JUDGMENT OF THE FEDERAL COURT OF APPEAL
February 10, 1989
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THE CANADA EMPLOYMENT
AND IMMIGRATION COMMISSION,
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THE DEPUTY ATTORNEY GENERAL OF CANADA,
Hearing held at Montreal on Tuesday, February 6
and Friday, February 10, 1989
REASONS FOR JUDGMENT
(Delivered from the bench at Montreal
on Friday, February 10, 1989)
The applicant voluntarily left his employment on June 6, 1985 for reasons of deafness. In his claim for benefit, he explained that he was looking for another job in a less noisy place. He added that in his free time he was helping out his wife, who was operating a video club (appeal docket, p10). According to the employer's statement, the applicant said upon leaving that he had a business at home to which he wanted to devote more time (appeal docket, p 9).
The applicant's wife operated two business out of the basement of the family home, one concerned with retail sales of radios, television sets and audio systems under the name ''Electronique St-Marc Enr'', and the other concerned with the rental of video equipment under the name ''Vidéo-Club St-Marc Enr''. Before the board of referees, the applicant stated that he was spending some six to seven hours per week in the operation of his wife's business He filed a list of the combined invoices of the two businesses, showing that he had signed approximately 23% of all invoices during the period when he would otherwise have been eligible to receive benefits. According to the investigator, however, the applicant was devoting forty hours per week to his wife's business and was free to set his own hours of work. Approximately 80% of the invoices for ''Electronique St-Marc Enr'' for June, July, August and December 1985 were signed by the applicant, as compared to only 15% to 20% of those for ''Vidéo-Club St-Marc Enr''. Again according to the investigator, the applicant had endorsed a loan of $25,000 to $30,000 that his wife had contracted with the caisse populaire for the purchase of merchandise stock (Appeal docket, pp 13, 31 and 32).
The board of referees concluded that despite the testimony heard at the hearing, the applicant had to have devoted a vast amount of time to his wife's business from June 1985 to February 1986. It found him ineligible for that period under ss 19 and 21 of the Unemployment Insurance Act, 1971 and ss 43(1) (b) and 43(2) of the Regulations, but eligible from March 2, 1986, the point at which the applicant completely terminated his participation in his wife's business.
The umpire only upheld the decision of the board of referees.
It should be noted that neither the Commission nor the board of referees raised the question as to whether the applicant was a person engaged in the operation of "a business' in a ... coadventure" 1 within the meaning of s 43(1)(a) of the Act. Only ss 43(1)(b) and 43(2) of the Regulations are thus at issue.
The two parties are in agreement in stating that s 43(1) of the Regulations, adopted under the authority of s 58(c) and (d) of the Act, refers to a self-employed person or a claimant who is employed in an employment other than that referred to in paragraph (a) and who controls his working hours. In the present case, it is beyond question that the applicant controlled his working hours, but he argues before us that his work was only a form of voluntary effort or assistance offered during his free time, with no contractual link or link of a contractual nature between him and his wife. In support of his contention, he relies on the decisions Attorney General of Canada v Gordon Cummins,A-802-85, April 30, 1986; Attorney General of Canada v Françoise Samson, A-341-79, December 18, 1979, as well as the award in CUB 13802, Donald G Adey, and concludes that the board of referees erred in law in applying s 43(1)(b) of the Regulations to him.
The evidence does not tell us whether or not the applicant had earnings or what his work schedule with respect to his wife's business was, during the period when he held regular employment and after he left that employment.
In order for assistance or voluntary effort to be authentic, the applicant would not be able to derive any economic benefit. We do not know in this case whether the applicant used the time available to him after his voluntary departure in such a way as to make do with a situation that could be economically advantageous to him in view of his financial interest in the business, such that he was also freed of the necessity of seeking employment, or whether he was merely filling up his free time while remaining available to look for work. This is a question of fact, with regard to which the onus was on him:
54.(1) No person is entitled to any benefit period that has been established for him, until he makes a claim for benefit for that week in accordance with section 55 and the regulations and proves that(a) he meets the requirements entitling him to receive benefit; and
(b) no circumstances or conditions exist that have the effect of disentitling or disqualifying him from receiving benefit. 2
On the evidence, the board of referees made a finding unfavourable to the applicant regarding the number of hours that he was devoting to his wife's business. In so doing, it did not err in law; rather it assessed the facts brought before it.
The Unemployment Insurance Act, 1971 does not prohibit a claimant from assisting another person where such assistance is not remunerated, but the assistance must indeed be non-remunerated. The situation that developed after March 1986 must be interpreted as having ended the ambiguity that existed with respect to the evidence.
I would therefore dismiss the application under section 28 of the Federal Court Act.
