The Queen v. Scheer Ltd., [1974] SCR 1046

Supreme Court of Canada

The Queen v. Scheer Ltd., [1974] S.C.R. 1046

Date: 1972-03-30

Her Majesty The Queen Appellant;

and

Scheer Limited Respondent.

1972: February 18; 1972: March 30.

Present: Fauteux C.J. and Abbott, Martland, Judson, Ritchie, Hall, Spence, Pigeon and Laskin JJ.

ON APPEAL FROM THE EXCHEQUER COURT OF CANADA

Constitutional law—Regulation—Validity—Persons not covered by a contract of service—Meaning of the word “employment”—Unemployment Insurance Act, R.S.C. 1970 (Can.) c. U‑2, ss. 25, 26(1)(d) and 29(2).

The Unemployment Insurance Commission, relying on Regulation 64B of the Unemployment Insurance Regulations promulgated under s. 26(1)(d) of the Act, had caused to be filed in the Exchequer Court a certificate claiming from respondent the sum of $9,173.08 for contributions due under the Unemployment Insurance Act. The Exchequer Court held this Regulation invalid in part because it included within insurable employment persons not subject to a contract of service, a power not conferred on it by the Act.

Held: The appeal should be allowed.

From 1946 to the present time Parliament in its unemployment insurance legislation has used the word “employment” to include a business, trade or occupation and not solely to designate a master and servant relationship. This is also the case with the present statute and there is no necessity to include in s. 26(1)(d) reference to cases where a contract of service does not exist. Section 26 (1)(d) can only have reference to cases where the employment, in the sense of occupation, is one upon other than a contract of service, because all the other cases are covered elsewhere in the statute, including s. 26(1)(a), (b) and (c). The statutory reference in s. 29(2) to those not covered by the contract of service cannot be interpreted to imply that those who are not covered by a contract of service cannot be dealt with by an order under s. 26(1)(d) of the statute.

APPEAL from a judgment of the Exchequer Court of Canada invalidating a Regulation adopted under the Unemployment Insurance Act. Appeal allowed.

P.M. Ollivier, Q.C., for the appellant.

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J.A. Robb, Q.C., and P.R. O’Brien, for the respondent.

The judgment of the Court was delivered by

SPENCE J.—This is an appeal from the decision of Mr. Justice Walsh pronounced on the 3rd day of February 1971. The learned Exchequer Court Judge considered a question referred to him under the provisions of s. 18(1)(g) of the Exchequer Court Act (then R.S.C. 1952, c. 98 as amended):

(g) the amount to be paid where the Crown and any person have agreed in writing that the Crown or such person shall pay an amount of money to be determined by the Exchequer Court, or any question of law or fact as to which the Crown and any person have agreed in writing that any such question of law or fact shall be determined by the Exchequer Court;

The question so referred for the decision of the Exchequer Court was:

Is Regulation 64B of the Unemployment Insurance Regulations, approved by Order‑in‑Council P.C. 1960-610 dated April 4, 1966, as amended by Order-in-Council P.C. 1968-1181 dated June 19, 1968, invalid in whole or in part and if the latter, which part?

The learned Exchequer Court Judge held:

Section 64B of the Unemployment Insurance Regulations is invalid in part to the extent that it includes in subsection (1) the words “notwithstanding that such employment may be self-employment or employment not under a contract of service”.

The Unemployment Insurance Commission had caused to be filed in the Exchequer Court a certificate under s. 104 of the Unemployment Insurance Act claiming from Scheer Limited the sum of $9,173.08 as contributions due under s. 37 of the said Act. In claiming the said amount from Scheer Limited, the Commission relied, inter alia, on s. 64B of the Unemployment Insurance Regulations and it was the validity of the said Regulation which was at issue before the learned Exchequer Court Judge.

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In view of the ground of invalidity found by Walsh J., a very brief and much abridged history of the legislation and regulations would appear to be of assistance.

