Federal Court Decision #A-986-88 - BERUBE, CLAUDE v. Commission

FRANÇAIS

JUDGMENT OF THE FEDERAL COURT OF APPEAL

Date:
February 21, 1990

Docket:
A-986-88

Umpire’s Decision:
CUB 15699

"TRANSLATION"

CORAM:

PRATTE, J.A.
MARCEAU, J.A.
HUGESSEN, J.A.

BETWEEN:

CLAUDE BÉRUBÉ,

applicant,

- v. -

EMPLOYMENT AND IMMIGRATION CANADA,

respondent.

Hearing held at Quebec, on Thursday, October 26, 1989.

REASONS FOR JUDGMENT
(Judgment rendered at Ottawa on
Wednesday, February 21, 1990)

HUGESSEN, J.A.:

This application, made pursuant to s. 28 of the Federal Court Act, is against a decision of the umpire affirming a decision of the board of referees, which dismissed the claimant’s appeal.

During the period at issue the claimant worked without pay fifty hours a week in a canteen owned by his mother. The latter worked in the same business from twenty to thirty hours a week. The business had only one paid employee, who worked forty hours a week for $120.

The Canada Employment and Immigration Commission denied the claim for benefits on the sole ground that the claimant was not unemployed. The legal provisions relied on in the notice of disentitlement ¹ are ss. 8 and 10 of the Act ² and ss. 44 of the Regulations. ³ The relevant parts of these provisions read as follows:

The board of referees dismissed the claimant’s appeal on the ground that, because he worked fifty hours a week,

it is well-settled case law that when work is done full-time, whether paid or not, this is definitely work within the meaning of the relevant provisions of the Act.

(Case, p. 24).

I will return to the "well-settled case law", because it does not at all have the meaning given to it by the board of referees, but for the moment it will suffice to note that the board concentrated solely on the number of hours worked by the applicant and regarded the fact that his work was unpaid as irrelevant.

In my opinion, this is an error of law. We have seen that the Commission relied on s. 44 of the Regulations, supra. To decide whether this regulation applied to the applicant, it first had to be decided whether the latter "is or was employed" at the relevant time.

To read the wording of s. 44 correctly, reference must first be made to the enabling provisions of the Act itself and then to the wording of s. 43 of the Regulations. Paragraphs 44 (b) and (c) of the Act authorize the Commission to make regulations:

It can clearly be seen that this regulatory power is directly associated with the wording of s. 10 of the Act and empowers the Commission to define a working week and a full working week, both for insurable and for uninsurable employment. Section 43 of the Regulations, as its title indicates, deals with the self-employed person:

Clearly this provision deals, in para. (1) (a), with the self-employed person, someone whose employment is not insurable because it was performed under a contract for services. ⁴ Section 44 of the Regulations, for its part, deals with a worker "other than a claimant referred to in section 43", and so necessarily one who is engaged in employment other than under a contract for services.

The primary condition for s. 44 to apply is thus the existence of an employer-employee relationship and the fact that the worker derives or expects to derive a benefit or profit from his work is of the very essence of this relationship. This is how the case law is now settled.

In Samson, ⁵ Addy J. held:

If a claimant who works for an employer is to be considered employed within the meaning of the Unemployment Insurance Act and specifically within the meaning of the above two sections, it is absolutely essential that an employer-employee relationship exists between the employee and the person receiving his services. This type of relationship necessarily implies that during or subsequent to employment, remuneration is payable to the employee by the employer for services rendered or, at least, the employee must tender his services for the specific purpose of eventually receiving remuneration, or monetary or material benefit of some kind from his employer. Such benefit could be the hope of obtaining regular paid employment from his employer in the future. In short, a person who works for another person strictly without remuneration is not employed within the meaning of these sections although he may be working regular hours performing tasks for which wages would normally be paid.

(at pp. 2 and 3.)

...

In this case, it is clear that in addition to not receiving or not being entitled to any remuneration, the appellant did not entertain any hopes of obtaining subsequent employment at the Humpty Dumpty Company. She worked without remuneration and only for the purpose of getting a fresh start, acquiring experience and for the benefit to her mental and physical health of being usefully occupied instead of remaining idle and perhaps aggravating her state of depression. In other words, it was work as a form of therapy, to quote the board of referees.

(at p. 4.)

This Court affirmed this decision, ⁶ while noting that remuneration was not the only factor to be considered:

Counsel for the applicant attacked the decision a quo by saying that it was based on an erroneous proposition, namely that someone providing his services to another person without receiving any remuneration is not working within the meaning of section 21 of the Unemployment Insurance Act, 1971.

