Tax Court of Canada Judgments

Date: 19990114

Docket: 96-2405-UI

BETWEEN:

ROSANNA BANCHERI,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on common evidence with the appeal of Anna Bancheri 96-650-UI on April 27 and 28, 1998, at Toronto, Ontario, by the Honourable Deputy Judge Michael H. Porter

Reasons for judgment

Porter, D.J.T.C.C.

[1] This appeal was heard at Toronto, Ontario on April 27 and 28, 1998. It was heard on common evidence, by consent of the parties, with the appeal of Anna Bancheri (96-650(UI)).

[2] The Appellant appeals the determination of the Minister of National Revenue (the "Minister") dated October 11, 1996 that the employment of the Appellant with 928199 Ontario Ltd., o/a Kingsway Paving & Interlock (the "Company"), from April 4, 1994 to September 2, 1994 was not insurable employment under the Unemployment Insurance Act (hereinafter referred to as the "U.I. Act"). The reason given for the determination was that:

"You were not employed under a contract of service as there was no employee/employer relationship between yourself and 928199 Ontario Limited, o/a Kingsway Paving & Interlock. Furthermore, if you were considered to have been employed under a contract of service, your employment would have been excepted from insurable employment because you were not dealing at arm's length nor were you deemed to be dealing at arm's length with 928199 Ontario Limited, o/a Kingsway Paving & Interlock."

[3] The established facts reveal that the Appellant is the wife of Angelo Bancheri, who together with his brother Gabriele Bancheri and his mother Anna Bancheri, at the material times owned all the outstanding shares of the Company. Thus, pursuant to section 3 of the Act and subsection 251(1) of the Income Tax Act, as related persons the Appellant and the Company are in law deemed not to deal with each other at arm's length. Accordingly the employment in question is, subject to the exception contained in subparagraph 3(2)(c)(ii) of the Act, categorized as "excepted employment", that is to say it is not employment which triggers the payment of unemployment insurance benefits upon its termination. The Minister has purportedly determined that the employment does not fall within the exception and the Appellant has appealed that decision.

[4] The Appellant has also challenged the validity of the decision itself. The decision was purported to be made on behalf of the Minister by an official in his department. The question that has arisen is whether that official had sufficient authority to make such a decision on behalf of the Minister either under the Delegation of Powers Regulations made by the Minister under the Act or by virtue of the Interpretation Act R.S.C., c. 123 or otherwise. If there was no such authority either actual or implied, then it is argued that the determination is null and void and there is nothing from which the Appellant might appeal.

[5] I propose to deal with this appeal in two parts, dealing first with the substantive aspect of the decision and secondly with the jurisdictional issue. Of course the first is not strictly necessary in the event that I find the determination to be null and void. However the parties spent two days arguing the factual issues and out of an abundance of caution I think that they are entitled to know where the Court stands on those issues.

PART 1 – Substantive Issues

The Law

[6] In the scheme established under the Act, Parliament has made provision for certain employment to be insurable, leading to the payment of benefits upon termination, and other employment which is "excepted" and thus carrying no benefits upon termination. Employment arrangements made between persons, who are not dealing with each other at arm's length, are categorized as "excepted employment". Spouses, parents and their children, brothers and corporations controlled by them, are deemed not to be dealing with each other at arm's length pursuant to subsection 251(1) of the Income Tax Act, which governs the situation. Quite clearly the purpose of this legislation is to safeguard the system from having to pay out a multitude of benefits based on artificial or fictitious employment arrangements.

[7] The harshness of this situation has however been tempered by subparagraph 3(2)(c)(ii) of the Act, which provides for such employment between related persons to be deemed to be at arm's length and thus in turn to be treated as insurable employment, if it meets all the other provisions, where the Minister is satisfied having regard to all the circumstances (including those items that are set out) that it is reasonable to conclude that they would have entered into a substantially similar contract if they had (in fact) been dealing with each other at arm's length. It may be helpful to reframe my understanding of this section. For people related to each other the gate is closed by the Act to any claim for insurance benefits unless the Minister can be satisfied that in effect the employment arrangement is the same as that which unrelated persons, that is persons who are clearly at arm's length, would have made. If it is a substantially similar contract of employment, Parliament has deemed it to be only fair that it should be included in the scheme. However the Minister is the gatekeeper. Unless he is so satisfied the gate remains closed and the employment remains excepted and the employee is not eligible for benefits.

[8] Section 61 of the Act deals with appeals to and determination of questions by the Minister. Subsection 61(6) requires that:

"... the Minister shall, with all due despatch, determine the question raised by the application ...."

[9] Thus the Minister has no discretion whether or not to decide the question. He is required by law to do so. If he is not satisfied, the gate remains closed and the employee is not eligible. If however he is satisfied, without more ado or any action on the part of the Minister (other than notification of the decision) the employee becomes eligible for benefits, provided he is otherwise qualified. It is not a discretionary power in the sense that if the Minister is satisfied he may then deem the employment to be insurable. He must "determine the question" and depending on that determination the law deems the employment to be either at arm's length or not at arm's length. In this sense the Minister has no discretion to exercise in the true sense of the word, for in making his decision he must act quasi-judicially and is not free to chose as he pleases. The various decisions of the Federal Court of Appeal on this issue reveal that the same test applies as to a myriad of other officials making quasi-judicial decisions in many different fields. See Tignish Auto Parts Inc. v. M.N.R., 185 N.R. 73, Ferme Émile Richard et Fils Inc. v. M.N.R., 178 N.R. 361, Attorney General of Canada and Jencan Ltd., (1997) 215 N.R. 352 and Her Majesty the Queen and Bayside Drive-in Ltd., (1997) 218 N.R. 150.