The Parliament of Canada by Statutes of Canada 1935, c. 38, enacted the Employment and Social Insurance Act. The ultra or intra vires character of that statute was referred to the Supreme Court of Canada by Order in Council made on the 5th of November 1935, and this Court, by a majority judgment upon such reference, reported in [1936] S.C.R. 427, held that the statute was ultra vires as being in pith and substance a statute in relation to the civil rights of employers and employed in each province. The Reference was appealed to the Privy Council and the judgment of the Supreme Court of Canada was affirmed in a judgment reported in [1937] A.C. 355. Lord Atkin giving judgment for Their Lordships said at p. 365:

There can be no doubt that, prima facie, provisions as to insurance of this kind, especially where they affect the contract of employment, fall within the class of property and civil rights in the Province, and would be within the exclusive competence of the Provincial Legislature.

He concluded his reasons with the statement:

In the present case, Their Lordships agree with the majority of the Supreme Court in holding that in pith and substance this Act is an insurance Act affecting the civil rights of employers and employed in each Province, and as such is invalid.

Thereafter, in 1940, the British North America Act was amended by adding in s. 91 a new heading designated as Number 2A simply in the words “Unemployment Insurance”. Following that, the statute previously declared invalid was re-enacted and now appears as Revised Statutes of Canada 1970, c. U-2. Reference hereafter will be made to the section numbers in the said 1970 revision as those sections do not exhibit any variation from the statute which was in effect immediately prior to the revision.

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The scheme adopted in the Act as originally enacted after the amendment of the British North America Act and which was 4 George IV, chap. 44, assented to on the 7th of August 1940, was to divide employment between insurable employment and excepted employment, and the two different classes were set out in schedules to the original statute. Section 14(1) of that original statute provided that when it appeared to the Commission that the terms and conditions of service and the nature of the work performed by any class of persons employed in an excepted employment were so similar to the terms and conditions of service of, and the nature of the work performed by, a class of persons employed in an insurable employment then they could be moved into the class of those within the insurable employment. It would appear therefore that up till 1946 the statute was concerned only with those who were bound as employers or employees under a contract of service. However, in the year 1946, by 10 Geo. V, c. 68, Parliament added s. 14A which I quote hereafter:

14A. The Commission may, by special order, declare that the terms and conditions of service of, and the nature of the work performed by a person or group or class of persons who are not employed under a contract of service are so similar to the terms and conditions of service of, and the nature of the work performed by, a group or class of persons who are employed under a contract of service as to result in anomalies or injustices in the operation of the Act, and thereupon the person or group or class of persons in respect of whom the declaration is made shall be deemed to be employed under a contract of service for the purposes of this Act.

It will be seen that by this amendment for the first time Parliament enlarged the scope of the statute so that the Commission could, under the circumstances set out in s. 14A, include in the coverage of the statute some persons who were not employed under a contract of service.

In 1955, by Statutes of Canada 1955, c. 50, the old Act was repealed and replaced by a new statute. I quote ss. 25 and 26(1) of the statute as

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then enacted, which provisions appear as sections similarly numbered in R.S.C. 1970, c. U-2.

25. Insurable employment is employment that is not included in excepted employment and is

(a) employment in Canada, by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are reckoned by time or by the piece, or partly by time and partly by the piece, or otherwise;

(b) employment in Canada as described in paragraph (a) under Her Majesty in right of Canada; or

(c) employment included in insurable employment under section 26.

26. (1) The Commission may, with the approval of the Governor in Council, make regulations for including in insurable employment,

(a) any excepted employment;

(b) any employment outside Canada or partly outside Canada, being employment that would be insurable employment if it were in Canada;

(c) the entire employment of a person who is engaged under one employer partly in insurable employment and partly in other employment; and

(d) any employment if it appears to the Commission that the nature of the work performed by persons employed in that employment is similar to the nature of the work performed by persons employed in insurable employment.

In 1956, by Statutes of Canada 1956, c. 50, an important amendment was added to the statute numbered 29(2) and that statute which reads as follows appears in the same form as the same number in the 1970 revision. It reads:

29. (2) Notwithstanding anything in this Act, the regulations made with the approval of the Governor in Council under section 26 for including employment in fishing in insurable employment may, for all purposes of this Act, provide for

(a) including as an insured person any person who is engaged in fishing (hereinafter called a “fisherman”), notwithstanding that such person is not an employee of any other person;

(b) including as an employer of a fisherman any person with whom the fisherman enters into contractual or other commercial relationship in respect of his occupation as a fisherman; and

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(c) all such other matters as are necessary to provide unemployment insurance for fishermen.

