Date: 20000818
Docket: 97-947-UI
BETWEEN:
DANUAL NOBBS,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Bell, J.T.C.C.
ISSUES:
[1]
1. Whether, respecting the periods of employment of the Appellant by his father, Fred Nobbs, between March 19, 1991 and December 31, 1993 the Minister of National Revenue ("Minister") exercised his discretion under section 3(2)(c)(ii) of the Unemployment Insurance Act [1] appropriately in concluding that the Appellant and Fred would not have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length; and
2. Whether the Appellant was in insurable employment with Fred for the period March 6, 1994 to April 2, 1994.
GENERAL:
[2] Appellant's counsel submitted that a decision of the Board of Referees made pursuant to the provisions of section 79 of the Act rendered the appeals herein for the periods covered by the August, 1991 and November, 1992 applications "moot". By that he meant that the issue herein had already been determined by that Board for those two periods and, in essence, could not be heard by this Court. The Commission had demanded repayment of the benefits for those periods. Specifically, the Board of Referees concluded that because the Commission's reconsideration of the overpayment of benefits for those periods was made more than 36 months after payment thereof, it was barred from establishing overpayment.[2]
FACTS:
[3] The Respondent acknowledged, by virtue of its reassessment of the Appellant under section 3(2)(c)(ii) of the Act and by implied admission in the Reply to the Notice of Appeal, that the Appellant was employed by his father, Fred Nobbs, during the following periods:
March 19, 1991 to July 26, 1991
November 4, 1991 to December 6, 1991
August 3, 1992 to October 31 1992
July 4, 1993 to July 31, 1993
August 29, 1993 to September 30, 1993
November 29, 1993 to December 31, 1993
[4] For those periods the Minister exercised his discretion under section 3(2)(c)(ii) to the effect that the parties would not have entered into a similar employment arrangement had they been at arm's length and that, therefore, the Appellant was in excepted employment.[3] The Minister, for these same reasons, determined that the Appellant was not in insurable employment for the period March 6, 1994 to April 2, 1994 and found that he was not employed by his father during that period.
[5] Fred Nobbs testified that he lived 40 miles from Dawson Creek, British Columbia and 100 miles from Grande Prairie, Alberta. He said that his farm, before 1994, consisted of 20 quarter sections all of which he owned himself and that he carried on a cow-calf operation, owning 500 cows in the 1993/1994 period and between 250 and 300 cows during the 1990/1991 period. He said that he had an extensive haying operation. He stated that the Appellant received no share of profits. Appellant's counsel produced copies of time sheets respecting Danual. These had been prepared by Fred. He stated that he paid Danual $760 per week based on 40 hour weeks, computed at the rate of $19 per hour. He said he had to pay that amount because of competition from the "oil patch" and the lumber industry in the area, there being a shortage of help in the farming business.
[6] Fred testified that he paid Danual by cheque or by cash when he asked for money to purchase cows. He paid him, he said, on some occasions, with cows at fair market value. He said that Danual's employment activities were mainly putting up hay, operating the tractor and baler, hauling hay, feeding animals and attending to the cows during the calving period. Fred testified also that his son, Wade, worked for him from time to time, performing the same types of services. He also had two other employees who were at arm's length, namely, Chuck and Brad. He paid them $12 per hour saying that they had less responsible jobs.
[7] He testified that he kept the farming operation cheque books but from time to time gave a cheque signed by him to Danual or his other son, Wade, so that they, not being sure where they would find required parts or supplies, could pay the purchase price of same. Danual also signed cheques for wages. He said simply that he was giving them a blank cheque with his signature. He stated that with respect to records of employment prepared by him for each period of Danual's services, the services were terminated because of shortage of work. He said that he was caught up on work and could handle what was left after the termination of the Appellant's services. When asked if Wade was working right after Danual was let go, Fred stated that he could not remember.
[8] No non-family employee had signing authority on any farming operation account.