[10] The function of this Court then, upon appeal, is to review the decision of the Minister and decide whether it was arrived at lawfully, that is in accordance with the Act and with the principles of natural justice. In the case Her Majesty the Queen v Bayside et al., supra, the Federal Court of Appeal laid out certain matters which should be considered by this Court when hearing these appeals. These were: (i) whether the Minister acted in bad faith or for an improper purpose or motive, (ii) whether the Minister failed to take into account all of the relevant circumstances as especially required by subparagraph 3(2)(c)(ii) or (iii) whether the Minister took into account an irrelevant factor.

[11] The Court went on to say:

"... It is only if the Minister made one or more of these reviewable errors that it can be said that his discretion was exercised in a manner contrary to law, and ... the Tax Court judge would be justified in conducting his own assessment of the balance of probabilities as to whether the respondents would have entered into substantially similar contracts of service if they had been at arm's length".

[12] It was argued before me that the stated facts upon which the Minister relied were in many cases wrong or misapprehended. Again I remind myself, when reviewing these submissions, that it is not for this Court to substitute its opinion of the evidence for that of the Minister. However, if his or her manner of arriving at the decision was unlawful in the context of the judgments set out above, those affected parts of the stated facts may be disregarded and I must then consider whether that which is left affords justifiable grounds for the decision. If those grounds, standing alone, are sufficient for the Minister to form a decision, albeit that the Court may not agree with it, the decision must stand. If on the other hand there is no basis left upon which the Minister might lawfully make such a decision, from an objective and reasonable point of view, then such decision may be struck down and the Court can consider the evidence before it on appeal and make its own decision. In summary then, if there are sufficient facts before the Minister for his decision, it is his or her determination to make and if he or she is "not satisfied" it is not for this Court to substitute its view of those facts and say he or she should have been satisfied. Similarly, if he or she was satisfied it is not for this Court to substitute its view that he or she should not have been satisfied (an unlikely scenario in any event). Only if the decision is reached in an improper manner and it is unreasonable, from an objective point of view, on the basis of the facts which were properly before the Minister, may the Court interfere.

[13] I am fortified in this approach by a number of decisions of various Courts of Appeal across the country and the Supreme Court of Canada in related decisions concerning the issue of various processes under the Criminal Code, which subsequently came to be reviewed by the Courts and are in my view analogous to the present situation. The standard of review of the validity of a search warrant was set out by Cory, J.A. (as he then was) in Times Square Book Store, Re (1985) 21 C.C.C. (3d) 503 (C.A.), where he said that it was not the role of the reviewing judge to look at or consider the authorization of a search warrant de novo and it was not open to the reviewing judge to substitute his or her own opinion for that of the issuing judge. Rather, on review, the first issue to be decided was whether or not there was evidence upon which a justice of the peace, acting judicially, could determine that a search warrant should be issued.

[14] The Ontario Court of Appeal reiterated and expanded upon this point of view in R. v. Church of Scientology of Toronto and Zaharia (1987) 31 C.C.C. (3d) 449 C.A. leave to appeal refused. In suggesting that the reviewing Court look at the "totality of the circumstances" the Court said at 492:

"Obviously if there is not such evidence to provide a basis for such a belief (that a criminal offence had been committed) it cannot be said that in those circumstances the justice should be satisfied. There will, however, be cases where such evidence (showing reasonable grounds) does exist and the justice could be satisfied but where he or she is not satisfied and does not exercise his or her discretion in favor of issuing a search warrant. In these circumstances, the reviewing judge must not say that the justice should have been satisfied and should have issued the warrant. Similarly, if the justice in such circumstances says that he or she is satisfied and issues the warrant, the reviewing judge must not say that the justice should not have been so satisfied".

"..While a judge exercising this relatively new power need not comply with the Wilson criteria, he should not review the authorization de novo. The correct approach is set out in the reasons of Martin J.A. in this appeal. He states...

If the trial judge concludes that, on the material before the authorizing judge, there was no basis upon which he could be satisfied that the pre-conditions for the granting of the authorisation exist, then, it seems to me that the trial judge is required to find that the search or seizure contravened s. 8 of the Charter.

The reviewing judge does not substitute his or her view for that of the authorizing judge. If, based on the record which was before the authorizing judge as amplified on the review, the reviewing judge concludes that the authorizing judge could have granted the authorization, then he or she should not interfere. In this process, the existence of fraud, non-disclosure, misleading evidence and new evidence are all relevant, but, rather than being a prerequisite to review, their sole impact is to determine whether there continues to be any basis for the decision of the authorizing judge."

[16] This approach appears to have been adopted by almost every appellate court in the country. (See R. v. Jackson (1983) 9 C.C.C. (3d) 125 (B.C. C.A.); R. v. Conrad et al. (1989) 99 A.R. 197; 79 Alta. L.R.; (2d) 307; 51 C.C.C. (3d) 311 (C.A.); Hudon v. R. (1989) 74 Sask. R. 204 (C.A.); and R. v. Turcotte (1988) 60 Sask. R. 289; 39 C.C.C. (3d) 193 (C.A.); R. v. Borowski (1990) 66 Man. R. (2d) 49; 57 C.C.C. (3d) 87 (C.A.); Bâtiments Fafard Inc. et autres c. Canada et autres (1991) 41 Q.A.C. 254 (C.A.); Société Radio-Canada v. Nouveau-Brunswick (Procureur général) et autres (1991) 104 N.B.R. (2d) 1; 261 A.P.R. 1; 55 C.C.C. (3d) 133 (C.A.); R. v. Carroll and Barker (1989) 88 N.S.R. (2d) 165; 225 A.P.R. 165; 47 C.C.C. (3d) 263 (C.A.); R. v. MacFarlane (K.R.) (1993) 100 Nfld. & P.E.I.R. 302; 318 A.P.R. 302; 76 C.C.C. (3d) 54 (P.E.I. C.A.). It seems to me most relevant to a review of the Minister’s determination, which is itself a quasi-judicial decision.