1 The Attorney General of Canada v Robert Tremblay, Robert Larouche et al., A-674-85, FCA, May 21, 1986.
* It would appear that's 43(1)(a) of the Regulations was intended - - [TR]
2 The Attorney general of Canada v Robert Falardeau et al., A-396-85, FCA, February 11, 1986.
This application under section 28 attacks a decision of an umpire acting under the authority of the Unemployment Insurance Act, 1971. 1
It is commonly accepted that the basic idea on which the Act is formulated is that an employee who has been acknowledged as having a benefit period following the loss of his employment is entitled to receive a weekly allowance for each week of such period in which he is unemployed. The idea could not be more simple, but for it to be put into practice, there must be agreement on the meaning of the term ''to be unemployed''. To be sure, Parliament did not fail to provide, in its Act, a definition of what was meant by a week of unemployment, but it chose a definition that needed to be made more specific, and it gave the Commission that task. The said definition is to be found in s 21(1) of the Act; the delegation for the adoption of the specifications is expressed in s 58(d) of the Act, whereas the additional specifications are given in ss 42, 43 and 44 of the Unemployment Insurance Regulations. Since these texts are directly related to each other, it is appropriate to read them together, but in the case of the Regulations, only those with general scope are required to this point.
21.(1) A week of unemployment for a claimant is a week in which he does not work a full working week.
58. The Commission may, with the approval of the Governor in Council, make regulations
...(d) prescribing the conditions and circumstances under which a claimant while self-employed or employed in employment that is not insurable employment or whose pattern of full-time employment differs from the normal and customary employment pattern of employed persons generally has worked or has not worked a full working week;...
43.(1) Subject to subsection (2) and (3), where a claimant is(a) self-employed or engaged in the operation of a business on his own account or in partnership or a co-adventure, orhe shall be regarded as working a full working week.
(b) employed in any employment other than that described on paragraph (a) in which he controls his working hours,
(2) Where a claimant is employed as described in subsection (1) and the employment is so minor in extent that a person would not normally follow it as a principal means of livelihood, he shall, in respect of that employment, not be regarded as working a full working week.
44.(1) A working week of a claimant, other than a claimant referred to in section 43, is a number of hours, days or shifts normally worked in a calendar week by persons in his grade, class or shift at the factory, workshop or other premises at which he is or was employed.
It might be expected that applying these provisions to individual cases would not always be easy, but it appears that even in themselves, in terms of their analysis, they are still subject to controversy. The application before the Court, taking account of the arguments relied on in support of it, attests to this controversy, and it is that which gives it its only real legitimacy.
The case could not be more simple or to the point. The applicant is an insured person who, after losing his employment, was assigned a benefit period and received his regular benefits in the usual manner. One day he received an official notice from the Commission informing him that his entitlement to benefits had been retroactively denied him. The reason was expressed as follows:
You have not proved to be unemployed within the meaning of sections 19 and 21 of the Act. Rather, you are working as a salesperson for Electronique St-Marc Enr, an employment in which you have the power to control your hours of work. According to section 43(1) of the Regulations, you are deemed to be working a full working week. You are therefore ineligible to receive benefits from June 10, 1985 as long as you do not prove to be unemployed.
The notice was not entirely accurate, for there were actually two small businesses, one concerned with the sale of ratios and television sets, the other with the rental of video equipment, which the applicant's wife operated out of the basement of their home, and it was in the activities of these businesses that the applicant had spent time. The applicant promptly disputed the denial decision, arguing, of course, that his role in the businesses was only to provide temporary support, that he had taken on that role only to help out and that he had devoted little time to it. He was unable to convince either the insurance officials or the board of referees, who, after hearing the matter, approved the Commission's decision for the weeks preceding receipt of notice, stating, ''Notwithstanding the testimony heard at the hearing, the board of referees must regretfully observe that the claimant must have devoted an enormous amount of time to his wife's business. '' [Trans] As to the umpire, before whom the case was later brought, he dealt with the appeal in short order: in terms of law, in his view, the board of referees had not erred, and with regard to the facts, the record contained evidence that ''enabled it to render the decision that it made''. The applicant then began his proceedings under s 28.
In support of his attack on the umpire's decision, the appellant, through his counsel, first sought to challenge the findings of the board of referees and the umpire regarding the amount of time that he was able to devote to his wife's business, but he quickly came to see that this was pointless. He then relied on an argument of quite another order, in reality an argument in law, basically claiming that the board and the umpire had made the findings that they did under the influence of a misinterpretation of the applicable statutory provisions. The argument is as follows.
