December 22, 2000, E.C.B. Control
No. 03/98/193 (72 LCR 45)
City of Richmond
K. Wiltshire, Presiding Member
Martin A. Linsley, F.C.A., Board Member
Firoz R. Dossa, Board Member
||J. Bruce Melville, Counsel for the Claimants
Eric Rice, Q.C., Counsel for the Respondent
REASONS FOR DECISION
 The claimant, N.Y. Automotive
Ltd., operated a franchise automotive repair business,
specializing in brake and suspension repairs, known
as "Vancouver Brake & Wheel (Richmond)".
The business was located in leased premises at 5711
No. 3 Road, Richmond, on lands legally described as:
North Range 6 West
New Westminster District
 The respondent, City of
Richmond, required part of the Land, including the entire
area of the claimant's leasehold interest, for its Lansdowne
Road Extension project.
 The claimant and
the respondent entered into an agreement under section
3 of the Expropriation Act, R.S.B.C. 1996, c.
125 (the "Act") providing for the transfer
of the claimant's interest in the Land to the respondent.
 The parties could not agree
on the compensation to be paid for the transfer of the
claimant's interest in the Land to the respondent. Our
task, therefore, is to determine the compensation to
be paid to the claimant, N.Y. Automotive Ltd., as if
the land had been expropriated under the Act.
2. AGREED FACTS
 The parties are in agreement
with respect to certain facts, including:
- Nizar Jiwani and Yasmin Jiwani, who are husband
and wife, own all of the shares of the claimant, N.Y.
Automotive Ltd., a company incorporated in 1993 under
the Company Act, R.S.B.C. 1996, c. 62.
- The claimant was the owner of a leasehold interest
in part of the Land pursuant to lease agreement dated
February 11, 1993 between George Hoegler, Mary Hoegler,
Helmut Hoegler and the claimant (the "Lease").
The term of the lease was for five years, commencing
March 1, 1993, with an option to renew for a further
five years. The claimant is an owner for the purposes
of the Act. The respondent acquired all of the claimant's
interest in the Land.
- A fully executed copy of the section 3 agreement
was delivered to the claimant on April 25, 1997.
- The leasehold interest was assigned to the respondent
on May 20, 1997, and the respondent took possession
of the property on May 30, 1997.
- Pursuant to section 3 of the Act and the terms of
the section 3 agreement, the effective date for determination
of compensation is May 31, 1997.
- The claimant makes no claim pursuant to section
31 of the Act for the market value of its interest
in the part of the Land taken.
- The claimant's business shut down and it was not
feasible for the claimant to relocate its business.
- The respondent made an advance payment of $102,000
on May 20, 1997 in respect of disturbance damages.
The respondent made a further payment on or about
May 31, 1997 in the amount of $3,387 by way of rent
paid to the landlord for May 1997 pursuant to the
- The claimant is entitled to be compensated for out
of pocket expenses totaling $6,340 which it incurred
in winding up the business between April 25, 1997
and May 31, 1997. This amount does not include, and
the parties do not agree on, the value of management
services provided in this period.
- The claimant incurred a cost of $5,600 in severance
pay for employees Randy Pope and Harry Baldeo. The
parties do not agree on entitlement to compensation
in respect of this cost.
- The value of the claimant's inventory immediately
prior to its disposition at auction was $3,390.32.
- The net proceeds of the auction of capital assets
and inventory were $8,380.80.
3. THE COMPENSATION CLAIM
3.1 Claimant's Position
 The claimant claims compensation
for disturbance damages pursuant to section 34 of the
 At the outset of the hearing,
the claimant sought to file an Amended Form A Application
for Determination of Compensation deleting some items
previously claimed and providing revised amounts for
other items claimed. The Amended Form A was accepted
for filing. The claimant also requested the Board defer
consideration of its claim (paragraph 12.9 of the Amended
Form A) concerning potential liability to the franchisor
for possible breach of the franchise agreement as a
result of the closure of the claimant's business. The
panel agreed to the deferral so requested.
 The claims for compensation
remaining to be considered by the Board at this time,
taking into account the above and the agreed facts,
are as follows:
- Loss in value of capital assets and inventory
on liquidation at auction
- Expenses incurred in winding up business
- Severance paid to employees, Pope and Baldeo
- Amount pursuant to section 34(4) of the Act
- Liability for severance to Mr. Jiwani
*In the Form A, the amount
claimed was $93,500 but in the course of the hearing
the claim was reduced to $78,000.
 The claimant also seeks
costs pursuant to section 45 of the Act and, if applicable,
interest pursuant to section 46 of the Act.
3.2 Respondent's Position
 The respondent considers
its advance payment of $102,000.00 to be generous. Specifically,
- The claimant's value of the tangible assets of the
business as a going concern.
- The amount of $7,220.00 claimed as expenses incurred
in winding up the business for the services of the
Jiwanis in that regard in the period from April 25
to May 31, 1997.
- The need for the claimant to pay severance to employees,
Pope and Baldeo.
- The goodwill of the business and, therefore, the
amount claimed under section 34(4).
- The liability of the claimant to pay severance to
 The positions advanced
by the parties raise issues that we have addressed under
two main headings: Business Loss and Severance Liability.
Under Business Loss, we address:
- Entitlement to disturbance damages under section
34(1)(a) of the Act in respect of the claims for loss
in value of capital assets and inventory, severance
paid to Pope and Baldeo, and the value of the Jiwanis'
services in connection with the winding-up of the
- Entitlement to what is characterized by the claimant
as a termination allowance pursuant to section 34(4)
of the Act assessed in relation to the goodwill of
the business where (as agreed here) the claimant cannot
relocate its business.
Under Severance Liability, we separately
address entitlement to disturbance damages under section
34(1)(a) of the Act with respect to the claim for compensation
relative to the claimant's liability for severance to
 Sections 34(1)(a) and (4)
of the Act read:
34 (1) An owner whose
land is expropriated is entitled to disturbance damages
consisting of the following:
(a) reasonable costs, expenses
and financial losses that are directly attributable
to the disturbance caused to the owner by the expropriation;
. . .
(4) If the board determines
that it is not feasible for an owner to relocate his
or her business, there may be included in the compensation
that is otherwise payable, an additional amount not
exceeding the value of the goodwill of the business.
5. BUSINESS LOSS
5.1 Expert Witnesses
 Evidence with respect to
the value of the business and the business loss sustained
by N.Y. Automotive Ltd. was presented by Toby Symes
of Symes Valuation Services and by Ron Hooge of BlairCrossonVoyer,
Chartered Accountants. Both Mr. Symes and Mr. Hooge
are Chartered Accountants and Chartered Business Valuators.
Mr. Symes was retained by N.Y. Automotive Ltd. and Mr.
Hooge was retained by the City of Richmond.
5.2 Valuation Methodology
 The valuation methodology
employed by Messrs. Symes and Hooge was identical. However,
there were five issues, each of which impacted on their
calculation of the value of the business, on which they
did not agree:
- The appropriate level of salary and benefits for
Mr. and Mrs. Jiwani.
- The amount of the annual provision which should
be made for sustaining capital reinvestment.
- The need to adjust the reported earnings for the
four months ended April 30, 1997 in order to predict
what the results would have been for the whole year.
- Whether the company could have borrowed an additional
$16,065 on the security of its assets.
- The amount of the automobile expenses properly attributable
to the business.
 The differences in opinion
with respect to these issues led to a material difference
in the two experts' opinions on the value of the business
as a going concern. Mr. Symes estimated the business
to have goodwill in the range of $71,500 to $84,500.
Mr. Hooge calculated the goodwill to be a negative amount
in the range of $18,300 to $23,100 and concluded that
the value of the tangible assets of the business was
diminished by the amount of the negative goodwill.