Analysis of the Minister’s decision

[17] I turn now to consider in detail how the Appellant, through her agent, challenges the decision of the Minister. First he asserts that the rules of natural justice were not followed, in that the Appellant had no knowledge of what facts were put before the Minister at time the decision was made, and thus had no opportunity to have input into that decision. It is of course a rather strange procedure that is followed in these appeals. Bowman J. commented upon it in the case of Persaud v. M.N.R. [1998] T.C.J. no. 11:

"It is strange that the first time that an appellant is told what these so-called assumptions are is when the Attorney-General files the reply to the notice of appeal. They are not, as I understand it, normally communicated to the appellant prior to the determination nor is the appellant (at that stage the applicant) given any opportunity to rebut them or to state why the determination unfavourable to him or her should not be made. At the risk of stating what I should have thought was obvious, it is patent that this failure constitutes a fundamental breach of one of the most essential tenets of natural justice. Since we have it on high authority that the act of being or not being satisfied involves the exercise of a ministerial discretion it is imperative that the principle of audi alterem partem be honoured. Moreover, the failure to give reasons at the time the discretion is exercised is in itself a breach of another cardinal rule of natural justice."

[18] In the situation before me however we perhaps have a greater insight than is normally the case, as the officials involved in investigating, reviewing and making the decision were called as witnesses. This was perhaps a rare event. Nevertheless they came and explained what they had done and why and they produced their written reports. All of this information was not available to the Appellant or her agent, until shortly before the hearing of this appeal when they sought and obtained court ordered disclosure from the Minister. All they had to go on up to that point was the Reply to the Notice of Appeal, which again they only received after they had filed the appeal.

[19] Thus it is argued that there was little information forthcoming upon which they could base any useful input into the decision to be made by the Minister before he made it and there was limited opportunity afforded to them to make any representations to the Minister before that decision was made. In this case however, that claim rings a little hollow, for the Appellant was extraordinarily dilatory in responding to the enquiries made of her by officials at Revenue Canada. The Appellant appealed the initial assessment to the Minister by letter dated December 13, 1995 which was received in the office of the Chief of Appeals on the April 8, 1996. On May 28, 1996 she was sent, as was the Company, a letter of explanation of the process together with a form of questionnaire which they were asked to complete and return. By September 24 that form had not been returned and on that day both the Company and the Appellant were sent a certified letter informing them that if they did not return the questionnaire on or before the October 4 a decision would be made based on the information available. According to the evidence of William McCallum, the official who wrote that letter, a reply was then received with the completed questionnaire on the October 1, 1996. He in turn completed his report with a recommendation to the Minister on October 2. He said that there was nothing in the questionnaire which changed his mind about the facts. He was of the view that the situation the Appellant presented was not supported by the facts. He had done a considerable amount of background work and his report was filed as part of Exhibit A-1.

[20] I have some difficulty coming to a conclusion that the Appellant has been deprived of her rights to natural justice, that is to make representations to the Minister about the decision he was about to make, when she had to be chased to even get her information into the process. If such a challenge was to be sustained by the Court, it seems to me that at the very least the Appellant would have to demonstrate a degree of diligence, which is hardly the case here. Thus I am not of the view that such a challenge to the decision of the Minister can be sustained in this case, if for no other reason than that. In saying that however, it is not to be taken that the Court is supportive of the rather curious procedure followed by Revenue Canada, whereby the facts, which are to be made available to the Minister to enable him to make his decision, are not disclosed to the Appellant so that he or she can also provide the Minister with some representation on those facts. This issue however is probably best left to another more appropriate case.

[21] The facts upon which the Minister was said to rely in coming to his decision are set out in the Reply to the Notice of Appeal, signed by counsel on behalf of the Deputy Attorney General of Canada. They are of course also set out in more detail in the report to the Minister prepared and signed by William McCallum, referred to above. I see no significant difference in these two documents other than that the report sets out a review of the Company's T2 account for the years 1991 to 1994 and its gross revenues for 1991 to 1995 as set out in its GST file. It also contains a summary of the Appellant's T1 file, setting out her income between the years 1988 and 1995. Although this was additional information over and above the information disclosed by counsel for the Deputy Attorney General in the Reply, and the Court is somewhat concerned that the decision was taken on grounds other than those so disclosed, I am not of the view that in this case the additional information made any difference at all. Apart from that, in the report there were several pages of information relating simply to the question of whether or not this was a case of a contract of service or a contract for services, an issue which the Minister has now conceded.

[22] I do not propose to set out, at length, the facts in the Reply, as I can simply say that to the greatest extent the Appellant agreed with them, as did her brother-in-law who gave evidence on behalf of the Company. She disputed one or two small items such as the Minister's assertion that she went to the Bank only once each month to pay the bills. She said it was more often than that. She also claimed to be supervised by her husband in that she had to tell him what she was doing each day. Substantially speaking however, she agreed with the facts as outlined in he Reply.

