Date: 20040423
Docket: T-1074-02
Citation: 2004 FC 600
OTTAWA, ONTARIO, THE 23rd DAY OF APRIL 2004
PRESENT: THE HONOURABLE MR. JUSTICE MARTINEAU
BETWEEN:
RICHARD DESJARDINS
Applicant
- and -
ATTORNEY GENERAL OF CANADA, representing the
EMPLOYMENT INSURANCE COMMISSION OF CANADA -
HUMAN RESOURCES DEVELOPMENT CANADA
Respondent
REASONS FOR ORDER AND ORDER
[1] On May 14, 2002, the Employment Insurance Commission of Canada (the Commission) formally requisitioned the applicant's current employer to pay the Receiver General of Canada 30% of the applicant's net income to be debited from his salary (the garnishment). It was indicated at the time that the applicant's debt amounted to $20,578.25 (the amount claimed). The issue in this case is whether the proceedings for recovery of the amount claimed, including the garnishment, were validly taken by the Commission; the applicant challenges their validity.
[2] The respondent submits that the recovery proceedings were and remain valid until the full payment in satisfaction of the amount claimed. The respondent explains that this amount corresponds to the balance of the applicant's debt, which is composed of the following items:
(a) $11,808.00 (the disputed amount), which corresponds to the overpayment of benefits that were paid by the Commission to the applicant beginning October 4, 1993, (the first period); and
(b) $7,584.00, which corresponds to the overpayment of benefits that were paid by the Commission to the applicant beginning November 21, 1994, (the second period), and $3,160.00, which corresponds to the penalty imposed by the Commission on the applicant for false statements during the second period (as reduced on September 7, 2000, by the Board of Referees pursuant to the applicant's appeal); the total of the latter two amounts comes to $10,744.00 (the undisputed amount).
[3] The garnishment was carried out under subsections 126(4) and (5) of the Employment Insurance Act, S.C. 1996, c. 23. These provisions read:
| (4) If the Commission has knowledge or suspects that a person is or is about to become indebted or liable to make a payment to a person liable to make a payment under Part I or II or under subsection (7), it may, by a notice served personally or sent by a confirmed delivery service, require the first person to pay the money otherwise payable to the second person in whole or in part to the Receiver General on account of the second person's liability. |
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(4) Lorsque la Commission sait ou soupçonne qu'une personne doit ou va bientôt devoir payer une dette ou verser une somme à une autre personne tenue d'effectuer un versement en application de la partie I ou II, ou au titre du paragraphe (7), elle peut, par un avis signifié à personne ou expédié par service de messagerie, exiger qu'elle verse au receveur général, pour imputation sur le versement en cause, tout ou partie des fonds qui seraient autrement payables à cette autre personne. |
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| (5) If the Commission has, under subsection (4), required an employer to pay to the Receiver General on account of an insured person's liability under Part I or II money otherwise payable by the employer to the employee as remuneration,
(a) the requirement is applicable to all future payments by the employer to the insured person as remuneration until the liability under that Part is satisfied; and
(b) the employer shall make payments to the Receiver General out of each payment of remuneration of such amount as may be stipulated by the Commission in the notice mentioned in subsection (4). |
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(5) Lorsque, en vertu du paragraphe (4), la Commission a exigé qu'un employeur verse au receveur général, pour imputation sur une dette d'un assuré visée par la partie I ou II, des fonds qui seraient autrement payables par l'employeur à l'assuré à titre de rémunération, cet avis vaut pour tous les versements de rémunération à faire ensuite par l'employeur à l'assuré jusqu'à extinction de la dette visée par la partie I ou II et il a pour effet d'exiger le paiement au receveur général, par prélèvement sur chacun des versements de rémunération, de la somme que peut indiquer la Commission dans l'avis mentionné au paragraphe (4). |
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[4] The applicant concedes that his debt could include any balance outstanding on the undisputed amount, an amount that he has in fact paid as a result of the recovery proceedings. But he submits that the claim addressed to the disputed amount is out of time and that the Commission is refusing in this respect to comply with the Board of Referees' decision in his favour. Through this application for judicial review, he is asking this Court to declare that the garnishment for the excess over the undisputed amount is contrary to law, and to order the repayment of any amount that has been collected in excess of the undisputed amount.
