IN THE SUPREME COURT OF BRITISH COLUMBIA

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Cal-terra Developments Ltd. v. Hunter, 2017 BCSC 1320 Date: 20170728 Docket: 15-4976 Registry: Victoria Re: Judicial Review Procedure Act, R.S.B.C. 1996, c. 241 and Employment Standards Act, R.S.B.C. 1996, c. 113 Between: Cal-terra Developments Ltd., Sol Station Body Bar Inc. and Terry Magnus Petitioners And: Pilar Hunter, Director of Employment Standards and Employment Standards Tribunal Respondents Before: The Honourable Mr. Justice Bracken On judicial review from: An order of the Employment Standards Tribunal, dated July 15, 2015 (EST#D072/15). Reasons for Judgment Appearing in Person and as Agent for Cal-terra Developments Ltd. and Sol Station Body Bar Inc.: Appearing in Person (but not taking part): Counsel for the Employment Standards Tribunal: Counsel for the Director of Employment Standards: Place and Date of Trial/Hearing: Place and Date of Judgment: T. Magnus and R. Taylor P. Hunter D. W. Garner J. Mason Victoria, B.C. June 21, 2017 Victoria, B.C. July 28, 2017

Cal-terra Developments Ltd. v. Hunter Page 2 [1] The petitioners seek judicial review of a decision of the Employment Standards Tribunal of July 15, 2015 (EST#D072/15) that dismissed an appeal of a decision of the Director of Employment Standards ( the Director ) on April 8, 2015 (ER#177-899). The Director s decision found that the petitioners Cal-terra Developments Ltd. ( Cal-terra ) and Sol Station Body Bar Inc. ( Sol Station ) had contravened the Employment Standards Act, R.S.B.C. 1996, c. 113, ( the Act ) by failing to pay wages, annual vacation pay and compensation for length of service to Ms. Pilar Hunter ( Ms. Hunter ). [2] The Director ordered the petitioners to pay Ms. Hunter wages in the amount of $11,352.85 and administrative penalties of $2,500 for a total of $13,852.85. The petitioners deny that Ms. Hunter was an employee of Sol Station Body Bar Inc. [3] At the opening of the hearing of this matter the style of cause was amended by consent to include Mr. Magnus as one of the petitioners. [4] Mr. Magnus is the sole director of both Sol Station and Cal-terra. Sol Station was incorporated in April 2013 as the corporate body intended to operate a salon in a commercial property in the Greater Victoria area of British Columbia that was owned by Cal-terra. The property was divided into several commercial units. Cal-terra had sought a suitable tenant for the space that was to be occupied by the salon, but could not find a suitable tenant. Mr. Magnus thought that a beauty salon would be a good use of the space and in March 2013, he placed an advertisement in the local newspaper seeking a manager of a salon. Ms. Hunter responded. [5] At that time Ms. Hunter was working as a manager in the cosmetics department of a large local department store. There were some discussions about her setting up the salon on her own and becoming a tenant of Cal-terra; however, Ms. Hunter was not able to invest the money needed for improvements to the space and for equipment and supplies. She said that she was interested in running the salon, but she was not in a position to obtain the necessary funding to invest. As a result, Mr. Magnus incorporated Sol Station and was the sole director and shareholder. Ms. Hunter had no financial interest in Sol Station.

Cal-terra Developments Ltd. v. Hunter Page 3 [6] Cal-terra, through Mr. Magnus, prepared a commercial lease agreement in which Cal-terra was landlord and Sol Station was the tenant. Both corporations were owned and controlled by Mr. Magnus. The lease commenced April 1, 2013 and was to end on March 31, 2018 with the option for the tenant to renew for one term of 3 years. The rent was $1,700 per month plus GST. Ms. Hunter signed on behalf of Sol Station even though she had no interest in that company. [7] Mr. Magnus paid for the leasehold improvements and equipment to set up the salon. He set a budget of $12,500 for Ms. Hunter to purchase supplies. The business apparently opened in early April 2013. [8] On May 22, 2013, Mr. Magnus and Ms. Hunter signed a short agreement setting out the terms of their arrangement. It was entitled Commercial Lease Agreement in printed letters and the words Employment Agreement were written by hand under the title. The agreement provided that for the first 18 months rent would be $1,300 per month and that Ms. Hunter would manage the business. Mr. Magnus was to receive one-half of the profits and the other one-half of the profits were to be held by him as a fund toward [sic] Marylar [Ms. Hunter s] purchase of shares. [9] The agreements are hard to decipher as the copies in the record have handwritten changes introduced to the agreement at several places. It is not clear who made the changes. One of the handwritten additions used phrases of terminates her position and or her position is terminated due to failure to operate the business in the black after 1.5 years. [10] Mr. Magnus argued that he was only the landlord and his interest was collecting the rent. He said that he did not want to be in the business of running a salon and that Ms. Hunter was to operate the salon as her own business. Their relationship was to be as partners not that of an employer/employee. He denied that Ms. Hunter was an employee.