[23] I see nowhere in the facts or in the evidence, where it could be said that the decision was made in bad faith or for an improper motive or purpose. I see nowhere where it could be said that irrelevant factors were taken into account nor that there was a failure to take into account all of the relevant circumstances. In fact the investigator went the extra mile to try and get the input from the Appellant. Furthermore it seems to me that all the matters that the Minister was supposed to take into account concerning the circumstances of the employment were considered, including the remuneration paid, the terms and conditions, the duration and the nature and importance of the work performed.

[24] I noted in particular from the evidence that the cheques paid to the Appellant did not add up to what supposedly she was paid over the period in question. She said in evidence that there must be some cheques missing. However nothing was produced to back up this assertion.

[25] I noted also that the pay was not forthcoming on a regular basis. Sometimes it was considerably in arrears for the period to which it was attributed and then paid in a lump sum, as large as $3,397.50 in one case. At other times she was paid in advance, but not as an advance in the way that a regular employee might receive it. I noted that she received a set salary regardless of the amount of hours she put in or what she actually did. She was not able to explain her duties very fully and one was left with the impression that she just answered the phone a few times a day and ran the odd errand for the Company. She did not convey at all that her duties were very extensive, and for this she was paid $500.00 per week.

Conclusion

PART 2. Jurisdictional issue

The Issue

[27] The evidence revealed that in fact it was not the Minister personally who made the decision but rather that it was purported to be made by one "J.M. Cleaver, Chief, Appeals Division for Minister of National Revenue". In fact it was neither made nor signed by this person at all. The determination was made by one R. Barned who, in evidence, said that he was an appeals team leader, that he had reviewed the report which had been prepared and signed by W.S. McCallum and reviewed by S.K. Brochu, and that he had then affixed a rubber stamp facsimile of the signature of Jackie Cleaver to the report and to the letters advising the Appellant and the Company of the determination. He claimed, as his authority for doing so, the fact that he had been delegated to so act in that capacity by Jackie Cleaver. In this respect he produced a blank standard form of "re-delegation of authority", which was not the one in question as it was issued in January 1997. However he said that the authority he had was similar in all respects. He did not produce it. The 1997 form reads as follows (Exhibit A-6):

"Exhibit 7041.3-A

REDELEGATION OF AUTHORITY

TO: ____________________________________ Date: ________________________________

(Acting Assistant Director of Appeals)

Due to administrative and operational demands, and to ensure the efficient conduct of our Appeals operations, you are hereby authorized to issue the following documents in appropriate circumstances, as part of your duties:

Reference Subject Documents Involved

Employment Insurance Act Applications for Determination Ministerial Notifications

subsection 93(3) of a Question or Appeal;

CPT 100, CPT 101 or letter

Canada Pension Plan Applications for Determination Ministerial Notifications

subsection 27(5) of a Question or Appeal;

CPT 100 or letter

While exercising my powers and performing my duties in this regard, you should ensure that your actions are in accordance with Appeals Headquarters or local instructions and that approval has been obtained from Headquarters in those situations requiring mandatory referral.

The issuance of these documents is to be executed by affixing a rubber stamp facsimile of my signature. I have assigned a stamp to you and it should only be used for that sole purpose. To avoid loss or misuse of this stamp, I trust you will exercise the control and security measures that have been agreed upon. It is also imperative that an adequate note be left on file to identify yourself in relation to the use of this stamp.

Unless it is revoked, this redelegation of powers and duties will be effective as long as you remain the incumbent of your position.

____________________________________

Assistant Director of Appeals

________________________________________________________________________________________________

Jan. 1997 Appeals Policies 7041.3-A

Redelegation of Authority"

[28] I am not at all satisfied by the evidence that any similar form was ever in fact completed and signed by Jackie Cleaver covering the period in question. Counsel for the Minister makes the point that this issue was only raised at the hearing of the appeal. However, it seems to me that Mr. Barned was required beforehand to come to Court and testify and one would have thought that he might have seen fit to bring with him his authority to act, when his decision was being called into question, rather than a form made up two years later. With respect, his evidence was just too vague on this point to satisfy me that there was any formal re-delegation of authority to him.

[29] It is not in issue that Jackie Cleaver had the authority to make the determination on behalf of the Minister. The question is whether she had sufficient authority to re-delegate that task. If she did it is clear that a decision was made. If she did not, it is argued that the decision so made was null and void and thus there is no determination from which to appeal.

The Law

[30] As a starting point, under Part III of the U.I. Act, the Minister is defined as the Minister of National Revenue. Under section 61 of the U.I. Act the Minister is given authority by Parliament to determine various questions, including the one in issue in the present case. Under section 64 of the U.I. Act the Deputy Minister is given authority by Parliament to exercise all the powers and perform all the duties of the Minister under this Part.

[31] Section 24 of the Interpretation Act makes the following provisions:

"(2) Words directing or empowering a minister of the Crown to do an act or thing, regardless of whether the act or thing is administrative, legislative or judicial, or otherwise applying to that minister as the holder of the office, include

(a) a minister acting for that minister or, if the office is vacant, a minister designated to act in the office by or under the authority of an order in council;

(b) the successors of that minister in the office;

(c) his or their deputy; and

(d) notwithstanding paragraph (c), a person appointed to serve, in the department or ministry of state over which the minister presides, in a capacity appropriate to the doing of the act or thing, or to the words so applying.

...

(4) Words directing or empowering any public officer, other than a minister of the Crown, to do any act or thing, or otherwise applying to the public officer by his name of office, include his successors in the office and his or their deputy.

(5) Where a power is conferred or a duty imposed on the holder of an office, the power may be exercised and the duty shall be performed by the person for the time being charged with the execution of the powers and duties of the office."

