Anderson v. M.N.R.

Anderson v. M.N.R.
Court (s) Database
Tax Court of Canada Judgments
Date
2021-04-08
Neutral citation
2021 TCC 28
File numbers
2018-271(EI), 2018-272(CPP)
Judges and Taxing Officers
Don R. Sommerfeldt
Subjects
Employment Insurance Act
Decision Content
Dockets: 2018-271(EI)
2018-272(CPP)
BETWEEN:
MICHAEL M. ANDERSON,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeals heard on December 11, 2019 at Grande Prairie, Alberta; and Written Submissions received on November 19, 2020, December 11, 2020 and December 18, 2020.
Before: The Honourable Justice Don R. Sommerfeldt
Appearances:
Counsel for the Appellant:
Michael E. Wheaton
Counsel for the Respondent:
Andrew Lawrence
JUDGMENT
The Appeals are dismissed, without costs, and the decision of the Minister of National Revenue that is the subject of these Appeals is confirmed.
Signed at Ottawa, Canada, this 8th day of April 2021.
“Don R. Sommerfeldt”
Sommerfeldt J.
Citation: 2021 TCC 28
Date: 20210408
Dockets: 2018-271(EI)
2018-272(CPP)
BETWEEN:
MICHAEL M. ANDERSON,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Sommerfeldt J.
I. ISSUE
[1] In 2016, was Michael M. Anderson an employee of Northern Interior Insurance Adjusters Ltd. (“NIIA”), or was his corporation, 1883022 Alberta Ltd. (“188AB”), a contractor working for NIIA? That is the question to be decided in these Appeals.
II. PROCEDURAL BACKGROUND
[2] In January 2017, Mr. Anderson’s bookkeeper and tax advisor requested a ruling from the Canada Revenue Agency (the “CRA”) as to the employment status of Mr. Anderson. By letter dated March 13, 2017, the CRA Rulings Officer notified Mr. Anderson that it had been determined that Mr. Anderson was not an employee of NIIA. Mr. Anderson appealed that ruling to the Minister of National Revenue (the “Minister”). By letter dated October 16, 2017, the Minister notified Mr. Anderson that it had been determined that, in 2016, Mr. Anderson was not an employee of NIIA, with the result that he was not eligible for employment insurance (“EI”) benefits. Mr. Anderson appealed the Minister’s decision (the “Decision”) as it applies for the purposes of both the Employment Insurance Act (the “EIA”) [1] and the Canada Pension Plan (the “CPP”). [2]
III. FACTS
[3] In 2015, Mr. Anderson was an experienced, educated and competent insurance adjuster. During his long career, he had previously worked for large national adjusting firms, small local adjusting firms, and had even owned and managed his own adjusting firm. He had achieved a “Level 3” designation, which is the highest designation granted by the Insurance Council of British Columbia (the “ICBC”) to insurance adjusters and, when managing his own firm, had been designated as a nominee (which is a designation required to supervise less experienced adjusters).
[4] NIIA was a local adjusting firm, with offices in Terrace, Smithers and Prince George, British Columbia. NIIA was, in 2015, equally owned by Dwayne Hillock and Stephen Ward, both of whom were Level 3 adjusters. Earlier in his career, Mr. Anderson had worked for NIIA, for several years, before leaving for another opportunity.
[5] By way of background, several years before 2015, Mr. Anderson had taken a position, as an insurance adviser, with Paul Davis Restoration. Consequently, Mr. Anderson’s Level 3 designation lapsed, as he was no longer working as an adjuster.
[6] In late 2014 and early 2015, discussions ensued between Mr. Anderson and Mr. Hillock about the possibility of Mr. Anderson rejoining NIIA and opening an office in Fort St. John, British Columbia. The discussions turned into negotiations and ultimately, at a dinner meeting in mid-February 2015, attended by Mr. Anderson, Mr. Hillock and Mr. Ward, NIIA presented to Mr. Anderson a three‑page document entitled “Offer of Employment.” [3] This document was not in the form of a typical employment agreement, as it contained only the following provisions:
(a) a reference to the commencement date (i.e., March 1, 2015);
(b) three brief point-form provisions, two of which related to the compensation to be paid to Mr. Anderson and the third of which related to mileage reimbursements; and
(c) three clauses designed to ensure that Mr. Anderson would not divulge NIIA’s confidential information or attempt to lure away the clients or employees of NIIA. [4]
The compensation was described as “60% commission on billings,” with a draw of $5,000 per month, to be paid at the middle and end of each month, [5] to be applied toward commissions, and with “Full reimbursement of kilometers.” The document did not contain any of the other provisions that are common in an employment agreement, such as the position to be held by the employee, the term of the employment, the duties of the employee, the obligations of the employer, vacation, benefits, and the like.
