IN THE MATTER of the UNEMPLOYMENT INSURANCE ACT
- and -
IN THE MATTER of a claim by
WILLARD WILSON
- and -
IN THE MATTER of an appeal to an Umpire by the claimant
from a decision by the Board of Referees given
on August 5, 1998 at Terrace, British Columbia.
CORRESPONDING FEDERAL COURT DECISION: A-531-00
Marin - Umpire
This appeal along with the appeal of David Crosby from a decision of a Board of Referees delivered at Nanaimo, British Columbia, on July 29, 1998 were heard together at Prince Rupert, British Columbia, on November 25, 1999. The issues arising from each appeal are similar, and the present decision will apply mutatis mutandis to both appeals.
Rulings of the Commission:
Appellant Wilson:
Mr. Wilson was advised by the Commission on March 31, 1998 that, pursuant to ss. 57 and 58 of the Unemployment Insurance Act, the "honorarium monies received while an elected official of the Skidegate Indian Band" were subject to allocation. As a result of the allocation of earnings from January 28 to December 15, 1996 an overpayment was established (Exhibits 17-1 to 17-3).
Counsel on behalf of the claimant filed an appeal which was heard on July 28, 1998 at Terrace, British Columbia.
Appellant Crosby:
Mr. Crosby was also advised by the Commission on January 6, 1998 that, pursuant to ss. 35 and 36 of the Employment Insurance Act, the "honorarium earnings" from the Skidegate Council from January 29 to June 17, 1996 were subject to allocation. An overpayment was established (Exhibit 9).
This Commission ruling was also appealed by counsel on behalf of the claimant; this appeal was heard on July 29, 1998 at Nanaimo.
Decisions of the Boards:
Both appeals were dismissed; I reproduce the relevant portion of the Board's decision in each case.
Wilson appeal (Exhibits 26-1 and 26-2):
HEARING:
The claimant's representative gave three different arguments in support of his client:
(i)The first argument was that the honorarium did not constitute income as stated in Section 57(1)(c) defines "office" as:
"... the position of an individual entitling him to a fixed or ascertainable stipend or remuneration..."
In the Board's opinion the claimant received remuneration for his role as councillor and this remuneration constitutes income under Subsection 57 if [sic] the Unemployment Insurance Act.
(ii) The second argument is that the remuneration is a "gift" and not income.
Again, based on the evidence, the Board of Referees decided that the amounts received constituted income under Subsection 57 of the Unemployment Insurance Act.
(iii) The claimant was on a self-employment agreement programme which allowed participants to keep their Unemployment Insurance benefits (Exhibit 24-5). However the Act had changed since September 1993 the date on Exhibit 25-5 and Subsection 57(1)(c) and 58(3) must be applied.
The Board of Referees decided that the honorarium received from the Skidegate Band constituted income in accordance with the Unemployment Insurance Legislation.
DECISION:
The Board of Referees unanimously dismisses the appeal.
Crosby appeal (Exhibits 19.2 and 19.3):
THE HEARING
The hearing was conducted via telephone to the offices of the Claimant's lawyers, Roberts & Stahl in Vancouver, British Columbia. Mr. Kim Roberts represented the claimant, who was not present.
The representative confirmed the issue to be whether or not the honoraria was to be considered income. He pointed out that the honoraria received by the Claimant was not an entitlement but a gift. It was not a fixed stipend although the Band policy was to pay the honoraria on a regular basis. Mr. Roberts pointed out that this was a Band policy and that the Claimant would not have had the right to sue for compensation should the Band policy change.
The hearing was recorded.
APPLICATION OF THE LAW
As defined in Subsection 35(1) of the Employment Insurance Regulations (Exhibit 17.4) "income" means any pecuniary or non pecuniary income that is or will be received by the claimant from an employer or any other person. In Subsection 35(1) employment is defined as "the tenure of an office as defined in subsection 2(1) of the Canada Pension Plan".
Much jurisprudence has been written on the subject of earnings, income and the allocation of same. In CUB 17682 the Umpire writes "The Board erred in law in relying on Black's Law Dictionary to preclude an honorarium received by the claimant for his elected position as a Band Councillor from being considered as earnings."
In view of the above sections of the Act and the jurisprudence cited, this Board finds that the honoraria must be included as earnings and reported on the Claimant's weekly reporting cards. It follows that the allocation of the "earnings" must be allocated to the weeks in which they were received.
DECISION
Appeal is dismissed.
Facts:
Both appellants, as elected members of the Skidegate Band Council, received honoraria from the Band while in receipt of benefits. The amounts received were not reported on the weekly report cards filed by each claimant. The Commission allocated the monies received as earnings for the purposes of the relevant Unemployment Insurance/Employment Insurance legislation.