[9] On cross-examination, Respondent's counsel asked a number of questions respecting wage sheets, cancelled cheques and time sheets. Fred stated that cows, which were given to the Appellant by him, as part payment for his services, remained on his farm. He said that he was not sure whether they were identified but that the Appellant, in time, received his own brand.
[10] The Appellant testified that he had bought a small farm and lived on it since 1990, that in 1991 and 1992 he owned two quarter sections, conducted a "small-time grain farming operation and had no livestock. He stated that he had his own equipment and rented equipment from a Dawson Creek company and had only a small amount of equipment from Fred. His evidence initially was directed towards establishing his independence of land ownership and operation. He testified that he was paid in part in cows by Fred and that they stayed on Fred's farm during the whole period under review in this case. He stated that he obtained his own cattle brand but that prior to obtaining it, he put identification tags on his cows which were mixed with his father's herd. He said, on cross-examination, that he had answered the question "Do you operate a farm?" in the negative on his April 6, 1994 application for unemployment insurance benefits because he thought that that question referred to his father's farm. He made the same statement with respect to the January 14, 1994 application, the November 4, 1992 application and the August 20, 1991 application.
[11] Respondent's counsel produced a letter from the Canada Employment Centre in Grande Prairie dated February 3, 1994 advising that he only had 14 insurable weeks whereas in that area 17 insurable weeks were needed to qualify for benefit. His applications had been filed in the Dawson Creek office for which area only 14 insurable weeks were, according to Respondent's counsel, required.
[12] The Appellant was asked by Respondent's counsel whether he had gotten more time from his father respecting the application described in that letter and then reapplied. He answered negatively. He then stated that he worked to December 31, 1993 having not enough weeks to receive unemployment insurance. He also said that he went back in March and when he was "done working" "he (Fred) didn't need me any more" so he reapplied for unemployment insurance.
[13] He stated in answer to a question along these lines by Respondent's counsel that sometimes he was laid off and replaced by his brother and vice-versa.
[14] Respondent's witness, one James English, an investigator with Employment Insurance gave evidence which, neither on direct examination or cross-examination, was useful in the determination of the issues.
[15] Karen Walchuk ("Walchuk") an appeals officer with Canada Pension Plan/Employment Insurance reviewed the applications for UI filed at Dawson Creek where, she said, only 14 insurable weeks were required for benefits whereas 17 were needed to qualify in the Grande Prairie region. She reviewed documents including a summary of wages supplied, hours, cancelled cheques, T4 slips, summary sheets signed by the Appellant and Fred, et cetera. She commented that there were cancelled cheques in even amounts and that if an employer had made remittances they wouldn't be even amounts. She said that the Appellant received cheques for wages on irregular dates, namely, April 26, April 30, May 3, May 31, June 10, June 26 and July 31, all in 1991. She stated that the record of earnings indicated that he was paid monthly. She said that in reviewing wages and the records of employment she noted that the pay periods on the records of employment, monthly and weekly, were not how the Appellant was paid. She stated that sometimes he received cheques, sometimes cash and, at other times, cows.
[16] Walchuk said that there were no cancelled cheques for 1994 and no evidence of remuneration. She said that she did not speak to Fred or the Appellant respecting this but simply sent questionnaires. She stated that appeals officers do not ask for proof of wages. She said that they ask the payor by questionnaire, not by direct examination.
[17] In the absence of a clear chronological presentation of relevant facts and dates, the best reconstruction possible respecting the appeals for two periods being moot is:
1. The first two claims for Unemployment Insurance benefits were made on August 22, 1991 and November 2, 1992.
2. These claims were paid to the Appellant.
3. On either March 2, 1996 or March 25, 1996[4] the Commission visited the Appellant evidently seeking repayment of benefits.
4. As a result, a request for an insurability ruling was made to Revenue Canada. The Board of Referees' decision says that:
This visit resulted in a request for an insurability ruling from Revenue Canada on July 12, 1996.
5. The claimant was informed on August 21, 1996 of Revenue Canada's decision that he was not in insurable employment.
6. The claimant appealed from this ruling by a document dated October 15, 1996 and stamped as having been received by Revenue Canada Taxation, Edmonton, on October 18, 1996.
