CUB 73416

GUY GOULARD, Umpire

The claimant applied for employment insurance benefits on November 12, 1997. He submitted a record of employment which indicated that he had worked for an employer from July 7, 1997 until November 8, 1997 and that he had accumulated 954 hours of employment. A claim was established effective November 9, 1997. As a result of an investigation, the Commission requested a ruling from Revenue Canada which determined that the claimant had accumulated only 676 hours of insurable employment. The Commission consequently determined that the claimant had not accumulated the required number of insurable hours in his qualifying period as he required 910 hours of insurable employment to be entitled to benefits. The claim was cancelled. This decision resulted in an overpayment of $5,352.00. The Commission further determined that the claimant had given false or misleading information in regard to his claim. It imposed a penalty of $2,189.00 and issued a notice of violation.

The claimant appealed the Commission's decision to a Board of Referees which dismissed the appeal on the issue of the cancellation of the benefit period and the resulting overpayment and on the issue of the imposition of a penalty but recommended that the penalty be reduced to $1.00. The Board allowed the appeal on the issue of the imposition of a notice of violation. The Commission appealed the Board's decision. This appeal was heard in Vancouver, British Columbia on October 15, 2009. The claimant did not attend but was represented by his lawyer.

Counsel for the Commission indicated that it agreed with the Board of Referees' request for a reduction of the penalty to $1.00. It submitted that the Board erred in law in allowing the claimant's appeal on the issue of the imposition of a notice of violation.

The Commission submitted that the Federal Court of Appeal has consistently held that, pursuant to section 7.1 of the Employment Insurance Act, a notice of violation flows automatically when a penalty, including a non monetary penalty, is imposed on a claimant for knowingly providing false or misleading information in relation to a claim and that the Commission has no discretion in this regard.

Counsel, on behalf of the claimant, submitted that although there is jurisprudence to support the Commission's position, the Federal Court held in Savard (A-546-05) that the Commission does have discretion in regard to issuing a notice of violation when a penalty is imposed on a claimant.

The only issue under appeal is therefore whether or not the Commission possesses the discretionary power of issuing a notice of violation once a penalty had been imposed on a claimant for knowingly providing false or misleading information.

I agree with claimant's counsel that some of the comments by Justice Létourneau in Savard (supra) can be interpreted as indicating that the Commission could have the discretion to issue a notice of violation when a penalty is imposed on a claimant for knowingly providing false or misleading information in relation to a claim, in particular in paragraphs 24, 37 and 38 of the decision. However, the judge's comments in this regard in that decision are obiter as the issue under appeal in that case was whether a penalty for the purpose of the imposition of a notice of violation pursuant to section 7.1 of the Act includes a non monetary penalty. The Court determined that it does.

In any event, since the Savard decision, the Court reiterated in Kaur (A-372-06) and Patry (A-32-07) that a notice of violation flows automatically when a penalty is imposed on a claimant for knowingly providing false or misleading information in relation to a claim. In Kaur, Justice Trudel is unequivocal in this regard:

"According to subsection 7.1(1) of the Act, a notice of violation follows when a penalty is imposed under subsection 7.1(4) of the Act. Parliament intended to ensure that every violation of the type described in subsection 7.1(4) results in an increase in the number of hours required to qualify for benefits. Neither the Commission, nor the Umpire has any discretion in this regard."

I therefore find that the Board of Referees exceeded its jurisdiction and erred in law and in fact in allowing the claimant's appeal on the issue of the notice of violation.

Accordingly, the Commission's appeal is allowed. The Board of Referees' decision is set aside and the Commission's decision is confirmed on the issue of the imposition of a notice of violation. The Board of Referees' decision is not otherwise affected. I also clarify that the penalty is fixed at $1.00.

Guy Goulard

UMPIRE

OTTAWA, Ontario
October 30, 2009