 Mr. Symes' calculations
of the business loss included goodwill in his determination
of the total value of the business. Mr. Hooge deducted
his estimated negative goodwill in determining the total
value of the business. Mr. Hooge also made an alternative
calculation of the business loss assuming no goodwill
but with no abatement of business value for negative
5.3 Salaries and Benefits of Mr.
& Mrs. Jiwani
 Mr. Jiwani testified that
he had taken courses in automotive repairs. Prior to
starting N.Y. Automotive Ltd. he was employed by Vancouver
Brake & Wheel. He held a number of positions with
that company from 1979 to 1993 including repairing cars,
running the brake calliper department and manager of
parts. Mr. Jiwani said that his salary at Vancouver
Brake & Wheel was between $35,000 and $40,000. However
he made more in 1991 because there was a bonus of about
$2,000 in that year. He worked a 40-hour, 5-day week.
 Mr. Jiwani provided the
following testimony with respect to his employment with
N.Y. Automotive Ltd.:
- He was employed full-time in the business from its
inception in May 1993 until its closure and he had
no other source of employment income during that period.
- He managed the business and his responsibilities
included dealing with customers, assigning work, ordering
parts, billing customers and sometimes working as
- Business hours were 8 a.m. to 5 p.m., Monday to
- The business would sometimes close early on Saturday
depending on the volume of business. An early Saturday
closing would be 3 p.m. but on those days staff would
not take a lunch break.
- He normally got in around 7:30 a.m. to 7:45 a.m.
and left around 5:15 p.m. to 5:30 p.m. each day.
- He worked 50 hours a week in the early days of the
- He closed the books at the end of each day and did
the banking at Canada Trust which was open until 8
- The business employed two full-time mechanics who
were paid $16 and $16.25 an hour.
 It is clear that Mr. Jiwani
worked long hours. His testimony on his starting and
finishing times shows an 81/2 to 9 hour day after deducting
an hour for lunch. This would give a 50 to 54 hour week
after allowing for an early closing on some Saturdays.
This is generally in line with the 50 hour week which
Mr. Jiwani estimated when testifying as to his working
day, although much less than the 60 to 65 hour week
which Mr. Hooge testified was the estimate given to
him by Mr. Jiwani. After considering the conflicting
evidence, which included reference to Mr. Jiwani's occasional
absences for personal reasons, we believe it is reasonable
to conclude that Mr. Jiwani worked an average of 50
hours a week in the business.
 The reports of Mr. Symes
and Mr. Hooge show that Mr. Jiwani's salary from N.Y.
Automotive Ltd. was at the rate of $36,000 a year for
the years 1995 and 1996 and the four months ended April
30, 1997. The Jiwanis' two sons, Zaheer and Talib are
shown as receiving salaries totalling $9,296 in 1995,
$8,175 in 1996 and $1,900 in the four months ended April
30, 1997. Mr. Jiwani testified that his sons did very
little work for the business. He said Zaheer might spend
two hours on a Saturday on clean up and Talib helped
install the accounting system in the computer. Mrs.
Jiwani said that no actual payment was made to their
 Zaheer Jiwani testified
that he was at school during the whole of the period
that the business operated and that his only work for
the company was one Saturday a month on clean up. Zaheer
Jiwani did not work on cars and has no training as an
automotive mechanic. He had no recollection of receiving
a pay cheque from the company.
 We have concluded that
any services rendered by Zaheer and Talib Jiwani were
inconsequential, and should be ignored for the purposes
of determining the earnings and the value of the company's
 The determination of an
appropriate salary level for Mr. Jiwani requires consideration
beyond the amount paid to him, directly or indirectly,
by the company. Mr. Symes and Mr. Hooge differed in
their views on the appropriate salary for Mr. Jiwani.
They both explained their reasons for reaching their
 Mr. Symes utilized a salary
level of $40,000 a year including benefits. He based
this on statistical data published by the Government
of Canada relating to British Columbia and the Yukon,
a publication "Financial Review of Collision Repair
Industry" prepared by Ference Weiker & Company
and statistical data published by the Automotive Retailers
Association. Mr. Symes quoted average earnings of $40,600
for a retail trade manager taken from the Government
publication. The other publications showed average earnings
of $39,201 for a non-owner manager in the job category
which Mr. Symes considered closest to N.Y. Automotive
Ltd., and average earnings of $40,284 for the owner
manager of a mechanical repair shop with sales of $468,000.
Mr. Symes did not know if the quoted earnings included
 Mr. Hooge made his calculations
using a salary of $45,000 for Mr. Jiwani exclusive of
fringe benefits. He based this on Mr. Jiwani's salary
at Vancouver Brake & Wheel and on information provided
to him by the owner of an independent brake and wheel
shop and a muffler shop. Mr. Jiwani told Mr. Hooge that
his salary from Vancouver Brake & Wheel was $40,000
to $45,000 plus benefits. He also told him that this
was for a five day week working from 8 a.m. to 5 p.m.
for a total of 40 to 45 hours a week. The owner of the
independent brake and wheel shop told Mr. Hooge that
the manager of his brake and wheel shop, who also does
mechanical work, earns $45,000 to $50,000 a year.
 Mr. Jiwani's salary as
an employee at Vancouver Brake & Wheel prior to
starting his own business can be considered to be an
independent assessment by an unrelated party of the
value of his services at that time. There is some inconsistency
in the information provided by Mr. Jiwani with respect
to the amount of his salary with Vancouver Brake &
Wheel, however, it seems to have been at least $40,000
a year plus benefits.
 Mr. Symes did not know
the hours worked for the earnings shown in the statistical
data that he used in arriving at his figure of $40,000
a year. We believe it is reasonable to assume that the
statistics would reflect an average work week of approximately
40 hours. This is 20% less than the 50 hours worked
by Mr. Jiwani. Ignoring overtime premium, this suggests
that a salary level of $50,000 would be appropriate
to reflect Mr. Jiwani's longer hours. Another approach
suggested by Mr. Hooge would be to calculate Mr. Jiwani's
salary based on the $16.25 an hour paid to his mechanic.
This would yield a salary of $42,250 based on a 50-hour
 There are shortcomings
in all of the above calculations. We observe that statistics
are based on averages and the average will not reflect
differences occasioned by a myriad of factors such as
longevity of employment, the quality of the services
provided by an individual employee and geographical
disparities. Also, the evidence suggests significant
variations in average salary between different categories
of employment and it can be difficult to decide which
category is the appropriate yardstick. Considering all
of the evidence, we conclude that $45,000 a year is
an appropriate salary for Mr. Jiwani plus 10% for employee
 Mrs. Jiwani is a Certified
General Accountant. She was employed for 10 years by
a shipping company until March 1995 when she resigned
for health reasons. Her position with the shipping company
carried significant responsibility. She was the controller
of the company and also provided accounting services
to client shipping lines. She reported directly to the
President and supervised a staff of up to six people.
Her salary was $65,000 a year plus significant bonuses.
 Mrs. Jiwani looked after
the accounting at N.Y. Automotive Ltd. from its inception.
This was done outside her working hours during the period
that she was employed by the shipping company. Mrs.
Jiwani spent more time at N.Y. Automotive Ltd. after
she resigned from the shipping company in March 1995.
She testified that on an average day, she would arrive
at about 10 a.m. and leave at between 2 p.m. and 3 p.m.
However, only a small portion of her average day was
actually occupied with business activities. The business
activities included preparation of payroll, preparation
of some cheques, making some bank deposits, monthly
and annual reporting to the franchisor, sometimes checking
receipt of parts against the order, preparing bank reconciliations
and preparing VISA and MasterCard reconciliations. She
estimated that these activities, together with the preparation
of financial statements, tax returns, reports to governments
and the maintenance and supervision of the accounting
records would take her about 20 hours a month.
