COURT FILE NO.: CV-19-00000438-0000 DATE: 2022/03/02

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1159273 Ontario Inc., Plaintiff (Moving Party) AND The Westport Telephone Company Limited, Defendant (Responding Party)

BEFORE: Mr. Justice Stanley J. Kershman

COUNSEL: Christopher Moryto, for the Plaintiff (Moving Party) Jeffrey Lanctot, for the Defendant (Responding Party)

HEARD: November 26, 2021 by Zoom at Kingston

DECISION ON MOTION FOR SUMMARY JUDGMENT

Introduction

[1] The Plaintiff, 1159273 Ontario Inc. (“115”), brings a Motion for Summary Judgement with respect to all of the claims made by it in its Amended Statement of Claim including damages for wrongful dismissal, HST, and interest.

[2] Thomas Lynn will be referred to as “Tom” and Steven Lynn will be referred to as “Steve” in this decision. This is not to suggest familiarity with any of the parties or to show disrespect to either of them.

Factual Background

[3] 115 is a corporation incorporated pursuant to the laws of Ontario and is controlled and owned, directly or indirectly, by Tom and his immediate family. Tom is 63 years old and resides in Westport, Ontario. He and thereafter the Plaintiff provided contracting services to the Defendant prior to the Plaintiff being terminated by the Defendant.

[4] The Defendant, The Westport Telephone Company, Limited (“WTC”) is a corporation incorporated pursuant to the laws of Ontario and provides telecommunications services for customers in the eastern Ontario area. Its headquarters are located at 28 Main Street, Westport, Ontario. Steve, directly or indirectly, owns more than 50 percent of the Defendant’s shares.

[5] Tom personally provided services to the Defendant as an employee between 1977 and 1996. Although the nature of the services did not change, Tom began providing services as a contractor to the Defendant through the Plaintiff starting in 1996. Tom’s employment was not formally terminated prior to providing services to the Defendant through the Plaintiff.

[6] From 1996 until it was terminated, the Plaintiff, who used Tom exclusively for the services, provided the following:

(a) worked full-time for the Defendant (on average 40 hours or more per week); (b) held the title of “Director of Technical Services” (an executive level position); (c) was responsible for providing engineering and technical advice on telecommunication network design to the Defendant; (d) was responsible for supervising, managing, and disciplining the Defendant’s employees; (e) was subject to the supervision and policies of the Defendant and helped to sell and support the Defendant’s products; (f) worked the Defendant’s typical hours of operation and outside work hours, as required to fulfil the duties of its position; (g) made use of its own laptop, cell phone, and vehicle but received property and other support from the Defendant for performing its services, including use of the premises, an office, and access to the Defendant’s support staff and tools and equipment; (h) carried a business card of the Defendant with a title from the Defendant; (i) was not known to the public and did not advertise or have a website offering its services; (j) was a shareholder in WTC either personally or through 115; and, (k) was an officer and director of the Defendant.

[7] At the time of termination, the Plaintiff, in exchange for providing contracting services to the Defendant, billed $12,083.33 per month plus HST or approximately $145,000 per year plus HST. The Plaintiff also received a bonus of $15,000 in 2018. The bonus for 2019 was expected to be $15,000.

[8] From August 1996 until February 2014, 115 held an ownership interest in WTC of between 21.5 percent and 29 percent. In February 2014, 115’s shares of WTC were transferred to a non-arm’s length corporation being 2408914 Ontario Inc. (“240”). The 240 shares were sold at arm’s length to a third party in September 2019.

[9] At times, the Plaintiff also held direct or indirect ownership interests in and received contract revenue (“Contract Revenue”) from North Leeds Bus Lines Ltd. (“NLBL”), North Leeds Cablecom Inc. (“NLCC”), LynnX Networks Inc. (“LYNNX”) and Trio Networks Inc. (“TRIO”) (collectively the “Ancillary Companies”). The Ancillary Companies were all related to the Defendant. NLCC was purchased as part of a strategy to protect the Defendant from cable company competition. LYNNX and TRIO were both incorporated to hold ownership in fiber optic facilities that benefited the Defendant. According to Tom, the Plaintiff’s interests in the Ancillary Companies had no effect on his job performance as Director of Technical Operation for the Defendant nor did it affect the number of hours that the Plaintiff/Tom spent working for the Defendant.

[10] According to Tom, throughout the parties’ contracting relationship, the majority of the Plaintiff’s Contract Revenue came from the Defendant. The Plaintiff also received other income, mostly in the form of investment income (partly consisting of WTC dividends).

[11] Tom served as president of WTC from September 27, 1995 to May 28, 2010. Thereafter he served as vice president until his resignation in 2019.

[12] In addition, Tom was a director of WTC from September 25, 1991 to June 20, 2019.

[13] WTC wrote a letter on July 19, 2019 to 115 advising that because of the sale of 240’s shares to a third party, the Plaintiff’s services provided under the business name of TTJ Technical Consultants (“TTJ”) would not be required after August 31, 2019. WTC was prepared to pay three months of consulting fees after terminating the consulting services as of June 31, 2019. This offer was not accepted by 115 and/or Tom (“115/Tom” or “115 and/or Tom”).

[14] Tom was 61 years old when WTC terminated 115’s services by letter dated November 4, 2019.

Issues

[15] The issues to be determined on this summary judgment motion are as follows:

(a) Is this action suitable for summary judgment? (b) Was the Plaintiff a dependent or independent contractor? (c) If the Plaintiff is found to be a dependant contractor, what is his entitlement to reasonable notice?

Issue #1 - Is this Action Suitable for Summary Judgment?

Plaintiff’s Position

[16] The Plaintiff relies on rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[17] In addition, the Plaintiff relies on the case of Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, in which the Supreme Court of Canada outlined, at para. 66, a two-step approach to be taken in deciding whether the summary judgment procedure is appropriate:

[T]he judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

[18] The Plaintiff argues that the courts in Ontario have granted summary judgment where contracting status and reasonable notice (including mitigation efforts) are disputed, noting that a claim for wrongful termination is straightforward and well-suited to a summary judgment motion. The Plaintiff relies on the following cases:

(a) Tetra Consulting v. Continental Bank et al., 2015 ONSC 4610, at paras. 12, 13; (b) Arnone v. Best Theratronics Ltd., 2014 ONSC 4216, at para. 17, aff’d in part 2015 ONCA 63, at paras. 12, 13, leave to appeal refused, [2015] S.C.C.A. No. 140; and, (c) Merritt v. Tigercat Industries, 2016 ONSC 1214, at para. 26.

Defendant’s Position

[19] The Defendant agrees that rule 20.04(2.1) of the Rules of Civil Procedure is the rule for determining matters by way of summary judgment.

[20] The Defendant also agrees that rule 20.04(2.1) of the Rules of Civil Procedure sets out the powers of judicial assessment. They acknowledge that Hryniak is the leading case.

[21] The Defendant also relies on the case of Canadian Premier Life Insurance Company v. Sears Canada Inc., 2010 ONSC 3834, 91 C.C.L.I. (4th) 120, in which Pepall J. suggested the following principles for deciding the summary judgement motion, at para. 70:

To sum up, it seems to me that new Rule 20 should be interpreted based on the following principles:

• The court must be satisfied that there is no genuine issue requiring a trial. • To be satisfied, the court may weigh the evidence, evaluate the credibility of a deponent, draw any reasonable inference from the evidence, and order that oral evidence be presented. By implication, these powers may involve the making of factual findings including a finding of a material fact. • The motions judge should take a hard look at all of the evidence to determine whether there is a genuine issue requiring a trial. • The burden of proof to establish that there is no genuine issue requiring a trial is on the moving party. • The respondent may not rest solely on the allegations or denials in its pleading. • Each side should put its best foot forward. • The Rule should be interpreted broadly so as to achieve the objectives of reduction of delay and costs, access to justice, and flexibility. At the same time, it must be acknowledged that elimination of trials is not an objective. At its core, justice is the ultimate objective. It is not to be sacrificed in the interests of speed and economy. That said, Rule 20 clearly contemplates that justice, speed and economy are not mutually exclusive attributes.