[32] Subsection 3 (1) of the Interpretation Act reads as follows:

"3. (1) Every provision of this Act applies, unless a contrary intention appears, to every enactment, whether enacted before or after the commencement of this Act."

[33] Under section 75 of the U.I. Act the Minister may with the approval of the Governor General in Council make regulations. Subsection 75(2) reads as follows:

"The Minister may make regulations authorizing any designated officer or class of officers to exercise any power or perform any duty of the Minister under this Part."

This would clearly encompass a determination made under subparagraph 3(2)(c)(ii) of the U.I. Act which in effect is a determination under section 61 of the U.I. Act.

[35] I have set the regulation out in this manner so that it is clear, when one analyses it, that the Directors of two Divisions and the Chief of a Section of the Department are specifically authorized to act. I glean from this that these are specific senior positions in the Head Office of the Department and that there is only one each of them. In addition to the persons occupying those specific positions 'an officer' (which is not defined in the regulation) who holds the position of Chief of Appeals in a District Office is authorized to act. There are, I take it, many of these persons who work out of the district offices of the Department throughout the country. The question then arises whether this refers to a person specifically appointed under the Public Service Employment Act to one of those positions, in this case Jackie Cleaver in London, Ontario or whether that person can sub-delegate to another person who then becomes an acting Chief of Appeals in that office. In other words can the person delegated to act on behalf of the Minister, by regulation made by the Minister with the approval of the Governor General in Council, in turn simply designate someone else to act on their behalf either formally in writing or informally. I suppose this begs the question that if an official in his Department can simply designate somebody else to act on behalf of the Minister without more ado, why is the Minister himself required to pass a regulation with the consent of the Governor General in Council to effect the same thing.

[36] It must also be remembered here, that it is not just a question of signing on behalf of someone else, who has already made the decision, but rather making a determination on behalf of a person specifically designated to act on behalf of the Minister. Furthermore, this particular determination has been termed by the Federal Court of Appeal as the exercise of a discretion on the part of the Minister to which the courts are required to give considerably more deference on an appeal than is normally the case. The impact of the determination in these cases is thus considerably more than that of a purely administrative type of action.

[37] It is clear from the case law going back to the war-time case Carltona Ltd v. Commissioners of Works and Others, [1943] 2 All. E.R. 560 (C.A.), that the common law presupposes that officials in a Department of Government will act on behalf of the Minister. The House of Lords said in that in that case:

"... The duties imposed upon ministers and the powers given to ministers are normally exercised under the authority of the ministers by responsible officials of the department. Public business could not be carried on if that were not the case. Constitutionally, the decision of such an official is, of course, the decision of the minister. The minister is responsible. It is he who must answer before Parliament for anything that his officials have done under his authority, and, if for an important matter he selected an official or such junior standing that he could not be expected competently to perform the work, the minister would have to answer for that in Parliament. The whole system of departmental organisation and administration is based on the view that ministers, being responsible to Parliament, will see that important duties are committed to experienced officials. If they do not do that, Parliament is the place where complaint must be made against them."

[38] Lord Denning in the case of Metropolitan Borough and Town Clerk of Lewisham v. Roberts, [1949] 2 K.B. 608 at p. 621, said this:

"... Now I take it to be quite plain that when a minister is entrusted with administrative, as distinct from legislative, functions he is entitled to act by any authorized official of his department. The minister is not bound to give his mind to the matter personally. This is implicit in the modern machinery of government ..."

[39] In Regina v. Harrison, 66 D.L.R. (3d) 660, Dickson J. (as he then was) speaking for the Supreme Court of Canada said:

"In my opinion, there is implied authority in the Attorney-General to delegate the power to instruct, in s. 605(1). I do not think that s. 605(1) requires the Attorney-General personally to appeal or personally to instruct counsel to appeal in every case. Although there is a general rule of construction in law that a person endowed with a discretionary power should exercise it personally (delegatus non potest delegare), that rule can be displaced by the language, scope or object of a particular administrative scheme. A power to delegate is often implicit in a scheme empowering a Minister to act. As Professor Willis remarked in "Delegatus Non Potest Delegare", 21 Can. Bar Rev. 257 (1943) at p. 264:

... in their application of the maxim delegatus non potest delegare to modern governmental agencies the Courts have in most cases preferred to depart from the literal construction of the words of the statute which would require them to read in the word "personally" and to adopt such a construction as will best accord with the facts of modern government which, being carried on in theory by elected representatives but in practice by civil servants or local government officers, undoubtedly requires them to read in the words "or any person authorized by it".

See also S.A. deSmith, Judicial Review of Administrative Action, 3rd ed. (1973), p. 271. Thus, where the exercise of a discretionary power is entrusted to a Minister of the Crown it may be presumed that the acts will be performed, not by the Minister in person, but by responsible officials in his Department: Carltona Ltd. v. Com'rs of Works et al., [1943] 2 All E.R. 560 (C.A.). The tasks of a Minister of the Crown in modern times are so many and varied that it is unreasonable to expect them to be performed personally. It is to be supposed that the Minister will select deputies and departmental officials of experience and competence, and that such appointees, for whose conduct the Minister is accountable to the Legislature, will act on behalf of the Minister, within the bounds of their respective grants of authority, in the discharge of ministerial responsibilities. Any other approach would but lead to administrative chaos and inefficiency."

[40] In the Harrison case, above, the Court found nothing in the Criminal Code which derogated from the thought that the duties imposed upon the Attorney-General were to be exercised by responsible officials of their respective Departments.