[7] The copy of the Offer of Employment entered into evidence (Exhibit A-1, Tab 1) was not signed. However, both Mr. Anderson and Mr. Hillock testified that they, as well as Mr. Ward, signed the document. [6] Accordingly, I accept that the Offer of Employment was signed and that it represented a valid contract.
[8] Mr. Hillock testified that he and Mr. Ward endeavoured to be progressively minded in managing and operating the business of NIIA. When each of them had been a young adjuster working for a national firm, they regretted that they were not each given an opportunity to work as an independent contractor, rather than as an employee. Accordingly, in managing NIIA, they had determined that they would provide each adjuster with an opportunity to choose whether to work as an employee or as an independent contractor. Mr. Hillock was adamant in his testimony that, during the negotiations leading to Mr. Anderson’s entering into an arrangement with NIIA, Mr. Anderson was given such a choice, and he chose to create a corporation that would work on a contract basis for NIIA.
[9] For his part, Mr. Anderson took the opposite position in his testimony. He stated that it was his view that it would have been contrary to the laws and rules governing insurance adjusters in British Columbia for him to interpose a corporation between NIIA and himself, given that he, at that time, no longer had a Level 3 designation and was required to work under the supervision of a Level 3 adjuster. He was insistent that Mr. Hillock and Mr. Ward forced him to incorporate a corporation to which his compensation would be paid by NIIA, and that he did so reluctantly, in order to be paid.
[10] Mr. Anderson stated that, although the Offer of Employment provided for a start date of March 1, 2015, he began working for NIIA in mid-February 2015. Initially he was doing non-adjusting work, related to opening, equipping and supplying NIIA’s new office in Fort St. John. He could not begin to work as an adjuster until such time as NIIA had made an application to the ICBC to have him designated as an adjuster authorized to represent NIIA. That process was completed on February 24, 2015, at which time Mr. Anderson began to work on several adjusting files that were waiting for him. Mr. Anderson stated that NIIA agreed to pay him $2,500 for the work that he did in the second half of February, even though this was not mentioned in the Offer of Employment. Mr. Anderson testified that, when there was a delay in receiving such payment, causing him to inquire about the delay, he was told by Mr. Ward that he would not be paid until he had established a corporation to receive the payment. Accordingly, Mr. Anderson arranged for 188AB to be incorporated on March 13, 2015.
[11] In his testimony, Mr. Hillock did not say anything about NIIA agreeing to pay Mr. Anderson for work done by him in February. According to Mr. Hillock, the first payment made by NIIA occurred on March 15, 2015 and related to work done during the first 15 days of March. Mr. Hillock stated that, at no time, did NIIA threaten Mr. Anderson or state that no compensation would be paid until Mr. Anderson had incorporated. Mr. Hillock reiterated that it was the choice of Mr. Anderson to incorporate.
[12] When 188AB was incorporated, Mr. Anderson made arrangements for it to register the trade name Northern Claims Services. [7]
[13] On March 13, 2015, Mr. Anderson sent an email to Mr. Hillock and Mr. Ward, advising that 188AB had been incorporated on that day. As the email was relatively short, containing only two paragraphs, those paragraphs are set out below:
Here is the letter of incorporation. For banking purposes drafts should be submited [sic] under the doing business name of Northern Claims services [sic].
Is it possible to do the March 15 transaction via Email Transfer?. [sic] If so please let me know. [8]
[14] During cross-examination, Mr. Hillock acknowledged that, after Mr. Anderson chose to use a contractor arrangement, nothing was done to amend or replace the Offer of Employment. Mr. Hillock conceded that such a revision should have been made but, because NIIA was a relatively small operation and this was the first time that an adjuster had chosen a contractor arrangement rather than an employment arrangement, NIIA did not have the systems or protocols in place to document the arrangement properly.
