CUB 18646

Muldoon, J.

The claimant seeks rescission of the referees' unanimous and drastically brief decision upholding the determination by the insurance officer that a court settlement received by the claimant from his employer in the amount of $12,500 was earnings to be allocated commencing December 22, 1985 until April 13, 1986. The award is variously called a court settlement and an arbitration award, maybe it is a court award for the claimant's counsel refers to litigation but that is not conclusive.

The claimant applied for benefits December 10, 1985, stating that he quit his job with Kelsey-Hayes Canada Ltd. as a customs and traffic supervisor on December 5, 1985 (ex. 2-1). He subsequently informed the Commission that he did not quit but was told to resign or he would be fired, and he was suing the company for wrongful dismissal (ex. 4). On March 16, 1988, the claimant advised the Commission that he had received $12,500 from his employer for wrongful dismissal in 1986. The Commission was told in a conversation with the employer that this took the form of an arbitration award, and was paid the week beginning November 16, 1986 (ex. 6). The Commission allocated this award commencing December 8, 1985 in accordance with the claimant's normal weekly earnings, up until April 19, 1986, when his claim ended. The balance was therefore not allocated (ex. 71).

The claimant was notified of the allocation of the settlement as earnings by notice dated March 29, 1988 (ex. 8), and a notice of overpayment in the amount of $4,503 was issued April 7, 1988 (ex. 9). He appealed this decision to a board of referees by letter dated April 21, 1988 (ex. 10), stating that the award was in the nature of severance pay and therefore ought to be exempt from earnings.

In its observations to the referees, the Commission asserted that the sum received by the claimant from his employer was not in the nature of severance pay, but rather was an arbitration award, and therefore was considered earnings under Regulation 57(2)(a) since it was not exempted under 57(3)(a) to (i), and was properly allocated under Regulation 58(5)(b) and 58(10).

The claimant submitted no further information before the referees and they found as follows: (ex. 12)

The Board of Referees finds as fact that the claimant had earnings for the weeks commencing 22 December, 1985 to 13 April, 1986, were determined [sic] to be $587.87 per week. These earnings resulted of a court settlement [sic] by the claimant in November, 1986 from his employer, Kelsey Hayes in the amount of $12,500.00

The appeal fails and the decision of the Insurance Officer is upheld.

The claimant asks to review this decision on the basis of section 95(b) and (c). He submits that the award for wrongful dismissal should be considered as exempt from earnings, and states that the referees did not consider all the facts presented during his hearing and acted in a capricious manner (exhibits 15-3 & 16-1). He has now retained counsel to represent him at the hearing, who submitted further facts, including his work history, which includes several long periods of unemployment for which he has only collected benefits once (the period now subject to this appeal). He also submits that the proceeds of his litigation after payment of legal fees and disbursements amounted to $8,000, and that this was not for wages due but severance pay granted in lieu of proper notice. Further, he submits that repayment would cause severe financial hardship forcing him into bankruptcy. He argues that the referees erred in refusing to consider the settlement as severance pay and exempt pursuant to Regulation 57(3)(e), and in the alternative submits that he be excused from repayment.

The Commission includes two CUBs in the file, COATES, CUB 14755, where a settlement for constructive dismissal of six month's pay in lieu of notice was considered to be earnings within Regulation 57(2), to be allocated pursuant to Regulation 58(5)(b) at the rate of the claimant's normal weekly earnings, and HEPPELLE, CUB 15233, where a settlement of a suit for wrongful dismissal and/or severance pay was considered earnings and allocated as such under Regulation 58(5).

Counsel's submission that the settlement was not an arbitration award, but rather should be considered severance pay, has no merit, since both are required to be allocated as earnings under Regulation 58(5) or 58(10). In the present situation, the settlement, even if regarded as severance pay, would not fall within the exemptions contained in Regulation 57(3), since this requires a benefit period commencing prior to March 31, 1985, or a collective agreement or written policy in existence prior to December 31, 1984.

It is clear from Attorney General of Canada v. Walford, [1979] 1 F.C. 768, and Attorney General of Canada v. Tetreault, (1986) 69 N.R. 231, that damages or a settlement for wrongful dismissal are considered earnings within Regulation 57(2)(a) and should be allocated under Regulation 58(5) either to the specific weeks for which they are awarded, or in the week in which the lay-off or separation occurred, unless it is proved by the claimant that the amount or some specified part of it was not paid as compensation for loss of income. The onus of proving this lies on the claimant under section 54 of the Act.

It appears that the referees may have made their determination in the absence of any evidence on the question of whether the settlement was in the nature of compensation for loss of income or otherwise, although, as noted above, they are entitled to assume it was of that nature unless evidence to the contrary is raised by the claimant. The claimant raised this point, and it was not cleared up by him at the hearing. The onus is on him to prove that it was not in the nature of compensation for loss of income.

The referees did not state how they made their finding of fact that the claimant had earnings, except to say that it resulted from a court settlement. They also did not specify any sections of the Act or Regulations or any jurisprudence to support their conclusion, although it does appear to be the correct conclusion. Although the referees' decision is quite inadequate in articulation, expressiveness and extent, and in letting the world know whether they had any thoughts of their own at all on the evidence, it must be confirmed in the result.

Now, this is the point at which to note that, at the hearing the Commission's counsel confirmed that the overpayment which the Commission claims is reduced from $4,503 (ex. 9) by $552, down to $3,951 now claimed as overpayment. Still, a sum not to be sneezed at by a person of ordinary means! The claimant has endured certain impecuniosity in regard to a matrimonial settlement. The Commission's going easy on him, as it may, if so minded pursuant to Regulation 60 surely does seem to be warranted. The claimant and/or his solicitor should give the Commission fuller details of any hardship he will endure as a result of this dismissal of his application for rescission of the referees' decision and its confirmation hereby.

F.C. Muldoon

Umpire

Ottawa, Ontario
August 14, 1990