 Mrs. Jiwani explained that
she had no technical knowledge of the brake and wheel
business. Other than accounting, her work at the business
was limited to occasionally picking up parts, occasionally
driving customers to their desired destinations, greeting
customers and making coffee.
 N.Y. Automotive Ltd. used
Pace accounting software. Mrs. Jiwani explained that
this is an integrated point of sale system which provides
all of the accounting records, including inventories
and financial statements, from the entry of the basic
data. She said the system is simple and minimizes the
time required to maintain the accounting records.
 Mrs. Jiwani valued her
accounting services at $300 a month based on 20 hours
a month at $15 an hour. This figure was used by Mr.
Symes in calculating the value of the business.
 Mr. Hooge assumed Mrs.
Jiwani's services were worth $12,000 a year in making
his calculation of the value of the business. He used
this in combination with a $45,000 salary for Mr. Jiwani.
He also prepared, but did not use, an alternative estimate
using a $3,600 salary for Mrs. Jiwani and a $56,000
salary for Mr. Jiwani. Mr. Hooge's $12,000 estimate
was based on 20 hours a week at $12 an hour. The $12
an hour was derived from an earlier estimate given to
him by Mrs. Jiwani of the hours she worked and her estimate
of the value of her services to the business. It differs
from the $15 an hour estimate she later gave to Mr.
Symes and in her testimony during the proceedings. Mr.
Hooge testified that $15 an hour was reasonable for
the general accounting work done by Mrs. Jiwani but
that the preparation of financial statements and tax
returns would warrant a charge of at least $50 an hour.
 Based on the testimony
of Mr. and Mrs. Jiwani and Mr. Hooge, we believe it
is reasonable to conclude that after March 1995, Mrs.
Jiwani was present at the business premises an average
of 20 hours a week. However, the Jiwanis' testimony
leads us to conclude that much of Mrs. Jiwani's time
spent at the business premises was non-productive.
 We accept Mrs. Jiwani's
estimate that only 20 hours a month was spent on accounting
matters and that $15 an hour is reasonable compensation
for routine day-to-day accounting. However, we believe
that a higher rate of $50 an hour should be applied
to the more senior levels of work, such as the overall
supervision of the accounting records and the preparation
of financial statements and income tax returns. There
is no doubt that Mrs. Jiwani has the skills required
to do this work and command this level of pay since
this is amply evidenced by her professional qualifications
and her salary level at the shipping company.
 Based on the foregoing,
and assuming 10% of her time to be spent on senior accounting
work, we calculate the value of Mrs. Jiwani's accounting
services to be:
 We also considered the
value of the balance of the time spent by Mrs. Jiwani
at the business. The only specific tasks identified
for this time were occasionally driving customers, checking
receipt of parts, picking up parts, greeting customers
and making coffee. Mrs. Jiwani said that after leaving
her previous job in March 1995, she attended the business
premises to "kill time" because she had nothing
else to do. The business operated successfully without
her day to day presence prior to March 1995 and we have
concluded that it is not appropriate to ascribe any
value to her services other than for accounting. Based
on the evidence we conclude that $4,440 a year would
be appropriate compensation for the accounting services
provided by Mrs. Jiwani plus 10% to cover employee benefits.
5.4 Sustaining Capital Reinvestment
 Mr. Hooge estimated that
an annual amount of $4,500 was required to provide for
the replacement or major overhaul of fixed assets. He
based this on the assumption that the assets had a useful
life of 15 years.
 Mr. Symes made no provision
for sustaining capital reinvestment because he believed
the fixed assets had a life of more than 15 years, and
that such provision as might be required net of tax
shield (being the reduction in income taxes flowing
from the deduction of the costs of replacing or overhauling
fixed assets) would not make a material difference to
his conclusions. Mr. Symes acknowledged that Mr. Hooge's
calculation was correct if the fixed assets had a life
of 15 years.
 There was no technical
evidence submitted concerning the probable life of fixed
assets. Schedules prepared by Mr. Hooge show that the
income tax depreciation rates applicable to the fixed
assets are 10% straight line for leasehold improvements,
20% on the diminishing balance for equipment and 30%
on the diminishing balance for computer hardware. Mr.
Hooge acknowledged that his choice of 15 years was arbitrary
but said that it was longer than the 10 year period
that he would normally use. He also said that he had
calculated that Mr. Symes' assumptions required an annual
provision for capital replacement in the range of $1,700
to $2,500. This would imply a useful life in the range
of approximately 30 to 40 years. Mr. Symes offered no
opinion on the life of the fixed assets other than to
say he thought it was longer than 15 years.
 The fixed assets comprise
shop equipment, an awning, computer hardware, furniture,
and leasehold improvements. It is probable that some
assets have a longer life than others. The actual life
of some assets will depend on the ability of the company
to renew the lease of its premises, which had an initial
term of five years with a right of renewal for a further
five years. Mr. Hooge, while acknowledging that his
selection of a 15 year life was arbitrary, had clearly
given considerable thought to the issue. After weighing
all of the evidence, we have concluded that Mr. Hooge's
estimate of a 15 year life is reasonable, and we have
accepted his calculations.
5.5 Earnings for the Four Months
Ended April 30, 1997
 Mr. Hooge adjusted the
earnings for the four months ended April 30, 1997 because
he believed that the four month period did not accurately
reflect the results that would have been achieved for
the whole year. Mr. Symes did not think any adjustments
 The adjustments made by
Mr. Hooge were:
- Reduction to gross profit of $1,247
This adjustment was triggered by the fact that
the gross profit percentage for the four months
ended April 30, 1997 was higher than the previous
year and higher than the average achieved by the
company since its inception. Mr. Hooge commented
that internally generated interim financial statements
are often not accurate because period end inventories
are not calculated and valued. We accept the general
accuracy of this statement but note that the cost
of materials and supplies, expressed as a percentage
of sales, was higher in the four months ended April
30, 1997 than in the two preceding years. Accordingly,
we do not think that the gross profit of this four
month period was inflated by artificially low material
and supplies costs.
The increase in gross profit percentage in the
four months ended April 30, 1997 is principally
attributable to a reduction in direct labour. This
remains the case after eliminating the wages of
the Jiwanis' sons, which are included in direct
labour. We do not think that the cost of direct
labour is subject to distortion because of the short
four month period.
We consider Mr. Hooge's adjustment to gross profit
to be inappropriate.
- Increase in accounting and legal of $500, increase
in office and miscellaneous of $1,875, and increase
in repairs and maintenance of $300
These expenses, expressed as a percentage of sales,
were generally consistent in the 1994, 1995 and
1996 years. However, in each case the expenses were
significantly lower in the four months ended April
30, 1997. Mr. Hooge's adjustments represent the
increases required to bring these expenses to the
level experienced in 1996.
We consider these adjustments to expenses to be
appropriate and we also note that none of the other
expenses in the four month period appeared to be
out of line with the historical experience after
allowance is made for known differences such as
family salaries and increase in rent.
 We conclude that the reported
earnings for the four months ended April 30, 1997 should
be reduced by $2,675 to provide for the aforementioned
5.6 Company Borrowings
 Mr. Symes estimated that
the company could borrow $16,065 based on a normal debt
equity ratio of 2:1 shown in annual statement studies
published by Robert Morris Associates. He said this
money could then be paid to the shareholders as a dividend
which would provide them with $14,137 after payment
of $1,928 income tax. Mr. Symes categorized this as
a redundant asset which should be reflected in the overall
value of the business.