Analysis

[22] Rule 1.04 of the Rules of Civil Procedure provides that the rules are to be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

[23] Furthermore, rule 1.04(1.1) allows the court to make orders and give directions that are proportionate to the importance and complexity the issues, and to the amount involved, in the proceeding.

[24] The court agrees that rule 20.04(2.1) is the governing rule related to summary judgment, and that Hryniak is the leading case related to summary judgement in Canada and set out the principles thereof.

[25] The court finds that the issues argued on this motion are capable of being decided by way of summary judgment.

Issue #2 – Was the Plaintiff a Dependent or Independent Contractor?

Plaintiff’s Position

[26] The Plaintiff argues that it was a dependent contractor for the Defendant. It relies on the case of Keenan v. Canac Kitchens, 2015 ONSC 1055, at para. 17, aff’d 2016 ONCA 79.

[27] The Plaintiff argues that the court in McKee v. Reid's Heritage Homes Ltd., 2009 ONCA 916, 315 D.L.R. (4th) 129, at para. 39, and elaborated on in Keenan, at paras. 18-21, held that the following factors are to be reviewed on a contextual and case-by-case basis in determining dependent contractor status:

(a) Whether or not the agent was limited exclusively (or near exclusivity) to the service of the principal; (b) Whether or not the agent is subject to the control of the principal, not only as to the product sold, but also as to when, where and how it is sold; (c) Whether or not the agent has an investment or interest in what are characterized as the tools relating to his service; (d) Whether or not the agent has undertaken any risks in the business sense or, alternatively, has any expectation of profit associated with the delivery of his services as distinct from a fixed commission; and, (e) Whether or not the activity of the agent is part of the business organization of the principal for which he works. In other words, whose business is it?

Exclusivity

[28] The Plaintiff argues that it had the requisite exclusivity with the Defendant to demonstrate its status as a dependent contractor. The Plaintiff was economically dependent on a vast majority of its contracting income from the Defendant and for all the years almost exclusively provided services to the Defendant. Contracting income from other entities constituted a minor portion of yearly and overall contracting income of the Plaintiff throughout its relationship with the Defendant. It relies on the case of Thurston v. Ontario (Children’s Lawyer), 2019 ONCA 640, 2019 C.L.L.C. 210-066, at para. 30, to discuss the definition of “near exclusivity”.

[29] The Plaintiff also relies on the case of Filiatrault v. Tri-County Welding Supplies Ltd., 2013 ONSC 3091, 2013 C.L.L.C. 210-038, another dependent contractor case in which additional income did not factor into the court’s decision-making process.

Control

[30] The Plaintiff argues that the Defendant had control over the Plaintiff because the Plaintiff, through Tom: (i) worked fulltime for the Defendant; (ii) worked the Defendant’s usual hours and such outside work hours as required to fulfil its role; (iii) held a title provided by the Defendant; and (iv) was subject to the supervision and policies of the Defendant’s board of directors and was required to sell and support the Defendant’s products to its customers.

Provision of Tools

[31] The Plaintiff argues that it was provided with tools from the Defendant to perform its services. The Plaintiff had access to and relied on the use of the premises, an office, and the Defendant’s support staff. Though the Plaintiff provided its own laptop, cell phone, and vehicle, the necessary reliance on office use and support services to provide services is demonstrative of its dependent contractor status, similar to the contractors in Keenan.

Business Risk or Expectation of Profit

[32] The Plaintiff argues that it did not have business risk or an expectation of profit when performing its services for the Defendant. Although from 1996 until 2014 the Plaintiff’s shares in the Defendant increased in value and paid out a yearly dividend, said investment returns were received by the Plaintiff in its capacity as a shareholder. In the Plaintiff’s capacity as Director of Technical Operations and as a dependent contractor, it did not undertake any business risk or expect to earn a profit, as it earned a fixed amount of compensation each month plus a modest bonus.

Integration

[33] The Plaintiff argues that it was integrated into the Defendant’s operations due to the features of the Plaintiff’s role outlined in paragraph 6 above. Providing technical advice on and support to network design is an integral component of a telecommunications corporation normally performed by employees. The Plaintiff was not differentiated from the Defendant when presented to the outside world or in organizational charts produced by the Defendant.

Defendant’s Position

[34] The Defendant argues that the documentary evidence attached to Steve’s responding affidavit for WTC dated July 7, 2021 proves that both Tom and 115 were not economically dependent on WTC because neither Tom nor 115 provided management services exclusively to WTC and, in fact, they earned substantial income from other sources and from Tom’s role as owner, operator, director, officer, consultant, and manager in various other companies.

[35] The Defendant argues that the principal issue to be decided is whether 115 is a dependent or independent contractor. WTC argues that as an independent contractor, 115 would not be entitled to damages for wrongful termination and accordingly, its claim should be dismissed in its entirety: Jack Ganz Consulting Ltd. v Recipe Unlimited Corporation, 2020 ONSC 3319, at para. 135.

[36] The Defendant submits that the Ontario Court of Appeal has identified that there is an intermediate position of “dependent contractor” that exists between the status of an employee and the status of an independent contractor. This intermediate category is differentiated from employee and independent contractor categories by the degree of economic dependency that exists in the working relationship between the contractor (worker) and the business organization that engages the worker: McKee, at paras. 22, 30.

[37] More particular to this case, the Defendant argues that a worker will be categorized as a dependent contractor as opposed to an independent contractor when the worker is completely, or almost completely, economically dependent on the Defendant: Jack Ganz, at para. 115.

[38] 115 alleges that it is a dependent contractor of WTC because it is completely, or almost completely, dependent economically on WTC. To prove this, the Defendant argues that 115 must demonstrate that it was economically dependent on WTC to such a degree that its total contract billings were exclusively earned either completely or near-completely from WTC: McKee, at para. 30; Wyman v. Kadlec, 2014 ONSC 4710, at para. 27.

[39] The Defendant argues that in order to answer this question, the Ontario Court of Appeal has directed that “exclusivity cannot be determined on a ‘snapshot’ approach because it is integrally tied to the question of economic dependency”: Keenan, at para. 25. Therefore, a determination of exclusivity must involve a full consideration of the relationship’s total history: Fisher v. 6007325 Canada Inc., 2017 ONSC 5943, C.C.E.L. (4th) 121, at para. 4.

[40] Then, after examining this full history, the Defendant argues that it is for the court to determine whether the worker was economically dependent on the company, due to exclusivity or a high level of economic dependence: Keenan, at para. 25.

[41] To measure the difference between dependent and independent contractors, the Defendant relies on the Ontario Court of Appeal’s decision in McKee, which made it clear that exclusivity of service is measured by the relative proportion of income earned from the business organization that they allege dependency upon relative to other sources of income. As the Ontario Court of Appeal put it: “exclusivity is determinative, as it demonstrates economic dependence” and, as such, exclusivity, the court said, is a “hallmark” for identifying a dependent contractor: Thurston, at para. 25.

[42] The Defendant argues that to be economically dependent in this sense, a worker must demonstrate with admissible and cogent evidence that substantially more than a majority of the dependent contractor’s income was earned from that one contract source alone. Otherwise, the worker will be found to be an independent contractor and not entitled to damages for pay in lieu of notice: Thurston, at para. 27.

[43] The Defendant submits that although additional facts may be relevant in determining economic dependency, “near exclusivity” requires proof that substantially more than 50 percent of billings by the worker are received from that one contract source: Jack Ganz, at para. 114; Thurston, at para. 30.

[44] In assessing that question, the Ontario Court of Appeal in Thurston left open the question of whether a finding of exclusivity would be negated if such exclusivity and economic dependence was self-induced (created by action taken by the claimant contractor in the first place). In that regard, the Divisional Court confirmed a trial judge’s finding of fact that the subject worker’s alleged economic dependency was self-induced was correctly considered in the trial judge’s decision, which found the worker was not a dependent contractor: Fisher, at para. 5.

[45] The Defendant argues that the evidence on this motion demonstrates that 115 was not economically dependent upon WTC because it did not earn all or nearly all of its income from WTC contract services, and, further, that any limited economic dependence 115 had upon WTC in more recent years was created by the extensive and complicated corporate transactions undertaken by Tom to minimize taxes and prepare for retirement.

[46] Furthermore, WTC argues that self-induced economic dependency would not necessarily make a worker a dependent contractor: Fisher, at para. 5.