The Commission established the appellant Wilson as having received the sum of $32,425 over 42 weeks (the period under review); it established the appellant Crosby received the sum of $13,038 over 19 weeks (the period under review).
The Commission also established that both appellants were in receipt of benefits while the monies were paid out by the Band Council.
No Band Council by-laws were filed identifying whether the monies paid were to reimburse the claimants for disbursements or out of pocket money.
ISSUES
The Commission is of the view that monies paid by the band while not insurable and not subject to premium are nonetheless earnings and therefore can be allocated under the legislation.
The Commission does not argue an employment relationship; however, it takes the view the claimants are office holders as defined in s. 2(I) of the Canada Pension Plan.
Counsel for the appellants is of a different view.
The appellants submitted to the Commission and before the Board that:
(i) The honoraria does not constitute income as defined in s. 57(1)(c) of the Act; the monies were paid as a gift, the councillor having no legal right or title to remuneration from said office. As such, the honoraria cannot be treated as income under s. 57(1) of the Regulation.
(ii) The honoraria therefore constitute a "gift" and not income or business income; alternatively, the monies paid are in the form of reimbursement for expenses incurred in attending Council meetings.
(iii) The claimants were on "self-employment agreement" programme (SEA) and allowed to retain certain benefits while serving as members of the Skidegate Band Council.
(iv) The definition of "office" in s. 2(1) of the Canada Pension Plan, while it may apply, encompasses an "entitlement" to a fixed stipend or remuneration and therefore has no impact on the appellants.
(v) The Government of Canada is "estopped" from disallowing the payment of honoraria in conjunction with benefits under the Act as it has known this to be the practice and has never intervened.
(vi) The honoraria was not paid for service rendered but rather as a sign of "respect and honour". It was suggested that "honorarium" and "office" are foreign concepts to the Assembly of First Nations (AFN) and Band Councils. The Commission was advised the practice pre-existed the Unemployment Insurance Act, the Canada Pension Plan and the Charter of Rights and Freedoms. The AFN is seeking Government clarification on these issues.
The appellants at the hearing of these appeals are deemed to have adopted the same arguments which led the Commission to make its ruling and the Board to reach its decision to support the Commission position.
A judicial review of the Board's decision is restricted to whether the Board erred in fact or in law in reaching its decision; while new arguments may be raised, I must also place myself in the same position as the Board and determine whether on the argument, evidence and law, it erred in its decision.
Before the undersigned, counsel for the appellants sharpened his focus to information given by Commission employees to the appellant Wilson to the effect he did not have to declare as income the monies paid by the Band and the effect of the legislative changes brought about by the 1993 Amendments to the Act which, in his view, do not bring the appellants within the ambit of s. 57 of the Regulations.
It was also argued that the term "office" is related to a stipend - an entitlement or a basic right while the honoraria paid were not an entitlement but a gift by Council.
It was further argued that "office" holder, as defined in the Canada Pension Plan, was not intended to apply to Band Councillors, otherwise the legislator would have stated so.
The Commission argues the monies were paid for services as elected officials, that no portions of same were designated as disbursements and therefore were subject to allocation.