If we interpreted the decision of the Umpire in the same was as counsel for the applicant, we would have to quash this decision. We consider that someone may work for another person within the meaning of section 21 although they receive no remuneration if, in addition, there is between the person performing the work and the person benefiting to or regarded in the same way as a contract of service.

However, we do not interpret the decision a quo as counsel for the applicant does. In our view, this decision is based not simply on the fact that respondent was not receiving, and did not expect to receive, any remuneration, but rather on the Umpire’s opinion that, in light of all the circumstances of this case (one such circumstances being that respondent was not paid), it was impossible to say that respondent had provided her services pursuant to a contract of service, or to a contract similar to a contract of service. On the evidence, this opinion does not rest on any error of law.

A final point was made by Strayer J. in Gordon Cummins: ⁷

I am of the view that the test adopted in CUB 5560 is correct: that is, that for a person to be deemed to have worked for an employer, it is essential that some kind of employer-employee relationship exists between them. Further, this kind of relationship implies that some form of remuneration, direct or indirect, immediate or eventual, should be involved.

(at p. 2.)

This decision was in turn affirmed without comment by this Court. ⁸

Finally, in Vinet v. Canada Employment and Immigration Commission, ⁹ the question was not s. 44 of the Regulations but para. 43 (1) (b). The Court was divided on the question of whether the latter provision also assumed the existence of an employer-employee relationship. Desjardins J.A., speaking for the majority (which included the undersigned), held that it did, while Marceau J.A. came to the opposite conclusion; but all members of the Court were unanimous as to the importance of remuneration with regard to s. 44. At p. 3 of her reasons, Desjardins J.A. said:

In order for assistance or voluntary effort to be authentic, the applicant would [sic] not be able to derive any economic benefit.

Marceau J.A. said, at p. 7 of his reason:

It is sufficient, I believe, to read ss 42 and 44 of the Regulations to see that they cover the cases in the first category. Thus to apply them it is necessary to identify the elements of a relationship to identify the elements of a relationship between parties to a contract for the hire of services, which implies detecting some form of engagement and the presence of some forms of payment, primarily of a monetary nature, received or to be received in exchange for the provision of services.

It can clearly be seen from all the foregoing not only that the board of referees erred in ignoring the unpaid nature of the applicant’s work but also that, in the circumstances of the case at bar, one of the main questions that it had to answer was precisely that of whether the said work was really unpaid, namely if the applicant did not really expect to derive any financial benefit from it.

For all these reasons, I would set aside the decision of the umpire, which affirmed that of the board of referees, and refer the case back to him to be again decided on the assumption that a claimant who provides his services free of charge is not thereby performing work within the meaning of subs. 10 (1) of the Act.

" James K. Hugessen "

J.A.

¹ Case, p. 16.

² Unemployment Insurance Act, R.S.C. 1985, c. U-1. For the sake of convenience references have the Revised Statutes numbering although the latter were not yet in effect in the period in question.

³ Unemployment Insurance Regulations, C.R.C. c. 1576.

⁴ Paragraph (1) (b) deals with another sort of worker, the one who is "self-employed" because he sets his own working hours; this provision was not relied on by the Commission and the Court does not have to decide whether it could apply to the applicant’s case.

⁵ CUB 5560, April 27, 1979.

⁶ Attorney General of Canada v. Samson, [1980] 1 F.C. 620, per Pratte J., at 620 and 621.

⁷ CUB 11084, August 26, 1985.

⁸ Attorney General of Canada v. Cummins, Court file No. A-802-85, judgment of April 30, 1986, not reported.

⁹ Court file No. A-771-88, judgment of February 10, 1989, not reported.

PRATTE J.A.:

I believe I was wrong to say, in Samson, ¹ that a person providing his services to another free of charge can still be performing work within the meaning of s. 10 (1) of the Unemployment Insurance Act. It now seems to me that the only work with which the Unemployment Insurance Act is concerned, and consequently the only work referred to in s. 10 (1) and the Regulations, is work which is done for oneself or for another with the aim or in the expectation of deriving a financial benefit therefrom.

I would therefore allow the application in the terms suggested by my brother Hugessen J.A.

"Louis Pratte"

J.A.