Cal-terra Developments Ltd. v. Hunter Page 4 [11] Ms. Hunter said that she understood she was to be the manager of the salon and was to run the day to day business. She said she was to be paid $3,000 per month as a salary. She denied that she was an independent contractor or the owner of the business. [12] The Director conducted a hearing at which both Mr. Magnus and Ms. Hunter testified and each of them provided various records in support of their testimony. The Director s delegate found that Ms. Hunter was an employee of Sol Station and not a self-employed business partner or a self-employed independent contractor. [13] Sol Station and Cal-terra filed a notice of appeal to the Employment Standards Tribunal ( the Tribunal ). The appeal was signed by Mr. Magnus on April 22, 2015 and received by the Tribunal on May 4, 2015. An extensive written submission was filed in support of the appeal. [14] The Tribunal issued its decision July 15, 2015 and it dismissed the appeal and confirmed the amounts owing by the appellants Sol Station and Cal-terra. The appellants sought a reconsideration of the appeal decision, but the Tribunal declined to do so. Issues [15] On this review, the petitioners argue that the Director was wrong to conclude that Ms. Hunter was an employee of Sol Station and therefore, the Tribunal erred in dismissing the appeal. Secondly, the petitioners say that Sol Station was not associated with Cal-terra, but with Ms. Hunter. The essence of the petitioners submissions are that the Director was wrong in the findings of fact made in the delegate s decision of April 8, 2015 and that those errors should have been corrected by the Tribunal. [16] The petitioners also seek to introduce new evidence upon this review. The evidence consists of an affidavit of Brenda Willie who worked with Ms. Hunter at the salon. She said that Ms. Hunter represented herself as the owner of the business and made business contacts in her personal name rather than Sol Station.

Cal-terra Developments Ltd. v. Hunter Page 5 [17] The central issue for determination is the reasonableness of the Tribunal decision. The petitioners did not make any submissions as to the fairness of the process before the Director s delegate or the Tribunal. Standard of Review [18] Counsel for the Director and for the Tribunal both submit that the standard of review to be applied is patent unreasonableness. Section 58 of the Administrative Tribunals Act, S.B.C. 2004 c. 45, provides: (1) If the Act under which the application arises contains or incorporates a privative clause, relative to the courts the tribunal must be considered to be an expert tribunal in relation to all matters over which it has exclusive jurisdiction. (2) In a judicial review proceeding relating to expert tribunals under subsection (1) (a) a finding of fact or law or an exercise of discretion by the tribunal in respect of a matter over which it has exclusive jurisdiction under a privative clause must not be interfered with unless it is patently unreasonable, (b) questions about the application of common law rules of natural justice and procedural fairness must be decided having regard to whether, in all of the circumstances, the tribunal acted fairly, and (c) for all matters other than those identified in paragraphs (a) and (b), the standard of review to be applied to the tribunal's decision is correctness. [19] This review is of the Tribunal s decision of July 15, 2015 which is informed by the decision of the Director s delegate of April 8, 2015. Upon this review, it is appropriate to review the decision of the Director s delegate for limited purpose of determining whether it was properly interpreted by the Tribunal: Communications, Energy & Paperworkers Union of Canada (Local 298) v. Eurocan Pulp & Paper Co., 2012 BCCA 354 at para. 31. [20] In Law Society of New Brunswick v. Ryan, 2003 SCC 20 at para. 52, the court described the standard of patent unreasonableness as: The standard of reasonableness simpliciter is also very different from the more deferential standard of patent unreasonableness. In Southam, supra, at para. 57, the Court described the difference between an unreasonable

Cal-terra Developments Ltd. v. Hunter Page 6 decision and a patently unreasonable one as rooted in the immediacy or obviousness of the defect. Another way to say this is that a patently unreasonable defect, once identified, can be explained simply and easily, leaving no real possibility of doubting that the decision is defective. A patently unreasonable decision has been described as clearly irrational or evidently not in accordance with reason (Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941, at pp. 963-64, per Cory J.; Centre communautaire juridique de l'estrie v. Sherbrooke (City), [1996] 3 S.C.R. 84, at paras. 9-12, per Gonthier J.). A decision that is patently unreasonable is so flawed that no amount of curial deference can justify letting it stand. [21] The same standard was also described in Suresh v. Canada (Minister of Citizenship & Immigration), 2002 SCC 1 at para. 29: The first question is what standard should be adopted with respect to the Minister's decision that a refugee constitutes a danger to the security of Canada. We agree with Robertson J.A. that the reviewing court should adopt a deferential approach to this question and should set aside the Minister's discretionary decision if it is patently unreasonable in the sense that it was made arbitrarily or in bad faith, it cannot be supported on the evidence, or the Minister failed to consider the appropriate factors. The court should not reweigh the factors or interfere merely because it would have come to a different conclusion. [22] Notwithstanding Dunsmuir v. New Brunswick, 2008 SCC 9, the standard of patent unreasonableness as defined in Law Society of New Brunswick v. Ryan continues to apply. See also Pacific Newspaper Group Inc. v. Communications, Energy and Paperworkers Union of Canada, Local 2000, 2014 BCCA 496 at para.48. Consideration of New Evidence [23] The Director submits that the new evidence advanced by the petitioners should not be admitted. Section 112(1)(c) of the Act provides for the admission of new evidence at an appeal. [24] The Director referred to the Tribunal s earlier decision #171/03, (Davies et al), where the test for admission of new evidence was discussed at p. 3: We take this opportunity to provide some comments and guidance on how the Tribunal will administer the ground of appeal identified in paragraph 112(1)(c). This ground is not intended to allow a person dissatisfied with the

