CUB 72841

GUY GOULARD, Umpire

The claimant worked for a company until November 18, 2005. He filed a benefit claim that was established effective November 20, 2005. The Commission later determined that the claimant was not unemployed because he did not have seven consecutive days without work and earnings. The Commission cancelled the benefit period effective November 20, 2005. This decision resulted in an overpayment of $5,440.00.

The claimant appealed from the Commission's decision to a Board of Referees, which allowed the appeal. The Commission appealed from the Board's decision to an Umpire. This appeal was heard in Quebec City, Quebec, on July 9, 2009. The claimant attended the hearing and was represented by counsel. Three appeals concerning benefit periods established in 2005, 2006 and 2007 were heard jointly.

The Commission's decision to the effect that the claimant did not have seven consecutive days without work and earnings was based on the fact that three employment benefits were still extended to the claimant after he was laid off. They were the following: the use of a vehicle, cellular telephone and credit card belonging to the employer.

The pertinent facts in this case can be summarized as follows: the claimant owned a business for 25 years. In 2004, he sold the company to another person, who is now his son-in-law. The terms and conditions of the sale are found in Exhibit 11 of the appeal docket.

The claimant and his son-in-law admitted that, after the claimant was laid off in November 2005, he continued to use a vehicle, a cellular telephone and a credit card belonging to the employer.

In a statutory declaration, the claimant indicated that he sold his company to his son-in-law who worked with him in the business. The claimant indicated that he sold the company because of health problems. He explained that his duties for the employer consisted of doing estimates between April and November and that he had not worked during the winter period since selling the company. The claimant's son-in-law indicated that the claimant helped him out during the busy period doing estimates.

The claimant attended the hearing before the Board of Referees and was represented by counsel. The owner of the company, the claimant's son-in-law, testified at the hearing before the Board. He submitted exhibits providing details of the sale. The Board summarized the testimony of the claimant's son-in-law as follows:

In return for the favourable purchase price and considerations on the sale balance, the purchaser agreed to let the vendor continue using the truck, the gas card and the cellular telephone until June 2009. Those considerations were an integral part of the transaction. The purchaser said that the arrangement saved him almost $300,000.

In his testimony, the claimant's son-in-law explained as follows that the amount of the gas bills for the claimant's truck (00001) includes bills for other company vehicles. Not all employees have a company-issued gas card; the company has 14 vehicles. The claimant lived across from the service station, and when he went there to get coffee, he paid other people's bills with his gas card. The claimant's son-in-law added that no other employee had the benefits that were extended to the claimant when he sold his business. He added that the claimant is in poor health and works a reduced schedule for the company during the busy season (summer).

In his arguments to the Board of Referees, counsel for the claimant stated that the benefits granted to the claimant by the employer were simply part of the sales agreement and had nothing to do with employment benefits.

The Board of Referees reviewed the evidence and indicated that the claimant's son-in-law was very credible in his statements regarding the terms and conditions of the sale and the reasons for which the claimant had been given certain benefits as part of the transaction. The Board allowed the claimant's appeal for the following reasons:

Based on those explanations, the Board of Referees finds that the benefits granted cannot be considered employment earnings within the meaning of the Act, since they are unrelated to work performed for or service rendered to the employer by the claimant. Exhibits 11 and 12 and the jurisprudence produced reinforce this interpretation of the three dockets.

On appeal from the Board of Referees' decision, the Commission submitted that the Board erred in fact and in law when it decided that the claimant had an interruption of earnings while he was still granted benefits by the employer, including the use of a vehicle, cellular telephone and credit card. The Commission submitted that the case law has established that such benefits constitute earnings pursuant to section 14(1) of the Employment Insurance Regulations. The Commission stated that the Board of Referees failed to take all the evidence in the appeal docket into account and that it based its decision solely on the testimony given by the claimant's son-in-law at the hearing. The Commission pointed out that there was no mention of the claimant in the sales agreement to the effect that the claimant could still receive the benefits mentioned above after he stopped working. The Commission submitted that the facts in the case law on which the Board based its decision were different than those in this case.

Counsel for the claimant submitted that there was no evidence presented to the Board to the effect that the claimant allegedly continued to provide services to the employer after he was laid off for the winter. Counsel pointed out that the evidence presented to the Board, which the Board found credible, showed that the claimant continued to use a vehicle, a cellular telephone and a credit card belonging to the employer because of the agreement that the claimant made with his son-in-law when he sold the company.