[47] WTC argues that there may be other factors that are relevant to determining this issue. It argues that “control” and “dependency” work together synergistically to create employment relationships that are closer to an employee/employer relationship than an independent contractor/contract provider relationship: McCormick v. Fasken Martineau DuMoulin LLP, 2014 SCC 39, [2014] 2 S.C.R. 108, at paras. 42, 45.

Analysis

WTC and The Ancillary Companies

[48] WTC was a family business started at least one generation before Tom and Steve. It included several related businesses, being the Ancillary Companies, which included bus lines, a cable company, and fibre optics facilities.

[49] Both Tom and Steve were principals of WTC, initially as individual shareholders. As the businesses grew, Tom and Steve incorporated companies to hold their shares and receive remuneration. This structure was recommended by their accountants, Arthur Andersen and Co. Chartered Accountants (“Arthur Andersen”), and/or lawyers for taxation and estate planning purposes, all of which are allowable under current Canadian tax laws.

[50] As the business grew, so did the value of the various companies.

[51] Tom started as an employee with WTC in 1977, when he was 17 years old. He continued his employment until 1996, when 115 was incorporated.

[52] Tom became a WTC shareholder in April 1979, owning three shares. His shareholdings increased until 1995, when he owned 136 of WTC’s shares. These shares were then transferred to 115.

[53] 115 later acquired further shares in WTC, bringing its total shareholdings to 185 shares.

[54] According to the information provided by the Defendant, dividends started being paid in 1995. Shortly thereafter, 115 was incorporated and it received dividends from 1996 to 2013, totalling $528,520.

[55] 240 received dividends from 2014 to 2019, totalling $444,000.

[56] Tom became a director of WTC on September 25, 1991 and remained until he resigned on June 20, 2019. He also served as president of WTC from September 27, 1995 to May 28, 2010. Thereafter, he served as vice president until his resignation in 2019. Tom worked for 115 from its date of incorporation.

Tom’s Employment and WTC

[57] In 1977 when Tom started working for WTC, he was an employee working for wages. He had a social insurance number and paid source deductions including income tax, Canada Pension Plan, and unemployment insurance. Tom voluntarily incorporated 115 based on instructions from Arthur Andersen. He became a shareholder, officer, and director of 115, which was a separate legal entity from Tom. 115 has no social insurance number. Based on the amount of its billings, it has a HST number.

[58] The court finds that when Tom became a shareholder, officer, and director of 115, his status as an employee at WTC was terminated, notwithstanding that no formal record of employment was generated.

115273 Ontario Inc.

[59] In his first affidavit, Tom says that it was at WTC and Steve’s request that he began to provide services as a dependent contractor. The evidence does not bear this out.

[60] 115 was incorporated at the suggestion of Arthur Andersen, who recommended the incorporation as part of a tax and estate planning strategy.

[61] A letter from Arthur Andersen is dated August 13, 1996 and is addressed to both Tom and Steve. On page 2, it sets out the objectives:

There are several objectives that the Lynn’s have at this time. The main objective is to be able to provide cash to acquire additional shares in Telephone. Currently, Steve and Tom use after tax dollars in order to be able to acquire shares that become available in Telephone. The second objective is to split income with other family members and to allow other family members to avail themselves in the future of the $500,000 small business capital gains deduction.

[62] The letter goes on to set out the plan. In terms of implementation, the letter recommends that each family establish a trust for their children, with the children’s parents and a trusted family friend or advisor as trustees.

[63] The letter goes on to set out the specifics, which in part says:

Tom will transfer into his management company the shares he currently owns personally in Telephone and Bus Lines. It should be accomplished using section 85 of the Income Tax Act. We recommend that the shares be transferred to the management company at a value sufficient to crystallize a gain of $400,000. The cost basis, therefore, of the shares of Telephone will be increased by $400,000. If the balance of the shares are ever sold, the $400,000 will not be subject to tax in the future. We understand the shares owned by Tom of Telephone have a value of $600,000. He will therefore transfer those shares at the value of $400,000. He would take back preference shares of his management company redeemable and retractable at $600,000. We understand that Bus Lines is worth $150,000. The shares he should take back are also preference shares redeemable and retractable at $150,000. The shares of Cablecom currently owned by Bus Lines have a value of $100,000. The shares should be sold by Bus Lines Management Co. for a note payable of $100,000. It is essential that the management companies’ assets are all to be used in an active business or in shares of debt of a Small Business Corporation.

[64] Both Tom and Steve incorporated companies to effect this strategy. Tom’s company was 115, which was incorporated under Ontario’s Business Corporations Act, R.S.O. 1990, c. B.16.

[65] Steve incorporated 1159272 Ontario Inc.

[66] 115 was incorporated on February 23, 1996. On August 28, 1996, Articles of Amendment were filed to amend the class and maximum number of shares.

[67] Further Articles of Amendment for 115 were filed on February 25, 2014 to review and revise the class and number of shares.

[68] Prior to 115 being incorporated, the court understands that Tom was strictly an employee. After 115 was incorporated, Tom began to use an unregistered business name of TTJ Technical Consultants. All invoices billed to WTC were under the name of TTJ.

[69] The evidence is that 115 owned 29 percent of WTC’s shares. As stated previously, at various times Tom was the president, the vice president, and a director of WTC.

[70] According to Tom, he owned approximately one third of the voting shares in WTC.

[71] The court finds that Tom incorporated 115 based on his accountant’s advice, which was to benefit Tom and his family members from both income tax and estate planning perspectives.

[72] The court finds that TTJ was a tradename used by 115. Any invoicing done by TTJ to WTC was on behalf of 115, whether TTJ was a registered business name or not. The court finds that the non-registration of the business name would not change the outcome of this case.

[73] From 2015 onwards, the monthly invoicing done by TTJ was always for the same amount no matter how many hours were worked or how much time was taken off for things like vacation. Prior to 2015, the invoice amounts were lower and were consistently for the same amount each month.

[74] Based on the evidence, the court finds that Tom never filed timesheets. Other employees were required to do so. Those employees were either salaried or paid by the hour.

[75] The court finds that the work done by TTJ for WTC was not billed on an hours-worked basis but on a monthly basis, notwithstanding how many hours Tom spent on WTC work. The billing amount was the same every month from 2015 until 2019. The same finding is made for the time period prior to 2015. Therefore, based on the fact that Tom submitted no timesheets and that the monthly billing amount was the same in each month, the court finds that there was no requirement for Tom to work a certain number of hours for WTC.

2408914 Ontario Inc

[76] 240 was incorporated on February 28, 2014 in Ontario.

[77] Tom presented a letter from 115 to WTC’s Board of Directors, dated February 20, 2014, seeking to transfer 115’s 185 shares of WTC to 240 as of February 28, 2014. A WTC Board of Directors’ resolution was passed approving the transfer of those shares.

[78] The court notes a discrepancy in that the letter is dated February 20, 2014, which is prior to 240’s date of the incorporation. The court does not make any negative inferences from this discrepancy.

[79] Therefore, as of February 28, 2014, 240 owned the 185 WTC shares formerly owned by 115.

[80] At the same time, 115 through TTJ continued to provide services and bill WTC.

[81] According to Tom at his cross-examination, The Penny and Tom Lynn Trust (“Lynn Trust”) was created on February 28, 2014. The Lynn Trust held 115’s common shares. Tom and his wife were the trust’s settlors. Tom said that the trust was created for tax savings and for distributing money to family members, including their two children.

[82] On September 30, 2019, 240 sold its shares in WTC to Mr. Robert Stanton, a third party. The purchase price was $4 million, of which $2,850,000 was paid in cash and $1,150,000 was to be paid over an eight-year period in equal yearly installments of $143,750. The first payment was to be made on September 30, 2020.

[83] Tom’s evidence was that from 2018 to 2019, he wanted to sell his shares. He offered the shares to Steve first, but they could not come a mutually acceptable arrangement. Thereafter, Tom offered to sell the shares to Mr. Stanton. According to Tom, a price was agreed upon with Mr. Stanton. Steve did not want Mr. Stanton as a shareholder and told him so. According to Tom, he continued with the sale to Mr. Stanton although at a reduced price. There was no evidence as to how much the original price was.

