IN THE MATTER of the EMPLOYMENT INSURANCE ACT
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IN THE MATTER of a claim by
I.V.
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IN THE MATTER of an appeal to an Umpire by the Commission
from a decision by the Board of Referees given on
March 31, 2010 at Regina, Saskatchewan
GERALD T.G. SENIUK, Umpire
This is an appeal by the Commission from a decision by the Board of Referees that allowed the claimant’s appeal from a determination by the Commission that allocated settlement payments as earnings pursuant to sections 35 and 36 of the Employment Insurance Regulations (the Regulations).
The claimant quit her employment with the Government of Yukon on February 17, 2008 (exhibit 3) in order to accompany a fiancé (exhibit 2.6) and separately made a complaint with the Yukon Human Rights Commission about sexual harassment in the workplace (exhibit 11.7). The Human Rights Commission recommended that the Government of Yukon, Department of Justice, Whitehorse Correctional Centre, pay the claimant the lump sum of $30,000 representing compensation for general and exemplary damages as well as reimbursement for out-of-pocket legal fees (exhibit 11.8).
The Director of the Human Rights Commission drafted a settlement agreement for the parties (exhibit 11.8), but inexplicably, the final settlement agreement is instead a handwritten document, appearing by the writing and lined-out emendations to have been hurriedly accomplished (exhibit 21.1). The document is without prejudice or precedent and is between I.V., the Yukon Public Service Commission (Employer) and PSAC (Union). This document states, in part, the following:
The Employer will pay to the C twenty-nine thousand dollars (29,000) less required deductions by way of financial loss, and ten thousand dollars ($10,000) by way damages as per section 24 of the Yukon Human Rights Act.
The Complainant will forthwith [inserted edit] withdraw all Yukon Human Rights Commission (YHRC) complaints.
Subsequently, the claimant received and cashed a cheque for $23,450.76, representing payment of the $29,000 which is described in the attached invoice as Wages in Lieu.
Damages paid to an ex-employee who has been wrongfully dismissed without notice are income arising out of an employment if they are paid as compensation for the loss of income suffered by the employee as a result of his or her wrongful dismissal. In order for damages to be exempt from earnings, a claimant would have to establish that the monies were paid to him or her for something other than loss of wages; that is, a loss which is totally unrelated to advantages arising from employment. For example, settlements paid to address injury to one’s health or reputation or to address one’s legal fees, would not be allocated as earnings. Where there are no special circumstances, any amount paid by an employer to a laid-off or dismissed employee is paid as compensation for the loss of income (Canada (A.G.) v. Walford, [1979] 1 F.C. 768 (F.C.A.) A-263-78; Canada (A.G.) v. Tetreault, [1986] F.C.J. No. 176 (F.C.A.) A-527-85; Canada v. Mayor, [1998] F.C.J. No. 310 (F.C.A.) A-667-88; Canada (A.G.) v. Harnett, [1992] F.C.J. No. 152 (F.C.A.) A-34-91; Canada (A.G.) v. Radigan, [2001] F.C.J. No. 153 (F.C.A.) A-567-99).
As a result of the documented evidence, the Commission took the view that this payment was to be allocated pursuant to the provisions of subsections 35(2) and 36(9) of the Regulations. The Federal Court of Appeal has long held that any payment under a settlement agreement paid to compensate the loss of employment income, including wages in lieu of notice, constitutes earnings within the meaning of subsection 35(2) of the Regulations (Canada (AG) v. Walford, A-263-78; Canada v. Mayor, A-667-88; Canada (AG) v. Harnett, A-34-91).
That decision was appealed by the claimant to the Board of Referees, which concluded that the intent of the Human Rights Commission (exhibit 8) and the appellant was the correct interpretation to be placed on the mediation agreement and therefore, Subsection 35(2) is inapplicable (exhibit 24.5). Monies paid as damages are not earnings within the meaning of section 35 (CUB 62226). The relevant part of its decision is as follows (exhibit 24.4 - 24.5):
EVIDENCE AT THE HEARING
The appellant testified in person and was credible and forthright. Her testimony is accepted by the Board. The appellant filed further documentary evidence in the form of copies of:
The appellant was assured by her union lawyer and the employer that she was not employed after she quit and any amount of settlement would not be wages or salary.
The report of the Yukon Human Rights Commission recommended no amount of the award should be in lieu of wages (Exhibit 11-8).