MARCEAU J.A. :

The applicant had been receiving benefits for several months pursuant to the Unemployment Insurance Act (R.S.C. 1985, c. U-1) when he received from the Canada Employment and Immigration Commission a notice telling him that as of a certain date he had lost all right to benefits because he was no longer unemployed at the time. The Commission had in fact been able to determine that since the said date he had worked continuously and regularly as a cook and waiter at a canteen operated by his mother. The applicant did not deny that he in fact worked fifty hours a week in his mother’s restaurant business. However, he pointed out that he was working without pay, so that he was not doing a full working week within the meaning of s. 10 of the Act, which removed all basis from the notice of disentitlement issued by the Commission. ¹

The applicant was unable to persuade the members of the board of referees that his claim was valid: as they understood the precedents, any week in which the claimant worked full-time could not be one in which he was unemployed, even if he was no receiving pay at the time; and he was also unable to persuade the umpire, who refused to intervene because he felt that the board’s decision was not vitiated by any error of law or based on any erroneous, perverse or arbitrary conclusion of fact. That is when the applicant filed the application at bar to review and set aside pursuant to s. 28.

My brother Hugessen J.A., whose reasons for judgment I have had an opportunity of reading, considers that the application should be upheld. He blames the umpire and board of referees for ignoring the argument that there was no pay, for if the work was "really unpaid, namely if the applicant did not really expect to derive any financial benefit from it", in his opinion it could not affect the applicant’s state of unemployment within the meaning of s. 10 (1) of the Act. I am sorry, but my understanding of the legislation does not allow me to subscribe to this viewpoint and, with respect, I must dissociate myself from it.

In my reasons for judgment in Réjean Vinet v. Canada Employment and Immigration Commission and Deputy Attorney General of Canada (1989), 100 N.R. 190, I undertook to explain how I read and understood the regulations to which reference has always been made to determine whether a claimant should be regarded as doing a full working week which would cause him to lose the state of unemployment necessary for him to be entitled to benefits. As we know, these provisions are contained in ss. 42, 43 and 44 of the Unemployment Insurance Regulations, C.R.C. c. 1576, sections adopted pursuant to s. 44 (c) and (d) of the Act (formerly 58 (c) and (d), to define in general and for various cases (which may explain their somewhat imprecise wording) what was meant by "full working week". I said that in my opinion in the case of a claimant who undertakes work for another, becoming that other person’s employee, ss. 42 and 44 should be applied; while in the case of a claimant who undertakes to work for himself, without answering to anyone, the reference should be s. 43. In the first case, the claimant will be seen as having performed a full working week, if he worked as long as an ordinary employee of the same grade or class would do; in the second case, there will be a presumption of a full working week but a presumption which the claimant can rebut by showing the minimal and insignificant nature of his activity. I consider that these rules were developed and stated to be applied without regard to whether the claimant’s activity was to return or in fact did return him a remuneration or profit, which is not in any case mentioned anywhere. The difficulties that arose clearly did not concern claimants who admitted being paid or making sufficient profits, but those alleging that they were not paid or earned nothing, and the rules were made to ensure that such a claim could not by itself have any consequence.

My understanding of the rules to be derived from ss. 42, 43 and 44 of the Regulations has not changed, but I should perhaps have explained it in Vinet by placing greater emphasis on an aspect the importance of which is now more apparent. These provisions relate to the work of an employee who in principle is paid or to work of a profit-making business. Sections 42 and 44 speak of a claimant who has a job as an ordinary employee and he is compared with other employees of the same grade or class, while s. 43 speaks of a person who is self-employed or who, without apparently losing his independence, does the work of an employee which can provide him with a "means of livelihood". Clearly then this excludes, first, personal and domestic work which the claimant does for himself, but also - and this is what is important here - purely gratuitous work, that which is not generally done as part of an employer-employee relationship, but is usually done on a disinterested basis and without obligation.

I too believe, therefore, that the applicable rules do not allow the Commission to "blame" a claimant for engaging in gratuitous work; but I believe that these rules do not place it at the mercy of the testimony of a claimant and the recipient of his services in determining the nature of gratuitous work (testimony which it is not even in a position to adequately check), that it must instead rely in this regard on the nature of the work, the surrounding circumstances and the social practice of the time, the only criteria over which it has any control and which it can apply with relative effectiveness. It is clear that the work of a cook and waiter in a canteen is not gratuitous work in this sense but the work of an employee who is ordinarily paid.

These are the reasons why in my opinion neither the board of referees nor the umpire committed any error of law in disregarding the claimant’s argument that he was not paid for the full-time employment he performed in his mother’s canteen. I would dismiss the application.

"Louis Marceau"

J.A

¹ We may note the wording of s. 10 (1) of the Act (formerly, before the 1985 reform, 21 (1), which must be read in association with s. 8 (formerly 19):

8. When an insured person who qualifies under section 6 makes an initial claim for benefit, a benefit period shall be established for him and thereupon benefit is payable to him in accordance with this Part for each week of unemployment that falls in the benefit period.

10.(1) A week of unemployment for a claimant is a week in which he does not work a full working week.