2005 BCCA 9 Zupan v. Vancouver (City)

Before:	The Honourable Madam Justice Rowles
	The Honourable Mr. Justice Low
	The Honourable Mr. Justice Thackray

M. Pongracic-Speier	Counsel for the Appellant
T.M. Zworski	Counsel for the Respondent
Place and Date of Hearing:	Vancouver, British Columbia
November 3, 2004
Place and Date of Judgment:	Vancouver, British Columbia
January 10, 2005

Written Reasons by:

The Honourable Mr. Justice Thackray

Concurred in by:

The Honourable Madam Justice Rowles

The Honourable Mr. Justice Low

Reasons for Judgment of the Honourable Mr. Justice Thackray:

[1] The appellant, Mario Zupan, appeals from an order of the Supreme Court of British Columbia dated 7 February 2003, emanating from the judgment of Mr. Justice Lowry. The order dismissed the plaintiff’s application for an order to maintain an action, in his own name, for wrongful dismissal against the City. The judgment is reported at [2003] B.C.J. No. 287 (Q.L.), 2003 BCSC 199.

[2] The judge summarized the facts as follows:

[2] Mr. Zupan is the owner of Mario Zupan Trucking Ltd. (the “company”) which was on a list of those the City regularly engaged [to] perform trucking services for its engineering department from 1992 until 2001. Mr. Zupan was the principal driver of the one truck the company had and operated for the City five days of almost every week, but on occasion, a substitute driver drove the truck. The company was deleted from the City’s list, and not further engaged, when the police reported having found evidence that a substitute driver had been using marihuana while operating the truck for the City.

[3] On this appeal no exception is taken to that statement of the facts. However, I will expand them somewhat in order to meet some of the submissions. The Sewer Operations Division of the Engineering Department of the City maintained a “hired truck list” (the “list”) which was a roster of equipment owners/operators approved to perform work for the Department. When there was a shortage of City owned equipment, it turned to the list. Mario Zupan Trucking Ltd. (the “company”) had been on the list since 1993. The appellant Mario Zupan was not on the list. He was an employee of the company.

[4] The company was registered with the Workers’ Compensation Board (WCB) as an employer and had a business licence with the City. The company’s income was determined by the money received from the City less operating expenses including the wages of employees of the company. The company owned one truck. The company was responsible for the wages of the operators of the truck, and for expenses such as traffic tickets and overweight fines.

[5] The company was regularly asked by the City to supply its truck. Because of its high ranking on the list, this amounted to full-time engagement of the truck. Since Mr. Zupan was the company’s only full-time employee, this provided him with regular employment. Mr. Zupan’s income was directly related to the profits generated by the company. However, while he was the primary operator of the truck, other persons employed by the company also operated the truck.

[6] The company was removed from the list following a report that a substitute driver, who was an employee of the company, had been using marijuana while operating the company’s truck for the City.

[7] The appellant submits that the relationship between him and the City was either employer/employee or employer/employee-like. He contends that the judge erred in deciding there was “no legal relationship” between Mr. Zupan and the City and in concluding that it was “unnecessary to decide whether ... the relationship between he and the City was akin to an employer-employee relationship as opposed to that of an independent contractor.” [para.7] The appellant says that the judge recognized the proper test but “jumped” to a conclusion “without considering the full spectrum and the particulars of the relationship.”

[8] The appellant submits that if Mr. Justice Lowry had analyzed the “total circumstances” he would have had to conclude that he had an ”employment-like” relationship with the City. The particulars that the appellant relies on for this submission are as follows.

[9] The City required licencing, certain safety measures and registration for equipment and set competency requirements for operators. The appellant defines these as “terms and conditions of work.” In response, the City submits that these are not “conditions of work”, but rather are the minimum requirements in order to qualify for registration on the list.