The purported settlement agreement was concluded after a summons from Moose Jaw to Whitehorse for mediation six months after delivering twins. She was not allowed to have anyone with her during the mediation. The union lawyer made representations that any settlement was not to be wages on this basis and after being browbeaten for 3 days she signed the document. The union lawyer borrowed her file for review and thereafter refused to return it and no longer answers her phone calls.
FINDINGS OF FACT, APPLICATION OF LAW
Under these circumstances the intent of the Human Rights Commission (Exhibit 8) and the appellant was the correct interpretation to be placed on the mediation agreement and therefore, Subsection 35(2) is inapplicable.
DECISION
The Board allows the appeal
In turn, the Commission appealed the Board of Referee’s decision on the grounds of correctness and an error of law. In its submission to the Umpire, the Commission stated, in parts, the following:
The issues before the Board were whether the payment of $29,000 was earnings within the meaning of s. 35(2) EIR; and whether it should be allocated to a period on claim under s. 36(9) EIR. The Board allowed the appeal without explaining why s. 35(2) EIR was inapplicable; and without addressing s. 36(9) EIR. The Board's failure to justify its decision under s. 114(3) EIA is an error in law.
Bellefleur v. Canada (AG), 2008 FCA 13
The Commission submits that neither Exhibit 8 nor the "intent" of the Human Rights Commission dated October 20, 2007 (Exhibit 11.8) made any reference to the $29,000 payment. Secondly, the claimant presented no proof to support her allegation that the entire settlement was for damages. On the contrary, the undisputed evidence in the file confirmed that $29,000 was paid for financial loss as wages in lieu of notice from February to August 2008; while $10,000 was paid under s. 24 of the Yukon Human Rights Act as damages to dignity/feelings (Exhibits 5, 6, 9, 21, 22). The Board erred in law when it ignored this evidence and failed to apply the legal test under s. 35(2) EIR to the proof that was before it.
Canada (AG) v. Hallée, 2008 FCA 159; Schooner v. Canada (AG), 2004 FCA 411; Déry v. Canada (AG), 2008 FCA 291
In Bellefleur, A-139-07, the Federal Court of Appeal explained what the Board of Referees was required to do in giving reasons for its decision. If viewed in a proper context, the Board of Referees met that test in this case. The court in Bellefleur stated in part as follows:
[3] A Board of Referees must justify its determinations. When it is faced with contradictory evidence, it cannot disregard it. It must consider it. If it decides that the evidence should be dismissed or assigned little or no weight at all, it must explain the reasons for the decision, failing which there is a risk that its decision will be marred by an error of law or be qualified as capricious.
[4] In Parks v. Canada (Attorney General), [1998] F.C.J. No. 770 (QL), at paragraphs 5 and 6, our Court reiterated the principle in these words, referring to subsection 79(2) of the Unemployment Insurance Act, now subsection 114(3):
5. We are all in agreement that the Board erred in law in failing to comply adequately with subsection 79(2). Specifically we are of the view that it was incumbent on the Board to state, at least briefly, that it rejected critical parts of the evidence of the applicant on grounds of credibility, and why it did so. In this case there was before the Board much written material from the employer of a hearsay nature. The affidavit evidence and oral statements of the claimant before the Board conflicted in various respects with this material. The Board simply states its conclusions without explaining why it preferred one version of events to the other.
6. While we do not interpret subsection 79(2) to require a detailed statement of findings of fact, we are of the view that the Board of Referees, to comply with that subsection, must when there is an issue of credibility state at least briefly, as part of its "findings ... on questions of fact material to the decision", that it rejects certain evidence on this basis and why. When it fails to do so it errs in law.
I will return to this point further down, but it seems to me that Bellefleur supports the Board of Referees in the case under appeal. Similarly, the Hallée decision (A-337-07) cited by the Commission can be distinguished on its facts, in that the Board in Hallée explicitly and for the wrong reasons disregarded important facts. That is not the situation in this appeal. In Hallée, the Federal Court of Appeal explained the error of the Board of Referees in that case as follows:
[4] As the Board's decision makes clear, the Board chose not to take the respondent's two previous errors into account, on the ground that the collective agreement provided for their exclusion.
[5] The existence of three consecutive errors was shown at all steps of the case, both in the documents filed in evidence and by the respondent's own admission.
[6] The argument to the effect that this major part of the evidence could be excluded based on the provisions of the collective agreement is without merit, as it was the Board's duty to examine all the evidence submitted, and excluding two previous errors is an error in law.
