Date: 19980107
Docket: 97-425-UI
BETWEEN:
SUZIE GAGNÉ,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
TREMBLAY, J.T.C.C.
[1] This appeal was heard on November 14, 1997, at Montréal, Quebec.
Issue
[2] The issue is whether the appellant held insurable employment within the meaning of the Unemployment Insurance Act (“the Act”) with the City of Montréal, hereinafter referred to as the payer, from March 19 to August 1, 1996.
[3] The appellant worked half time under a contract of service. She was considered to be on sick leave the other half of the time, for which she was paid benefits directly by The Prudential Insurance Company. The respondent argued that benefits are not earnings, let alone insurable earnings within the meaning of the Act.
[4] According to the appellant, this situation resulted from the combination of the following: the instructions given by Dr. Line Leduc, an obstetrician-gynecologist, that she keep working half time until she had her baby, and the agreements between her employer, the City of Montréal, and Prudential.
[5] In reply, the respondent referred to subsection 3(1) of the Unemployment Insurance (Collection of Premiums) Regulations (“the Regulations”).
Burden of proof
[7] The appellant bears the burden of showing that the respondent’s assessments are incorrect. This burden of proof results from a number of judicial decisions, including the judgment of the Supreme Court of Canada in Johnston v. Minister of National Revenue.[1]
[8] In Johnston, the Court held that the facts assumed by the respondent in support of the assessments or reassessments are also assumed to be true until proven otherwise. In the case at bar, the facts assumed by the respondent are set out in subparagraphs (a) to (f) of paragraph 5 of the Reply to the Notice of Appeal. That paragraph reads as follows:
[TRANSLATION]
5. In making his determination, the respondent Minister of National Revenue (“the Minister”) relied, inter alia, on the following facts:
(a) the appellant worked for the City of Montréal; [admitted]
(b) she worked under a contract of service; [admitted]
(c) during the period at issue, she worked half time and was considered to be on sick leave the other half of the time; [admitted]
(d) the shortfall in the appellant’s salary was made up for by benefits paid directly to the appellant by the insurance company; [admitted]
(e) benefits are not remuneration or earnings; [denied]
(f) those benefits are not part of the appellant’s insurable earnings. [denied]
Facts in evidence
[8] After the above admissions were made, the evidence was completed by the appellant’s testimony and the filing of Exhibits A-1 to A-13 and I-l.
[9] The appellant worked as a sports development officer for the City of Montréal in 1995 and several previous years. The appellant’s testimony in Court, which is summarized in Exhibit A-1, provides a brief history of the facts surrounding her two maternity and parental leaves. The following passage is taken from her testimony:
[TRANSLATION]
History of the facts surrounding my two maternity and parental leaves
P1A Letter from Human Resources Development Canada informing me that I was eligible for maternity benefits starting on May 15, 1994
P1B Letter from Human Resources Development Canada informing me that I could receive parental benefits for a maximum of 10 weeks starting on September 11, 1994
From December 12, 1994, to March 2, 1996, full-time work on the basis of 1,820 hours a year.
In December 1995, Dr. Pierre Charbonneau, a general practitioner with the Ahuntsic medical clinic at 241 Fleury ouest, H3L 1V2, (514) 382-0062, diagnosed his patient, Suzie Gagné, with chronic fatigue syndrome.
On March 21, 1996, Dr. Line Leduc, an obstetrician with the Centre d’obstétrique-gynécologique at 1100 ave. Beaumont, VMR, H3P 3E5, (514) 344-4411, recommended that I not work at all until delivery because of my health and my three previous high-risk pregnancies. Subsequently, given my employer’s insistence on having me work because of the importance of what I was working on, Dr. Leduc changed her recommendation and provided an opinion that I could return to work half time but might have to stop working altogether depending on the circumstances.
From March 29 to August 1, 1996, half-time work. My earnings came from two sources: my employer, the City of Montréal, and The Prudential Insurance Company of America under a group disability plan.
On August 5, 1996, documents to claim maternity and parental benefits filed with the Human Resources Development Canada office at 9675 rue Papineau, H2B 3C8, (514) 496-1101.
P1 Letter from L. Christophe, an insurance officer, informing me that my claim for maternity benefits had been approved as of August 4, 1996.
27/8/96 Call to Ms. Aubin at 496-1101 to ask why the benefits are half as much as the benefits ($445) I received during my first leave in 1994. Will find out.
Message on answering machine: Daniel St-Laurent explained the calculation: $10,118, 55 percent of average over last 20 weeks = $278 (62 percent)
28/8/96 Call to Ms. Robin about same question. Will transfer the file.