[10] The City also required operators to wear certain types of clothing and it unilaterally set hourly rates of remuneration. In response the City correctly points out that the clothing requirement was not a requirement of the City, but rather of the Workers’ Compensation Board. As to unilaterally setting an hourly equipment rate, it was the favourable bargaining position of the City that gave it this prerogative. It was not because of the relationship between Mr. Zupan and the City.

[11] The appellant further submits that the City was the company’s sole source of revenue and that the company was the appellant’s sole source of income. This, in my opinion, goes to defining the relationship between Mr. Zupan and his company. Mr. Zupan looked to the company for his income while it was the company, not Mr. Zupan, that submitted invoices to the City at the end of each day and the City issued cheques payable to the company.

[12] The appellant further submits that in regulating the use of substitute drivers the City acknowledged a different relationship with Mr. Zupan in that he was the regular driver. While it is true that the City was controlling the use of substitute drivers, it was not creating a contract with Mr. Zupan. Its policy simply required that the company have its truck operated, in the main, by its principal driver. Failing that, by a driver with suitable qualifications and not on a regular basis.

[13] These factors, which the appellant deems to be matters of control, should, according to the appellant, define his relationship as being that of employment and give him a right to reasonable notice of termination. I agree that the requirements of the City exerted a degree of control over Mr. Zupan. However, some of them similarly applied to substitute drivers and it cannot be suggested they were brought into an employment-like relationship with the City. In other words, control, as such, is not an absolute in defining the relationship.

[14] It follows that the nature of the work performed, the intimacy between the parties and the contractual arrangement must be considered. These define the “total circumstances” referred to by the appellant. While the reasons for judgment of Mr. Justice Lowry do not specifically mention all of the internal ingredients upon which he came to his decision, there is no basis for the suggestion that he “jumped” to a conclusion. This Court’s statements in Van Mol v. Ashmore (1999), 168 D.L.R. (4^th) 637, 1999 BCCA 6 were adopted by the Supreme Court of Canada in Van de Perre v. Edwards, [2001] 2 S.C.R. 1014, 2001 SCC 60. Bastarache J. said:

[15]... an omission [in a judge’s reasons] is only a material error if it gives rise to the reasoned belief that the trial judge must have forgotten, ignored or misconceived the evidence in a way that affected his conclusion. Without this reasoned belief, the appellate court cannot reconsider the evidence.

Mr. Justice Lowry’s statement that “Mr. Zupan had no legal relationship with the City” allows for no conclusion other than that in his opinion the various factors that go to defining the relationship did not amount to one that was indicative of employment of Mr. Zupan. As such, Mr. Zupan was not entitled to notice.

[15] The appellant nevertheless asserts that this Court should find that there was an intermediate relationship supporting the right of Mr. Zupan to maintain an action in his own name. The appellant cites Bird v. Warnock Hersey Professional Services Ltd. (1980), 25 B.C.L.R. 95, [1980] B.C.J. No. 2057 (Q.L.) (S.C.). Mr. Bird, a chartered accountant and financial consultant, had a management company which, as found by the Court, “rented out the skills of John Bird for a fee and thus enabled him to take certain tax advantages not available to a single individual practitioner.” [para. 2]

[16] Mr. Justice Locke cited authorities for the proposition that if a person is “subject to some degree of actual control” that this “influences the permanency of the relationship to the degree that it creates an intermediate area.” This intermediate area may be one within which an obligation to provide reasonable notice is to be implied.

[17] Locke J. cited Carter v. Bell and Sons (1936), 2 D.L.R. 438 (Ont. C.A.) as the leading case on this subject and quoted from page 440:

There are many cases of an intermediate nature where the relationship of master and servant does not exist but where an agreement to terminate the arrangement upon reasonable notice may be implied. This is such a case. The mode of remuneration points to a mercantile agency pure and simple, but the duties to be performed indicate a relationship of a more permanent character. The choice of sub-agents and their training, the recommendation of them to the company for appointment, the supervision of these men when appointed, all point to this more permanent relationship. The fact that the plaintiff was entering a new territory as representative of the defendant and was endeavouring to create a market for the defendant’s products and that to their knowledge he was taking his wife and children with him to the west indicate a relationship that could not be terminated at will by either party.