[15] The Minister, through Mr. Hillock, introduced a bundle of cheques representing most of the compensation cheques paid by NIIA. [9] Those cheques cover the semi-monthly pay periods with end dates from March 31, 2015 to September 30, 2016, and two additional cheques dated January 9, 2018 and January 18, 2018. [10] Each of those cheques, as instructed by Mr. Anderson, was made payable to Northern Claims Services.
[16] No cheques were produced for the payment, if any, in respect of work done in late February 2015 or the work done during the first 15 days of March 2015. As noted above, in Mr. Anderson’s email of March 13, 2015, he asked Mr. Hillock and Mr. Ward whether it was “possible to do the March 15 transaction via Email Transfer.” [11] However, in his oral testimony, Mr. Anderson stated that “the first cheque was made out to Michael Anderson, and I deposited [it] in the bank account that I had created.” [12] Thus, it is unclear whether the payment on March 15, 2015 was made by email transfer or by cheque.
[17] Initially, NIIA mailed the compensation cheques to Northern Claims Services or to Mr. Anderson (the evidence was not clear as to the name of the addressee that was put on the envelopes in which the cheques were mailed) at either NIIA’s office in Fort St. John or Mr. Anderson’s residence in Grande Prairie. Mr. Anderson found that it took too long for those cheques to arrive in the mail, so he made arrangements with the office manager of NIIA in Terrace, which was the location of NIIA’s administrative office, to deposit the cheques directly into the bank account that Northern Claims Services had at a Canadian chartered bank. [13] Mr. Anderson referred to this as a direct deposit arrangement, but it is my understanding that it was not a situation where the money was transferred electronically from NIIA’s bank account directly to the bank account of Northern Claims Services. Rather, the arrangement involved the physical deposit of an actual cheque into the bank account of Northern Claims Services. [14]
[18] Mr. Anderson or 188AB (depending on one’s view of the matter) was entitled to be reimbursed for certain expenses incurred while working for NIIA. During the 19 months that Mr. Anderson or 188AB worked for NIIA, three reimbursement cheques were issued. Two of those cheques were made payable to Mr. Anderson, and one cheque was made payable to Northern Claims Services. Mr. Hillock said that it was an error on the part of NIIA to make two of the reimbursement cheques payable to Mr. Anderson, rather than following the latter’s instructions to make the cheques payable to Northern Claims Services.
[19] At some point in time, Mr. Anderson arranged for NIIA to open an office in Grande Prairie, Alberta. Apparently, this office was located in Mr. Anderson’s home.
[20] In March or April 2016, a decision was made to reduce the monthly draws from $5,000 to $4,000 and to increase the commission rate from 60% to 65%. [15] Mr. Hillock explained that this was done because the Fort St. John and Grande Prairie offices were less profitable than originally anticipated. Mr. Anderson stated that this was a unilateral decision made by NIIA, which was foisted upon him.
[21] Many of the cheques representing compensation paid by NIIA were in the amount of $2,500 (from March 31, 2015 to March 31, 2016) or $2,000 (from April 29, 2016 to September 30, 2016). For the months in which an additional commission was earned, the amounts of the cheques were greater (e.g., $2,885.50 on April 15, 2016, $5,110 on May 12, 2016 and $6,345.70 on July 15, 2016). Several of the semi-monthly cheques combined the semi-monthly draw (which may have occasionally included additional commission) and the reimbursement of automobile expenses (calculated on a per-kilometre basis). [16] It appears that, after Mr. Anderson or 188AB stopped working for NIIA, NIIA issued four additional cheques, apparently representing compensation for Mr. Anderson’s or 188AB’s work-in-progress (“WIP”) billed by NIIA after Mr. Anderson’s departure. [17]
[22] A variety of handwritten captions appeared in the lower left-hand corner of the various cheques. For instance, the caption “Mar 15-31st Contract Services” was used to describe the cheque dated March 31, 2015. While the handwriting is not clear, it appears that each cheque from April 15, 2015 to June 15, 2015 used the term “Contractor fees” after a notation of the chronological period covered by the cheque. The cheque dated June 30, 2015 used the caption “Contract sales June 15‑30”; and the cheque dated July 15, 2015 used the caption “Contract July 1‑15th.” The cheque dated July 30, 2015 showed the caption “June Mileage & Pay end July 30/15.” Other cheques simply provided the beginning and ending dates of the chronological period covered by the cheque, and, where applicable, a reference to automobile expenses. Notably, the cheque dated September 30, 2015 bore the caption “payroll Sept 15-30/15,” while the cheque dated October 15, 2015 contained the caption “Regular Draw.” From October 30, 2015 to January 18, 2018, the captions on all the cheques in evidence contained the phrase “Contract Services,” sometimes followed by the dates of the applicable chronological period or a reference to mileage or automobile expenses.