[84] Tom thought that he could continue at WTC even though he was selling the shares to a third party that Steve opposed and that everything would continue as it had in the past, with WTC retaining 115 for services on the same basis as prior to that share sale.

[85] WTC did offer Tom the opportunity to provide it with contracting services by way of a contract including specific terms that 115/Tom was to be an independent contractor. The contract was not accepted.

[86] WTC provided options to Tom in a letter dated November 4, 2019. As it turned out, WTC withdrew the offer and the options it contained.

[87] Tom takes the position that 115 was a dependent contractor, dependent on WTC for some, if not all, of the 115 billings income.

[88] To support his position, Tom, at different times, produced two charts that purported to show the contracting revenue/billings/income, previously described as Contract Revenue, from WTC and the Ancillary Companies. In the original chart (“Original Chart”) contained in his affidavit dated May 10, 2021, the Contract Revenue varied between $106,000 to $147,000 from 1996 to 2013. The Original Chart is found at Schedule A.

[89] A revised chart (“Revised Chart”) was included in Tom’s factum, but not in any affidavit material. Notwithstanding that the Revised Chart was not in any affidavit, the court finds that the Revised Chart and its contents are acceptable for the purpose of this motion. The Revised Chart is found at Schedule B.

[90] In the Revised Chart, the Contract Revenue varied between $140,000 to $160,000 from 2014 to 2018.

[91] Tom acknowledged that in various years, 115 had additional income including dividend income, rental income, and “other income”, as shown on the Revised Chart.

[92] The court finds that from 1977, when Tom joined WTC, to 1995, Tom was an employee. Throughout some or all this time, he served in a managerial role. He became a WTC shareholder in 1979 and became an officer and director of WTC in 1991 and continued as such until 2019.

[93] Therefore, the court finds that Tom had multiple roles at various times, as an employee, director, officer, and shareholder.

[94] From 1996 to 2014, 115 was the entity that billed and collected fees and HST from WTC. Tom and/or his family members either directly or indirectly owned 115, which did the contracting work for WTC.

[95] The court finds that the Contracting Revenue included in the Revised Chart differs from that in the Original Chart.

[96] Based on the Revised Chart, from 1996 to 2013, the percentage of work done for WTC ranged from 52.83 percent to 88.18 percent. The balance of the Contract Revenue came from the Ancillary Companies.

[97] According to the Revised Chart, from 2014 to 2019, 100 percent of the Contract Revenue came from WTC.

Revenues

[98] In the Original Chart, Tom lists income from “Internet Kingston” and “North Frontenac Telephone Co. Ltd.”. The court finds that these entities and their Contract Revenue are not mentioned in the Revised Chart, although they may be part of one or more of the Ancillary Companies. The evidence is not clear on this point.

[99] Tom admitted on cross-examination that certain Contract Revenue was not disclosed in the Original Chart including that from North Leeds Cablecom Inc. Notwithstanding that, he acknowledged that he did earn Contract Revenue from this company from 1997 to 2005. The same comment applied to NLBL, LYNXX, and TRIO. The court makes findings to this effect.

[100] The court finds that the Contract Revenue disclosed is one of numerous discrepancies related to calculating Contract Revenue received by 115 from WTC in the Original Chart.

[101] Based on the Revised Chart and Tom’s evidence at his cross-examination, the court finds that the Original Chart provided in his Affidavit sworn May 13, 2021 understates the Contract Revenue, in some cases, significantly. The court finds that the Original Chart is misleading and incorrect.

[102] The court does not know exactly when the Revised Chart was prepared, but it was certainly after Tom was cross-examined on his affidavit when he acknowledged that the Contract Revenue in the Original Chart for the period of 2003 to 2014 was incorrect.

[103] Furthermore, the court finds that Tom was selective in the Contract Revenue information he provided because it only included data from 2003 to 2014, a period of 12 years. The Revised Chart included data from 1996 to 2019, a period of 24 years, which provides the court with a much different and more detailed account of the situation.

[104] In the Original Chart, the court notes that Tom indicated that the Contract Revenue for 2003 to 2011 were approximately $125,000 when in fact they were: $82,800 in 2003, $102,960 in 2004, $112,320 in 2005. Thereafter, the Contract Revenue increased to $125,000 per year. The court notes that in the Original Chart, the Plaintiff/Tom indicated that the amounts were “approximate”.

[105] In addition, the court finds that the Contract Revenue from the Ancillary Companies in both the Original Chart and the Revised Chart are separate and distinct from the Contract Revenue from WTC.

[106] The court finds that Tom’s evidence relating to the quantum of Contract Revenue changed from his original affidavit to his cross-examination. The court finds that the Contract Revenue information contained in the original affidavit is misleading and understated, in some cases, by significant amounts. On cross examination, Tom agreed that it was misleading.

[107] The court finds that Tom lacks credibility concerning the Contract Revenue amounts and misleads both the Defendant and the court on this point.

[108] As set out in the Revised Chart, 115 did contracting work for the Ancillary Companies. Notwithstanding that the Ancillary Companies had similar shareholders, officers, and directors to WTC, the court finds that they are different entities than WTC. The court notes that as set out in the Revised Chart, 115 billed these companies from at least 1996 until 2013.

[109] The court notes that after the estate planning and restructuring in 2014, 115 did not bill any of the Ancillary Companies.

[110] In addition, as a director of at least WTC, Tom received director remuneration and director bonuses directly and not through 115. There is no evidence one way or the other as to whether Tom was the director of the Ancillary Companies and was receiving director remuneration from them as well.

[111] The court finds that whatever renumeration he received from WTC and any of the Ancillary Companies as a director is not the same type of remuneration that he would have received as a contractor, whether dependent or independent.

[112] In conclusion, the court finds that the information about the Contract Revenue in the Original Chart is inaccurate compared to the Revised Chart.

Income Tax Returns for 115

[113] Income tax returns for 115 were provided for 2013 to 2019 inclusive. The court realizes that 115’s year end was February 28 each year.

[114] The court finds that the type of income/revenue as described in the chart below (“Percentage Revenue Chart”) is the same as Contract Revenue, previously discussed in this decision.

[115] One of the questions asked in the income tax return is how much of the income was derived from what sources.

[116] The information set out below is what Tom provided to the Canada Revenue Agency (“CRA”). Tom signed a certification that the information calculated in the return was true and correct. A summary of the information is set out in the Percentage Revenue Chart:

Year	Type of Income	Percentage
2013	Consulting	100%
2014	Consulting	50%
	Investment	30%
	Rental and Other	20%
2015	Consulting	50%
	Investment	30%
	Rental and Other	20%
2016	Consulting	50%
	Investment	30%
	Rental and Other	20%
2017	Consulting	50%
	Investment	30%
	Rental and Other	20%
2018	Consulting	70%
	Investment	30%
2019	Consulting	70%
	Investment	30%

[117] The court notes that there were no schedules attached to the income tax returns filed on the motion notwithstanding that schedules existed. Therefore, the court is not able to determine from where the revenue is derived, other than what is stated on the pages provided.

[118] The court finds that the information filed with the CRA is a true picture of 115’s revenues, including Contract Revenue, and the sources thereof for those taxation years.

[119] Based on the percentage calculation in the returns, the court finds that from 2014 to 2017 the revenue from consulting was only 50 percent. On that basis, the court finds that for 2014 to 2017 115 did not exclusively provide services to WTC.

[120] In 2018 and 2019, the consulting portion of the revenue was 70 percent. Again, based on the evidence, the court finds that 115 did not exclusively or near exclusively provide services to WTC for those years. Almost a third of the revenue was derived from other sources.

[121] 2013 is the odd year because it says that 100 percent of the revenue received was from consulting. This is what the certification says notwithstanding that in the Revised Chart it shows that revenue from WTC was $130,000, revenue from LYNNX was $5,424, and revenue from TRIO was $12,000. There was also investment/dividend income of $77,600, rental income of $57,304, and other income of $975. Based on the evidence available in the motion materials, the court finds that the information for 2013 contained in the Percentage Revenue Chart is correct because of the certification made to CRA.

[122] Tom admitted on cross-examination that in some of the years from 2014 to 2017, the WTC Contract Revenue are only 50 percent of 115’s Contract Revenue and the rest is from other sources. The court makes a finding to this effect.