[18] Mr. Justice Locke, after narrating the facts in the case before him, said:

[13] From beginning to end and obviously for perfectly legitimate tax reasons, Bird arranged that the money be paid to his corporate management vehicle, Transfotech Ltd. As a result, no deductions were made by the employer. Expenses and disbursements connected with business were, however, usually paid to Bird personally in his own name and some credit cards and club expenses taken out in his own name also. He also received the title of “Executive Assistant to the President” which was a staff position and not a line one ...

[14] ... Bird did the work, the money was paid to his corporate vehicle, and the employer got what he paid for: work. ...

[15] ... does it matter who the plaintiff is here – Bird or Transfotech? In my opinion, following the authorities cited above, it does not: in either case if there were only one plaintiff, a Court should hear all of the circumstances relating to the contract and conclude that even if there were prima facie indicia of Transfotech being an independent contractor only, that this was (as was said in Carter’s case) only a mode of payment. John Bird was subject to the daily control of his employer Warnock Hersey and he falls squarely within the “intermediate area” expressed in that and other cases and in the result either he, his company, or both are entitled to reasonable notice.

[19] This conclusion of Locke J. was based upon a finding that, on the facts, Mr. Bird was in the “intermediate area.” But even then he went only so far as to find that “either he, his company, or both are entitled to reasonable notice.” He also noted that this was an action “solely to set the term of reasonable notice after discharge.” Furthermore, as pointed out by the respondent in its factum, the plaintiff was able to establish an employment relationship with the defendant independent of the formal arrangements with his corporate alter ego.

[20] However, the appellant submits that Bird was cited with approval in Marbry Distributors Ltd. v. Avrecan International Inc. (1999), 67 B.C.L.R. (3d) 102, 1999 BCCA 172. The principal of Marbry Distributors Ltd., Mr. Gordon Marbry, was also a plaintiff. The company had a contract with the defendant to be its sales agent/distributor in British Columbia of Reebok Canada Inc. products. The agreement which had been in place for ten years at the date of termination by the defendant provided that Marbry Distributors Ltd. was to perform a wide variety of functions which the judge detailed in his reasons and to which I will refer later.

[21] Mr. Justice Braidwood said the first question to be answered was whether reasonable notice was required. In what almost appears to be an aside he said:

[10] First of all, I wish to note that the fact that the plaintiff/employee is an incorporated company is not a bar to recovery. In Bird v. Warnock Hersey Professional Services Ltd. [citation omitted] Mr. Justice Locke refused to attach any significance to the technical structure of the parties ...

[22] Mr. Justice Braidwood then quoted paragraph 15 of Bird, which I quoted above. The appellant is correct that Bird was cited with approval in Marbry, but as can be seen from the above quotation the matter for which it was cited is not relevant to the issue in the case at bar.

[23] Marbry considered the case law, including Carter v. Bell, but the focus was on whether the relationship “was more akin to one of employer/employee than that of independent contractor or strict agency.” [para. 19] As to the “intermediate category”, Braidwood J.A. [para. 38] said that it “involves different aspects and therefore additional considerations come into play.” He suggested that it is helpful in “determining where on the continuum” an intermediate category exists to consider (1) the duration/permanency of the relationship; (2) the degree of reliance/closeness of the relationship; and (3) the degree of exclusivity.

[24] Mr. Justice Braidwood set out details of the duties undertaken by the plaintiff and the control exerted by the defendant. He said as follows:

[44] I also wish to make some comments respecting the degree of control that Avrecan had over Marbry. During the term of the agreement Marbry was required to do the following:

(a) maintain a showroom containing an inventory of demonstration products;

(b) represent Reebok Canada in customer relations in matters of stock shipments, defective product and quality control;

(d) distribute invoices and collect cheques for Avrecan during postal strikes;

(e) conduct product knowledge sessions for Reebok customers retail sales staff;

(f) assist Avrecan in tracking down counterfeit Reebok products; and

(g) devote time to finding athletes and sports teams to use and promote Reebok.