[5] The background to this claim may be summarized as follows.
[6] On January 10, 1997, the Commission decided to reconsider the applicant's claims for benefit for the two aforementioned periods, and at the same time it decided to impose penalties for false and misleading statements. In this instance, it is not necessary to discuss the decisions concerning the second period.
[7] More particularly, in a letter dated January 10, 1997, the Commission notified the applicant that he would have to repay any amount to which he was not entitled and in addition pay a penalty of $5,865.00. The Commission's decision reads as follows:
[translation]
We have examined your claim for benefit and it is our opinion that you have knowingly made 17 false or misleading statements. Contrary to what you had stated, we have learned that you were working for yourself.
Consequently, you will have to repay any amount to which you were not entitled and in addition pay a penalty of $5,865.00. This penalty is imposed because, in the Commission's opinion, you have knowingly made false or misleading statements. No cheque will be sent to you before the amount owing is fully repaid.
Have you made other false or misleading statements in the past? If so, you will avoid penalties or prosecution if you so inform us promptly, unless an investigation is already under way. Please note that if we discover other false statements, this could result in heavier fines or prosecution.
If you have some additional information that could alter this decision or if you wish further particulars, please contact us. For faster service, please ensure that you provide us with your social insurance number.
If you do not agree with our decision, which is based on the Unemployment Insurance Act, you have the right to appeal within 30 days following receipt of this notice. If you wish to appeal it, please follow the directions attached hereto.
[My emphasis]
[8] As this notice indicates, the imposition of the penalty of $5,865.00 and the demand for repayment of the overpayment made to the applicant are based on the Commission's finding that the applicant had knowingly made 17 false or misleading statements.
[9] In separate decisions issued on the same day, the Commission also notified the applicant:
(a) that it had cancelled his claim for benefit for the first period, as Revenue Canada had decided that his employment was not insurable (on January 15, 1999, the Revenue Canada decision was upheld by the Tax Court of Canada; on March 20, 2000, an application for judicial review of the latter decision was dismissed by the Federal Court of Appeal);
(b) that it could not pay him any benefits for the first period because he controlled his hours of work and he had not proved his availability.
[10] On February 6, 1997, the applicant filed an appeal from the decisions made by the Commission.
[11] On September 7, 2000, the Board of Referees allowed the applicant's appeal and rescinded "the decision" of the Commission. The Board of Referees' decision reads as follows:
[translation]
At issue here is whether the claimant knowingly made 17 false statements and whether a penalty of $5,865.00 should be imposed on him.
The Commission has the burden of proof (CUB 23647).
The Commission has not produced any proof of the statements it claims are false (exhibit 12.2, 1st paragraph). The Board of Referees must conclude that there is no false statement. Furthermore, absent any false statement, this case is out of time (s. 33 E.I. Act).
The Board of Referees unanimously allows the appeal and rescinds the decision of the Commission. [My emphasis]
[12] This decision of the Board of Referees was upheld by an umpire on July 6, 2001. There was no application for judicial review from the umpire's decision, so the Board of Referees' decision is final and is binding on the parties. Accordingly, the applicant submits that there is no legal basis for the recovery proceedings in relation to the first period. On the one hand, the decision of January 10, 1997, was rescinded by the Board of Referees. On the other hand, any claim covering the disputed amount is out of time. And that is what was decided in a final decision by the Board of Referees dated September 7, 2000.
[13] The respondent challenges the interpretation that the applicant gives to the decision of the Board of Referees, which, it says, was limited to setting aside the penalty of $5,865.00. The respondent is also of the opinion that the comment that "[the] case is out of time" is obiter dictum. The respondent further argues that in the wake of the dismissal of the applicant's appeal from the negative decision of Revenue Canada, he voluntarily abandoned his appeal from the Commission's decisions other than the appeal against the imposition of a penalty of $5,865.00.