 Mr. Symes' calculation
of debt equity ratio included adjustments increasing
asset values by a net amount of $32,707 and liabilities
by $2,502. The principal adjustments were to increase
the $31,710 book value of fixed assets by $43,290 to
bring them to an estimated value of $75,000 and to write
off $11,997 unamortized franchise costs. The debt equity
ratio of N.Y. Automotive Ltd. prior to these accounting
adjustments was 2.4:1. The debt equity ratio after the
adjustments and after the payment of a dividend of $16,065
from the notional refinancing would be 2:1.
 Mr. Symes said that he
believed a bank would lend N.Y. Automotive Ltd. $16,065
on the security of its assets. Based on his personal
experience he thought a bank would lend a total of 75%
of accounts receivable and 50% of inventory and fixed
assets. He also thought a bank would require shareholders
to subordinate their loans to the claims of the bank.
 Mr. Hooge also made calculations
of the debt equity ratios before and after adjustments.
He considered it inappropriate to write up the value
of fixed assets when comparing the debt equity ratio
with the Robert Morris studies because the Robert Morris
studies were based on book values, not estimated values.
Mr. Hooge did, however, calculate that the debt equity
ratio was 4.5:1 after writing off the unamortized franchise
fee. He made this calculation because he noted that
intangible assets were not a material factor in the
Robert Morris data.
 Mr. Hooge testified on
his discussions with a banker concerning the amount,
which N.Y. Automotive Ltd. might borrow against the
security of its assets. He was told that the bank would
not lend against the company awning and leasehold improvements.
The bank would probably lend up to 65% of the value
of the company's equipment. The bank would require an
appraisal in order to determine value, but for loan
purposes, would not accept values which were in excess
of cost. In the absence of an appraisal, the bank would
probably use the net book values to determine the maximum
amount of their loan. Mr. Hooge pointed out that the
cost and net book value of the equipment, computer and
furniture totalled $35,000 and $14,000 respectively.
Thus it might be possible for N.Y. Automotive Ltd. to
borrow a maximum of $23,000 against its fixed assets
if it obtained an appraisal showing that the assets
were worth no less than their cost. In the absence of
an appraisal, a loan of $9,000 might be obtained based
on their net book value of $14,000.
 Mr. Hooge explained that
the company was largely financed by shareholder loans,
which totalled $37,060 at April 24, 1997. He estimated
that the cash and term deposits, which totalled $23,567,
were sufficient to allow repayment of $12,000 against
shareholder loans and still leave sufficient working
capital to permit the company to meet its third party
liabilities in the normal course of business. This would
reduce shareholder loans to $25,060. Mr. Hooge likened
the shareholder loans to bank debt and said that a buyer
of the business would require repayment of these loans
from any bank borrowings. He pointed out that bank loans
totalling $41,000 would be required to repay shareholder
loans and pay the $16,035 dividend postulated by Mr.
Symes. He said this was clearly beyond the company's
maximum borrowing capacity.  Two issues must be
considered in reaching a decision on whether N.Y. Automotive
Ltd. has a redundant asset through unused borrowing
capacity. Firstly, do the balance sheet ratios suggest
that there is unused borrowing capacity? Secondly, could
the company borrow an amount sufficient to permit the
payment of a dividend, on the strength of its assets
without outside assistance?
 The Robert Morris studies
reflect the book values of the assets and liabilities
of the reporting companies. Accordingly, we believe
the unadjusted book values of N.Y. Automotive Ltd. should
be used for comparative purposes. These show a debt
equity ratio of 2.4:1 as compared with 2:1 reported
by Robert Morris. This leads us to conclude that N.Y.
Automotive Ltd. had no obvious unused borrowing capacity
since it carries more debt than the industry average.
 Mr. Hooge's testimony suggests
that the company might be able to borrow a maximum of
$23,000 against its fixed assets. There seems to be
little or no borrowing capacity against accounts receivable
and inventory because of the low levels, which the company
in fact maintained. We were not provided with details
of the normal level of accounts receivable but noted
that accounts receivable and prepaid expenses together
totalled between $2,281 and $5,247 at the end of the
company's fiscal years. This suggests that most customers
pay their bills when they pick up their cars. Inventories
showed a year over year decline to a level of $3,013
at December 31, 1996. We believe it is reasonable to
conclude that the company's borrowing capacity would
be no greater than $23,000 being the maximum amount
that might be secured against its fixed assets.
 We accept Mr. Hooge's testimony
that a bank loan of $41,000 would be required to repay
shareholder loans and pay a dividend of $16,065 and
that this is beyond the company's borrowing capacity.
We also accept Mr. Hooge's testimony that a purchaser
of the company would require the shareholder loans to
be repaid before taking a dividend. In this connection
we note that the repayment of shareholder loans would
be an impediment to obtaining a bank loan because, as
testified by Mr. Symes, the bank would request a subordination
of shareholder loans to the claims of the bank.
 It seems unlikely that
the shareholders of N.Y. Automotive Ltd. would seek
a loan on these terms since it would be irrational and
imprudent to take a taxable dividend without first repaying
shareholder loans, particularly when the credit risk
associated with those shareholder loans would be increased
as a result of the subordination to the bank.
 After weighing all of the
evidence and the testimony of the two experts, we have
concluded that the company could not reasonably have
borrowed from the bank to pay a dividend.
5.7 Automobile Expenses
 The expenses paid by the
company include the day to day operating expenses of
cars owned by the Jiwani family. There was originally
only one car, a 1983 Chevrolet Caprice. A second car,
an Oldsmobile, was purchased in 1994 for the use of
the Jiwanis' two sons. The operating expenses paid by
the company comprise insurance, gas, and repairs and
maintenance. The capital cost of the cars was paid by
the Jiwanis personally and the company did not reimburse
them for the depreciation and cost of capital associated
with the ownership of the cars.
 Mr. Jiwani testified that
the 1983 Caprice was used in the business for picking
up parts, delivering financial statements to the franchiser
and giving lifts to customers. He said that the car
was at the business six days a week but said 90% of
the use was personal and 10% for business.
 Mr. Symes excluded 90%
of the automobile expenses when calculating the company's
earnings based on Mr. Jiwani's assertion that only 10%
of the car use was for business.
 Mr. Hooge intended to exclude
50% of the automobile expenses when calculating company
earnings. His actual exclusion was 45% due to a misinterpretation
of Mr. Symes report. Mr. Hooge testified that Mr. Jiwani
had told him that the car was used 90% on business.
His 50% estimate of business use was made by taking
the mid-point of the two conflicting percentages provided
by Mr. Jiwani.
 The testimony suggests
that the 1983 Chevrolet Caprice was the principal, or
perhaps the only, car used in the business. There was
no evidence with respect to the depreciation and financing
costs associated with the ownership of this vehicle.
They may be small since the car was 10 years old at
the time that N.Y. Automotive Ltd. commenced business.
However, it is clear that the car expenses recorded
by the company do not include these costs. It is also
clear that the car expenses paid by the company include
a second car commencing sometime in 1994. Thus, assuming
only one car was used in the business for 10% of its
total use, the application of that percentage to post
1994 recorded costs will overstate the business expense
because the recorded costs include expenses relating
to a second car. Conversely the recorded costs are understated
because they do not include depreciation or cost of
 We received no information
on depreciation and cost of capital invested in the
car. We do not know how much of the expenses paid by
the company relate to the second car used by the Jiwanis'
sons. While Mr. Jiwani's testimony of 10% business use
appears to be an estimate and not based on mileage calculations,
it appears to be in keeping with the evidence as to
the requirements of the business. Based on the available
evidence and the testimony at the hearing, we accept
Mr. Symes' calculations as being the best available
allocation of automobile expenses between business use
and personal use.