Purporting to act under the authority of s. 26(d) of the Unemployment Insurance Act, the Commission, with the approval of the Governor in Council, enacted s. 64A which had the effect of bringing “self-employed barbers and hairdressers” within the class of insurable employment and s. 64B of the Regulations which reads as follows:

64B. (1) Except for employment that is excepted employment, the employment of every person who

(a) is employed in driving any taxi, commercial bus, school bus or other vehicle that is used by a business or public authority for carrying passengers, and

(b) is not the owner of the vehicle or the proprietor or operator of the business or public authority that uses the vehicle for carrying passengers,

shall be included in insurable employment notwithstanding that such employment may be self-employment or employment not under a contract of service.

(2) The operator or proprietor of a business or a public authority that uses a vehicle described in subsection (1) for carrying passengers shall, for all the purposes of the Act and these Regulations, be deemed to be the employer of every person whose employment is included in insurable employment pursuant to subsection (1).

…

It was the contention of the respondent before the Exchequer Court and it is the contention of the respondent here that s. 64B is ultra vires in that the statute gives to the Commission no power to enact regulations bringing within the class of insurable employment those who are not governed by any contract of service. Neither the words “unemployment insurance” nor the word “employment” are defined in the Act nor in the Interpretation Act. Section 2(8) which defines the words “insurable employment” is not helpful however as it simply defines it as “employment specified in s. 25” and therefore still leaves undetermined the meaning of the word “employment”. Definitions from dictionaries need not be quoted, sufficient

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to say that it would seem to be the unanimous opinion of the authors of all such works that the word “employment” has two alternative meanings: either (a) a contract of service, or (b) the occupation, business or trade in which a person is engaged. It is the contention of the respondent, a contention which was successful in the Exchequer Court, that only the former meaning should be adopted in construing the Unemployment Insurance Act; it is, however, the contention of the Commission that the word has been used in the sense of business, trade or occupation.

As I have said, the statute which preceded the present statute and which had been enacted by Parliament in 1935 was declared ultra vires by the Judicial Committee. That statute dealt only with the situation where there was a master and servant relationship, that is, a contract of service. I find nothing, however, in the judgment of Lord Atkin in the Judicial Committee which would confine his judgment in reference to the ultra vires character of the statute to one which dealt only with master and servant relationship and, on the other hand, I think that a contract between a taxi cab owner and a person who operated that taxi cab under a contract other than a contract of service would be equally a contract dealing with the property and civil rights of the parties and interference with it by virtue of federal legislation would be equally ultra vires.

It should be noted that the counsel agreed that the constitutional validity of s. 26 of the Unemployment Insurance Act was not in question but only the validity of s. 64B of the Regulations as being authorized by the provisions of s. 26(1)(d) of the statute.

With respect, I agree with Walsh J. that the meaning of the word “employment” must be gathered from the survey of the statute and the intention of Parliament in using the language employed determined having regard to the context in which it is used. I, therefore, stress that from 1946 on, when s. 14A as it was then known was enacted, the statute has included in it a situation where no contract of service has

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been in effect and has used the word “employment” to designate that situation as well as the situation when a contract of service was in existence.

The example which comes to mind, of course, at the present time, is s. 29(2) bringing self‑employed fishermen within the class of insurable employment. I, therefore, am of the view that, at any rate from 1946 to the present time, Parliament in its unemployment insurance legislation has used the word “employment” to include a business, trade or occupation and not solely to designate a master and servant relationship.