[23] No source deductions (in respect of income tax, EI premiums or Canada Pension Plan contributions) were withheld from any of the cheques representing draws, additional commissions or post-departure payments. [18]
[24] According to Mr. Hillock, during the general time frame that is the subject of these Appeals, six adjusters worked for NIIA. He did not indicate whether he and Mr. Ward were included in those six or whether they were in addition to those six. Four of those adjusters had chosen to work as employees and two of them (i.e., Mr. Anderson and another adjuster) had chosen to provide services through contractor corporations. [19] NIIA withheld source deductions from the compensation paid to the four employees, but not from the compensation paid to the two contractor corporations. At the end of 2015 and 2016, NIIA issued T4 slips to the four employees, but not to the two adjusters with contractor corporations. [20]
[25] When Mr. Anderson filed his T1 income tax return for 2015 on August 4 2016, he reported $1 of employment income. [21] He did not report any business income. Mr. Anderson stated that his accountant delayed filing the 2015 income tax return because she was trying, unsuccessfully, to obtain from NIIA a T4 slip in respect of Mr. Anderson. Mr. Anderson did not file a T1 income tax return for 2016. [22] During his testimony, Mr. Anderson explained that he could not file his income tax return for 2016 because his status (as an employee of NIIA or as a shareholder and employee of 188AB) had not yet been ascertained.
[26] While the evidence was not clear, it seems that 188AB did not obtain a business number from the CRA, nor did it file any T2 income tax returns with the CRA. As well, it seems that 188AB did not register under the Excise Tax Act (the “ETA”) for the purposes of the goods and services tax (the “GST”). [23]
[27] Unfortunately, in 2016 Mr. Anderson was injured in three motor vehicle accidents, each progressively worse than the preceding accident. The first accident occurred in March 2016, while Mr. Anderson was driving through a parking lot and his vehicle was T-boned by another vehicle backing out of a parking spot. [24] As a result of that accident, Mr. Anderson sustained a serious whiplash injury, followed by debilitating headaches, which necessitated physiotherapy and pain medication.
[28] A few months later, in August 2016, after a painful physiotherapy session, which necessitated the taking of pain medication, as Mr. Anderson was driving from Grande Cache to Grande Prairie, he fell asleep at the wheel, and his vehicle ran into the back end of a welding truck. [25] Mr. Anderson narrowly avoided being killed in that accident.
[29] On December 15, 2016, while returning from Prince George to Grande Prairie, Mr. Anderson was asleep in the passenger’s seat of the vehicle that his wife was driving. Due to poor road conditions, while crossing a bridge, she lost control of the vehicle, which went over the side of the bridge and down a steep embankment, rolling six times, before it came to rest in a deep gully. Mr. Anderson sustained “a fairly severe brain injury” in that accident. [26]
[30] The brain injury sustained in his third accident left Mr. Anderson with several disabilities. He has made remarkable, and perhaps miraculous, progress in recovering from his injuries. Nevertheless, Mr. Anderson explained that he has been left with cognitive issues and memory issues, although the memory issues relate more to short-term memory than to long-term memory. Mr. Anderson stated that he continues to “suffer from severe PTSD [post-traumatic stress disorder] as a result of the accident and circumstances surrounding [his] employment…,” and that he is still receiving treatment. [27]
[31] After the second accident, Mr. Anderson realized that his convalescence would take some time, and he wondered whether he was in a position to continue working. Accordingly, on September 8, 2016 he sent a letter to NIIA, to the attention of Mr. Hillock, requesting a leave of absence. [28] In that letter, after mentioning that his healthcare advisors had suggested that he should reduce his work and rest more during his convalescence, he stated the following in the context of employment insurance:
I do not qualify for EI benefits nor do we have a disability program either through your office or personally….
I query, therefore, are we covered under the WCB [Workers Compensation Board] program provincially, or any other program that I have overlooked[?] [29] [Emphasis added.]