5.8 Calculations of Loss on Disposal
of Business Assets
 Our calculations follow
the methodology used by both Mr. Symes and Mr. Hooge.
The adjustments to earnings are identical to those made
by Mr. Symes and Mr. Hooge except where they held differing
opinions when the adjustments reflect our conclusions
based on the testimony presented at the hearing.
 Mr. Symes and Mr. Hooge
made similar estimates of the going concern value of
the fixed assets. Mr. Symes estimated a value range
of $65,000 to $75,000. Mr. Hooge estimated $72,400 in
his February 12, 1996 report but used Mr. Symes' range
of $65,000 to $75,000 in his April 1, 1999 rebuttal
report. Mr. Hooge also used Mr. Symes' 3.5 and 4.5 capitalization
multipliers to value the business in his rebuttal report.
These jointly used capitalization multipliers and estimates
of going concern value of fixed assets are incorporated
in the calculations below:
Estimated Maintainable Cash Flow:
*The expense adjustments include
90% of the car expenses paid by the company.
 Our calculation of the
loss on disposition of assets sustained by N.Y. Automotive
Ltd. as a result of the expropriation is as follows:
*Fixed assets have been valued
at the midpoint of the value range since this amount
is reflected in the goodwill/franchise midpoint value.
5.9 Winding Up Expenses
 The parties have agreed
that out of pocket expenses totalling $6,340 were properly
incurred in winding up the business.
 N.Y. Automotive Ltd. also
claims the following expenses which are disputed by
the City of Richmond:
|Services of Mr. and Mrs. Jiwani
for the period April 25 to May 31, 1997:
| Severance pay for
employees R. Pope and H. Baldeo
 Mr. Jiwani testified that
he received the executed agreement made pursuant to
section 3 of the Expropriation Act on April 25,
1997. The agreement required N.Y. Automotive Ltd. to
give vacant possession on May 31, 1997. Mr. Jiwani explained
that he terminated the employment of Randy Pope and
Harry Baldeo as soon as he received the executed agreement
and paid them the required severance pay. Mr. Jiwani
did not think it was reasonable to require the employees
to work out their severance period because:
- he was concerned that the stress associated with
losing their job might lead to faulty work;
- he thought it would be difficult to sell new work
when the customers knew that the business was closing
down and would not be available to attend to warranty
- the time period to May 31, 1997 would be required
to wind up the business.
 We believe N.Y. Automotive
Ltd. acted reasonably in closing the business and terminating
the employment of Randy Pope and Henry Baldeo on receipt
of the executed section 3 agreement on April 25, 1997,
particularly in view of the narrow time frame for winding
up the business. We also see warranty and work quality
considerations as valid in view of the imminent closure.
We note that Maynards Industries Ltd., who conducted
the auction of the company's assets, stipulated in their
letter of April 22, 1997 that a period of three weeks
was required for the preparation, sale and removal of
these assets. We consider the $5,600 severance payment
to employees Pope and Baldeo to be a proper cost of
winding up the business.
 Mr. & Mrs. Jiwani spent
the period April 25 to May 31, 1997 winding up the business.
This included returning parts where return was possible,
making arrangement for the sale of the company's tangible
assets by auction, terminating utility contracts, reconciling
supplier accounts and preparing financial statements
and reports to governments and franchisor. There was
no evidence on the time spent on these activities and
whether it was more or less than the time spent when
the business was operating normally. Based on the available
evidence we cannot conclude that Mr. & Mrs. Jiwani's
work during the five week wind up period would have
been more onerous or time consuming than when the business
was operating. Compensation at the rates which we have
previously determined to be reasonable would be a proper
cost of winding up the business. Our calculation is
5.10 Summary of Business Loss
 Our summary of the business
loss, excluding severance liability for Mr. Jiwani,
is as follows:
6. SEVERANCE LIABILITY
 Mr. Jiwani stated he was
51 years of age at the time of the hearing in the fall
of 1999. He described his education as being equivalent
to a Grade 12 education in British Columbia. He had
been employed by Vancouver Brake & Wheel in Vancouver
from 1979 to 1993. He had taken various automotive repair
courses and had worked his way up to the position of
manager of the parts department for all Vancouver Brake
& Wheel shops.
 With the closure in late
1992 or early 1993 of the then existing Vancouver Brake
& Wheel shop in Richmond, Mr. Jiwani was offered
an opportunity to open a new Vancouver Brake & Wheel
operation in Richmond as a franchisee. He saw this as
an opportunity to advance and entered into a franchise
agreement in May 1993 with Vancouver Brake & Wheel
(Richmond) Ltd. (the "Franchise Agreement").
Mr. Jiwani was identified in that agreement as the Franchisee.
The Franchise Agreement contains a non-competition covenant
13.01 Non-Competition of
Franchisee. During the Term and for one year after
Termination, in the event of termination of this agreement
prior to the expiry of the Term by either the Franchisor
or the Franchisee, or in the event of expiry of the
Term, the Franchisee shall not individually or in
partnership or in conjunction with any person or persons,
firm, association, syndicate or company, as partner,
principal, agent, shareholder, employee or in any
other manner or capacity whatsoever, directly or indirectly,
carry on or be engaged in or concerned with or interested
in, or lend money to, lease or sublet premises to,
supply to, consult with, advise, manage, guarantee
the debts or obligations of, or permit his name or
any part thereof to be used or employed by any person
or persons, firm, association, syndicate or company
engaged in or concerned with or interested in, the
operation of any business similar to or competitive
with the Business or the Franchisor's Business within
a 25-kilometre radius of the Licensed Location, or
within a 25-kilometre radius of either of the Vancouver
Brake & Wheel locations currently operated by
the Franchisor or its affiliates at 1239 Kingsway
and 1841 East Hastings Street, Vancouver, B.C. or
any successor locations thereto opened and operated
during the Term, or within a 25-kilometre radius of
the Guildford Town Centre shopping centre in Surrey,
B.C., or such smaller area as determined by the Franchisor
and notified to the Franchisee in writing.
 Mr. Jiwani subsequently
assigned the franchise agreement to the corporate claimant,
N.Y. Automotive Ltd. effective May 27, 1993, pursuant
to an assignment agreement dated June 24, 1993 (the
"Assignment"). Section 6 of the Assignment
6. This consent shall not
waive or modify in any manner the rights of the Franchisor
under the Franchise Agreement and the Assignor acknowledges
and understands that this Assignment shall not relieve
and release the Assignor from any and all obligations
under the terms of the Franchise Agreement.
 The business commenced
operations May 27, 1993. Mr. Jiwani described his role
as that of an owner/manager. He derived his income solely
from the business after operations commenced, working
full time in the business until operations ceased and
the business was wound up in May 1997.
 Mr. Jiwani testified that
from May 1997 until January 15, 1999 he had no employment
and no source of income. He said he did not seek employment
after the business closed because of his age, because
of the restrictive covenant in the Franchise Agreement,
and because he was not interested in employment but
in finding another business. Initially, he took a vacation
period of some 2 months. After that he indicated he
spent most of his time researching and investigating
various businesses outside the automotive area, eventually
making a few purchase proposals, and in mid-January
1999 investing in a dry cleaning business. He confirmed
that in the period from May 1997 to mid January 1999
he did not approach his previous employer, Vancouver
Brake & Wheel, for employment because he had no
intention of returning to work for that employer or,
indeed, for any other employer. He preferred, as he
put it, to be his own boss. With respect to his search
for another business, Mr. Jiwani agreed that he had
assumed he could not open another automotive repair
business because of the restrictive covenant. However,
he neither discussed this with the franchisor, nor did
he seek legal advice on this point in May 1997 or after.