[41] The Supreme Court of Canada returned to this issue again in 1977 in the immigration case of Ramawad v. Minister of Manpower and Immigration, 81 D.L.R. (3d) 687. After referring to the above words of Mr. Justice Dickson, Pratte J. said this:

"... A power to delegate is often implicit in a scheme empowering a Minister to act." Whether such power exists however or, in other words, whether it may be presumed that the act will be performed not by the Minister but by responsible officers in his Department will depend on the intent of Parliament as it may be derived from, amongst other things, the language used in the statute as well as the subject-matter of the discretion entrusted to the Minister.

In the Immigration Act, Parliament has recognized the existence of different levels of authority, namely, the Governor in Council, the Minister, the Director, the immigration officer in charge, the Special Inquiry Officer and the immigration officer. The authority granted by Parliament to each of such levels is clearly specified in the Act. In some cases, the Act allows for a sharing of authority as between some of these levels. For instance, under s. 12, a peace officer is obligated to carry out any warrant issued under the Act for the arrest, detention or deportation of any person if "so directed by the Minister, Deputy Minister Director, Special Inquiry Officer or an immigration officer". Also, s. 36(2) authorizes "the Minister, Director, a Special Inquiry Officer or an immigration officer" to give certain instructions with respect of the deportation of a person against whom a deportation order has been made.

Similarly, the Regulations issued under the Act make a clear distinction between the authority conferred on the Minister on the one hand and on his officials on the other hand.

Indeed, in the Act and in the Regulations, the most important functions have been reserved for the Minister's discretion while authority in other areas has been delegated directly to specified officials.

The general framework of the Act and of the Regulations is clear evidence of the intent of Parliament and of the Governor in Council that the discretionary power entrusted to the Minister be exercised by him rather than by this officials acting under the authority of an implied delegation, subject of course to any statutory provision to the contrary. To put it differently, the legislation here in question, because of the way it is framed and also possibly because of its subject-matter, makes it impossible to say, as was the situation in Harrison, that the power of the Minister to delegate is implicit; quite the contrary.

I am reinforced in my opinion on this point by s. 67 of the Act which reads as follows:

67. The Minister may authorize the Deputy Minister or the Director to perform and exercise any of the duties, powers and functions that may be or are required to be performed or exercised by the Minister under this Act or the regulations and any such duty, power or function performed or exercised by the Deputy Minister or the Director under the authority of the Minister shall be deemed to have been performed or exercised by the Minister.

The effect of this section is, by necessary implication, to deny the Minister the right to delegate powers vested in him to persons not mentioned therein.

I therefore come to the conclusion that the discretion entrusted to the Minister under para. 3G(d) of the Regulations must be exercised by him or, if properly authorized to do so under s. 67, by one of the persons therein mentioned which do not include the Special Inquiry Officer who issued the deportation order there in question."

[42] Mr. Justice Gunn of the Saskatchewan Court of Queen’s Bench when faced with a similar case, Yorkton Restaurant Venture Capital Corp v. Saskatchewan (Minister of Economic Development), 118 D.L.R. (4th) 735, summarized the law as he saw it in the following manner:

"Delegation of authority or power may be explicit or implicit. The courts have been prepared to recognize the implicit power of delegation by Ministers who are unable personally to solve all problems that might arise in applying the Acts for which they are responsible. However, more caution must be exercised in the review of implicit delegation by Deputy Ministers and agencies, particularly when the power sought to be exercised involves an element of judgment, discretion and the rights of citizens.

The Act does not explicitly provide any authority for express delegation. The Interpretation Act provides authority for delegation to the Deputy Minister but it does not provide any authority for further delegation by the Deputy Minister. The Minister has not personally complied with s. 23. The Deputy Minister provided the response to the notice of objection, but in that response indicated that the "'Department' has no alternative but to continue with the process of deregistration". This seems to overlook the discretionary powers provided to the Minister (s. 16).

The actual revocation of registration is not signed by either the Minister or his deputy. All of this must be considered in the context of his discretionary powers and the fact that the Act purports to severely limit any rights of appeal from a decision of the Minister. This is clearly within the powers of the legislature, but more care must be taken with respect to the exercise of his powers if the citizens who are subject to those rights may not appeal."

This case is of interest as of course the rights of the citizen to appeal in the situation at hand are also somewhat limited.

[43] I also refer to the Federal Court Trial Division case of Doyle v. M.N.R., 89 DTC 5483, where Reed J. dealt with a similar situation. That case involved the delegation of powers from the Minister of National Revenue under the Income Tax Act. The power in question was under subsection 225.1(5) of that Act. By the regulations made under that Act, various powers and duties were delegated to different officials in the Department. However there was no reference anywhere in the regulations to subsection 225.1(5). The question then arose whether in the face of the regulatory code of delegation, there remained a role for the common law to play where no specific delegation of the power or duty had been made in the regulations. In the course of deciding that the principle allowing for implied delegation did apply to the section in question the learned justice said this:

"It may very well be, with respect to the specifically enumerated sections in regulation 900, that a scheme of delegation which accorded directors general other than those specifically identified in the regulation authority to exercise the Minister's powers pursuant to a specific section would be invalid as in conflict with the regulation..."

[44] Whilst not directly deciding that issue it did seem that the learned Justice was inclined to the view that if there is a regulatory scheme in place under the U.I. Act providing for specific powers and duties to be exercised on behalf of the Minister by specified officials, then any other scheme of delegation of those same powers and duties (e.g. under the common law or by virtue of the Interpretation Act) would be invalid as being in conflict with the regulation.