IV. ANALYSIS
A. Employee or Independent Contractor
[32] Mr. Anderson claims that he was an employee of NIIA. The Minister asserts that Mr. Anderson worked for 188AB, which was a contractor hired by NIIA. There is no suggestion that Mr. Anderson himself was an independent contractor hired by NIIA. Nevertheless, the test used to determine whether an individual is an employee or an independent contractor may have some application in resolving the fundamental issue in these Appeals.
(1) Jurisprudence
[33] Although there is no universal test for determining whether a worker is an employee or an independent contractor, the “central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account.” [30] In making such determination, the following factors should generally be considered:
a) Does the hirer control the worker’s activities?
b) Does the hirer provide the tools and equipment required by the worker, or is the worker required to provide his or her own tools and equipment?
c) Does the worker hire his or her own helpers?
d) What is the degree of financial risk taken by the worker? In other words, does the worker have a risk of loss?
e) What is the degree of responsibility for investment and management held by the worker?
f) Does the worker have an opportunity for profit in the performance of his or her tasks? [31]
There is no set formula concerning the application of the above factors, which is a non-exhaustive list. [32]
[34] In the last two decades, the courts have noted the importance of considering the stated intention of the parties (i.e., the hirer and the worker) in determining whether the worker is an employee or an independent contractor. The role of intention was explained by the Federal Court of Appeal in Connor Homes in this manner:
30 Alongside the test as set out in Weibe Door and Sagaz, in the past few years another jurisprudential trend has emerged which affords substantial weight to the stated intention of the parties: Wolf v. The Queen, 2002 D.T.C. 6053 (F.C.A.) …; Royal Winnipeg Ballet v. Canada (Minister of National Revenue) 2006 FCA 87….
33 As a result, Royal Winnipeg Ballet stands for the proposition that what must first be considered is whether there is a mutual understanding or common intention between the parties regarding their relationship. Where such a common intention is found, be it as independent contractor or employee, the test set out in Wiebe Door is then to be applied by considering the relevant factors in light of that mutual intent for the purpose of determining if, on balance, the relevant facts support and are consistent with the common intent….
38 Consequently, Wolf and Royal Winnipeg Ballet set out a two step process of inquiry that is used to assist in addressing the central question, as established in Sagaz and Wiebe Door, which is to determine whether the individual is performing or not the services as his own business on his own account.
39 Under the first step, the subjective intent of each party to the relationship must be ascertained. This can be determined either by the written contractual relationship the parties have entered into or by the actual behaviour of each party, such as invoices for services rendered, registration for GST purposes and income tax filings as an independent contractor.
40 The second step is to ascertain whether an objective reality sustains the subjective intent of the parties. As noted by Sharlow J.A. in TBT Personnel Services Inc. v. Canada, 2011 FCA 256, … at para. 9, “it is also necessary to consider the Wiebe Door factors to determine whether the facts are consistent with the parties’ expressed intention.” In other words, the subjective intent of the parties cannot trump the reality of the relationship as ascertained through objective facts. In this second step, the parties[’] intent as well as the terms of the contract may also be taken into account since they colors [sic] the relationship. As noted in Royal Winnipeg Ballet at para. 64, the relevant factors must be considered “in the light of” the parties’ intent. However, that being stated, the second step is an analysis of the pertinent facts for the purpose of determining whether the test set out in Wiebe Door and Sagaz has been in fact met, i.e[.,] whether the legal effect of the relationship the parties have established is one of independent contractor or of employer-employee.
41 The central question at issue remains whether the person who has been engaged to perform the services is, in actual fact, performing them as a person in business on his own account. As stated in both Wiebe Door and Sagaz, in making this determination no particular factor is dominant and there is no set formula. The factors to consider will thus vary with the circumstances. Nevertheless, the specific factors discussed in Wiebe Door and Sagaz will usually be relevant, such as the level of control over the worker’s activities, whether the worker provides his own equipment, hires his helpers, manages and assumes financial risks, and has an opportunity of profit in the performance of his tasks….
