Reference no: EM133938826

Question

Bingo Inc alleged that its bookkeeper, Bruce Clinton, had stolen from it. The company made a claim against its insurer, Allison Insurance Ltd, to recover the loss. Allison Insurance refused the claim on the basis that the policy stated that:

In the event of loss and/ or damages that can be attributed, even in part, to the acts of an employee, Allison Insurance will not be held responsible for compensating the company for said losses and/or damages.

The issue is whether Bruce was a company employee at the time of the theft. The evidence indicates that he performed basic bookkeeping services for the company, worked regular hours out of the Bingo Inc offices, and was subject to the direct supervision of a company manager. Bruce was not a member of a recognized professional association, and his duties were those normally associated with a bookkeeper, not a professional accountant. Consequently, Bruce was paid on an hourly basis - he did not set fees depending on the nature of services he performed. He had no shares in the company, no incentive-based remuneration. No deductions were made from his cheques, nor did he receive holiday pay or any other company benefits.

Question

Apply both the control test and organization test to determine whether Allison Insurance will likely have to make a payment under the policy. Support your position.