[123] For the years 2018 to 2019, the consulting revenue was 70 percent. The court makes a finding to this effect. Based on the evidence, the court finds that during 2013 to 2019, not all or nearly all of the consulting revenue earned by 115 came from WTC. On that basis alone, the court finds that 115 was not a dependent contractor for 2013 to 2019.

Various Factors to Determine Dependent/Independent Contractor Status

[124] The various factors to be reviewed on a contextual and case-by-case basis to determine dependant/independent contractor status are set out in the cases of McKee and Keenan.

[125] The factors are as follows:

1. Whether or not the agent was limited exclusively (or near exclusivity) to the service of the principal;
2. Whether or not the agent is subject to the control of the principal not only as to the product sold, but also as to when, where, and how it is sold;
3. Whether or not the agent has an investment or interest in what are characterized as the tools relating to his services;
4. Whether or not the agent has undertaken any risks in the business sense, or, alternatively has any expectation of profit associated with the delivery of his services as distinct from a fixed commission; and,
5. Whether or not the activity of the agent is part of the business organization of the principal for which he works. In other words, whose business is it?

[126] The court agrees with the information contained at paragraph 9 of Tom’s Affidavit sworn May 13, 2021, setting out various factors related to his employment. At the same time, the court finds that there are other factors to consider:

1. He or 115, a company partially owned by him, was a shareholder in WTC.
2. Tom was an officer and director of WTC, as well as the Ancillary Companies that he supplied services to and billed. He was a director of WTC from 1991 to 2019, when he resigned because of the share sale to the third party.
3. Tom also received compensation from WTC as a director, which is particularized in the WTC directors meeting minutes included as part of the evidence on the motion.
4. Tom was one of WTC’s signing officers for at least one loan from the Bank of Montreal for approximately $1,500,000.
5. In the eyes of the public, Tom was known as an owner of WTC together with his brother Steve, based on the various media outlet articles provided.

Exclusivity

[127] The issue of exclusivity, as set out in Fisher, at para. 4, must consider the total history of the relationship.

[128] In Thurston, the court said at paras. 24-25:

But the determination as to dependent contractor status must be made having regard to the purpose of the concept: the extension of the common law entitlement to notice of termination from employees to dependent contractors. That extension was justified in McKee on the basis that, like employees — and unlike independent contractors — dependent contractors are to a large extent economically dependent, albeit on a contracting party rather than an employer.

In distinguishing dependent from independent contractors, McKee made clear that exclusivity of service provision, and therefore of income, is key. As the court put it, "exclusivity is determinative, as it demonstrates economic dependence"; exclusivity, the court said, is a "hallmark" of the dependent contractor category: McKee, at para. 34. In Keenan, at para. 25, this court emphasized that exclusivity was "integrally tied to the question of economic dependency" and that the determination of exclusivity requires consideration of the full history of the relationship in question.

[129] Based on paras. 24 and 25 of Thurston, a dependent contractor must, to a large extent, be economically dependent on the contracting party. In addition, that economic dependence is generally due to complete exclusivity or a high level of exclusivity in their work.

[130] The Plaintiff said that he received the vast majority of his Contract Revenue from WTC. It relies on the Thurston case and says that “near completely exclusive” cannot be reduced to a specific number to determine dependent contractor status.

[131] A review of the Revised Chart shows that between 1996 and 2010, 115 received approximately between 52.83 percent and 71.48 percent of its Contract Revenue from WTC.

[132] In the present case, there was some economic dependence. However, based on 115’s billings, particularly for the years 1996 to 2010, the court does not find that complete exclusivity or a high level of exclusivity was reached. This is in part because he was also working for the Ancillary Companies.

[133] Therefore, 115 did not work exclusively for WTC for the 14 years between 1996 and 2010. From 2011 to 2013, more than 80 percent of the billings were from WTC. From 2014 to 2019, on a contracting revenue basis, this Contract Revenue from WTC was 100 percent.

[134] From 2011 to 2013, the percentage of work done for WTC reached over 88 percent. At that point, the court agrees that it does become more exclusive. Prior to 2010, the court finds that 115 was not exclusively providing service to WTC.

[135] While 115 argues that the contracting income from the other entities was a minor portion of its yearly income and overall income, the court rejects that argument, particularly for the period 1996 to 2010.

[136] The Plaintiff also relies on the case of Filiatrault. In that case, Liquid Air was incorporated in Quebec and supplied gases and related products and services to purchasers. Tri-County was incorporated in Ontario. Mr. Filiatrault founded the company and was an authorized distributor for Liquid Air.

[137] Mr. Filiatrault was president, CEO, and chair of the board for Tri-County. Mrs. Filiatrault was the vice president of human resources. Their three sons also worked in the company.

[138] Mr. Filiatrault received a base salary and bonus, which varied from year to year. Mrs. Filiatrault received an annual salary with no bonus.

[139] The Filiatraults and their sons entered into a new distributorship agreement with Liquid Air in 1996. Article 23.10 provided that the three sons would have employment with Liquid Air after the sale of the Tri-County shares. There was no clause allowing either the continued employment or termination of Mr. and Mrs. Filiatrault. The share purchase was completed on September 15, 2009. Mr. and Mrs. Filiatrault were terminated on the same day. Thereafter, the three sons became the operators of Tri-County.

[140] Mr. and Mrs. Filiatrault sued for wrongful dismissal and damages.

[141] In its analysis, the court found that the Filiatraults’ relationship could be classified as a dependent contractor. The court said that the law treats persons providing such service in this type of relationship much like regular employees at termination.

[142] The court said that the sale of the business through selling the shares did not alone result in the employees’ termination. The new owner was to take the company subject to certain claims, such as the payment of severance pay.

[143] The court said that the length of reasonable notice was determined by looking at the employee’s history of employment. The court ultimately found that a term of reasonable notice is implied in the notice and is calculated based on the duration of employment. The court found that the contractual matter in issue related to employment and that the law implies a term of reasonable notice on dismissal without cause.

[144] The court found that severance pay is based on the employee’s annual income and history of employment. In this particular case, the Filiatraults’ compromised to limit their claim to 18 months notice. The court also found that the Filiatraults’ had mitigated their losses.

[145] In the present case, Tom was no longer employed by WTC. He was an employee of 115 who is the owner of the shares, which were subsequently sold to 240. He continued to provide consulting services to WTC through 115.

[146] In the Filiatraults’ case, both the parties were employees who received annual salaries and bonuses and had deductions taken by their employer. There was no evidence that there was any income from other sources related to the business in question or any related businesses.

[147] The Plaintiff also relied on Thurston. In that case, the respondent was a sole practitioner lawyer who provided legal services to the Office of the Children’s Lawyer (“OCL”) over a period of 13 years pursuant to a series of fixed contract agreements. The last agreement expired and was not renewed.

[148] The respondent brought a claim alleging that she was a dependent contractor and was entitled to 20 months notice of termination. The OCL brought a motion for summary judgement dismissing her claim.

[149] At the motion for summary judgment, the motion judge found that the respondent’s relationship with the OCL was continuous for 13 years and that she was perceived to be an OCL employee.

[150] The motion judge found that these factors tipped the balance in favour of the respondent being a dependent contractor.

[151] The OCL appealed to the Ontario Court of Appeal, which found that the motion judge misapprehended the nature of the legal standard and failed to give effect to several relevant considerations.

[152] The court said that a dependent contractor relationship is a non-employment relationship in which there is a certain minimum economic dependency demonstrated by complete or near exclusivity. The exclusivity of service provision is key.

[153] The Court of Appeal also looked at how much the respondent worked exclusively for the OCL. The court found that she did not work exclusively for the OCL as she maintained a private legal practice. Only 39.9 percent of her annual billings came from the OCL. The court did not consider this to be exclusive or near exclusivity. The court found that while near complete exclusivity cannot be reduced to a number and additional factors may be relevant, it requires substantially more than 50 percent of billings.

[154] The court made various observations at paras. 23–25, 30, 32:

As this court set out in McKee at para. 30, dependent contractor status is a non-employment relationship in which there is "a certain minimum economic dependency, which may be demonstrated by complete or near-complete exclusivity". "Minimum economic dependency" is a vaguely worded standard, and its application yields outcomes that are highly context-specific: McKee, at para. 38. It follows that a judge's decision as to the nature of a working relationship is generally entitled to deference.