According to the applicant, it has become accepted in case law that for a claimant to be considered as employed in an employment that prevents him from being unemployed within the meaning of the Act, and hence to be entitled to benefits, there must exist between him and the person for whom he is working an employer-employee relationship, or at least a relationship comparable or similar to the one between employer and employee, and his services must yield earnings which may be direct or indirect or even eventual but must be real. In support of his contention, the applicant cites two decisions of this Court, one rendered on December 18, 1976 in Attorney General of Canada and F Samson (unreported) and a second, more recent decision dated April 16, 1986, in Attorney General of Canada and Gordon Cummins (also unreported but substantially upholding CUB 11084) to which he joins a decision supported by detailed reasons, dated August 17, 1988, in the Donald G Adey case (CUB 13802A). How, then, can it be argued, says the applicant, that he was employed in an employment within the meaning of s 43(1) or more specifically s 43(1)(b), since there clearly never existed an employer-employee relationship between him and his wife and he had no earnings?
To be sure, whether or not an employer-employee relationship existed and whether or not earnings were made are questions of fact on which the record is silent, and in any case it is up to the claimant to prove the facts regarding his entitlement (s.54). But to dispose of the argument on this basis alone seems to me to be insufficient. It was successfully established that the applicant had personally endorsed a loan for his wife for business purposes; if payment had been made for his services, an effort would surely have been made to establish this. It is true that on this subject the applicant testified before the board of referees, and it would have been difficult for him to do more, since the facts in question are basically negative facts. If I dismiss the argument in law advanced by the applicant, it is not for want of evidence that there were no earnings; rather it is because I find that the argument itself is based on a misreading of the statutory provisions and a misinformed interpretation of the previous cases cited.
Let us reread the statutory provisions in question and examine them in light of their intended function in resolving the difficulties of giving effect to the legislation. The initial question is easy to formulate: When a claimant, during his benefit period, begins to perform work of other than a personal or domestic nature, must it immediately and automatically be concluded that he has ceased to be unemployed and is not longer entitled to his benefits? S. 21(1) of the Act answers straightaway in the negative, and it is easy to understand why: to do otherwise would have extremely onerous consequences in practical terms and would encourage pure idleness. The Act states that there must be a full week of work. But in reality, this answer in itself contains nothing positive. It merely serves to postpone the useful answer to a later stage, for it is indeed necessary to know when the claimant must be considered to have worked a full working week. The Regulations then come into play, addressing the only two possible hypotheses: either the claimant begins to work for someone else as the latter's employee, within the framework of an employer-employee relationship, or he begins to work for himself, without answering to anyone, in other words, without participating in any employer-employee relationship.
It is sufficient, I believe, to read ss 42 and 44 of the Regulations to see that they cover the cases in the first category. Thus to apply them it is necessary to identify the elements of a relationship between parties to a contract for the hire of services, which implies detecting some form of engagement and the presence of some form of payment, primarily of a monetary nature, received or to be received in exchange for the provision of services. The criterion for determining what a full working week is will then be the number of hours worked by employees of the same grade or class.
Similarly, it is sufficient to read s. 43 to see that it covers the second hypothesis, that of the independent worker, the worker who has not put himself in an employer-employee relationship. The expression ''is employed in [an] employment'' (''exerce un emploi'' in the French version) is taken, it seems to me, not in the sense of ''working as an employee'', but rather of ''doing the work of an employed person'' (That is, a self-employed person). The heading under which the section is presented makes this point clearly. The focus here is on the ''self-employed person'' (in some cases, the fact of not being subject to any work schedule will be a sign of this status), and no employer-employee relationship is involved, nor therefore is there any idea of salary either. What has been done in this hypothesis has been to establish at the outset a presumption of a full working week, leaving the claimant the opportunity to rebut the presumption by showing the minimal and insignificant nature of his activity.
And this dichotomy, this difference in treatment between the two situations, is in my opinion entirely rational, based as it is on the necessities of verification. For the guiding idea remains the same: it is necessary to be able to ascertain that the claimant is still in the labour market, is free of any commitment, occupation or interest that might limit or reduce his opportunity or desire to return to work, and thus his availability remains unhampered. Of course, I am not speaking of availability here in the sense in which the term is often used, to designate another condition of entitlement to benefit referring to the state of mind of the person who, by his efforts to find employment, shows his desire to end his unemployment. I am using the term availability in a more passive sense, designating a person who continues not to be bound or committed by anything that might prevent or divert him from returning to work.
The cases cited by the applicant, the Samson, Cummins and Adey cases, were clearly cases belonging to the first category, where the employer-employee relationship is involved. But the case before us belongs to the second category, and it is immediately evident that the Commission was entirely right to rely on s. 43(1)(b) in support of its notice of denial, and that the board of referees was justified in focusing on and limiting its application to the question of time, since that was the only question to arise.
The applicant's argument in law is ill-founded, and the application under s 28 should be dismissed.
1 In these reasons, given the date of the decision in question, I have confined myself to the Act as it existed before the 1985 revision, which has been in force since last December.2011-01-10