Louisa Mojela v Canmart Ltd & Anor

A contractual restriction on giving notice of termination during a protected period does not, without clear wording, restrict a separate right to terminate without notice for specified misconduct or breach. A clause providing compensation for premature notice therefore does not apply where employment is summarily terminated under a distinct contractual power.

Where a party clearly accepts conduct as bringing a contract to an end, it may generally rely on other pre-existing repudiatory conduct to justify that termination, subject to the contractual scheme. An employee’s fiduciary obligations may arise from contractual terms requiring single-minded loyalty, particularly where the employee occupies a senior position of trust. Accrued contractual rights may survive termination, but an unexercised contractual election to receive cash instead of equity does not necessarily do so.

Louisa Mojela was Executive Chairperson of Akanda Corporation and employed by Canmart Ltd under a service agreement. Canmart and Akanda summarily terminated the agreement for alleged gross misconduct and refusal to comply with instructions.

Ms Mojela claimed that the termination breached a clause restricting Canmart from giving notice during the first 18 months of the agreement, and sought summary judgment for salary, benefits and deferred compensation. She also sought summary judgment dismissing the defendants’ counterclaim concerning the liquidation of a group subsidiary, Bophelo.

The central issues were the construction of the termination provisions, whether alternative grounds could justify the dismissal, whether Ms Mojela owed arguable fiduciary duties, and whether her deferred-compensation claims were suitable for summary judgment.

1. Summary judgment principles. The court could determine issues of law or construction summarily where the material evidence was available and the parties had a sufficient opportunity to address the issues. The question was whether the defendants had a realistic prospect of defending the claims, not merely whether the pleadings disclosed a defence.
2. Construction of the service agreement. Clause 2.2 regulated termination by notice. It did not restrict termination without notice under clause 21. The 18-month protection prevented premature notice except on the specified grounds, but did not create a general period during which termination was unavailable. The claim based on an allegedly prohibited summary termination therefore failed.
3. Alternative grounds for dismissal. The dismissal letter objectively communicated immediate termination and identified the refusal to comply with instructions as the operative conduct. Even if the claimant’s construction of clause 2.2 had been correct, the defendants could potentially rely on other realistic and arguable repudiatory breaches falling within the excepted grounds. The Boston Deep Sea Fishing principle was applicable because the termination was alleged to be wrongful, rather than a lawful termination under an unrelated contractual power. The contrary approach in Cavanagh was distinguishable.
4. Fiduciary duties and counterclaim. Employment alone does not automatically create a fiduciary relationship. However, contractual acknowledgement of fiduciary status, combined with a senior role requiring loyalty to the employer and group, provided substantial support for an arguable fiduciary relationship. Those obligations arguably continued while Ms Mojela remained Executive Chair, despite her removal from management functions. The proposed counterclaim concerning the liquidation of Bophelo was realistic and arguable, and permission to amend was granted.
5. Deferred compensation. Rights to equity awards under clauses 8.4 and 11.3 had accrued before termination. Clause 21.1 did not clearly remove accrued rights. However, the contractual right to elect cash had not been exercised before discharge and did not survive termination. The claim for summary judgment for cash payment therefore failed, without deciding whether damages might be recoverable on a properly pleaded repudiatory-breach claim.
6. The application for summary judgment was dismissed in its entirety. The amended counterclaim was permitted to proceed to trial.