Applicable Legislation:
It was agreed that the applicable legislation includes:
Section 57(1)(a) and (c) of the Regulations:
57.(1) In this section
"income" means any pecuniary or non-pecuniary income that is or will be received by a claimant from an employer or any other person; "employment" means
(i) any employment, whether insurable, not insurable or excepted employment, under any express or implied contract or service or other contract of employment,
(ii) whether or not services are or will be performed by the claimant for any person, and
(iii) whether or not income received by a claimant is from a person other than the person for whom services are or will be performed, and
(iv) any self-employment whether on the claimant's own account or in partnership or co-adventure; and
(v) the tenure of an office as defined in subsection 2(1) of the Canada Pension Plan. [I have underlined]
Subsection 2(1) of the Canada Pension Plan reads:
2.(1). "office" means the position of an individual entitling him to a fixed or ascertainable stipend or remuneration and includes a judicial office, the office of a minister of the Crown, the office of a lieutenant governor, the office of a member of the Senate or House of Commons, a member of a legislative assembly or a member of a legislative or executive council and any other office the incumbent of which is elected by popular vote or is elected or appointed in a representative capacity, and also includes the position of a corporation director, and "officer" means a person holding such an office;
Previous Rullings and Decisions;
Cullen J., sitting as Umpire in the Alec matter (CUB 17033), stated at p. 5:
In dealing with the question of whether the honoraria are earnings, the claimant is correct when he noted that the Board provided no reasons for its finding. It appears to simply have reiterated the insurance officer's decision on this point. The determination of earnings for benefit purposes must be done in accordance with section 57 of tire Regulations. Paragraph 57(2)(a) of the Regulations provides that earnings are the "entire income of the claimant arising out of any employment". However, clause 57(6)(a)(i) provides that:
(6) For the purposes of subsection (2), "earnings" includes,
(a) in the case of a claimant who is not self-employed, only that amount of his income remaining after deducting
(vi) expenses incurred by him for the direct purpose of earning that income,
The relationship between income and expenses was dealt with by Muldoon, 1. in CUB 11083 - Cairns. Cairns involved the characterization of an aldemanic stipend and an aldermanic allowance. The allowance, being tax free and being paid specifically to cover expenses related to the job was not considered earnings, but the regular stipend was. At page 6 of his decision, Muldoon, J. considered whether the northern allowance received by the claimant was on the same or similar footing as the aldermanic allowance:
The aldermanic allowance is provided in recognition of the fact that the elected representative does not perform all of his or her official duties, and functions of a representative of the people only in the council chamber, but must also mingle with, and attend to the concerns of, the electorate on many and diverse occasions. It imports a notion of dynamic communication with constituents, but has nothing to do with the costs of board and lodging or the other costs of living.
The same reasoning should be applied to the honoraria received by the claimant to determine whether they can be "subsumed in the same concept as that of the aldermanic allowance". If so, honoraria should not be considered earnings.
As the claimant indicated in his observations, this matter has been going on since 1984. the Board, I feel, has made a number of errors. As it would be pointless to refer the matter back to yet another Board, I will exercise my discretion under section 80 (formerly section 96) of the Act and make the decision that the Board should have made on the issues dealing with full working weeks, misleading statements and earnings.
[I have underlined]
In my view, the Alec decision turned on:
1) The Board's failure to provide reasons for its findings; and
2) The interpretation given to the former Regulation. The reference in the decision to the Cairns matter clearly identifies instances where an "allowance" is given to cover expenses.
Rouleau J. in the Raven matter (CUB 17682) also dealt with an allocation of monies received by a Councillor with the Hollow Water Band, and stated at p. 3:
The claimant ... was receiving two types of cheques, one for honorarium and the other for reimbursement of expenses, and was unable to prove that the honorarium was used for expenses. He would not have received monies except for the fact that he served as a councillor, therefore the honorarium is earnings and should be allocated.
This was followed by the decision of Simpson J. sitting as Umpire in the Solomon matter (CUB 22808A). The decision adds little to the present debate, except to confirm that allocation cannot be made when amounts disbursed are for reimbursement of expenses incurred.
Haddad J. sitting as Umpire in the Spinks matter (CUB 38144A) considered whether a weekly sum of approximately $100 was subject to allocation under s. 57 of the Regulations to the Act. The Umpire accepted the fact that the weekly honorarium avoided the administrative expenses of examining expense accounts submitted by Councillors performing Band duties.
Commission counsel in Spinks conceded that the honorarium was for the purpose of covering expenses. Umpire Haddad had no problem determining that such monies could not be allocated. The learned Umpire said at p. 3:
There is no dispute that claimant is an elected official thereby ruling out the employer-employee relationship. The question arises, then as to whether claimant occupies an office within the definition of the Canada Pension Plan. In examining that question I focus upon the words "entitling him to a fixed or ascertainable stipend or remuneration". Throughout the evidence it is clear that honoraria received by the claimant was not a fixed entitlement. Indeed, it was not an entitlement at all. Election to the position of Councillor did not confer upon the position an entitlement to a stipend or other form of remuneration. Payment of an honorarium to a Councillor was within the discretion of the Council of the Lytton First Nation. As pointed out by counsel the Council was at liberty to discontinue payment of the honorarium and, although the claimant while retaining the position and performing the duties which devolve upon a councillor, he would have no legal recourse to force the Band to pay an honorarium or some form of stipend. He would, of course, be entitled to be reimbursed for his expenses.
Counsel for the Commission in his presentation said that the Commission does not deny that the honorarium received by the claimant was for the purpose of covering his expenses in performing his duties. He says the Commission ought to be entitled to an accounting of claimant's actual expenses as it is conceivable that the honorarium exceeded the expenses incurred by the claimant and any surplus would be treated as earnings.