He testified that he saw the restrictive covenant as
clear cut and that at the time he signed the Franchise
Agreement in 1993 he had been advised by a lawyer that
he would not be able to own an auto repair business
within the restricted areas.
6.2 Claimant's Argument
 The claimed amount of $120,000
was stated by counsel for the claimant to be based upon
the projected annual cash flow that would have been
generated by the business between the closing of the
claimant's business at the end of May 1997 and the commencement
of the new business in January 1999, i.e. approximately
$75,000 per annum for a period of 19 months.
 Counsel conceded that Mr.
Jiwani could not claim compensation in his personal
capacity since he was not an "owner" under
the Act. However, he argued that the corporate claimant,
N.Y. Automotive Ltd., had an obligation to make a severance
payment to Mr. Jiwani and should be compensated in respect
of that liability. In support of that argument he cited
the cases of Roadmaster Auto Centre Ltd. v. Burnaby
(City) (1997), 62 L.C.R. 124 (B.C.E.C.B.) and
Meyer v. British Columbia (Minister of Transportation
& Highways) (1995), 55 L.C.R. 94 (B.C.E.C.B.).
6.3 Respondent's Argument
 Counsel for the respondent
submits the corporate claimant has no liability to Mr.
Jiwani. He points to a lack of evidence that Mr. Jiwani
had advanced a claim against N.Y. Automotive Ltd. He
argues that there is no basis upon which to allow compensation
in the circumstances considered here and says that the
Meyer and Roadmaster cases are not applicable.
 Respondent's counsel describes
Mr. Jiwani's choice to seek out a new business as a
"lifestyle choice". Even if the corporate
claimant was potentially liable for severance, counsel
argues there was a total abdication by Mr. Jiwani of
his duty to mitigate his losses, disentitling him to
any severance. Counsel argues that because of the breadth
of the restrictive covenant contained in the Franchise
Agreement, that covenant would be unenforceable. He
notes Mr. Jiwani failed to seek any release from his
obligations under the restrictive covenant and submits
this was not because Mr. Jiwani's ability to get a job
was destroyed, but because of his lifestyle choice.
He also argues the Assignment operated to release Mr.
Jiwani from his obligations under the Franchise Agreement.
6.4 Analysis and Conclusion
 The following issues must
be resolved in reaching a conclusion on the severance
- Whether Mr. Jiwani has a sustainable claim for damages
for loss of employment against N.Y. Automotive Ltd.,
and if so
- The rate of remuneration to be used in calculating
the severance liability, and
- The period of time for which he should be compensated.
 The financial circumstances
of N.Y. Automotive Ltd. are similar to the financial
circumstances of the business considered in Meyer.
In both cases, the businesses had goodwill and were
profitable after paying a reasonable salary to the principal
 The principal distinction
is the Jiwanis operated their business through N.Y.
Automotive Ltd., an incorporated company, whereas in
the Meyer case, the claimant was the sole proprietor
of an unincorporated business. In Meyer, the
Board found the claim by Mrs. Meyer for "loss of
employment as owner/manager" fell within section
34(1)(a) of the Act, as a financial loss directly attributable
to the disturbance caused by the expropriation. Unlike
Mrs. Meyer, Mr. Jiwani is himself not a claimant and
therefore the claimant here, N.Y. Automotive Ltd., can
only be entitled to disturbance damages if it has a
liability to Mr. Jiwani in respect of his loss of employment.
 The first question then
is whether or not Mr. Jiwani was an employee of N.Y.
Automotive Ltd. entitled to reasonable notice on termination
of his employment.
 The board in an earlier
decision, Surrey Animal Hospital Ltd. v. British
Columbia (Minister of Transportation and Highways)
(1993), 51 L.C.R. 37, briefly considered a claim for
severance pay in a similar situation. The Board dismissed
that claim on the basis that Dr. Ross, one of the principals
of the corporate claimant, was not an employee of the
corporate claimant entitled to the benefit of the provisions
of the Employment Standards Act.
 We have more fully considered
the question of whether or not Mr. Jiwani may be considered
an employee of the corporate claimant, N.Y. Automotive
Ltd., not in the restrictive sense of whether or not
Mr. Jiwani would be entitled to the benefit of the provisions
of the Employment Standards Act, but rather
in the broader context of his position at common law.
 We note the references
in Surrey Animal Hospital Ltd. to the cases
of Re Bolt & Iron Co.; Livingstone's Case
(1888), 14 O.R. 211 (Ch.D.), aff'd 16 O.A.R. 397 (C.A.)
and Allish v. Allied Engineering of B.C. Limited
(1957), 9 D.L.R. (2d) 688, 22 W.W.R. 641. We consider
those cases to be distinguishable from the situation
before us, in that both address the question of entitlement
to severance on termination of a "managing director"
in their capacity as a director. For us, the question
is, rather, whether there was an employment relationship
between Mr. Jiwani and N.Y. Automotive Ltd.
 On the evidence before
us, Mr. Jiwani in his day to day activities at the rented
premises of N.Y. Automotive Ltd. fulfilled a role similar
to that of a senior service advisor/manager in an automotive
repair facility. He discussed necessary repairs with
customers, provided repair estimates, completed work
orders, ordered necessary parts and received payments
from customers upon completion of the work. In addition,
he completed bank deposits, assigned work to and supervised
the two automotive technicians employed by N.Y. Automotive
Ltd. and, when it was busy, worked on customers' vehicles
himself. These are not the duties of a managing director.
Had he not performed these duties, N.Y. Automotive Ltd.
would have had to hire an additional employee to perform
such duties. This is, of course, consistent with the
deduction by both business valuation experts of a salary
amount for Mr. Jiwani's services in order to arrive
at the earnings and hence goodwill of the business carried
on by N.Y. Automotive Ltd. The services performed by
Mr. Jiwani for N.Y. Automotive Ltd. were, we conclude,
of a nature and character equivalent to that of a full
time automotive service advisor/manager and are one
element supporting an employment relationship.
 Mr. Jiwani testified that
his only sources of income during the periods N.Y. Automotive
Ltd. operated its business were the amounts he received
from N.Y. Automotive Ltd., either as salary or as profits
from the business. The financial records of N.Y. Automotive
Ltd. indicate a salary was paid to Mr. Jiwani. The receipt
of remuneration from N.Y. Automotive Ltd. is another
element confirming the existence of an employment relationship
between Mr. Jiwani and N.Y. Automotive Ltd.
 The other usual element
of an employment relationship, the employer's control
over the manner of doing the work might on first glance
be considered to be absent here, where the controlling
shareholder and the purported employee are one and the
 In a case analogous to
the case before us, where the same individual, Lee,
was both the controlling shareholder and governing director
of a company, as well as employed at a salary as its
chief pilot, it was held that the relationship of Lee
in his role of chief pilot was that of an employee.
That case, Lee v. Lee's Air Farming Ltd., 
A.C. 12 (P.C.) confirmed that the individual and the
company are separate legal entities and that one and
the same person may function in dual capacities, acting
in one capacity to give orders to himself in another
 Similarly, in McGuire
v. Wardair Canada Ltd. (1969), 70 C.L.L.C. 14,026,
71 W.W.R. 705 (Alta.S.C.) the court held that McGuire,
who was both a director, vice president and general
manager of Wardair was, in his capacity of general manager,
an employee of the company entitled to damages in lieu
of reasonable notice upon the termination of that employment.
