Employment and Immigration Commission of Canada v. MacDonald Tobacco Inc., [1981] 1 SCR 401

Supreme Court of Canada

Employment and Immigration Commission of Canada v. MacDonald Tobacco Inc., [1981] 1 S.C.R. 401

Date: 1981-04-06

Employment and Immigration Commission of Canada Appellant;

and

MacDonald Tobacco Inc. Respondent;

and

Her Majesty The Queen Mis en cause.

1981: March 18; 1981: April 6.

Present: Laskin C.J. and Martland, Ritchie, Dickson and Beetz JJ.

ON APPEAL FROM THE FEDERAL COURT OF APPEAL

Administrative law—Unemployment Insurance—Power to revoke reduction granted for previous years—Judicial authority—Unemployment Insurance Act, 1970-71-72 (Can.), c. 48 as amended, ss. 64(4), 64(6), 70, 75 and Regulations, s. 24—Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28.

An employer covered by the Unemployment Insurance Act and Regulations applied successfully for reduction of its unemployment insurance premiums for the years 1974, 1975 and 1976 through successive applications. Its application for reduction for the year 1977 was rejected by the officer of the Commission who also purported to revoke the reductions granted for three previous years and told the employer it would have to make up the underpayments for those years. The employer did not contest the refusal to allow a reduction for 1977 but sought reconsideration by the Review Panel of the revocation of the reductions allowed for the previous three years. The Review Panel denied relief and its position was confirmed by a majority decision of the Unemployment Insurance Commission.

On a section 28 application to the Federal Court of Appeal, that Court held that the officer exercised a quasi-judicial function and, in the absence of express power to revoke previous decisions, he had acted illegally in so doing and accordingly allowed the employer’s appeal.

Held: The appeal should be dismissed.

The question was whether the scheme of the Act, and especially of the relevant Regulations, allows an officer of the Commission, the Review Panel or the Commission itself, to undo retroactively and suo motu what had been done by way of allowing premium reductions for previous years. It was evident from the Regulations that in

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respect of an application for a premium reduction, a review can only be made at the instance of the employer. The Commission contended, however, that a decision granting the reduction is a nullity when it turns out that the conditions or requirements for it were not met, and that the officer acting under s. 24(2) of the Regulations was acting in an administrative capacity and could set aside a reduction improperly made.

In this case, the officer was engaged in a judicial exercise in making decisions in accordance with the Regulations enacted pursuant to s. 64 of the Act and thus under prescribed standards which the officer was obliged to apply and which were not mere guides for a wide discretion. The fact that the officer may have erred in law in granting reductions did not mean that he exceeded or failed to exercise his jurisdiction: he was properly seized of the applications and his errors did not make his decisions nullities.

Finally, s. 70 of the Act, which confers wider powers upon the Minister of National Revenue than are given either to the officer or the Commission, could not be relied upon since the present case did not bring the Minister’s authority into play.

Minister of National Revenue v. Coopers and Lybrand, [1979] 1 S.C.R. 495, referred to.

APPEAL from a judgment of the Federal Court of Appeal[1], granting an application under s. 28 of the Federal Court Act to review and set aside a decision of the Unemployment Insurance Commission. Appeal dismissed.

Paul Ollivier, Q.C., and Gaspard Côté, Q.C., for the appellant.

Raymond LeMoyne and Louis Lemire, for the respondent.

The judgment of the Court was delivered by

THE CHIEF JUSTICE—An employer covered by the Unemployment Insurance Act, 1970‑71‑72 (Can.), c. 48 as amended, and Regulations thereunder, applied successfully for reduction of its unemployment insurance premiums for the years 1974, 1975 and 1976 through successive applications. It made another application for reduction for the year 1977. Not only was this rejected but the

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officer of the Commission, charged to decide the matter, purported to revoke the reductions granted for the three previous years, and the employer was told it would have to make up the underpayments for those years. The employer did not contest the refusal to allow a reduction for 1977 but sought reconsideration by the Review Panel of the revocation of the reductions allowed for the previous three years. The Review Panel denied relief and its position was confirmed by a majority decision of the Unemployment Insurance Commission. On a section 28 application to the Federal Court of Appeal, that Court held that the officer, charged to determine whether or not to allow a premium reduction, exercised a quasi-judicial function and, in the absence of express power to revoke previous decisions, he had acted illegally in so doing. The case is here on this issue.

It is not contested that the employer, strictly speaking, was not entitled to premium reductions for the years 1974, 1975 and 1976. The question is, however, whether the scheme of the Act, and especially of the relevant Regulations, allows an officer of the Commission or, indeed, the Review Panel or the Commission itself, to undo retroactively and suo motu what had been done by way of allowing premium reductions for previous years.

Sections 64(4) and (6) of the Unemployment Insurance Act, supra, as amended by 1974‑75‑76 (Can.), c. 80, s. 23, in force at the material times, read as follows:

(4) The Commission shall, with the approval of the Governor in Council, make regulations to provide a system for reducing an employer’s premium payable under this Act when the payment of any allowances, monies or other benefits under a plan that covers insured persons employed by the employer, other than one established under provincial law, would have the effect of reducing the benefits that are payable to such insured persons under the Act, in respect of unemployment caused by illness or pregnancy, if insured persons employed by the employer will benefit from the reduction of the employer’s premium in an amount at least

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equal to five-twelfths of the reduction, but subject to paragraph (a) of section 65.