7. On April 1, 1997 the Minister determined that the claimant was not in insurable employment.
8. At some point the Commission demanded repayment from the Appellant and he appealed to a Board of Referees.
9. That Board of Referees gave a decision on December 1, 1997 that the Commission was out of time (more than three years) respecting the first two claims. A portion of that decision reads as follows:
Following a review of the evidence, jurisprudence and legislation the Board finds that the Commission is barred from establishing an overpayment based on Revenue Canada's insurability ruling on the claimant's first two claims, August, 1991 and November, 1992, as the review took place outside the thirty-six months provided in Act (sic) for review.
ANALYSIS AND CONCLUSION:
[18] The evidence of the Appellant and his father, including the sometimes abrupt manner in which the Appellant's evidence was given, has not persuaded me that the facts reviewed by the Minister were insufficient to support the conclusion reached under section 3(2)(c)(ii). There is no evidence that the Minister acted in bad faith or for an improper purpose or motive. This applies to all periods described above. Very little evidence was presented respecting the period March 6, 1994 to April 2, 1994. A time worksheet for that period, identified by Frederick Nobbs, showing 4 weeks of 40 hours each at $760 per week with a notation of receipt, signed by the Appellant, of $3,040 for that period, was entered in evidence. I have no reason to believe the Appellant was not an employee for that period.
[19] I now turn to the matter respecting the periods which Appellant's counsel described as moot.
[20] The Act is, at best, very muddled in its procedural provisions, and consequently, very difficult to comprehend. Section 43 is found in Part I under the heading "Claim Procedure". The pertinent portions of section 43, dealing with the Commissioner's reconsideration, read as follows:
43.(1) Notwithstanding section 86 but subject to subsection (6), the Commission may at any time within thirty-six months after benefit has been paid or would have been payable reconsider any claim made in respect thereof and if the Commission decides that a person has received money by way of benefit thereunder for which he was not qualified or to which he was not entitled or has not received money for which he was qualified and to which he was entitled, the Commission shall calculate the amount that was so received or payable, as the case may be, and notify the claimant of its decision.
(2) Any decision made by the Commission pursuant to subsection (1) is subject to appeal under section 79.
(3) ... the amount ... as calculated under subsection (1) is the amount repayable under section 35. [5]
[21] The appeal, made pursuant to section 43(2) was made to the aforesaid board of referees under section 79 of the Act.[6]
[22] An appeal from a decision of the board of referees can be made to an umpire under section 80 of the Act. Section 84 provides that:
The decision of the umpire on an appeal from a decision of a board of referees is final, and, except for judicial review under the Federal Court Act, is not subject to appeal to or review by any court.
[23] Section 61[7] of the Act, which deals with the determination of whether a person is in insurable employment is found in Part III of the Act under the heading "COLLECTION OF PREMIUMS" and sub-heading "Payment of Premiums". Section 70 of the Act[8] provides for an appeal from "a determination by, or a decision on an appeal to the Minister under section 61". Section 72 provides, not unlike the language of section 84 respecting an umpire's decision, that:
The decision of the Tax Court of Canada under section 70 is final and, except for judicial review under the Federal Court Act, is not subject to appeal to or review by any court.
[24] A person can, therefore, be in the position of having the Commission deciding that a benefit received by that person for "which he was not qualified or to which he was not entitled"[9] is repayable under section 35. If an appeal to the board of referees and then to an umpire sustains that finding the decision is final except for judicial review under the Federal Court Act.
[25] That claimant may also appeal to this Court under section 70, the decision of which is final except for judicial review under the Federal Court Act. A decision by this Court that he was in insurable employment could result in two opposing conclusions with respect to the same facts under judicial review before the Federal Court of Appeal.
[26] This potentially absurd result highlights the confused and confusing litter of ill-conceived and ill-placed statutory provisions.
