



COURT OF APPEAL
        FOR BRITISH COLUMBIA




Citation:



Zupan
                v. Vancouver (City),









2005 BCCA
            9




Date: 20050110




Docket: CA30636

Between:

Mario Zupan

Appellant

(
Plaintiff
)

And

The City
      of Vancouver

Respondent

(
Defendant
)











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 plaintiffs 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 Citys 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 companys 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 companys only full-time employee, this
      provided him with regular employment.  Mr. Zupans 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 companys 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 companys sole source of
      revenue and that the company was the appellants 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 Courts 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 judges 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 Lowrys 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 defendants 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 Carters 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;

(c) conduct
      account collections and monitor accounts receivable on behalf of Avrecan;

(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 Dennings business integration test in
Stevenson
[
Stevenson
      Jordon & Harrison Ltd. v. MacDonald and Evans
, [1952] 1 T.L.R.
      101 (C.A.)], I find that Marbrys activities formed an integral part of
      Avrecans business.  It was Marbry who assisted the set up of the distribution
      network and distributed Avrecans products through that network.  Without
      this function Avrecans 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 Avrecans 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
      plaintiffs use of Longspur Management to take advantage of certain income
      tax benefits.

. . .

[21]  The decision
      in
Bird
guides me in my decision on the defendants 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