[45] I am inclined to adopt this proposition in the case at hand. When the Supreme Court of Canada referred to the delegation of powers as being either explicit or implicit, it seems to me that such are mutually exclusive in relation to the same powers and duties. That is to say that if specific powers are delegated to specific officials or officers holding specific designated titles, then those powers and duties may not be delegated further. The scheme set up by statute or regulation envisages that there be specific designations and, if despite that the common law or the provisions of the Interpretation Act could be utilized to re-designate further down the line, then one has to ask the purpose of having the scheme set up by statute or regulation in the first place, for it would be unnecessary and redundant. It seems to me that in making provision for the Minister to make regulations providing for the delegation of his powers and duties, with the consent of the Governor General in Council, Parliament intended to put the brakes on the otherwise generally recognized powers of delegation, and those brakes were applied in this case by the promulgation of such regulations. It would be a farce to require the Minister to have the consent of the Governor General in Council to make regulations delegating his powers and at the same to allow the person, to whom he has so delegated, to re-delegate those same powers without more ado. In such a situation the designate would have more authority to delegate than the Minister himself, and clearly that could not have been within the contemplation of Parliament.

[46] The Interpretation Act operates in the general scheme of things. In effect it incorporates the common law doctrine as enunciated in R. v. Harrison (above). It does not in my view operate in its broad terms, when there is a specific scheme of delegation established under a statute or a regulation made pursuant to a statute, for if it did there would be no need for such a scheme, as everything could be basically delegated downwards in any event. Specifically section 3 of the Interpretation Act makes provision for it to apply unless a contrary intention applies in a particular enactment. An explicit scheme of delegation, in my view, does establish a contrary intention.

[47] It seems to me that there is a fundamental distinction to make between an explicit scheme of delegation, whether it be by statute or regulation, and one that is implicit. In the first situation, either Parliament or the Minister and the Governor General in Council have specifically decided the degree of delegation of authority that is to take place. In the implicit scheme they have not and thus the common law and the Interpretation Act provide for common sense and practicality to be applied for the sake of administrative convenience. Delegation and sub-delegation can thus be effected down to the appropriate level of authority within the Department, that the circumstances will allow. Whether or not any particular authority has been delegated beyond that point is probably a question of fact and ultimately judicial decision. Thus an important administrative or quasi-judicial decision delegated down to the janitor as suggested by the Agent of the Appellant, would no doubt have crossed the allowable boundary and would be held by the courts to be invalid.

[48] In summary, the law does not allow for an implicit scheme of delegation of authority to override an explicit statutory or regulatory one. Not only does the latter come from the highest law making authority in the land, but to allow for it to be extended or overridden would simply make it redundant. If it were to be extended beyond its specific terms, it would seem that Parliament or the Minister or the Governor General in Council, as the case may be, could quite easily make provision for that, if that was their intention, by the addition of words such as "or their delegate". In the absence of their doing so, the presumption must be that they did not intend that to happen, for otherwise their scheme would be purposeless.

[49] The question to be asked therefore, in these situations, is whether the power or duty formed part of an explicit regulatory scheme of delegation. If it did then there can be no further sub-delegation of that power or authority. If it did not, it may fall under an implicit scheme of delegation and sub-delegation either at common law or in accordance with the provisions of the Interpretation Act. This may well apply, as can be seen from the Doyle case (above), to a power and duty which is contained in a statute, where there exists an explicit scheme of delegation, but that power or duty is not mentioned in the scheme. Thus whilst an implicit scheme of delegation may not override an explicit scheme it may supplement it where the explicit scheme is silent as to any particular power or duty.

Application of the law to this case

[50] In the case before the Court there is clearly an explicit scheme of delegation of authority in place. The Regulations refer specifically to decisions taken under section 61 of the U.I. Act and refer specifically to the delegation of the authority to make that decision to "an officer holding the position of Chief of Appeals in a District Office of the Department of National Revenue, Taxation". J. Cleaver was clearly a person who held that position in the London office at the time in question. J. Barned did not. His authority came solely from a purported sub-delegation by J. Cleaver. He was not appointed to the position by the Public Service Commission or by virtue of the Public Service Employment Act. His position was a group team leader, and any purported authority to act on behalf of J. Cleaver came simply from her authorization to act on her behalf during her absence. It may be that enabled him to so act with respect to the day to day administration of the office. However, in face of the explicit scheme of delegation which existed under the U.I. Act and the Regulations that authorization did not in law extend to the making of decisions under section 61 of the U.I. Act and in particular a determination under paragraph 3(2)(c)(ii).

[51] I am further persuaded to the view that re-delegation of the powers and duties was not contemplated by the Minister or the Governor General in Council, by the very nature of the regulations themselves. If such was the case a review of the regulations in question would reveal numbers 4–11 inclusive to be entirely redundant. For if the words "officer holding the position of Assistant Deputy Minister" were to be given the meaning for which counsel for Crown now argues, the person holding this position could simply sub-delegate all the powers he chose under Part III and there would be no need for any further regulations delegating specific powers to specific officials. In such case that could all be done administratively by the official involved. The very fact of the passing of specific regulations, must mean that more than that is required. I think that in the rush to provide for the easy administration of a statute by public officials in a Department, care has to be taken not to allow administrative convenience to overtake the true meaning and intent of the legislation.

[52] In my opinion the scheme of delegation made under the U.I. Act is explicit, that is to say it is firmly and clearly specified which powers and duties are assigned to which officials and such scheme is exclusive. Its very nature excludes there being any other implicit scheme except perhaps as in the case of Doyle (above), where there are powers or duties not covered by the regulations. To the extent that they are mentioned the delegation of those powers and duties is finite.

