CUB 77643

TRANSLATION

IN THE MATTER of the EMPLOYMENT INSURANCE ACT

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IN THE MATTER of a claim for benefits by
R.A.

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IN THE MATTER of an appeal to an Umpire by the Commission
from the decision of a Board of Referees given on
March 25, 2010, at St-Romuald, Quebec.

DECISION

(a) the disentitlement imposed under sections 9 and 10 of the Employment Insurance Act (the Act) and section 30 of the Employment Insurance Regulations (the Regulations) because he failed to prove that he was unemployed;
(b) the penalty imposed under section 38 of the Act for knowingly making false statement(s); and
(c) the notice of violation issued under section 7.1 of the Act following the penalty imposed for committing an act or omission.

The Commission appeals from the Board of Referees’ decision, which rescinded the Commission’s decisions.

Facts:
A benefit period was established for the claimant effective April 13, 2008 (Exhibit 2).

Apparently, after losing his employment, the claimant became a shareholder in a business.

The business was registered on April 10, 2008, and the claimant is the president and administrator (Exhibit 5). In addition, there are two other shareholders and all three have the same percentage of shares.

Exhibits 3-3 to 3-11 show all the business’s operations based on information provided by the claimant in June 2009.

According to Exhibits 4-1 to 4-10, more information was given with respect to the operation of the business, specifically the business’s role, the expenses incurred and the claimant’s participation.

It is important to point out that, contrary to what was stated in Exhibit 24-2, a shareholder who holds 33% of the shares in a company can be president and administrator. In addition, that shareholder reporting that he or she is a minority shareholder does not constitute a false statement.

According to the vouchers, the claimant apparently received $27,236.24 from June 2008 to March 2009 in travel, accommodation and meal expenses while the other two shareholders received $22,725.06 and $27,133.98 respectively (Exhibits 8-5 to 8-10). From June 2008 to March 2009, the claimant’s cell phone charges were $758.25 and the other two shareholders’ charges were $3,845.79 and $1,712.66 (Exhibits 8-13 to 8-15).

The new business had a deficit of $65,000 in September 2009, despite start-up attempts and meetings with various potential clients. It was for this reason that the claimant reported that he was not self-employed and that he had not been paid for any work.

The claimant, whose participation in the activities of the business was very limited, could not see how the business could be considered a means of livelihood.

Analysis of the Board of Referees’ decision:
Reading the Board of Referees’ decision shows the undersigned that the Board made its decision on the basis of an analysis of the evidence in the docket.

The claimant testified and apparently worked only 6 hours a week for the business.

According to the Board of Referees, the claimant proved that he was unemployed despite the role he played in the business.

On this issue, the Board paid particularly close attention to the elements considered in the operation of a business, while taking into account the criteria set out in section 30(3) of the Regulations.

The Board of Referees analyzed the documentation produced and the testimony. After reviewing the case law, the Board of Referees upheld the claimant’s appeal.

Decision:
The Board of Referees is the trier of fact and has the exclusive authority to make findings.

The Umpire must consider everything in the context of the application of the Act and whether, in its analysis, the Board of Referees erred in law.

Thus, once the claimant has been found to be working pursuant to subsection (1), the next step is to determine if that employment is so minor in extent so as to constitute an exception to the general rule of disentitlement. In assessing whether employment is minor in extent, there are six factors to be considered. They are the time spent on the enterprise, the capital and resources invested, the financial success or failure of the enterprise, the continuity of the business, the nature of the business, and the willingness of the claimant to seek other employment (originally set out by Dubé, J. as Umpire in CUB 5454)

It is an error of law for the Board not to consider the exception in s. 43(2) and the six factors outlined above in assessing whether a claimant is unemployed (CUBs 19015, 19013, 13687).

The Board of Referees made its decision on the basis of the six criteria and made findings that it believed to be justified in this case.

Furthermore, this principle was recognized by the Federal Court of Appeal in Gates (A-600-94), in which Linden J. wrote:

The unemployment insurance system does not exist to provide a salary for all those who wish to start a new business and say they do not believe that doing so is working. Despite professed ignorance, the Commission and the Board of Referees, depending on the evidence and common sense, may disbelieve these claimants and decide that there was in fact knowledge of falsity.

The evidence about knowledge must be evaluated by the Commission or the Board and findings of fact and credibility made. It may not be enough to say that the claimant was not credible or that credibility is in doubt; more may be required of the fact-finder. This has been recognized by Mr. Justice MacGuigan in Re McDonald, supra, where he stated:

I cannot, however, take such a benign view of the effect of the board’s finding of non-credibility with respect to the issue of misrepresentation. Merely disbelieving the applicant’s testimony is not a sufficient basis for the board’s conclusion that he knowingly made false or misleading statements. There is another element of proof required, relating to his state of mind, one on which the onus, as I have already said, rests with the Commission. The board’s finding that the applicant’s credibility was in doubt does not amount to a finding that the Commission has discharged its burden, ...

In deciding whether there was subjective knowledge by a claimant, however, the Commission or Board may take into account common sense and objective factors. In other words, if a claimant claims to be ignorant of something that the whole world knows, the fact finder could rightly disbelieve that claimant and find that there was, in fact, subjective knowledge, despite the denial. Not to know the obvious, therefore, might properly lead to an inference that the claimant is lying. This does not make the test objective; it does, however, take into account objective matters in coming to a decision on subjective knowledge. If, in the end, the trier of fact is of the view that the claimant really did not know that the representation was false, there is no violation of subsection 33(1). That it is possible for honest confusion to arise as to the meaning of the word work can be seen from Mr. Justice Cattanach’s reasons in Q.G. (CUB 6661A, September 23, 1982) to the effect that voluntary work and work in the garden are not considered to be work for our purposes.

The information in the docket shows the claimant’s willingness to seek full-time employment with various businesses. There is nothing that contradicts this point and this shows very objectively that the claimant could not support himself with the new business. The concept of full-time work does not refer to the compilation of work hours, but rather, the time spent.

In this case, the time is insignificant and there is no reason for the Umpire to intervene.

For these reasons, the Commission’s appeal is dismissed and the Board of Referees’ decision is upheld.