The test to be adopted, in my view, is whether the weekly honorarium was so excessive that it would be unreasonable to believe that its real purpose was to compensate for a Councillor's daily expenses. That is to say consideration should be given as to whether the honorarium is so excessive that it is a guise for a wage or salary. That is a judgment call and the Board of Referees did not examine the honorarium from that perspective. The Board said the claimant "was unable to prove that the honorarium was used for expenses. He would not have received the monies except for the fact that he served as a Councillor, therefore the honorarium is earnings and should be allowed". In making that statement the Board wholly disregarded the evidence offered by the Lytton First Nation regarding the rather extensive travelling to which a Councillor was committed in carrying out his duties and the real purpose of the honorarium. It is correct to say claimant received the money because he was a Councillor but he received it to permit him to perform his function as such.
Having regard to the territory claimant serviced, the honorarium of $100 a week is not at all excessive - particularly when one takes into account the cost of gasoline and the general expense of operating an automobile and the cost of meals while travelling Indeed, claimant's counsel contends that the honorarium did not full cover expenses. That submission was acknowledged, but disregarded, by the Board in arriving at its conclusion. The Band's intent of relieving Councillors the task of keeping a record of expenses and relieving itself of the administrative costs of examining expense accounts is quite a logical common sense decision.
The Board erred in disregarding the material before it and it erred in law in its conclusion that the honoraria fell within the definition of earnings. In my view, the honoraria should not be classified as earnings.
Accordingly the statements made by the claimant on his report cards were not false.
For the foregoing reasons I allow the appeal in respect of both issues.
[I have underlined]
These decisions are not particularly useful to the appellants in the circumstances; in each decision alluded to, there was a basis to support a finding that monies paid were for disbursements; where it was not so established, the sums were allocated as earnings.
The issue of estoppel cannot apply; it is trite law that where a status imposes conditions with respect to entitlement under an Act, the Crown cannot be bound by estoppel in a way which would make ineffective the statutory requirements.
Similarly, whatever advice was dispensed by Commission employees to either or both appellants is irrelevant and cannot per se bind the Commission (see Granger [1986] 3 F.C. 70).
The issue of the Self-Employment Assistance Program is, in my opinion, moot and cannot assist the appellants. In any event, it was not advanced as a ground of appeal before me.
The more substantial argument is whether the monies are captured by the 1993 amendments relating to the definition of "office" in subsection 57(1)(c) above quoted and incorporating by reference the definition of "office" contained in the Canada Pension Plan.
This incorporation by reference triggers two issues: Were the appellants holders of an "office" and, if so, was there an entitlement associated with that office? The dictionary definition of "entitlement" is of little value; in its broader sense, the definition of "entitle" from the Webster's New World Dictionary includes "to qualify" and would, by definition, capture the appellants if they are holders of an office.
The method of payment of the monies is relevant in determining the issue of entitlement. The appellant Wilson received a regular weekly amount during the period under review; initially, the honorarium was as low as $125, but increased to as much as $1,250. A similar pattern is noted in the case of the appellant Crosby.
To suggest that the payment was not an entitlement since it flowed from a policy of the Council and, therefore, was not an entitlement is not an acceptable distinction. The members of the Council themselves fixed the honoraria; they simply did not just come from any other external source. The honoraria were self-sponsored and subjectively granted.
To my mind, however, it is the regularity of the payment (not necessarily the amount), coupled with the expectation of it which excludes the notion that the payments were in the form of a gift or a gratuity and not a fixed payment. While the amounts varied, their regularity made it a "fixed" stipend or remuneration.
The decision of the Alberta Supreme Court in Vladicka and Board of School of Trustees of Calgary School District #19, 45 D.L.R. 442, is not helpful since the Unemployment Insurance Act defines the scope of its application.
While it may be argued the appellants may not be included in the first part of the definition as holders of an "office", in my view, they are capture by the inclusion of "any other office the incumbent of which is elected ... or appointed in a representative capacity ... "
The definition of an office holder in subsection 57(1) of the Regulations is clear and unambiguous and must apply in each case having regard to the clear circumstances established.
The appellants are holders of an office, as defined in the Regulations. They were in receipt of an entitlement as a result of holding that office and, therefore, in receipt of monies subject to allocation.
The Board did not err in fact or in law; my intervention is not required in either appeal.
Conclusion:
The appellants were both in receipt of movies which were subject to allocation under subsection 57(1) of the Regulations.
If the repayment creates a hardship, the matter can be taken up with the Commission, pursuant to s. 56(1)(f)(ii) of the Regulations.
Disposition:
Both appeals are dismissed, and the Commission's rulings are sustained.
R. J. Marin
UMPIRE
OTTAWA, Ontario
July 11 2000