…

(6) For the purposes of subsections (4) and (5), the Commission may, with the approval of the Governor in Council, make regulations

(a) prescribing the manner and time for making an application for a premium reduction;

(b) prescribing the standards that must be met by a plan to qualify for a premium reduction and the time during which such plan must be in effect;

(c) prescribing the method for determining the amount of reduction for plans of given standards and the use to be made of actuarial calculations and estimates;

(d) providing for the making of decisions relating to premium reduction and appeals therefrom in cases of dispute;

(e) prescribing the manner in which the insured earnings of insured persons will be reported by employers to the Department of National Revenue, Taxation; and

(f) generally, providing for any other matters necessary for carrying out the purposes and provisions of subsections (4) and (5).

Regulations respecting applications for premium reduction were properly brought into force and they provided the following in s. 24 thereof:

24. (1) …

(2) Upon receiving an application for a reduction of an employer’s premium, an officer of the Commission shall decide whether or not a reduction shall be made.

(3) An employer may, within 30 days of the mailing of a notice of a decision made pursuant to subsection (2), (or within such further time as the Commission may allow,) apply for a review of the decision by a review panel consisting of officers designated by the Commission.

(4) An employer who is not satisfied with the decision of the review panel referred to in subsection (3) may appeal to the Commission for a final determination of the question.

(The bracketed words in subs. (3) were not in force when the dispute herein arose.)

What is evident from the Regulations and, especially the quoted provisions of s. 24, is that there is a one-way review prescribed in respect of an

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application for a premium reduction, namely, a review at the instance of the employer. If, as in the present case, a premium reduction is allowed by the Commission’s officer, there is nothing in the Regulations that permits review of the allowance if the employer is satisfied with it; neither the officer nor the Review Panel nor the Commission itself is given any express power to act on his or its own initiative to set aside an allowed reduction after it has been granted. Only the employer may, under the Regulations, contest a decision which is unfavourable to it.

Three submissions were made on behalf of the appellant Commission. First, it was contended that since a reduction can only be allowed if certain conditions or requirements are met by the employer which applied for it, a decision granting the reduction is a nullity when, as is the case here, it turns out that the conditions or requirements were not met. This contention was fortified by and associated with a second contention that the officer acts under s. 24(2) of the Regulations in an administrative and not in a judicial or quasi-judicial capacity and hence he may, as a matter of administrative authority, review and set aside a reduction that was not properly made, either by him or by some other officer seized of the particular application. Moreover, so the contention went, even if it was not open to an officer to revoke a reduction of premium, the Commission could do so in pursuance of its overall administrative authority. It is obvious, in respect of this latter submission, that the Commission can only act retroactively (if it has the power alleged) to revoke a reduction of premium allowed in a previous year. Nowhere in the Act or Regulations is any such authority conferred.

The third contention was based on s. 70 of the Unemployment Insurance Act and I shall come to that later in these reasons. I note at this point only that the appellant did not contest the jurisdiction of the Federal Court under s. 28, and this position appears to me to undercut the administrative argument of the appellant. Section 28 of the Federal Court Act, R.S.C. 1970, (2nd Supp.), c. 10 is, as

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Dickson J. noted in Minister of National Revenue v. Coopers and Lybrand[2], at p. 499, a difficult provision. It reads as follows:

28. (1) Notwithstanding section 18 or the provisions of any other Act, the Court of Appeal has jurisdiction to hear and determine an application to review and set aside a decision or order, other than a decision or order of an administrative nature not required by law to be made on a judicial or quasi-judicial basis, made by or in the course of proceedings before a federal board, commission or other tribunal, upon the ground that the board, commission or tribunal

(a) failed to observe a principle of natural justice or otherwise acted beyond or refused to exercise its jurisdiction;

(b) erred in law in making its decision or order, whether or not the error appears on the face of the record; or

(c) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it.

(2) Any such application may be made by the Attorney General of Canada or any party directly affected by the decision or order by filing a notice of the application in the Court within ten days of the time the decision or order was first communicated to the office of the Deputy Attorney General of Canada or to that party by the board, commission or other tribunal, or within such further time as the Court of Appeal or a judge thereof may, either before or after the expiry of those ten days, fix or allow.

(3) Where the Court of Appeal has jurisdiction under this section to hear and determine an application to review and set aside a decision or order, the Trial Division has no jurisdiction to entertain any proceeding in respect of that decision or order.

(4) A federal board, commission or other tribunal to which subsection (1) applies may at any stage of its proceedings refer any question or issue of law, of jurisdiction or of practice and procedure to the Court of Appeal for hearing and determination.

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(5) An application or reference to the Court of Appeal made under this section shall be heard and determined without delay and in a summary way.