Cal-terra Developments Ltd. v. Hunter Page 7 result of a Determination to simply seek out more evidence to supplement what was already provided to, or acquired by, the Director during the complaint process if, in the circumstances, that evidence could have been provided to the Director before the Determination was made. The key aspect of paragraph 112(1)(c) in this regard is that the fresh evidence being provided on appeal was not available at the time the Determination was made. In all cases, the Tribunal retains a discretion whether to accept fresh evidence. In deciding how its discretion will be exercised, the Tribunal will be guided by the test applied in civil Courts for admitting fresh evidence on appeal. That test is a relatively strict one and must meet four conditions: (a) the evidence could not, with the exercise of due diligence, have been discovered and presented to the Director during the investigation or adjudication of the complaint and prior to the Determination being made; (b) the evidence must be relevant to a material issue arising from the complaint; (c) the evidence must be credible in the sense that it is reasonably capable of belief; and (d) the evidence must have high potential probative value, in the sense that, if believed, it could, on its own or when considered with other evidence, have led the Director to a different conclusion on the material issue. [25] As the Tribunal noted, the test set out above is essentially the same test applied in the courts in civil cases: Palmer v. The Queen, [1980] 1 S.C.R. 759 at p. 775; as referred to in Friedland (Re), 2013 BCCA 119 at para. 20. The rules reflect the caution required when considering the admission of fresh evidence, but they are not absolute. A court has a discretion to admit fresh evidence if it is in the interests of justice to do so: Golder Associates Ltd. v. North Coast Wind Energy Corp., 2010 BCCA 263, at para. 37. [26] In applying the test to the facts of this case, I note that the information contained in the affidavit of Ms. Willie was likely available prior to the Director s hearing. The affidavit while brief appears credible and is at least arguably relevant to an issue in the complaint. However, the evidence does not have high potential probative value. Given the evidence on the same point given by Mr. Magnus, I do consider the evidence in the affidavit of Ms. Willie to be capable of on its own, or in combination with all of the other evidence presented, to have led the Director to a different conclusion. The Director had the benefit of considerable documentary

Cal-terra Developments Ltd. v. Hunter Page 8 evidence consisting of 341 pages as well as the testimony of both Mr. Magnus and Ms. Hunter. [27] Also, as counsel for the Director points out, the petitioners had received several notices which contained detailed information about what documents and evidence was expected at the hearing. I find that the new evidence could and should have been available at the hearing before the Director and that in any event, it is not sufficiently probative to warrant admission after the hearing before the Director. [28] I agree with the conclusion reached in the Reconsideration Decision of November 2, 2015 where the Tribunal found that the new material has rather limited, if any probative value. See BC EST#RD113/15. [29] Ms. Hunter was initially hired as the manager of Sol Station and she was given a business card which showed her as the manager of the salon. The documents are confusing, but the lease agreement has the words employment agreement under the title. Even though Ms. Hunter signed the lease on behalf of Sol Station, Mr. Magnus was and remains the sole director and shareholder of Sol Station and controlled many of the major decisions in the operation of the salon. While Ms. Hunter was given considerable freedom in the day-to-day business, that freedom was not unlimited. [30] To conclude that the decision of the Tribunal was patently unreasonable, I must find that it was made arbitrarily or in bad faith, it cannot be supported on the evidence, or the Tribunal failed to consider the appropriate factors. (See Suresh, above) [31] On my review of all of the material, I find that the decision of the Tribunal was not patently unreasonable. On all of the evidence, it was open to the Director to make the findings of fact at the Director s hearing. The Tribunal carefully reviewed the material and submissions of the petitioners and clearly understood what was at

Cal-terra Developments Ltd. v. Hunter Page 9 issue. The Tribunal noted the broad definition of employee in the Act and considered the relevant factors in coming to its decision. [32] The Tribunal concluded that the key factual findings were not either inadequately supported or unsupported by the evidentiary record: see EST#D072/15, at para 27. Applying the standard of review as defined in Law Society of New Brunswick v. Ryan, I do not find that the decision of the Tribunal was patently unreasonable. The petition for judicial review is therefore dismissed. [33] Neither the Director nor the Tribunal seek costs. J. K. Bracken, J. The Honourable Mr. Justice Bracken