42 … The first step of the analysis should always be to determine at the outset the intent of the parties and then, using the prism of that intent, determining in a second step whether the parties’ relationship, as reflected in objective reality, is one of employer-employee or of independent contractor. [33]
[35] In Insurance Institute of Ontario, while considering the application of the two steps in the test enunciated in Connor Homes, Justice Graham focused specifically on whether the result of the first step affects the application of the test in the second step. He concluded “that intention must be relevant when the Wiebe Door and Sagaz factors indicate that the relationship is one thing but the parties intended it to be another thing and their relationship is similar to what they intended.” [34] Concerning the application of the second step, Justice Graham stated:
26. Based on all of the foregoing, I conclude that the second step of the Connor Homes test should be applied as follows:
a) Where the payor and the worker do not share a common intention, their relationship will be the relationship indicated by the Wiebe Door and Sagaz factors.
b) Where the payor and the worker share a common intention:
if the Wiebe Door and Sagaz factors are consistent with that common intention, then their relationship will be the relationship that they intended;
if the Wiebe Door and Sagaz factors are completely inconsistent with that common intention, then their relationship will be the relationship indicated by those factors; and
if the Wiebe Door and Sagaz factors are inconsistent with that common intention but the parties nonetheless act and carry on their relationship in a manner that is similar to what one would expect from their intentions, then their relationship will be the relationship that they intended. [35]
(2) Application
[36] Following the guidance set out in Connor Homes, I will first consider whether there was a mutual understanding or common intention among NIIA, 188AB and Mr. Anderson regarding their relationship. I will then consider the factors identified in Sagaz and Wiebe Door in light of such mutual intent (if any) for the purpose of determining if, on balance, the relevant facts sustain and are consistent with such intent.
(a) Intention
[37] The evidence does not clearly establish that NIIA, 188AB and Mr. Anderson had a common intention one way or the other. Some of the evidence pointed to an intention to create a contractor relationship. For instance, Mr. Hillock testified that NIIA gave Mr. Anderson the choice to work as an employee or to incorporate a corporation that would be a contractor, and that Mr. Anderson chose the latter alternative. Mr. Anderson then arranged for 188AB to be incorporated and directed that the compensation cheques be deposited into the bank account of 188AB. In advising NIIA of the name of his new corporation, Mr. Anderson also provided the corporation’s trade name, which Mr. Anderson described as its “doing business name.”
[38] Other evidence pointed to an intention to create an employment relationship. For instance, the document that Mr. Hillock, Mr. Ward and Mr. Anderson signed at their meeting in February 2015 was entitled “Offer of Employment.” 188AB did not issue invoices to NIIA. 188AB did not register with the CRA in order to obtain a GST number, nor did 188AB collect GST from NIIA. [36] There was no evidence of 188AB having filed a corporate income tax return to report business income. The business cards used by Mr. Anderson showed only his name, and made no reference to 188AB. [37] As well, Mr. Anderson was adamant during his oral testimony that he had intended to be an employee of NIIA.
[39] A further possibility is that, in 2015 and 2016, Mr. Anderson and NIIA (as represented by Mr. Hillock and Mr. Ward) did have a common intention to the effect that 188AB was an independent contractor hired by NIIA to provide insurance adjusting services, but that, sometime after Mr. Anderson stopped working, his understanding or recollection of the arrangement underwent a change (perhaps due to the brain injury that he sustained in the third motor vehicle accident). Regardless of the underlying reason for the differing views of Mr. Anderson and Mr. Hillock, it is clear that, when these Appeals were commenced and when they were heard, Mr. Anderson, 188AB and NIIA did not share a common intention concerning the nature of their former relationship. Given the current lack of consensus among Mr. Anderson, 188AB and NIIA, I will assume, for the purposes of the Sagaz, Wiebe Door and Connor Homes analysis, that there was no clearly established common intention in 2015 and 2016 as to the nature of the relationship among those parties.
[40] Having completed the first Connor Homes step, without having conclusively found a common intention to have created either a contractor relationship or an employment relationship, I now move to the second Connor Homes step, and embark on an analysis of the Sagaz and Wiebe Door factors, with a view to determining the nature of the former relationship among Mr. Anderson, 188AB and NIIA.