Both Livingstone's Case and Allish, amongst
others, were considered in the context of the circumstances
leading up to McGuire's initial employment to determine
whether there was ground for implying a term of reasonable
notice. It was concluded that in the cases reviewed
the basis for disallowing damages for wrongful dismissal
of a managing director was that as a director of the
company the remuneration was in the nature of a gratuity
in the absence of special circumstances to the contrary
and that a director is not a servant and therefore the
relationship of master and servant does not apply. The
court found McGuire's position to be clearly distinguishable
from that considered in the cases reviewed and held
his employment as general manager was distinct and apart
from his appointment as a director and vice-president.
 In the case before us,
Mr. Jiwani and N.Y. Automotive Ltd. are clearly separate
legal entities and there is no reason in law which precludes
Mr. Jiwani from being both an employee and the controlling
shareholder of N.Y. Automotive Ltd. We consider Mr.
Jiwani's day to day activities in the roles of service
advisor/manager and sometimes automotive technician
to be distinct and apart from his roles as a director,
officer and shareholder of N.Y. Automotive Ltd. In his
performance of his day to day services, we conclude
Mr. Jiwani was an employee of the corporate claimant,
N.Y. Automotive Ltd., entitled to reasonable notice
of termination of his employment or damages in lieu
of such notice.
 There was no evidence that
Mr. Jiwani had made a claim against N.Y. Automotive
Ltd. although, in the circumstances of this case, we
believe that this technical requirement could be met
quite easily. Thus, we consider the liability exists
even if a claim has not been formally advanced. On our
analysis, Mr. Jiwani has a cause of action against N.Y.
Automotive Ltd. and the proper amount of the claim then
falls, as do the severance claims of Pope and Baldeo
earlier considered, within section 34(1)(a) of the Act
as a reasonable expense directly attributable to the
 Having regard to the amount
of that expense, the claimant cited Roadmaster
in support of its claim that the severance liability
is equivalent to the cash flow of the business of N.Y.
Automotive Ltd. Roadmaster differs on its facts
since the business in that case was found to have no
goodwill and the cash flow was generally insufficient
to pay a fair market salary to the principal. To the
extent that there can be said to be any award made in
that case analogous to the severance liability claim
made here, it is the award made for financial losses
from the date of expropriation to the end of the lease
term, a period of approximately 18 months. That award
is based on the Board's analysis of the expert evidence
estimating the likely cash flows of the business during
that period but for the expropriation. Claims for a
termination allowance under section 34(4) of the Act
and for executive time were dismissed as having been
included in the award for financial losses in the post
expropriation period. We note the Board's comment that
in awarding financial losses to the end of the lease
term by including management wages and benefits it was
accepting in the circumstances of the Roadmaster
case the applicability of the exception in Plouffe
v. Ottawa (City) (1973), 4 L.C.R. 37 (Ont. L.C.B.).
The Board went on to note that therefore any award in
the nature of a termination allowance would be double
 In the case before us,
the opposite is true. The business of N.Y. Automotive
Ltd. does have goodwill and this is reflected in the
award we have made under business loss pursuant to section
34 (4) of the Act, making the Plouffe exception
inapplicable here. To award an amount under the severance
claim equivalent to the whole of the maintainable cash
flow of N.Y. Automotive Ltd., as the claimant suggests,
would result in double compensation because it is the
cash flow which produces the goodwill that is the basis
for the award under section 34(4). We therefore reject
the claimant's suggestion that the amount of severance
should be based on the cash flow of the business of
N.Y. Automotive Ltd.
 Since the claim is for
liability as a result of the termination of Mr. Jiwani's
employment arising from the winding-up of the business
of N.Y. Automotive Ltd., we find the principles applicable
to the determination of damages in a wrongful dismissal
action are those to be applied.
 It is therefore necessary
to determine the appropriate rate of remuneration. The
use of fair market salary is consistent with Meyer.
Since goodwill has been calculated after deduction of
a market salary plus benefits for Mr. Jiwani's services,
the use of the same remuneration rate will ensure there
is no element of double recovery nor any deficiency
of recovery. Accordingly, the Board considers the annual
salary of $45,000 plus 10% for benefits, as previously
determined in connection with the section 34 (4) award,
to be the appropriate salary and benefit amounts to
be used to calculate the severance liability.
 In the Meyer case
while the claim for "loss of employment as owner/manager"
was characterized by the Board as a financial loss under
section 33 (1)(a), now section 34(1)(a), the position
of the claimant was seen to be akin to "[a] person
wrongfully dismissed from employment where age, length
of service, nature of the position, and availability
of similar positions all factor into determining the
amount of reasonable notice a dismissed employee would
be entitled to: see Ansari v. British Columbia Hydro
and Power Authority,  4 W.W.R. 124 (B.C.S.C.)."
 The nature of the claim
before us rests on liability for wrongful dismissal
and thus the factors to be considered in determining
the appropriate time period are clearly those applicable
in determining the period of reasonable notice in a
wrongful dismissal action. The courts have generally
applied the principles set out by McRuer C.J.H.C. in
Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R.
(2d) 140 (Ont. H.C.) at p. 145:
There can be no catalogue laid down
as to what is reasonable notice in particular classes
of cases. The reasonableness of the notice must be
decided with reference to each particular case, having
regard to the character of the employment, the length
of service of the servant, the age of the servant
and the availability of similar employment, having
regard to the experience, training and qualifications
of the servant.
 Bardal was applied
in Ansari and has subsequently been adopted
by the Supreme Court of Canada in Machtinger v.
HOJ Industries Ltd.,  1 S.C.R. 986.
 Mr. Jiwani was employed
by Vancouver Brake & Wheel from 1979 to 1993, a
period of 14 years. He then managed the business of
N.Y. Automotive Ltd. as a franchisee of Vancouver Brake
& Wheel for the four years from its inception in
May 1993 to its closure in May 1997. Length of employment
is germane to the determination of severance entitlement.
We considered whether Mr. Jiwani's employment as the
manager of a franchisee of Vancouver Brake & Wheel
should be construed to be a continuation of his employment
with Vancouver Brake & Wheel but concluded that
this would be inappropriate. Mr. Jiwani terminated his
employment with Vancouver Brake & Wheel in 1993
in favour of self-employment through the family ownership
of N.Y. Automotive Ltd. Mr. Jiwani's employment, as
the manager of a family owned franchisee company, cannot
be construed to be a continuation of his employment
as a parts manager of the franchisor company in which
he had no ownership interest, particularly when he himself
voluntarily terminated that employment. We have concluded
that four years is Mr. Jiwani's period of employment
for the purpose of determining the amount of the severance
 The extent to which Mr.
Jiwani's activities were restricted by the Franchise
Agreement has been the subject of argument by counsel
for the parties. It is our view; however, that it had
no bearing on Mr. Jiwani's failure to find employment
with a third party because he did not and never intended
to seek such employment. It might have prevented Mr.
Jiwani from purchasing a business similar to that conducted
by Vancouver Brake & Wheel within one year from
the termination of the franchise, if that business was
in the geographic area set out in the Franchise Agreement.
However, Mr. Jiwani sought no legal advice on the enforceability
of the non-competition clause after receipt of the section
3 agreement although, as noted earlier, he stated that
he had been given legal advice at the time he entered
into the franchise agreement. Nor did he discuss with
the franchisor the possibility of obtaining a release
or modification of the restrictive covenant. This, notwithstanding
Mr. Jiwani's evidence that on closing the business of
N.Y. Automotive Ltd., he spoke to the franchisor regarding
the release of Mr. Baldeo to return to work for the
franchisor. We can only conclude Mr. Jiwani was content
to exclude the automobile repair business from his field
of future endeavours.
 The claimant argues for
a severance period of 19 months, being the time it took
for Mr. Jiwani to purchase a new business. We believe
this is unreasonably long. It is also the wrong basis
upon which to calculate damages for wrongful dismissal.
