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.
J.T.C.C.
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