[14] The applicant's submissions seem to me to be well-founded.
[15] The Board of Referees clearly rescinded the decision of January 10, 1997, reported in paragraph 7 of these reasons. And the claim for repayment of the overpayment contained in that decision is based on the premise that the applicant (knowingly) made 17 false or misleading statements, which is clearly not the case in this instance. By allowing the applicant's appeal and rescinding "the decision" of the Commission, therefore, the Board of Referees rescinded all of the measures contained in that decision, which includes not only the imposition of a penalty of $5,865.00 but also the demand for repayment of any overpayment claimed from the applicant for the first period. Also, the fact that the applicant has apparently abandoned the appeal he had filed against the other decisions of the Commission, as the respondent submits, is not determinative in my opinion.
[16] Whatever the case, no evidence of the abandonment alleged by the respondent was placed in the Court file, as required by the rules of this Court. I note as well that this is hearsay evidence, which in this case is not a sufficient guarantee of reliability. On the other hand, in the present state of the record, I am unable to determine whether the Board of Referees did in fact take note of the alleged abandonment and act on it. In this case, assuming the position that is most favourable to the respondent, it could not be anything more than a partial abandonment, and this cannot be determined with certainty. The respondent had the onus of adducing the best evidence of the alleged abandonment. But the conflicting documentation to which the Court was referred is subject to divergent interpretations. In this regard, my preference is to limit myself to the content of the letter dated June 16, 2000, sent by the applicant's counsel to the Commission, which states that he does not wish to withdraw his appeal and that he wishes to continue the proceedings before the Board of Referees.
[17] To the extent that there was a false statement, the Commission did in fact have a period of reconsideration of 72 months, instead of the usual period of 36 months. Section 43 of the Unemployment Insurance Act, R.S.C. 1985, c. U-1 (the UIA), which then applied, reads:
| 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 has 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.
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43.(1) Nonobstant l'article 86 mais sous réserve du paragraphe (6), la Commission peut, dans les trente-six mois qui suivent le moment où des prestations ont été payées ou sont devenues payables, examiner de nouveau toute demande au sujet de ces prestations et, si elle décide qu'une personne a reçu une somme au titre de prestations pour lesquelles elle ne remplissait pas les conditions requises ou au bénéfice desquelles elle n'était pas admissible ou n'a pas reçu la somme d'argent pour laquelle elle remplissait les conditions requises et au bénéfice de laquelle elle était admissible, la Commission calcule la somme payée ou payable, selon le cas, et notifie sa décision au prestataire.
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| (6) Where, in the opinion of the Commission, a false or misleading statement or representation has been made in connection with a claim, the Commission has seventy-two months within which to reconsider the claim under subsection (1).
[my emphasis] |
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(6) Lorsque la Commission estime qu'une déclaration ou représentation fausse ou trompeuse a été faite relativement à une demande de prestations, elle dispose d'un délai de soixante douze mois pour réexaminer la demande en vertu du paragraphe (1).
[mon soulignement] |
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[18] However, the Commission's power to impose a penalty where it thinks the claimant has knowingly made a false or misleading statement is given to it under subsection 33(1) of the UIA, in which case the penalty imposed on the claimant must be imposed within the 36-month period under subsection 33(4) of the UIA. The latter provisions are as follows:
| 33.(1) Where the Commission becomes aware of facts that in its opinion establish that a claimant or any person on the claimant's behalf has, in relation to a claim for benefit, made statements or representations that the claimant or person knew to be false or misleading or, being required under this Act or the regulations to furnish information, furnished information or made statement or representations that the claimant or person knew to be false or misleading, the Commission may impose on the claimant a penalty in respect of each false or misleading statement, representation or piece of information, but the penalty shall be not greater than an amount equal to three times the claimant's weekly rate of benefit.