Mr. Jiwani admitted he made no attempt to mitigate his
loss of earnings by seeking alternate employment while
he searched for another business in which to invest.
He decided to take two months' holiday after winding
up the business of N.Y. Automotive Ltd. He did not attempt
to clarify the extent to which the Franchise Agreement
limited his future activities, either as an employee
 The respondent argues
that Mr. Jiwani is disentitled to any amount for severance
because of his failure to seek alternate employment.
In order to succeed on this mitigation argument, the
respondent must prove not only that Mr. Jiwani failed
to diligently seek alternate employment, but also that,
on the balance of probabilities, he would have obtained
appropriate work had he made reasonable efforts. See
Maguire v. Sutton (1998), 34 C.C.E.L. (2d) 67
 No evidence was adduced
to show that suitable employment positions were available
to Mr. Jiwani. Thus, while the evidence is clear that
Mr. Jiwani did not actively seek re-employment choosing
instead to pursue other possible business investment
opportunities, there is no evidence to show that if
he had done so he would have obtained a suitable job
earlier than would otherwise be anticipated in his case
taking into account all other relevant factors.
 Conversely, there was
no evidence adduced on behalf of the claimant to indicate
that the period of reasonable notice should be longer
in Mr. Jiwani's case because suitable employment positions
were not available despite reasonable efforts to obtain
 We, therefore, have no
basis upon which to conclude the period of reasonable
notice should be either longer or shorter than it would
otherwise be because of either a failure to mitigate
or considerations as to availability of similar employment.
 We consider a notice period
of six months to be reasonable having regard to all
of the circumstances and the evidence before us, including
Mr. Jiwani's age, his position and the length of his
service with N.Y. Automotive Ltd. We find that the notice
period commenced on April 25, 1997, the date the fully
executed section 3 agreement was delivered to N.Y. Automotive
Ltd. and N.Y. Automotive Ltd. commenced winding-up the
6.5 Summary of Severance Liability
 We have already determined
the appropriate salary and benefits for Mr. Jiwani's
services to be $45,000 annually plus 10% for employee
benefits. Mr. Jiwani's remuneration from April 25, 1997
to May 31,1997 has already been included in the calculation
of compensation as an expense incurred in the winding-up
of the business and must be deducted here to avoid duplication.
Our calculation of N.Y. Automotive Ltd.'s remaining
severance liability to Mr. Jiwani is as follows:
 N.Y. Automotive Ltd. has
been awarded $118,400 as disturbance damages pursuant
to sections 34(1)(a) and (4) of the Act. $98,410 of
the amount awarded has been generically referred to
as a business loss and the remaining amount awarded
in respect of severance liability might also be characterized
as a business loss. Following the reasoning in Sequoia
Springs West Development Corporation v. Her Majesty
the Queen in Right of the Province of British Columbia
as represented by the Minister of Transportation and
Highways, unreported, E.C.B. No. 93/95/188, September
1, 2000, we conclude that no deduction is to be made
in the present case in respect of compensation for business loss(es) when
carrying out the calculations under sections 45(4) and
46(4) of the Act relating to costs and interest since
no amount was claimed or awarded under section 34(3)
of the Act.
 An advance payment of
$102,000 was made to the claimant on May 20, 1997. The
additional payment of $3,387 made on May 31, 1997 was,
as we understand it, paid directly to the landlord pursuant
to the Lease to cover the rent for May 1997. Thus, the
claimant did not incur disturbance damages in respect
of the May rent and the payment, having been made to
the landlord, is not in our view to be treated as a
payment to the claimant for the purposes of interest
 Section 46(1)(a) of the
Act provides that the expropriating authority must pay
interest on any amount awarded in excess of any amount
paid by the expropriating authority under section 20(1)
or (12) or otherwise, to be calculated annually, in
the case of disturbance damages, from the date the damages
were incurred, or any other date that the board considers
reasonable. Therefore, the claimant is entitled to interest
under section 46(1)(a) on the amount awarded of $118,400,
with adjustments to take into account the advance payment
of $102,000 on May 20, 1997. Under section 46(2), interest
is payable at an annual rate that is equal to the prime
lending rate of the banker to the government.
 We have concluded that
interest should run from April 25, 1997, which is the
date a fully executed copy of the section 3 agreement
was delivered to the claimant and the claimant commenced
the winding-up of its business. While the possession
date was not until May 31, 1997, the winding-up of the
business which gave rise to the disturbance damages
in our view necessarily commenced earlier and it was
reasonable for the claimant to discontinue its business
on April 25, 1997, as soon as the taking became certain
with the delivery of the section 3 agreement.
 The advance payment made
by the respondent to the claimant under section 20 constitutes
approximately 86% of the total compensation awarded.
Therefore, the provision under section 46(4) for additional
interest applies. Additional interest is payable at
an annual rate of 5%, on the difference of $16,400 from
May 20, 1997, the date of the advance payment, to the
date of this decision.
 As a result of the hearing,
the claimant has been awarded $118,400 in compensation.
This award amounts to approximately 116% of the advance
payments already received. Pursuant to section 45(4)
of the Act, the claimant is entitled to costs.
 Those costs are the actual
legal, appraisal and other costs incurred by the claimant
for the purpose of asserting its claim for compensation
or damages, pursuant to sections 45(3) and 45(7)(a)
of the Act, up to and including June 27, 1999. Thereafter,
while other costs may continue to fall under section
45(7)(a), legal and appraisal costs are governed by
the Tariff of Costs Regulation, B.C. Reg. 189/99
(the "Tariff"), as provided under section
45(7)(b) of the Act. Under section 3(3) of the Tariff,
we fix the scale under which costs will be assessed
at Scale 2, considering the matters addressed to be
of ordinary difficulty or importance.
THEREFORE IT IS ORDERED THAT:
THE RESPONDENT SHALL PAY TO THE CLAIMANT:
1. Compensation in the amount of $118,400
for disturbance damages pursuant to sections 34(1)(a)
and (4) of the Act;
2. Interest on the amount in item
(1) pursuant to section 46(1) of the Act from and including
April 25, 1997 until paid, with adjustments to take
into account the sum of $102,000 paid on May 20, 1997,
by the respondent to the claimant.
Pursuant to section 46(2) of the
Act, interest shall be calculated annually at the
a) Four and three-quarters per cent
(4.75%) from January 1, 1997 to June 30, 1997
b) Four and three-quarters per cent
(4.75%) from July 1, 1997 to December 31, 1997
c) Six per cent (6.00%) from January
1, 1998 to June 30, 1998
d) Six and one-half per cent (6.5%)
from July 1, 1998 to December 31, 1998.
e) Six and three-quarters per cent
(6.75%) from January 1, 1999 to June 30, 1999.
f) Six and one-quarter per cent
(6.25%) from July 1, 1999 to December 31, 1999.
g) Six and one-half per cent (6.5%)
from January 1, 2000 to June 30, 2000.
h) Seven and one-half per cent (7.5%)
from July 1, 2000 to December 31, 2000.
3. Additional interest on the amount
of $16,400 pursuant to section 46(4) of the Act, from
and including May 20, 1997, the date of the relevant
advance payment, at a rate of five percent (5.00%) per
annum to the date of this decision.
4. The claimant's actual reasonable
legal, appraisal and other costs of, and incidental
to, the application and hearing before the board pursuant
to sections 45(3), (4) and (7)(a) of the Act; provided,
however, that the costs payable in respect of legal
and appraisal costs incurred on and after June 28, 1999
shall be those costs prescribed pursuant to section
45(7)(b) of the Act and the Tariff on Scale 2.