The respondent has advanced two arguments which must be considered: firstly, that the said s. 14A had in it an exact reference to a situation in which there was no contract of service in effect and that that reference does not appear in s. 26(1)(d) of the present statute and, secondly, that when Parliament wished to deal with a case where no contract of service was in existence it did so by specific statutory amendment in the form of s. 29(2) of the statute rather than merely by Unemployment Insurance Commission regulation as in the present regulation 64(B). In reference to the first of these submissions, I think regard must be had to the format of the various sections in the present Unemployment Insurance Act. By s. 25(c) “insurable employment” is to include employment brought therein by virtue of s. 26, then s. 26 outlines the rights of the Commission to bring within “insurable employment” employment, using the word in the sense of trade of occupation, not otherwise included therein. Section 27 then outlines the excepted employment and s. 28 gives to the Commission power to remove from insurable employment certain employments or occupations and put them in the excepted employment classification. In each of the sections, the emphasis seems to me to be upon the occupation and not upon a contract of service and I therefore see no necessity of including in s. 26(1)(d) reference to cases where a contract of service does not exist. Therefore, I cannot put upon the omission to make such reference the

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consequences which the respondent in his argument would attribute to such omission. Upon the second submission, it is argued that Parliament, when it desired to cover self-employment of those engaged in certain occupations, felt it was necessary to do so by statutory enactment and not by regulation, and enacted s. 29(2) as to self-employed fishermen. Therefore, it is submitted Parliament did not intend that there could be such extension to self-employed persons by virtue simply of the regulations enacted as empowered by s. 21(d) of the statute. It must be remembered that the power to extend granted by s. 26(1)(d) is a very limited power. It only extends to any employment if it appears to the Commission that the nature of the work performed by persons engaged in that employment is similar to the nature of the work performed by persons engaged in insurable employment. It may well be that Parliament was of the opinion that the nature of the work performed by a self-employed fisherman using his own boat and then selling the fish which he catches under a continuing contract to some fish processing plant was of a very different nature to that of the taxi driver who drives a vehicle owned by a taxi company and under the contract with that taxi company shares the proceeds of his fares in some defined proportion. Parliament, believing that self-insured fishermen should be covered by the provisions of the Unemployment Insurance Act but could not be brought in by virtue of the regulations enacted under s. 26(1)(d), enacted a statutory provision, s. 29(2), which brought them within the coverage.

I, therefore, am of the opinion that the statutory reference in s. 29(2) to those not covered by the contract of service cannot be interpreted to imply that those who are not covered by a contract of service cannot be dealt with by an order under s. 26(1)(d) of the statute.

In passing, I note that although s. 26(1)(d) of the statute is, as I have pointed out, limited in

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its application, its limits are not as strict as those which existed in the old s. 14(A). That section required a similarity in the terms of work, the conditions of service and the nature of the work. The present s. 26(1)(d) requires similarity only in the nature of the work. It may well be that Parliament was of the opinion that s. 14(A) was contradictory within its terms in that it required a similarity of terms of work and at the same time permitted the inclusion in insurable employment of those who were not employed under a contract of service and that that contradiction within the section has been removed in the present s. 26(1)(d).

I am much impressed by the submission that s. 26(1)(d) can only have reference to cases where the employment, in the sense of occupation, is one upon other than a contract of service because all the other cases are covered elsewhere in the statute including s. 26(1)(a), (b) and (c). The case one thinks of automatically is the case of bringing an employment in the excepted employments within the insurable employments. That is specifically covered in s. 26(1)(a); employment outside of Canada or partly outside of Canada is covered in s. 26(1)(b); and employment on a partially-insurable employment and a partially-excepted employment is covered in s. 26(1)(c). Other specific cases are covered in s. 26(2).

I am not ready to explain the apparent redundant nature of s. 26(1)(d), if it does not apply to cases of contracts other than contracts of service, on the basis of the maxim ex abundanti cautela and I subscribe to Lord Halsbury’s statement in Commissioners of Income Tax v. Pemsell[1], at p. 549:

But I do not think it competent for any court to proceed upon the assumption that the legislature had made a mistake. Whatever the real fact may be, I think a court of law is bound to proceed on the assumption that the legislature is an ideal person that does not make mistakes.

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For these reasons, I would answer the question put in the agreement of the parties as follows:

Section 64(B) of the Unemployment Insurance Regulations is valid throughout.

The appeal should be allowed, the Crown is entitled to its costs in this Court and in the Exchequer Court.

Appeal allowed with costs.

Solicitor for the appellant: Donald S. Maxwell, Ottawa.

Solicitors for the respondent: Stikeman, Elliott, Tamaki, Mercier & Robb, Montréal.