(6) Notwithstanding subsection (1), no proceeding shall be taken thereunder in respect of a decision or order of the Governor in Council, the Treasury Board, a superior court or the Pension Appeals Board or in respect of a proceeding for a service offence under the National Defence Act.

It is obvious from the terms of s. 28 that the Federal Court’s jurisdiction to entertain an application thereunder depends on whether the decision or order of which review is sought is a decision or order other than one of an administrative nature not required by law to be made on a judicial or quasi-judicial basis. Put in other words, decisions or orders which may be classified as administrative are nonetheless reviewable, within the terms of s. 28, if the authority which makes them was required to act judicially or quasi-judicially. In my view, it is no longer sensible to retain the old stereotyped classifications of statutory authority as being either administrative or judicial (or quasi-judicial) as providing a basis for review by the courts in the latter case but not in the former. It is more compatible with substance to look at statutory tribunals or boards or authorities in terms of the functions which, either at large or in a particular situation, they are obliged to discharge. It requires no citation of authority to note that an administrative tribunal may have judicial functions as well as administrative or ministerial functions.

The concession of jurisdiction in the Federal Court in this case absolves me of any need to inquire whether the officer charged to consider an application for a reduction of premium is a “federal board, commission or other tribunal” as defined in s. 2 of the Federal Court Act. However, he plainly is, as is also the Unemployment Insurance Commission. Again, the concession so made carries with it that the officer and the Commission, in dealing with an application for reduction of premi-

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um, were engaged in a judicial exercise. That was, in any event, the view of the Federal Court of Appeal. Pratte J., speaking for that Court, was plainly right in stating that the officer of the Commission, charged, in the words of s. 24(2) of the Regulations, to decide whether a reduction shall be made, was obliged to make the decision in accordance with the Regulations enacted pursuant to s. 64 of the Act and thus under prescribed standards. The judicial character of this power of decision is underlined by the provisions for review. There are no policy considerations involved in the exercise of an authority which comes from the Regulations and not by delegation from the Commission. Employers’ rights are involved in an application invoking the authority of an officer and made pursuant to the criteria set out in the Regulations, criteria which the officer is obliged to apply. They are not mere guides for a wide discretion.

In saying that the officer is carrying out a judicial function, I am not to be taken as saying also that he must give an oral hearing. The Regulations provide for the form and contents of an application for reduction of premium. This satisfies, in the circumstances, any requirement of fairness because it is left to an employer to invoke the Regulations which, in pursuance of the Act, set out the conditions to be met for a reduction of premium. The officer’s duty is to see if the facts set out in the application meet the requirements prescribed for a reduction of premium. If the employer is not satisfied with the officer’s decision, the Regulations provide for two levels of review at his instigation alone.

It is not for the courts to supply a review of a decision wrongfully made in favour of an employer when the Regulations do not do so and when they could so easily be amended to that end. As it is, the fact that the officer may have erred in law in granting reductions for the years 1974, 1975 and 1976 does not mean that he exceeded or failed to exercise his jurisdiction. He was properly seized of

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the respective applications for those years and his errors did not make his decisions nullities.

This brings me to consider the submission based on s. 70 of the Act. It is found in Part IV, headed “Collection of Premiums” whereas s. 64 under which the Regulations herein were made is found in Part III. “Minister” in Part III is defined to mean the Minister of Labour; and in Part IV the term is defined to mean the Minister of National Revenue. Section 70 is as follows:

70. (1) The Minister may assess an employer for an amount payable by him under this Act, or may reassess such employer or make such additional assessments as the circumstances require, and the expression “assessment” when used in this Act with reference to any action so taken by the Minister under this section includes such reassessment or additional assessment.

(2) After assessing an employer for an amount payable by him under this Act the Minister shall send the employer a notice of assessment, and upon such notice being sent to the employer the assessment shall be deemed to be valid and binding subject to being vacated or varied on appeal under this Act, and the employer is liable to pay to Her Majesty the amount thereof forthwith.

(3) Notwithstanding subsection (1) or (2), no assessment, reassessment or additional assessment of an amount payable by an employer under this Act may be made by the Minister under this section after three years have elapsed after the end of the year in which any premium in relation to which that amount is payable should have been paid, unless the employer has made any misrepresentation or committed any fraud in filing any return or in supplying any information pursuant to this Part in relation thereto.

It is, in my view, impossible to resort to s. 70 to shore up a case that cannot succeed under s. 64 of the Act and the Regulations made thereunder. Wider powers are expressly conferred upon the Minister of National Revenue than are given either to the officer or the Commission under the Regulations. This is emphasized by appeal procedures prescribed under ss. 75, 84 and 85 of the Act which it is unnecessary to reproduce. It is enough to say that there is provision in s. 75 for action by the Minister on his own initiative. It may well be

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that an issue of assessment raised by a wrongful reduction of premium may be taken up by the Minister but the present case does not bring the Minister’s authority into play.

I would dismiss the appeal with costs.

Appeal dismissed with costs.

Solicitor for the appellant and the mis en cause: R. Tassé, Ottawa.

Solicitors for the respondent: Doheny, Mackenzie, Grivakes, Gervais & Lemoyne, Montreal.