[27] The foregoing sets the scene for consideration of Appellant's submission that this Court cannot consider the matters before it for two periods above described. This is based on the finding of the Board of Referees that the Commission is barred from establishing an overpayment resulting in the Appellant not being liable to repay the benefits received.
[28] Appellant's counsel, in a written submission, stated:
"As a result of this lack of liability, the issue of whether these benefits were incorrectly paid or were correctly paid is no longer an issue affecting the rights and liabilities of the parties to this appeal.
and that
...the Board of Referees' decision obviates the need for a decision in this appeal respecting the period covered by it."
[29] Respondent's counsel submitted that the board of referee's decision simply precluded the Commission from taking action to recover benefits paid and that such inability to recover has no bearing on the issue before this Court, namely the correctness of the Minister's decision that the Appellant was not engaged in insurable employment.
[30] Having regard to the convoluted structure of the Act it is not difficult to perceive why Appellant's counsel has adopted the argument above stated.
[31] It is extremely difficult to comprehend the philosophy and direction of the legislation relating to various functions and procedures, the total effect of which is unnecessarily and hopelessly complicated by lack of clarity.[10] Respondent's counsel submitted
"...that Parliament intended that the respective functions of the Commission and the Minister by clearly delineated. The Act sets out the functions and the respective avenues of appeal associated with decisions from those authorities."
If that was Parliament's intent, it failed. If the legislation was written clearly to describe collection functions, determination of entitlement functions and review functions in clear language with logical structure so that the result sought by the Appellant would not be a logically arguable position, which it is, Respondent's counsel submission would have more merit. I have demonstrated the absurd position of two possible judicial reviews of different conclusions reached by an Umpire and by this Court. Clarity of approach and draftsmanship could have avoided this confusion.
[32] The Act provides for an appeal to this Court from the Minister's determination respecting insurable employment. Does one not wonder why confusion arises in circumstances where a person may be found to be in insurable employment and presumably required to repay benefits when a concurrent procedure, anointed by this allegedly clear legislation, has resulted in an entirely opposite conclusion arising out of other provisions?
[33] Under section 70(2) this Court:
may reverse, affirm or vary the determination.
This subsection also sets out what the Court may do respecting assessments, thereby creating more confusion dealing with what the Court may do in respect of both a determination and an assessment.
[34] Because the Court can only deal with the determination of the question of whether the Appellant was in insurable employment, it does not have the power to determine that this appeal is "moot" so far as the two periods are concerned.
[35] Regrettably, both counsel, at my request, before I had carefully examined the scope of this Court's jurisdiction under section 70, made comprehensive written submissions with respect to this point. It was, only upon close consideration of the Court's powers, after an intense effort to martial the relevant facts, that I concluded I would be unable to adjudicate on this matter.[11]
[36] In this regard, there is useful comment on the doctrine of election in Carswell's Words & Phrases, Volume 3 at pages 3-640 to 642 inclusive. The aforesaid submissions and the pursuit of this doctrine would have assisted me in answering the question posed by the Appellant. I would also have been assisted by the analysis of the confusing legislation referred to above and the unacceptable potential of an unemployment insurance claimant finding himself in the Federal Court on two judicial reviews examining opposing answers to one question. It is unfortunate that this Court cannot rule upon that point, but its jurisdiction is expressly limited. This is not the forum for the pursuit of that matter.
[37] In result, therefore, I find that the Appellant was not in insurable employment for the periods described. The Minister's discretion was exercised in a lawful manner in that he did not act in bad faith or for an improper purpose or motive, did not fail to take into account the relevant circumstances and did not take into account irrelevant circumstances. Accordingly, I cannot replace the Minister's exercise of discretion.
[38] The appeal is dismissed.
Signed at Ottawa, Canada this 18th day of August, 2000.
"R.D. Bell"
J.T.C.C.