[7] Moreover, the fact that the respondent gave the wrong medication to a resident despite the fact that the resident told her that it was not her usual medication; that the respondent, by her own admission, noticed that it was not the usual medication, yet did not check the information on the dosette; that the resident had to be taken to hospital; and that it was the third time that the respondent made such a significant error demonstrates unequivocally that the respondent's conduct was so reckless as to approach willfulness.
That is a far different situation than in this appeal. The Board of Referees, as can be seen by the above portion of its decision, noted all the relevant evidence. Another Federal Court of Appeal that relied upon Bellefleur, although not cited by the Commission, is more analogous to the situation in this appeal. This is the decision in Lona McKinnon (Fosker) 2010 FCA 250, A-16-10, which held as follows:
[2] The applicant claimed sick benefits for the period between May 7 and July 1, 2006, during which she was allegedly absent from work recovering from surgery. She reported to the Commission that she received no earnings during this period. During its investigation, the Commission received pay statements from her employer indicating that the applicant returned to work on May 30, 2006. The applicant initially responded that the payments might have been for overtime banked before her surgery. The Commission concluded that the applicant had been overpaid benefits in the amount of $2010, and that she knowingly made false or misleading representations. It assessed her with a penalty of $1005.
[3] Before the Board, the applicant testified that she did not receive any payment during the time in question, including for banked hours. The Board allowed her appeal and explained its finding on this central point as follows:
We find the claimant and her husband's testimony credible, because it was consistent. We find that the employer's pay slips are inconsistent and shoddy. We find that the claimant has stated consistently that she never received the money the employer allegedly paid her during the benefit period.
[4] On further appeal, the Umpire reversed the Board's decision and restored the decision of the Commission. First, the Umpire held that the Board did not give sufficient weight to a declaration by the employer to Human Resources and Development Canada. Second, the Umpire wrote that the Board ignored important evidence, including information related to the employer's pay records and the applicant's own initial explanation that she had been paid for banked overtime hours. He said that if the Board wished to reject this evidence, it was required to explain why it chose to do so. The Umpire quashed the Board's decision and restored the initial rulings of the Commission.
[5] There are two issues on this application: whether the Umpire erred in finding that the Board's reasons were inadequate, and if he made no such error, whether the Umpire erred by restoring the Commission's rulings.
[6] The applicant submits that the Umpire erred in law by requiring that the Board's reasons explicitly address every piece of contradictory evidence, and by substituting the Board's analysis of the evidence with his own. It is well-settled that the standard of review for an Umpire's decision on a question of law is correctness: MacNeil v. Canada (Employment Insurance Commission), 2009 FCA 306, 396 N.R. 157.
[7] As this Court held in Bellefleur v. Canada (Attorney General), 2008 FCA 13 at paragraph 3, the Board is not entitled to ignore important evidence, or reject it without explanation. On the other hand, it is important to remember that the Board is not composed of lawyers, and that its process is designed to be informal and efficient for litigants. Its decisions therefore should not be read microscopically: Roberts v. Canada (Employment & Immigration Commission) (1985) 60 N.R. 349 at paragraph 10 (C.A.). It is not necessary that the Board's reasons analyze each piece of evidence. Instead, the central requirement is that the Board's reasons explain how it reached its decision: Clifford v. Ontario (Attorney General), 2009 ONCA 670, 98 O.R. (3d) 210 at paragraph 20.
[8] In this case, the Board explained its decision by writing that it found the testimony of the applicant and her husband credible because it found their testimony consistent. Because credibility decisions are based on a multitude of tangible and intangible factors, it is difficult for a tribunal to express why it finds a witness credible in much detail. The Board's reasons are adequate in this respect.
[9] The Board also adequately acknowledged the evidence against the applicant. It specifically referred to the employer's pay slips – the primary evidence against the applicant – and held that they were "inconsistent and shoddy." The Board noted that the employer's declaration to Human Resources and Development Canada was inconsistent with the evidence in the actual pay stubs.
[10] The Board considered the evidence against the applicant, and its reasons explain why it chose to reject it: the Board found the applicant's evidence to be more consistent. The Board was better placed than either the Umpire or this Court to weigh the evidence and assess credibility, and its conclusion was reasonable. It was under no obligation to give the employer's declaration to Human Resources and Development Canada more weight than the applicant's testimony.
[11] The application is allowed. The decision of the Umpire will be set aside and the matter is remitted to the Umpire with the direction that the Commission's appeal from the decision of the Board of Referees be dismissed.