I recognize that, in some cases, the case law has established that continuing to receive certain benefits such as a vehicle, a cellular telephone or a credit card belonging to the employer may constitute earnings within the meaning of section 14(1) of the Employment Insurance Regulations. However, in most of these cases, it was shown that the claimant continued to provide services or that the claimant was available to the employer during the periods in question (CUBs 51153, 35521 and 59808A). In this case, there was no evidence to the effect that the claimant provided services while he was laid off. The claimant's son-in-law even indicated that, during the busy season, the claimant worked reduced hours because of his fragile health. The claimant said in his statutory declaration that he never worked during the winter period and that he only ever did residential estimates from April to November.

Furthermore, in the case law to which the Commission referred, there was no evidence that the benefits received by the claimants in those cases were supposedly granted for reasons other than the claimants' work. In this case, the undisputed evidence showed that the benefits received by the claimant were agreed upon by the claimant and his son-in-law as part of the terms and conditions regarding the financing of the company's sale. The fact that there was a familial relationship between these two parties may have also been pertinent to the terms of the agreement.

In Théberge et al. (A-691-01), the Federal Court of Appeal established that, for an amount received by a claimant to be considered earnings within the meaning of the Employment Insurance Act, it must be shown that there was a relationship between the amount received by the claimant and work done or there must at least be a link or relationship between the claimant's employment and the amount received. In this decision, Desjardins J. wrote the following:

In Lawrie Vernon, supra, Linden J.A. noted that the definition of earnings set out in the Regulations is very general and that, consequently, the exact meaning of the word "earnings" must be drawn from the caselaw. He then cited Côté, noting the paragraph by Pratte J.A. dealing with the meaning of the term earnings in the Act. Linden J.A. then linked the criteria developed by both the majority (Pratte and Lacombe JJ.A.), and Marceau J.A. in Côté, to the idea that to be considered earnings, a receipt must in a general way have the characteristics of an amount paid in consideration of work done by the claimant -- the receipt must be from work done, and not merely as a consequence of a person's employment status (paragraphs 10 and 11 of his reasons). He then asked the following question: "Is the ... subsidy in question here a receipt arising out of work done by the employees, and does it bear a sufficient connection to that work to be properly found to be consideration for the work so performed?" . . .
Can an amount which is not in consideration of work done in the traditional sense and which has not been expressly included in the Regulations by the Commission, be earnings within the meaning of the Act and the Regulations?
That is the issue in this case.
We must, I believe, answer in the affirmative on condition that this amount is comparable to earnings and that there is a "certain connection" or a "sufficient connection" between the claimant's employment (in the absence of work done in the traditional sense) and the sum received. These elements are inherent, in my view, to the judicial interpretation of the Act and the Regulations.

In this case, there was no evidence to the effect that the benefits received by the claimant were tied to his employment. On the contrary, the undisputed evidence, which the Board found very credible, established that the claimant did not provide any service during the periods in question and that the benefits that the claimant continued to receive all year were part of the terms and conditions of the financing agreement when the claimant sold his company to his son-in-law.

The case law holds that the Board of Referees is responsible for assessing the evidence and the testimony before it. The Federal Court of Appeal stated the following on this matter in Guay (A-1036-96):

In any event, it is the Board of Referees - the pivot of the entire system put in place by the Act for the purpose of verifying and interpreting the facts - that must make this assessment.

The case law (Le Centre de valorisation des produits marins de Tourelle Inc., A-547-01; McCarthy, A-600-93; Ash, A-115-94; Ratté, A-255-95; Ducharme, A-618-00; and Peace, A-97-03) also holds that the Umpire cannot substitute his or her opinion for that of the Board of Referees unless the Board's decision appears to have been made in a perverse or capricious manner or without regard for the material before it. In Ducharme (supra), Richard C.J. wrote the following:

In addition to having access to the relevant exhibits, which were also in the record before the Umpire, the members of the board of referees had the advantage of hearing the claimant's testimony.

It appears from the decision of the board of referees that that testimony was inconsistent with what was said in the claimant's statutory declaration (Exhibit 5), which was that his employment was not casual.

The board of referees considered a question of fact and found that the claimant was credible.

There was no reason for the Umpire to intervene and substitute his assessment of the claimant's credibility.

In this case, the Board reviewed the evidence found in the docket and presented at the hearing and the Board rendered a decision that is entirely compatible with this evidence. The Board found that there was no link between the claimant's employment and the benefits that he received. The jurisdiction of the Umpire is limited by section 115(2) of the Act. Unless the Board of Referees failed to observe a principle of natural justice, erred in law or based its decision on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it, the Umpire must dismiss the appeal.

The Commission did not show that the Board of Referees erred in fact or in law in deciding as it did.

Consequently, the appeal is dismissed.

Guy Goulard

UMPIRE

OTTAWA, Ontario
July 17, 2009