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33.(1) Lorsque la Commission prend connaissance de faits qui, à son avis, démontrent qu'un prestataire ou une personne agissant pour le compte de celui-ci a, relativement à une demande de prestations ou à l'occasion de renseignements exigés par la présente loi ou par les règlements, sciemment fait une déclaration fausse ou trompeuse, fourni un renseignement faux ou trompeur ou présenté des observations fausses ou trompeuses, elle peut infliger au prestataire, pour chacun des déclarations, renseignements ou observations faux ou trompeurs, une pénalité dont le montant ne dépasse pas le triple de son taux de prestations hebdomadaires.
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| (4) A penalty provided under subsection (1) or (2) shall not be imposed after thirty-six months from the date on which the false or misleading statement, representation or piece of information was made or furnished.
[my emphasis] |
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(4) Les pénalités prévues aux paragraphe (1) et (2) ne peuvent être infligées plus de trente-six mois après la date à laquelle a été faite la déclaration, fourni le renseignement ou présentée l'observation faux ou trompeurs.
[mon soulignement] |
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[19] There are some significant differences between subsection 33(1) of the UIA and subsection 43(6) of the UIA. For example, subsection 43(6) simply refers to a false or misleading statement, while subsection 33(1) requires that the person making the statement "knew" it was false or misleading. On the other hand, if the Commission decides not to exercise the discretion it has under subsection 33(1) to impose a penalty, there is nothing to prevent it from reconsidering a false or misleading statement within the time prescribed in subsection 43(6) of the UIA: Canada (Attorney General) v. Pilote, [1998] F.C.J. No. 1923 (F.C.A.) (QL).
[20] Furthermore, sections 33 and 43 of the UIA must be read in conjunction with section 35 of that Act, which provides:
| 35.(1) Where a person has received benefit under this 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. |
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35.(1) Lorsqu'une personne a touché des prestations en vertu de la présente loi au titre d'une période pour laquelle elle était exclue du bénéfice des prestations ou a touché des prestations auxquelles elle n'est pas admissible, elle est tenue de rembourser la somme versée par la Commission à cet égard. |
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| (2) All amounts payable under this section or section 33, 37 or 38 are debts due to Her Majesty and are recoverable as such in the Federal Court or any other court of competent jurisdiction or in any other manner provided by this Act.
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(2) Les sommes payables en vertu du présent article ou des articles 33, 37 ou 38 constituent des créances de Sa Majesté, dont le recouvrement peut être poursuivi à ce titre soit devant la Cour fédérale ou tout autre tribunal compétent, soit selon toute autre modalité prévue par la présente loi.
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| (4) No amount due as a debt to Her Majesty under this section may be recovered after seventy-two months from the date on which the liability arose.
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(4) Le recouvrement des créances visées au présent article se prescrit par soixante-douze mois à compter de la date où elles ont pris naissance.
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[21] Thus, the amount of the penalty and/or overcharge becomes a liquid debt payable from the time when the claimant is legally notified of the exact amount to be repaid, in which case the period for recovery of this debt is limited to 72 months under subsection 35(4) of the UIA: Canada (Attorney General) v. Laforest, [1988] F.C.J. No. 546 (F.C.A.) (QL); and Brière v. Canada (Employment and Immigration Commission), [1988] F.C.J. No. 551, at para. 67 (F.C.A.) (QL). I note here that no evidence was submitted of the date at which the Commission legally notified the applicant that the disputed amount had become payable (the decisions of January 10, 1997, do not specify the amount of the overpayment claimed from the applicant).
[22] This being said, when the normal 36-month period for reconsideration under subsection 43(1) of the UIA has expired and the Commission specifically wishes to avail itself of the extension of time established in subsection 43(6) of the UIA, where its decision is appealed, the Commission must demonstrate to the Board of Referees that the exception provided in that provision applies. In this regard, I am of the opinion that the Commission must have more than a mere suspicion that there was a false or misleading statement. Indeed, the Commission cannot act arbitrarily without any evidence before it or on the basis of erroneous or unverified information. Otherwise, subsection 43(1) of the UIA would be of no effect, which is clearly contrary to the intention expressed by Parliament that the normal period for reconsideration is 36 months and not 72 months.