As in this McKinnon case quoted above, the Board in this case similarly acknowledged the evidence against the claimant (the handwritten settlement and the cheque) and found the claimant to be credible. It is clear that the Board of Referees did not go on to meticulously state its reasons for believing the claimant’s explanation that the payment was really for damages as a result of settlement of a sexual harassment complaint to the Human Rights Commission. But it is equally clear that the Board found her credible and based its findings on that. This was a most reasonable finding by the Board of Referees given all of the evidence before it. Why, when a claimant has quit her employment, is an employer purporting to pay monies to her in lieu of wages? Why is a condition of such payment to the claimant made conditional on the claimant withdrawing her complaint to the Human Rights Commission of sexual harassment in the employer’s workplace? The claimant quit her employment to move with her fiancé, not to escape the sexual harassment. The labelling of this settlement as wages in lieu (exhibit 22) or financial loss (exhibit 21.1) makes no sense given the record on the file. Except for the explanation given by the claimant, there is no other explanation for the contradictions in this documentary record.
The search for truth is one of the important functions of a Board of Referees. The Board of Referees is entitled, as it did in this case, to look beyond the terms of a settlement agreement and determine the true facts. This was specifically allowed in the Federal Court of Appeal decision of Meechan 2003 FCA 368, A-140-03, which stated, in part, the following:
[18] We recognize that the Board of Referees was not bound in any way by the decision of the Arbitrators and we also acknowledge that the fact that the parties have attached a particular label to a given damage settlement is not conclusive.
In the present appeal, the Board of Referees similarly did not find that the handwritten settlement was conclusive. The Board did not disregard that evidence, but it relied on the credible evidence of the claimant to determine the truth of the matter, and that truth appears obvious from the record: the payment was for damages to settle a sexual harassment case as recommended by the Yukon Human Rights Commission that investigated the matter.
All of the statements made by the Board under the heading Evidence at the Hearing must be read as though the Board is offering this as reasons for its ultimate conclusion. These are findings of fact, not simply noting facts. This is clear by a fair reading of the decision in total, especially where everything under the section Evidence at the Hearing is prefaced by the finding of the claimant’s credibility. These reasons indicate all the relevant evidence was considered, but the claimant’s evidence was relied upon to give a proper interpretation to the documentary evidence on the file. As the Federal Court of Appeal in McKinnon (supra) cautioned:
[7] As this Court held in Bellefleur v. Canada (Attorney General), 2008 FCA 13 at paragraph 3, the Board is not entitled to ignore important evidence, or reject it without explanation. On the other hand, it is important to remember that the Board is not composed of lawyers, and that its process is designed to be informal and efficient for litigants. Its decisions therefore should not be read microscopically: Roberts v. Canada (Employment & Immigration Commission) (1985) 60 N.R. 349 at paragraph 10 (C.A.). It is not necessary that the Board's reasons analyze each piece of evidence. Instead, the central requirement is that the Board's reasons explain how it reached its decision: Clifford v. Ontario (Attorney General), 2009 ONCA 670, 98 O.R. (3d) 210 at paragraph 20.
This appeal is similar to the case of Radigan A-567-99, where the Federal Court of Appeal stated, in part, the following:
[7] In characterizing settlement amounts as earnings or non-earnings it is important to keep in mind the basic principles. One starts with paragraph 57(2)(a) of the Employment Insurance Regulations which provides that the earnings to be taken into account in determining whether there has been an interruption of earning includes:
(a) the entire income of a claimant arising out of any employment.
[8] It has long been held by this Court that a settlement payment made in respect of an action for wrongful dismissal is "income arising out of .... employment" unless the claimant can demonstrate that due to "special circumstances" some portion of it should be regarded as compensation for some other expense or loss.
[9] While the principles enunciated in Renaud were "generally" endorsed by this Court in Dunn, we emphasized there that:
...in each case it is a matter of fact for the Board to determine on the evidence before it as to the various components of the settlement ....
[10] Unsatisfactory as is the formulation of the Board’s decision, it did hear the evidence of the claimant and it had the benefit of the Commission’s submissions on the law as to the need for it to find "special circumstances" warranting the exclusion of the $4,000 from allocated earnings. In the face of this evidence and representations it found that the $4,000 should be excluded from earnings. The Commission did not satisfy the Umpire, nor did it satisfy us, that the Board erred in fact or law in so finding.
The Board of Referees correctly performed its duties, it considered all the relevant evidence, it provided adequate reasons for its decision and its decision on the facts is reasonable. The Board of Referees committed no error of law, nor did it disregard evidence or make findings of fact that were capricious or unreasonable.
The appeal is dismissed.
Gerald T.G. Seniuk
UMPIRE
Saskatoon, Saskatchewan
January 14, 2011