(b) Control
[41] As Mr. Anderson was not a Level 3 adjuster in 2015 and 2016, he was required by the applicable legal and regulatory regime to work under the supervision of a Level 3 adjuster, such as Mr. Hillock or Mr. Ward. Thus, insofar as the legal and regulatory regime was concerned, it could be said that NIIA had an element of control over Mr. Anderson. On the other hand, Mr. Anderson was at Level 2 only because he had left the adjusting profession for several years before returning to the profession in 2015. Mr. Hillock testified that Mr. Anderson was an experienced senior adjuster, who had previously attained Level 3, who had been a branch manager, who had technical skills, and who could do his own reports to insurers without supervision. [38] Furthermore, Mr. Anderson had previously owned and managed his own adjusting firm. [39] Mr. Hillock testified that he did not exercise any control over the manner in which Mr. Anderson organized or performed his adjusting activities, [40] and that “Mr. Anderson basically worked on his own.” [41]
[42] It is my understanding that, although NIIA held the license under which Mr. Anderson worked, NIIA did not control the manner in which he investigated accidents, interacted with insureds, claimants and other adjusters, drafted his reports to the insurers which he represented, or otherwise adjusted claims. In other words, although, for the purposes of the ICBC’s rules, Mr. Anderson was authorized to represent NIIA, and NIIA was in a position to control the result or quality of work done by Mr. Anderson, that circumstance did not constitute control by NIIA over the performance by Mr. Anderson of his insurance adjusting activities. [42]
(c) Tools and Equipment
[43] NIIA provided Mr. Anderson and 188AB with an office in Fort St. John, a laptop computer, computer software (including software customized for insurance adjusters), an internet connection, utilities and office supplies. [43] Mr. Anderson was required to provide his own vehicle, cell phone and camera, although he or 188AB was reimbursed for certain vehicle operating expenses and phone expenses, and he was paid $2 for every photograph that he took on his own camera in his capacity as an adjuster and that was used on a client file. When NIIA opened an office in Grande Prairie, that office was situated in Mr. Anderson’s home. There was no evidence to suggest that NIIA paid rent to Mr. Anderson for the home‑office space or that NIIA reimbursed Mr. Anderson for the business-related portion of occupancy costs, such as utilities, insurance or property taxes.
(d) Hiring of Helpers
[44] There was no detailed evidence as to whether any helpers were hired, either by Mr. Anderson or 188AB, to assist him or it in his or its adjusting responsibilities. However, when Mr. Anderson arranged for NIIA to have a rented post office box in Grande Prairie, Mr. Anderson’s wife was designated as an additional person who was authorized to pick up the mail. [44] After Mr. Anderson’s second motor vehicle accident in 2016, his wife sometimes drove for him on work‑related trips. [45] There was no evidence as to whether she was paid for picking up the mail or for driving.
(e) Risk of Loss
[45] There was no evidence of Mr. Anderson or 188AB having sustained a loss in 2015 or 2016. Given that fixed semi-monthly draws of $2,500 or $2,000 (before or after March/April 2016 respectively) were paid by NIIA to 188AB, and given that many of the expenses incurred by Mr. Anderson or 188AB were reimbursed by NIIA, it seems unlikely that there was a significant risk of incurring a loss. Nevertheless, Mr. Anderson or 188AB could have incurred a loss if the unreimbursed expenses had exceeded the aggregate of the draws for a particular fiscal period. Furthermore, Mr. Anderson’s use of his vehicle in the course of his work posed its own risks, as indicated in Dynamex Canada:
The contract also carried with it the risk for [the appellant] of significant loss. Traffic fines, damage to his vehicle and the potential for liability to others for damage caused in the course of the work were all potential sources of loss. Some of these risks were significant, and some he could insure against. Indeed, he was required to insure against liability to third parties. But the potential for unforeseen losses is always a hazard in those cases where the worker provides the vehicle at his own expense. [46]
(f) Responsibility for Investment and Management
[46] There was no evidence that related to this particular factor.