[45] Having regard to Lord Denning’s “business integration” test in Stevenson [Stevenson Jordon & Harrison Ltd. v. MacDonald and Evans, [1952] 1 T.L.R. 101 (C.A.)], I find that Marbry’s activities formed an integral part of Avrecan’s business. It was Marbry who assisted the set up of the distribution network and distributed Avrecan’s products through that network. Without this function Avrecan’s products could not have been sold to those customers that Marbry serviced. It can not be said that Marbry performed a function that was only accessory to Avrecan’s pursuit.

[46] For all of the reasons expressed above I would classify the relationship between Marbry and Avrecan as more akin to employee/employer than that of independent contractor or strict agency. As such, this relationship falls in that intermediate category as identified in Carter v. Bell, supra, where the agreement may only be terminated with reasonable notice.

[25] It will be readily seen that the duties, responsibilities, and control in the relationship in Marbry is in no way comparable to that in the case at bar. Furthermore, the issue was whether the Marbry Distributors Ltd. was in a relationship akin to employer/employee or if it was an independent contractor or agent for which no notice of termination was required.

[26] In the case at bar Mr. Justice Lowry held, in effect, that the relationship between Mr. Zupan and the City was never on the “continuum” between employer/employee and independent contractor. In his words, there was “no legal relationship” between Mr. Zupan and the City.

[27] The appellant also relies upon MacPhail v. Tackama Forest Products Ltd. (1993), 86 B.C.L.R. (2d) 218, [1993] B.C.J. No. 2170 (Q.L.)(S.C.), a wrongful dismissal action. In coming to his decision Mr. Justice Leggatt said:

[4] The arrangement between the parties was such that Longspur Management was interposed between the plaintiff and the defendants. In all respects other than remuneration the normal indicia of an employment relationship continued to exist between the plaintiff and the defendants. The plaintiff was personally under the direct control of the defendants. He was required to attend at the defendants’ premises, told not only what to do but how, when, and where to do it. The plaintiff had no risk of loss nor chance of profit as the remuneration paid to Longspur Management was set upon a stated amount. The success or failure of this application will depend on the legal significance of the plaintiff’s use of Longspur Management to take advantage of certain income tax benefits.

. . .

[21] The decision in Bird guides me in my decision on the defendant’s Rule 18A application. The plaintiff is in the same position as the plaintiff Mr. Bird in Bird. ...

[22] My decision is based on the fact that there is an independent relationship between the parties. This relationship exists collaterally to the formal agreement between Longspur Management and the defendants. This independent relationship is clearly an employment relationship between the plaintiff and the defendant.

[28] The appellant submits that Mr. Justice Lowry “misapprehended the message of MacPhail.” Mr. Justice Lowry said as follows regarding MacPhail:

[5] ... The difference [between MacPhail and the case at bar], however, is that the employee in that case had what the court recognized to be an independent employment relationship with his employer which was collateral to the agreement regarding remuneration between the company and the employer. ...

[29] In my opinion Mr. Justice Lowry was correct in that conclusion and he was thus entitled to distinguish MacPhail.

[30] I do not find that Mr. Justice Lowry erred in concluding that “Mr. Zupan had no legal relationship with the City” and that “Mr. Zupan cannot maintain an action for wrongful dismissal against the City.” More specifically, I find that there was no employer/employee relationship and no employer/employee-like relationship.

[31] I would dismiss the appeal.

“The Honourable Mr. Justice Thackray”

I Agree:

“The Honourable Madam Justice Rowles”

I Agree:

“The Honourable Mr. Justice Low”

Citation:	*Zupan v. Vancouver (City),*
	2005 BCCA 9