But the determination as to dependent contractor status must be made having regard to the purpose of the concept: the extension of the common law entitlement to notice of termination from employees to dependent contractors. That extension was justified in McKee on the basis that, like employees — and unlike independent contractors — dependent contractors are to a large extent economically dependent, albeit on a contracting party rather than an employer.

In distinguishing dependent from independent contractors, McKee made clear that exclusivity of service provision, and therefore of income, is key. As the court put it, "exclusivity is determinative, as it demonstrates economic dependence"; exclusivity, the court said, is a "hallmark" of the dependent contractor category: McKee, at para. 34. In Keenan, at para. 25, this court emphasized that exclusivity was "integrally tied to the question of economic dependency" and that the determination of exclusivity requires consideration of the full history of the relationship in question.

Exclusivity is a categorical concept — it poses an either/or question, and "near-complete exclusivity" must be understood with this in mind. "Near-complete exclusivity" cannot be reduced to a specific number that determines dependent contractor status; additional factors may be relevant in determining economic dependency. But "near-exclusivity" necessarily requires substantially more than 50% of billings. If it were otherwise, exclusivity — the "hallmark" of dependent contractor status — would be rendered meaningless.

In short, the OCL was one of the respondent's clients — a very important client, but only one of her clients. The loss of a client will be more or less significant to any contractor, but care must be taken in applying dependent contractor case law to professionals such as lawyers working under retainer agreements.

[155] The Thurston case can be distinguished from this case because at no time did the lawyer in the Thurston case move from a self-employed person to an incorporated company. The contract was always with the law corporation and the Ontario Legal Aid Plan.

[156] Furthermore, the respondent in Thurston was never an officer, director, or shareholder in the Ontario Legal Aid Plan.

[157] This case is distinguishable from Thurston because Tom started as an employee and then transitioned to a position at 115.

[158] The court has reviewed the Filiatrault case and distinguishes it from the present case because Tom had worked as an employee from 1977 to 1996 and then worked for 115, which was owned by Tom and his wife. In Filiatrault, the Filiatraults were employees.

[159] There is no evidence in the present case as to what Tom’s salary was from 115.

[160] The court finds that 115 was used as an instrument to direct income based on estate and tax planning strategies, as directed by professionals. The present case is distinguishable from both the Thurston and the Filiatrault cases both on a factual basis and based on where the income was derived from in those specific cases.

[161] The court finds that 115 did not provide contract services exclusively to WTC, based on the Revised Chart and based on the income tax returns analyzed previously.

[162] The court finds that the Plaintiff was not economically dependent for a vast majority of its contracting income from the Defendant for all its years of service. The Plaintiff, in conjunction with Tom, used various tax and estate planning tools to determine how much income would be received and by whom. The complexity of the corporate structures recommended and implemented by professionals indicates to the court that the division of income streams was done based on professional advice to, among other things, minimize taxes, effect transfers of ownership within Tom’s family, and to allow Tom to prepare for retirement.

[163] The court also distinguishes the Thurston case from the present case because in Thurston, there was no complicated tax structure or tax planning, as was implemented here.

[164] Economic dependence was determined by Tom and Steve in accordance with the instructions received from their professional advisors. While it may appear that 115 was economically dependent on WTC, that would only be on a snapshot basis. From a historical and contextual perspective, the court finds that 115 was not economically dependent on WTC and if it was, such a design was made in consultation with Tom and his professional advisors. The court finds that any attempt to design a mechanism to make 115 look economically dependant on WTC should not be allowed.

[165] Based on this information, the court does not find that the principle of exclusivity as set out in the Thurston case applies to this case in determining economic dependence.

[166] The court finds that the billing percentages of between 52 to 71 percent do not amount to exclusivity.

[167] It is challenging to determine exclusivity or non-exclusivity in terms of the amount of billings in this case. Looking at this case contextually and historically, including the income received from 115 as well as from other sources including the Ancillary Companies, not to mention Tom’s income from directorships and dividends from WTC, the court finds that exclusivity or near exclusivity is not made out by the Plaintiff in this case.

[168] The court is aware that 115 is the Plaintiff, not Tom. However, even taking that into account, the evidence is that from 1996 to 2010, 115 consulting fees were not exclusively derived from WTC. They were derived from WTC and the Ancillary Companies, as well as other sources previously set out in this decision.

[169] In 2011-2013, the Contract Revenue from WTC was over 88 percent. The court finds that in those years there was near exclusivity.

[170] From 2014 to 2019, the evidence based on the income tax returns is that, at most, 70 percent of the consulting fees were based on income received from WTC. The court finds that there was no exclusivity or near exclusivity during those years.

[171] While Tom may argue that it is not appropriate to look at the income tax returns as the basis for the determination and that the court should examine the actual number of billings from 115, the court finds that since Tom’s Original Chart is incorrect and misleading, it is appropriate to rely on the information provided and certified by Tom as the appropriate evidence of what the billings were and their origin.

[172] Therefore, the court finds that contextually and historically 115 did not provide services to WTC either exclusively or on a near-exclusive basis.

Control

[173] The Plaintiff argues that WTC controlled it. The court disagrees with that argument. Between 1996 and 2010, at least 30 percent of the business’ income was earned from the Ancillary Companies. It could only earn those monies if Tom worked outside normal work hours to fulfill that role or if he worked the usual number of hours but divided his time between WTC and the Ancillary Companies.

[174] While Tom may have been provided with the title by the Defendant, 115 was not provided with the title by the Defendant.

[175] As stated previously, looking at the various organizational charts produced as evidence at the motion, Tom had supervisory capacity over at least 10 employees of WTC in 2010, at least 17 people by 2015, and approximately 30 people by 2018.

[176] Tom and 115 through Tom had some control over WTC. He may not have been the controlling shareholder either directly or through 115, but 115 owned up to 29 percent of WTC’s shares. Furthermore, he had input and influence as an officer, director, and shareholder through 115.

[177] The court acknowledges that there was no written agreement between 115 and WTC. An independent contractor agreement had been provided to 115/Tom for signature, but he refused to sign it. Notwithstanding that fact, 115/Tom continued to do the work for WTC and the Ancillary Companies.

[178] While the court agrees that WTC had a certain amount of control over Tom’s time, at the same time, 115’s income from WTC between 1996 and 2010 was less than 72 percent.

[179] The court finds that 115’s ownership of shares in WTC provided it with a certain amount of control over the way WTC was operated. The court is aware that Tom was not a majority shareholder, but he still had some control as an officer and director of the company and one of the directing minds of WTC, when 115 had the consulting contract.

[180] The reason that 115 was incorporated was based on the tax and estate planning recommendations of Tom and Steve’s accountants. Both accepted the recommendations and followed through with them. There is no evidence that Tom was told by WTC to incorporate and contract with WTC. The court finds that Tom incorporated 115 on his accountant’s advice, in large part as an estate and tax planning tool.

Provision of Tools

[181] The court agrees Tom provided a certain amount of his own equipment. Other items were provided including his office furniture. Tom was an officer, a director, and either president or vice president of WTC at various times. This entitled him to the provision of tools by WTC suitable to his position. He also provided tools of his own accord. Towards the end of his time at WTC, there were two corporate offices, one in Westport and one in Kingston. There is no evidence that Tom could not choose which one to operate out of. He made that decision.

[182] The court rejects the Plaintiff’s argument about the provision of tools. WTC gave him an office and staff. He was the president and subsequent vice president of WTC at various times. The office and any items given to him were in keeping with his responsibilities as part of his executive function.

[183] The court finds that the interests of 115 were comingled with the interests of WTC, Tom, Steve, and the Ancillary Companies. The factual matrix is easily and clearly distinguishable from the cases relied upon by the Plaintiff.

[184] The court does not find that the provision of tools was any indication of Tom being a dependent contractor.

Business Risk or Imputation of Profit

[185] The Plaintiff argues that he did not have any business risk or expectation of profit when he provided his services.

[186] The Plaintiff acknowledges that his shares in WTC increased in value from 1996 until 2014. It provides no evidence of whether there was any increase in the shares’ value before 1996 or after 2014.