(g) Opportunity for Profit
[47] The agreement under which Mr. Anderson or 188AB worked clearly provided a chance for profit. Initially the compensation was set at monthly draws of $5,000 (i.e., $2,500 in mid-month and $2,500 at month end). The monthly draws later changed to $4,000 (i.e., $2,000 in mid-month and $2,000 at month end). In addition, Mr. Anderson or 188AB was initially entitled to 60% of any billings for his or its work to the extent that the billings exceeded $5,000 per month. In March or April 2016, the commission rate changed to 65% of any billings in excess of $4,000 per month. This was a target that was achievable, as evidenced by compensation cheques paid to Northern Claims Services in the amounts of $2,885.50 on April 15, 2016, $5,110 on May 12, 2016, $6,345.70 on July 15, 2016, $7,851.30 on January 9, 2018 and $4,205.85 on January 18, 2018. [47] In addition, the table that is the first page of Exhibit R-5 indicates that compensation cheques in the amounts of $1,336 and $6,097.25 were paid by NIIA to 188AB on December 15, 2016 and January 13, 2017 respectively. [48]
[48] Mr. Anderson had a reputation as an experienced insurance adjuster. That reputation attracted business for NIIA. In particular, Mr. Anderson had contacts with three insurers, to which he referred as “Mutual Fire, SGI, [and] Intact Insurance,” which would have provided him with a greater opportunity to earn commissions. [49] In addition, from time to time Mr. Anderson, sometimes with Mr. Hillock and Mr. Ward, went on various marketing trips. [50]
(h) Weighing and Balancing
[49] In my view, the control test, when viewed in the context of the working arrangements (as distinct from the context of governmental regulation), points to contractor status. The tools and equipment test is somewhat balanced. While the hiring of helpers test may be a neutral factor, it might possibly suggest contractor status, depending on the circumstances of Mrs. Anderson, which were not fully established in the evidence. The opportunity for profit test clearly supports contractor status, while the risk of loss test points in both directions. The responsibility for investment and management test is not relevant based on the evidence presented at the hearing.
[50] Disregarding the interposition of 188AB between NIIA and Mr. Anderson, on balance, the Sagaz and Wiebe Door factors point toward contractor status. The question is to what extent, if any, the presence of 188AB impacts the analysis. Before considering that question, however, it would be helpful to discuss the concept of the continuum between an employee and an independent contractor.
B. Continuum Between an Employee and an Independent Contractor
[51] Counsel for Mr. Anderson referred me to the decision of the Supreme Court of British Columbia in Pasche v. MDE Enterprises Ltd. [51] That case involved a claim for wrongful dismissal by a worker, who had not incorporated and who claimed to be an employee, while the entity for which the work was done asserted that the worker was an independent contractor. In its decision, the BC Supreme Court acknowledged that in recent years various courts have held that there is an intermediate category in “the continuum between an employee and an independent contractor.” [52] In Pasche, the Court quoted the following statement by the BC Supreme Court in an earlier case:
The jurisprudence of employment law has, in relatively recent times, evolved to recognize the realities of the modern workplace and the fact that the relationship between workers and those to whom they provide their services are not simply binary -- either employee-employer or independent contractor. In a number of decisions, the courts have come to acknowledge that there are a variety of different arrangements that the parties may have. The approach to be taken is to examine the situation from a functional perspective.
The result has been the recognition of relationships that fall within an area between the two traditional models…. [53]
[52] In British Columbia, these hybrid or mid-continuum cases are sometimes referred to as “intermediate” cases. [54] In Ontario, such relationships are typically described as “dependent contractor” relationships. [55]
[53] In Pasche, the Court also quoted the following statement by the BC Supreme Court in another case:
As a general proposition, a person on an employer’s payroll and for whom the employer makes conventional statutory deductions from his pay will be considered to be an employee. If his contract does not provide otherwise, that person is entitled to reasonable notice of termination of his employment. An independent contractor, on the other hand, is not an employee. Between those two states lies a construct of the common law: the dependent contractor. The dependent contractor is not on payroll, but in most other ways operates and is treated as an employee. A dependent contractor is entitled to reasonable notice of termination of his contract. [56]
In the Pasche case, the Court concluded that the plaintiff was not an employee or an independent contractor, but was a dependent contractor. Significantly, in Pasche, the Court held that a dependent contractor is not an employee. [57]
[54] Pasche and some of the cases cited therein stated that, in a wrongful dismissal context, some of the protections available to an employee, such as adequate notice of termination, are also available to a dependent contractor. I am not certain that that principle may be expanded and extrapolated to the determination of a worker’s status in the context of the EIA and the CPP. Furthermore, as noted above, Pasche indicated that a dependent contractor is not an employee.
[55] Subsection 5(1) of the EIA makes it clear that, apart from service in the Canadian Forces or a police force, the term insurable employment requires that there be employment in one of four specified categories. [58] Similarly, the definition of the term pensionable employment in subsections 2(1) and 6(1) of the CPP makes it