[23] However, as it was pointed out earlier, the Board of Referees made a final decision that there had not been any false statement in relation to the first period. On the one hand, the Commission could not impose a penalty of $5,865.00 on the applicant, for the two conditions provided in subsection 33(1) of the UIA (false or misleading nature of the statement and mens rea) were not fulfilled in this case. On the other hand, the condition under subsection 43(6) of the UIA (false or misleading nature) was not fulfilled either. Consequently, the reconsideration of the claim for benefit necessarily had to be conducted within the usual period of 36 months under subsection 43(1) of the UIA. But this period had expired when, in January 1997, the Commission reconsidered the claim for benefit for the first period. The file on the claim was therefore out of time. Moreover, the Board of Referees clearly states in its decision: "absent any false statement, this case is out of time (s. 33 E.I. Act)."
[24] In my opinion, and contrary to the respondent's submission, that was no mere obiter dictum. Nor do I think that the reference in the decision to section 33 of the UIA is determinative. The decision must be read as a whole. We do not require that the members of a Board of Referees be jurists. Their decisions need not have the legal precision of a court judgment. But the comment that "absent any false statement, this case is out of time" is in this case meaningless unless is it linked to the condition in subsection 43(6) of the UIA, which requires a false statement (in fact, under subsection 33(4) of the UIA no penalty may be imposed after 36 months from the date on which the false or misleading statement was made).
[25] A claimant may, through an application for judicial review, have this Court verify the lawful validity of any recovery proceeding. The Commission must act in accordance with the Act. In this case, the Commission had to comply with the unanimous decision of the Board of Referees that there was no false statement concerning the first period. Also, the file in relation to any claim covering the first period was out of time. Consequently, the Commission cannot take recovery proceedings against the applicant for the purpose of obtaining repayment of the disputed amount. Moreover, according to the uncontradicted evidence in this case, the applicant has fully paid the penalty and repaid the overpayment that were claimed from him by the Commission for the second period. Accordingly, the garnishment cannot be maintained and the applicant is entitled to be repaid any amount that has been collected over and above the undisputed amount. In view of the result, the applicant shall be entitled to costs against the respondent.
ORDER
FOR THESE REASONS, IT IS ORDERED:
1. The application for judicial review is allowed with costs against the respondent;
2. The recovery proceedings undertaken by the Commission, including the garnishment, to obtain payment of the disputed amount are invalid, unlawful and contrary to the Act;
3. The applicant shall be repaid any amount that has been collected over and above the undisputed amount; and
4. The expressions "garnishment", "disputed amount" and "undisputed amount" used in this order have the same meaning as the meaning attributed to them in paragraphs 1 and 2 of the reasons for order.
"Luc Martineau"
Judge
Certified true translation
Suzanne Gauthier, C.Tr., LL.L.
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-1074-02
STYLE: RICHARD DESJARDINS v.
ATTORNEY GENERAL OF CANADA
PLACE OF HEARING: QUÉBEC, QUEBEC
DATE OF HEARING: MARCH 9, 2004
REASONS FOR ORDER
AND ORDER: THE HONOURABLE MR. JUSTICE MARTINEAU
DATED: APRIL 23, 2004
APPEARANCES:
DENIS GINGRAS FOR THE APPLICANT
PAUL DESCHÊNES FOR THE RESPONDENT
SOLICITORS OF RECORD:
GINGRAS, VALLERAND, BARMA,
LAROCHE, AMYOT
QUÉBEC, QUEBEC FOR THE APPLICANT
MORRIS ROSENBERG
DEPUTY ATTORNEY GENERAL OF CANADA FOR THE RESPONDENT