[187] On the other hand, WTC provides greater detail about the increase in the dividends paid per share. In 1995, they were $50 per share. They increased to $60 per share in 1998. They further increased to $65 per share in 1999. A further increase to $100 per share occurred in 2000 and stayed at that rate until 2008 when the dividend increased again to $200 per share. The dividend increased to $300 per share in 2010. The dividend increased to $400 per share in 2011 and remained consistently at $400 per share until 2019.

[188] The dividend chart (“Dividend Chart”), which is produced as Schedule C, is an extract from WTC’s financials concerning dividends received by Tom, 115, or 240.

[189] The Plaintiff and Tom knew that the shares were increasing in value based on the dividends being paid per share. In 2014, as part of estate and tax planning, 115 voluntarily transferred the shares to 240 with WTC’s consent. This estate and tax planning was to allow the increase in value to flow to other members of Tom’s family including his spouse and two children.

[190] From a contextual perspective, the court finds that when looked at solely through the lens of the management consulting contract there may not have been as great an expectation of profit. However, when looking at the big picture, the court finds that there were other sources of revenue that provided an expectation of profit and actual profit to 115 and/or Tom.

[191] While the Plaintiff did not have any business risk or expectation of profit while performing services, its shares in WTC increased in value and paid out a yearly dividend, as can be seen from the Dividend Chart.

[192] Furthermore, 115 invoices were for a fixed compensation each month no matter how much or how little work was done. The evidence is that all the invoices were paid on time, which meant that no interest was ever charged.

[193] The court finds that 115 was used as a tax planning and tax saving strategy as recommended by their professionals to reduce the Plaintiff and Tom’s incomes.

[194] The court notes that the only income received by 115 from WTC between 2014 and 2019 was the Contract Revenue. The court also notes that this was the same time that 115 transferred the shares to 240. As can be seen from the Dividend Chart, the dividend income reduced dramatically after 2014 because the dividend was no longer being received by 115. It was, however, being received, presumably by 240.

[195] The court finds that because Tom was a shareholder, as well as an officer and director of WTC, that he could effectively determine which companies were billed and by whom, and how he and/or 115 would receive compensation in a tax efficient manner.

[196] To put it another way, Tom/115 had various income streams from WTC and the Ancillary Companies. Based on the professional advice provided, Tom could shift income streams and determine where the income streams would flow and when. He had the flexibility to do so as he was an officer, director, and shareholder of WTC and presumably the Ancillary Companies. 115 was a tool that Tom used to carry out the strategies recommended by his advisers.

Integration

[197] As for the issue of integration, 115 was never shown on the organizational charts. Tom was, but not 115.

[198] To be clear, 115 was never the Director of Technical Operations – Tom was. He had at least 10 other people reporting to him in 2010. He had 17 people reporting to him in 2015 and 25 people in 2018.

[199] In terms of providing technical advice, from 1996 through to at least 2013, 115 provided advice to the Ancillary Companies. Therefore, the court finds that Tom provided consulting services to WTC and the Ancillary Companies for this period.

[200] The Plaintiff argues that it was integrated into WTC’s operations due to the features of the Plaintiff’s role outlined in paragraph 6 above and that providing technical advice on and support to network design is an integral component of a telecommunications corporation normally performed by employees. The Plaintiff says that it was not differentiated from the Defendant when presented to the outside world or in organizational charts produced by the Defendant.

[201] The court finds this argument to be inaccurate, particularly in relation to the organizational chart of WTC. As previously stated, 115 is not shown anywhere on the organizational charts submitted as evidence, while Tom was shown on the organizational charts of 2010, 2015, and 2018, which shows Tom as the Director of Technical Services.

[202] According to Steve, both Tom and he were the owners of WTC and were the face of WTC to the public. This is based on information obtained from articles in the media. The court realizes that the media is not to be taken as the final word on the facts. In this case, the court finds that both Tom and Steve, together either personally or through their various corporations, were the majority owners of WTC and the two of them were the face of the company.

Issue #3 - If the Plaintiff is found to be a dependant contractor, what is the Plaintiff’s entitlement to reasonable notice?

Based on the finding that the Plaintiff and/or Tom was an independent contractor, the issue does not require analysis.

Other Issues

Mitigation – Seeking Employment Post Termination

[203] While not a part of the dependent/independent contractor analysis, the court wishes to remark on the steps taken to mitigate any potential damages suffered by the Plaintiff.

[204] The Plaintiff argues that neither it nor Tom has been able to find additional work to replace the work that he was doing through 115. It says that it has no contracting or employment income.

[205] Tom says that he is unable to find employment based on his age at that time being 61. He says that he made a few phone calls and put out a few feelers but was unable to find any employment in his field.

[206] The Defendant’s evidence, based on Tom’s cross-examination, is that:

1. Tom has not prepared or circulated a résumé or curriculum vitae.
2. Tom lives in Westport, Ontario and was not prepared to move to find employment.
3. Tom made several contacts looking for work and found none.
4. Tom registered on the Indeed and Monster websites.

[207] The court notes that Tom did not produce any of his personal income tax returns to show what his income was or where it came from after November 2019, notwithstanding that he would have filed his personal income tax return in June 2020 at the latest.

[208] When Tom was asked to produce his résumé, he indicated that he did not have one. He also indicated that he did not have any reference letters and that he did not use any employment counselling services to assist him to find alternative work.

[209] Tom did not have any notes on what businesses he contacted other than two telephone calls he made. Furthermore, he did not make any written applications for employment.

[210] Lastly, Tom indicated that he was not prepared to move out of the Westport area if he did find alternative employment.

[211] Based on the aforesaid, the court finds that Tom did very little, if anything, to mitigate his loss of income through 115. The attempts at finding alternative employment by 115 and/or Tom were half-hearted and disingenuous.

[212] Furthermore, the evidence is that WTC offered 115 and/or Tom a services agreement dated November 1, 2019, which included the provision of various technical services along the lines of the ones previously provided but did not include any managerial services. This contract would have paid up to $120,000 per year based on the number of hours worked at a rate of $60 per hour plus HST.

[213] 115 and/or Tom chose to refuse the offer. Part of the reasoning for the refusal was that there was no guarantee that he would earn at least $120,000 per year because the payment under the contract was dependent on how many hours he worked. Tom described it as an “on-call” contract.

[214] From the court’s perspective, 115/Tom erred in rejecting this contract. This action was commenced on December 18, 2019. The contract could have been accepted and there would have been some evidence of how many hours were being worked. Tom and/or 115 chose not to accept the contract and the offer was withdrawn.

[215] This is not a situation where Tom’s family retained the shares in WTC and Tom was terminated. Tom, through 240, voluntarily chose to sell his shares to a third party. It was only then, based on 240’s sale of shares, that the original consulting contract was terminated. There was an offer of a contract position made by WTC without managerial responsibility and it was declined or not accepted and the offer was withdrawn. 115 and/or Tom bears the consequences of declining the offer knowing that there might not be any future consulting income from third parties.

[216] The court finds that 115 and/or Tom chose to refuse the offer in light of not having any prospects of alternative employment. The court finds that there was an opportunity by the Plaintiff and/or Tom to mitigate the damages and that opportunity was not accepted. Eventually, WTC withdrew the offer.

[217] The court finds that 115 and/or Tom failed to mitigate by refusing this offer or finding alternative work.

[218] In conclusion, based on the aforesaid analysis, the court finds that 115 is an independent contractor.

[219] Based on the finding that 115 nor Tom is a dependent contractor, neither the Plaintiff nor Tom is entitled to pay in lieu of any notice, bonus, or GST/HST.

Granting Summary Judgement to Responding Party Without Notice of Motion

Defendant’s Position

[220] The Defendant argues that based on the reasons underlying the scope of summary judgement rule, courts have accepted that it is open to grant summary judgment, or partial summary judgment, in favour of the responding party to a motion for summary judgment, even if that party has not filed a notice of motion requesting that order. The Defendant relies on Michael G. Tweedie’s book, Summary Judgment in Ontario: Rule 20 Post-Hyrniak (Toronto: Canada Law Book, 2015) at pp. 22-23.

Plaintiff’s Position

[221] From the court’s notes, the Plaintiff did not deal with this issue.