[53] I am mindful of two other cases to which I was referred by counsel, with which I should deal. First in the case of Swyryda v. The Queen, also a decision of the Saskatchewan Court of Queen’s Bench, 81 D.T.C. 5109, Noble J. held that the Director – Taxation at the Saskatchewan District Office, who was the designated person, under the regulations made under the Income Tax Act, to act on behalf of the Minister with respect to the issue of a requirement letter, could re-delegate that authority to another official in his department. I note that the learned Justice made a point of the fact that it was a purely administrative function in question, made during the ordinary course of the administration of that statute. That seems to me to be quite distinguishable from the exercise of a discretion on behalf of the Minister which affects the rights of a citizen with quite limited rights of appeal. I do note also in that case, that the Judge placed reliance on subsection 244(13) of the Income Tax Act and specifically said that it was not necessary to make reference therefore to the Interpretation Act.

[54] I have also been referred to the case of Tremblay v. Canada (Minister of National Revenue) [1996] T.C.J. no. 245, a decision of my brother judge Robichaud of this Court. In that case the stamp of the Chief of Appeals was applied to the notification sent to the Appellant, by another official in the Department. There is no reference in the judgment to the decision being made by anyone other than the authorized person under the regulation, but simply that his stamp was applied to the letter of notification by another person. Thus this case is clearly distinguishable from the case before me where the evidence was directly given that the decision was made by a person other than the designated person in the regulation. It is well-settled law that the signature itself may be affixed to a decision by way of a clerical function as is often the case in the courts, where the clerk of the court frequently sign orders made by a judge. I see nothing in this case which deals with the more substantive issues which are before me.

[55] Lastly, counsel for the Minister made the argument that the words in the regulation "officer holding the position of" means that the regulations contemplate that persons might form time to time stand in for the "Chief of Appeals" in a District Office. He argues that the use of these words rather than simply saying "Chief of Appeals in a District Office" is broader and thus means that the Chief of Appeals can designate persons to act in her place. With respect, this argument does not hold up. It is an argument that supports itself by pulling on its own bootstraps. The language "officer holding the position of" is not unique to this one regulation. It is found throughout these various regulations, from number 3, relating to the Assistant Deputy Minister on down. If this argument were to be accepted, there would again be no need for any further regulations. The floodgates would be open and the regulations would be redundant, as I have already pointed out. In my view these various positions or titles enumerated in the regulations relate to official positions established in the Public Service. Persons through various procedures, such as appointment by the Public Service Commission, are appointed to hold these positions. These may not be the only positions they hold in the Public Service, but they are appointed formally to hold them. For instance the person holding the position of Assistant Deputy Minister, Taxation, may also hold other positions. What is contemplated by the regulations, it seems to me, is some formal appointment to the position in question, not just a temporary stand in. In referring to "officer holding the position" that does not mean some person acting on a temporary basis whilst the official holder of the position is away. I agree that it is a curious choice of words that have been used. However, any other interpretation would make no sense of the established scheme of delegation. If the Minister had intended for the holders of those various positions to be able to re-delegate their authority, he could quite easily have said so by including such words a "or their delegate" as are found in the French (but not the English) version of subsection 24(4) of the Interpretation Act. The Minister did not do so and if would be pure fiction to say he intended to do so.

Conclusion

[56] In conclusion I find that J. Barned had no authority in law to make the purported determination, the subject matter of the present appeal. He was not an officer holding the position of Chief of Appeals in a District Office of the Department of National Revenue. He was certainly not one of the other officials designated by the regulations to make a decision under section 61 of the U.I. Act.

[57] The purported re-delegation of authority to him by J. Cleaver, whatever form it took which is really unknown, was of no legal effect as it relates to this matter, as she did not have the legal authority to so re-delegate to another person.

[58] It is clear from the evidence that J. Cleaver did not make the decision. She at no time applied her mind to the subject, and this is not a case of a signature being applied on her behalf, after she had made the decision. The decision was solely taken by J. Barned. As raised by the Agent for the Appellant I find it strange that he would not have used his own name on behalf of J. Cleaver. There seems something almost surreptitious in applying the stamp in her name, when the decision was not taken by her, and not revealing the true name of the person making the decision on her behalf. That in itself does not affect my judgment, but I do wonder why such a practice was followed. I did note that it was simply by chance in this case that it was discovered that J. Cleaver did not in fact make the decision and exercise the discretion on behalf of the Minister.

[59] I have now to consider what affect my conclusions have upon the purported determination from which the appellant has brought this appeal. I am urged by counsel for the Minister in such case to hold that determination is null and void and does not exist, in which case there is nothing from which to appeal. The Agent for the Appellant refers to the cost of the two-day hearing and the hardship which would fall upon the Appellant if she had to go through another appeal, through no fault of her own. I sympathize with that point of view, but I must decide this as a question of law and those arguments are best left for others. In my view the position taken by counsel for the Minister is the correct one. I liken it to the situation dealt with by Pratte J. in the Ramawad case (above) where after holding that the Special Inquiry Officer did not have the delegated authority to make the decision which he did make, he said:

Thus, everything which flowed from it was a nullity.

[60] That is so in this case also. I hold that the purported determination, which is the subject of this appeal, was invalid. Thus it is not a decision of the Minister and is of no effect. There is therefore nothing from which to appeal and the parties are back to square one.

[61] As there is no valid determination, it is not appropriate to make any reversal, affirmation or variation of a determination under subsection 70(2) of the U.I. Act.

Signed at Calgary, Alberta, this 14th day of January 1999.

"Michael H. Porter"

D.J.T.C.C.