the parties’ contractual rights and obligations.
- Restrictive covenants negotiated as part of a business acquisition are generally assessed differently from those arising in a stand-alone employment relationship because they form part of the commercial bargain for the purchase of the business.
- Where the substantive law of different jurisdictions diverge on mitigation for fixed-term contracts (as was the case between Ontario and British Columbia here), the parties’ choice or stipulation of governing law can determine the outcome on damages following early termination.
For help drafting a consistent suite of documents in a business transaction, please contact your Hicks Morley lawyer.
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