COURT FILE NO.: 97-947(UI)
STYLE OF CAUSE: Danual Nobbs v. Minister of National Revenue
PLACE OF HEARING: Edmonton, Alberta
DATE OF HEARING: December 8, 1999
REASONS FOR JUDGMENT BY: The Honourable R.D. Bell
DATE OF JUDGMENT: August 18, 2000
APPEARANCES:
Counsel for the Appellant: Bruce Logan
Counsel for the Respondent: Margaret McCabe
COUNSEL OF RECORD:
For the Appellant:
Name: Bruce Logan
Firm: Bruce Logan, Barrister & Solicitor
Grande Prairie, Alberta
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
97-947(UI)
BETWEEN:
DANUAL NOBBS,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on December 8, 1999 at Edmonton, Alberta, by
the Honourable Judge R.D. Bell
Appearances
Counsel for the Appellant: Bruce Logan
Counsel for the Respondent: Margaret McCabe
JUDGMENT
The appeal is dismissed and the determination of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada this 18th day of August, 2000.
|
"R.D. Bell" |
J.T.C.C.
[1] All statutory references herein are to this Act.
[2] Section 43 of the Act.
[3] Section 3(1) of the Act states that insurable employment is not included in excepted employment.
[4] Both dates are shown in the Board of Referees' decision.
[5] Section 35 provides that:
"where a person has received a benefit under the Act for any period in respect of which he is disqualified or any benefit to which he is not entitled, he is liable to repay an amount equal to the amount paid by the Commission in respect thereof."
[6] The pertinent parts of section 79 are:
79.(1) The claimant or an employer of the claimant may at any time within thirty days after the day on which a decision of the Commission is communicated to him, or within such further time as the Commission may in any particular case for special reasons allow, appeal to the board of referees in the manner prescribed.
...
(2) A decision of a board of referees shall be recorded in writing and shall include a statement of the findings of the board on questions of fact material to the decision.
[7] The pertinent parts of Section 61 read as follows:
61. (3) Where there arises in relation to a claim for benefit under this Act any question concerning
(a) whether a person is or was employed in insurable employment,
...
an application to the Minister for determination of the question may be made by the Commission at any time and by that person or the employer or purported employer of that person within ninety days after being notified of the decision of the Commission.
(4) Where a question or appeal referred to in subsection ... (3) is to be determined by the Minister, the Minister shall notify the employer or purported employer and any person who may be affected by the application and, in the case of an application under subsection (3), the Commission of his intention to determine the question or appeal and shall afford the employer, purported employer, Commission and any person who may be affected by the application, or any of them, as the circumstances require, an opportunity to furnish information and to make representations to protect their interests.
...
(6) On an application or appeal under this section, the Minister shall, with all due dispatch, determine the question raised by the application or vacate, confirm or vary the assessment, or reassess, and he shall thereupon notify any person affected.
[8] 70. (1) The Commission or a person affected by a determination by, or a decision on an appeal to, the Minister under section 61 may, within ninety days after the determination or decision is communicated to him, or within such longer time as the Tax Court of Canada on application made to it within those ninety days may allow, appeal from the determination or decision to that Court in the manner prescribed.
(1.1) For the purpose of subsection (1), the determination of the time at which a decision on an appeal to, or a determination by, the Minister under section 61 is communicated to the Commission or to a person shall be made in accordance with the rule, if any, made under paragraph 20(1.1)(h.1) of the Tax Court of Canada Act.
(2) On an appeal under this section, the Tax Court of Canada may reverse, affirm or vary the determination, may vacate, confirm or vary the assessment or may refer the matter back to the Minister for reconsideration and reassessment, and shall thereupon in writing notify the parties to the appeal of its decision and the reasons therefor.
R.S., 1985, c. 51 (4th supp.), s. 23; 1993, c. 27, s. 228.
[9] Section 43.
[10] I have not reviewed the Employment Insurance Act, the successor to the Unemployment Insurance Act, to determine whether it is more comprehensive and understandable.
[11] This Court is, similarly, not entitled to determine the Respondent's ability to enforce repayment of benefits in circumstances where this Court finds an appellant is in insurable employment but where the Commission has already been forestalled in collection attempts.