Analysis

[222] In the typical case, the power to grant summary judgement is exercised in favour of the party bringing the motion. The Supreme Court of Canada provided that it was open to the court under rr. 20.04(2) and (4) to grant summary judgment in favour of the responding party even if that party did not bring a motion requesting such relief. The majority of the Supreme Court agreed with Iacobucci J. on this issue: Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R. 415, at p. 421.

[223] In Summary Judgment in Ontario, Tweedie M. stated, at p. 22:

Summary judgment cuts both ways and those parties who put their best foot forward may find that this merits judgment in their favour even if they are not the moving party and without delivering a formal notice of motion.

He relies on the case of Brown v. Baum, 2015 ONSC 849, at para. 76.

[224] Therefore, based on rr. 1.04 and 20.04(2) of the Rules of Civil Procedure and despite that the Defendant did not bring a motion for summary judgment, the court finds that the central issue has been determined in favour of the Defendant. Therefore, the court finds that the Plaintiff’s claim fails. The fact that there was no formal motion by the Defendant for summary judgment is not an impediment for the court dismissing the Plaintiff’s claim.

[225] Accordingly, notwithstanding there is no formal motion for summary judgment by the Defendant, the Plaintiff’s claim is dismissed.

Conclusion

[226] The sole issue in this action related to the question of whether 115 was a dependent or independent contractor. The court has found that 115 was an independent contractor. Therefore, the Plaintiff’s motion for summary judgement fails because the court has found that the Plaintiff is an independent contractor and not a dependent contractor. Based on that finding, the court finds that the Plaintiff’s action cannot succeed and is dismissed.

Costs

[227] Both parties have provided cost outlines. Based on the finding made in this decision, new cost outlines shall be provided, if necessary, within 14 days.

[228] The parties will have an additional 14 days thereafter to resolve the issue of costs. If they are unable to do so, they shall contact the Trial Coordinator to arrange a date and time to argue the issue at 9:30 a.m. Each side will have 15 minutes to argue their position.

[229] Order accordingly

Mr. Justice Stanley J. Kershman Date: March 2, 2022

Schedule A

ORIGINAL CHART

Year	Defendant (Approximate)	Internet Kingston	North Frontenac Telephone Corp Ltd.	Northleeds Bus Lines Ltd.	Internet Kingston	Lynnx Networks Inc.	Trio Networks Inc.
2003	$125,000.00	$500.00	$500.00
2004	$125,000.00				$4,680.00
2005	$125,000.00				$10,000.00		$4,065.10
2006	$125,000.00				$10,095.66
2007	$125,000.00				$12,071.67
2008	$125,000.00				$31,366.00	$5,000.00	$11,951.01
2009	$125,000.00				$30,000.00	$5,000.00	$12,000.00
2010	$125,000.00				$57,000.00	$5,000.00	$12,000.00
2011	$125,000.00					$5,000.00	$12,000.00
2012	$130,000.00					$5,000.00	$12,000.00
2013	$130,000.00					$5,424.00	$12,000.00
2014	$140,000.00					$5,624.00

Schedule B

REVISED CHART

Year	WTC	NLBL	NLCC	LYNNX	TRIO	Total	% WTC	Investment/ Dividend	Rental	Other
1996	$56,000.00	$50,000.00				$106,000.00	52.83%	$6,800.00
1997	$67,200.00	$49,000.00	$2,400.00			$118,600.00	56.66%	$6,850.00
1998	$67,200.00	$39,000.00	$6,000.00			$112,200.00	59.89%	$8,280.00
1999	$67,200.00	$30,000.00	$12,000.00			$109,200.00	61.54%	$9,490.00
2000	$67,200.00	$46,000.00	$12,000.00			$125,200.00	53.67%	$17,600.00
2001	$67,200.00	$48,500.00	$12,000.00			$127,700.00	52.62%	$17,900.00
2002	$67,200.00	$56,000.00	$12,000.00			$135,200.00	49.70%	$17,900.00
2003	$82,800.00	$56,500.00	$12,000.00	$1,000.00		$152,300.00	54.37%	$18,400.00
2004	$102,960.00	$45,488.00	$8,000.00	$5,000.00	$4,065.00	$165,513.00	62.21%	$18,400.00
2005	$112,320.00	$42,156.00	$6,000.00	$11,040.00	$10,111.00	$181,627.00	61.84%	$18,400.00
2006	$125,000.00	$34,295.00	$10,289.00		$10,096.00	$179,680.00	69.57%	$18,500.00
2007	$125,000.00	$43,327.00	$10,394.00		$12,072.00	$190,793.00	65.52%	$18,500.00
2008	$125,000.00	$30,000.00	$10,223.00		$11,951.00	$177,174.00	70.55%	$37,000.00
2009	$125,000.00	$30,000.00	$7,880.00		$12,000.00	$174,880.00	71.48%	$41,500.00
2010	$125,000.00	$49,500.00	$5,000.00		$12,000.00	$191,500.00	65.27%	$40,600.00
2011	$125,000.00			$5,000.00	$12,000.00	$142,000.00	88.03%	$59,100.00	$906.00
2012	$130,000.00			$5,000.00	$12,000.00	$147,000.00	88.44%	$77,600.00
2013	$130,000.00			$5,424.00	$12,000.00	$147,424.00	88.18%	$77,600.00	$57,304.00	$975.00
2014	$140,000.00					$140,000.00	100.00%	$77,600.00	$94,056.00
2015	$145,000.00					$145,000.00	100.00%	$3,600.00	Loss
2016	$145,000.00					$145,000.00	100.00%	$2,700.00	Loss
2017	$155,000.00					$155,000.00	100.00%	$1,800.00	Loss
2018	$160,000.00					$160,000.00	100.00%	$1,482.00	$4,409.00
2019	$122,094.20					$122,094.20	100.00%	$17,731.00
Total	$2,634,374.20	$649,766.00	$82,400.00	$76,250.00	$108,295.00	$3,551,085.20	74.19%	$615,333.00	$155,769.00	$1,881.00

Schedule C

DIVIDEND CHART

Date of Transfer	Total # of Shares	Tom Personally	Tom/Penny 1159273 Ontario Inc.	Tom/Penny 2408914 Ontario Inc.	Dividend/Share	Dividend received April 30th each year	WTC Fiscal Year
30-Apr-79	3	3
20-Jun-79	6	3
30-Jan-80	9	3
21-Feb-84	99	90
23-Mar-95	136	37			50	$6,800.00	1995
28-Aug-96	136	-136	136		50	$6,800.00	1996
17-Sep-96	137		1
29-May-97	140		2		50	$6,850.00	1997
12-Dec-97	138		1
29-May-98	142		2
18-Dec-98	145		3		60	$8,280.00	1998
22-Jan-99	146		1
29-Oct-99	173		27
29-Oct-99	176		3
30-Jun-00	179		3		65	$9,490.00	1999
					100	$17,600.00	2000
					100	$17,900.00	2001
04-Mar-03	182		3		100	$17,900.00	2002
04-Mar-03	183		1
03-Apr-03	184		1		100	$18,400.00	2003
					100	$18,400.00	2004
01-Sep-05	185		1		100	$18,400.00	2005
					100	$18,500.00	2006
					100	$18,500.00	2007
					200	$37,000.00	2008
					200	$37,000.00	2009
					300	$55,500.00	2010
28-Feb-14	185		-185	185	400	$74,000.00	2011
					400	$74,000.00	2012
					400	$74,000.00	2013
					400	$74,000.00	2014
					400	$74,000.00	2015
					400	$74,000.00	2016
					400	$74,000.00	2017
					400	$74,000.00	2018
2019	0	0		185		$979,320.00	2019

COURT FILE NO.: CV-19-00000438-0000 DATE: 2022/03/02

ONTARIO SUPERIOR COURT OF JUSTICE RE: 1159273 Ontario Inc., Plaintiff (Moving Party) AND The Westport Telephone Company Limited, Defendant (Responding Party)

BEFORE: Mr. Justice Stanley J. Kershman

COUNSEL: Christopher Moryto, for the Plaintiff (Moving Party) Jeffrey Lanctot, for the Defendant (Responding Party)

DECISION FOR SUMMARY JUDGMENT MOTION

Kershman J. Released: March 2, 2022