[10] On September 30, 1996, she received the following document (Exhibit A-6) from Patrice Allard, the Acting Director of the Montréal Tax Services Office:
[TRANSLATION]
Dear Ms. Gagné:
SUBJECT: EMPLOYMENT/UNEMPLOYMENT INSURANCE
LEGISLATION
Determination No.: 08-96-3286
The Department of Human Resources Development has sent us a request for determination of the insurability of the wage-loss insurance benefits paid by The Prudential/London Life Insurance Company for the period from March 19 to August 1, 1996, while you were an employee of the City of Montréal.
Although we acknowledge that you were an employee of the City of Montréal, we consider that the wage-loss insurance benefits were not insurable under subsection 3(1) of the Unemployment Insurance (Collection of Premiums) Regulations, which states the following:
A person’s earnings from insurable employment means any remuneration, whether wholly or partly pecuniary, received or enjoyed by him, paid to him by his employer in respect of insurable employment.
[11] The appellant said that in her view, she is entitled to the same payments she was entitled to when she had her first child, namely $445:
[TRANSLATION]
As I understand it, this difference is related to the fact that I sincerely tried to meet my employer’s expectations in spite of my health and that I was ill during my second pregnancy.
[12] She was told that if the benefits had been sent to the employer and, after receiving them, the employer had included them with the partial salary paid for the work she had done, the total amount would have been insurable.
Analysis
[13] The benefits received from The Prudential Insurance Company cannot be considered insurable earnings within the meaning of the Act.
[14] To begin with, section 2 of the Act defines “insurable earnings” as follows:
“insurable earnings” means, in relation to any period, the total amount of the earnings from insurable employment for that period of an insured person or the maximum insurable earnings for that period as prescribed by or under this Act, whichever is the lesser;
In addition, subsection 3(1) of the Regulations reads as follows:
PART I
INSURABLE EARNINGS
Earnings from Insurable Employment
3.(1) For the purposes of this Part, a person’s earnings from insurable employment means any remuneration, whether wholly or partly pecuniary, received or enjoyed by him, paid to him by his employer in respect of insurable employment except:
(a) a payment under a supplemental unemployment benefit plan;
(b) the value of board, lodging and all other benefits received or enjoyed in a pay period in respect of the employment if no cash remuneration is paid by the employer in respect of the pay period;
(c) in the case of a clergyman, the value of lodging received or enjoyed by him in respect of his employment as a clergyman and provided by his diocese, parish or congregation; and
(d) any amount excluded as income pursuant to paragraph 6(1)(a) or (b) or subsection 6(6) or (16) of the Income Tax Act.
[15] In Davy Wong, 1995, F.C.J. No. 984, Appeal No. A-612-94, the Federal Court of Appeal stated the following:
MARCEAU J.A.: -- The applicant was employed with the Alberta Cancer Board for over ten years. In October of 1991, he was injured on the job and was off work from October 23, 1991 until March 15, 1992. While off work, the applicant received worker’s compensation payments which were equivalent to 90% of his take-home pay. These payments are not insurable earnings under the Unemployment Insurance Act.
[16] The appellant in that case had also received a top-up that his employer had given him by error. The Federal Court found that the top-up was not insurable income either. It gave the following reasons for this finding:
In order for income to be considered earnings pursuant to subsection 57(2), it must “arise out of any employment”. The definition of “employment” given in the same provision requires the existence of a contract. Consequently, in order for income from an employer to be earnings, it must be paid in the context of an employment contract. In this case, the payments did not form part of the applicant’s employment contract. In our opinion, payments made in error do not “arise” out of employment and they do not constitute remuneration, since they are not paid pursuant to a contract of employment. The payments arrived in the hands of the applicant due to the fact that he was employed, but they were not made as part of his compensation as an employee, as a remuneration for his services under the contract of employment. That such payments should not affect the normal expectations of a claimant appears to us in keeping with the requirements of an insurance scheme like the one which is at the basis of the Unemployment Insurance Act.
[17] As regards the assumption stated in paragraph 12 above, namely that if the amount paid by the insurance company had been sent to the employer and the employer had then paid it to the appellant with her salary, the entire amount would have been insurable income, the question would have to be whether the amount paid by the insurance company was for the appellant’s services. If so, it would be insurable income. If the amount paid was benefits, the fact that it made a detour through the insurer before reaching the appellant would not matter; its nature would not have changed and it would therefore not be insurable income.
[18] When the appellant received unemployment insurance benefits in 1994, the $445 she received was calculated on the basis of the salary she had actually been paid for her services during the preceding periods. The same was true in 1995, but the amount she had been paid for her services was lower.
Conclusion
[19] The appeal is dismissed.
Signed at Québec, Quebec, January 8, 1998.
“Guy Tremblay”
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 16th day of November 1998.
Kathryn Barnard, Revisor