Allard c. Canada (Procureur Général), 2001 FCT 789

                                                                                                                                            Date: 20010712

                                                                                                                                           Docket: T-27-99

Ottawa, Ontario, the 12^th day of July, 2001

Present:           The Honourable Mr. Justice François Lemieux

BETWEEN:

BERNARD ALLARD

Applicant

- AND -

ATTORNEY GENERAL OF CANADA

Respondent

O R D E R

For the reasons given, the application for judicial review is dismissed.

                      "François Lemieux"

                                     J.

Certified true translation

Suzanne M. Gauthier, LL.L., Trad. a.

Date: 20010712

                                                Docket: T-27-99

Neutral Citation: 2001 FCT 789

Between:

BERNARD ALLARD

Applicant

- AND -

ATTORNEY GENERAL OF CANADA

Respondent

REASONS FOR ORDER

LEMIEUX J.

INTRODUCTION

[1]         The main issues raised by this application for judicial review filed pursuant to section 18.1 of the Federal Court Act are addressed to the scope of the authority of the Canada Employment and Immigration Commission ("the Commission") to write off an overpayment of employment insurance benefits, a power conferred on it in section 60 of the Employment Insurance Regulations (the "Regulations"), and its application to the circumstances of the applicant, Bernard Allard.

FACTS

[2]         Bernard Allard (the "applicant") is the president of and a consultant to Paysage Gaspésie Inc. ("Paysage Gaspésie"). Since 1983 he has held 90% of the shares and his wife, Françoise Boulizon, has held 10%. Paysage Gaspésie is a horticultural services company founded by Mr. Allard in 1983; it is involved in the design and implementation of landscape development plans and landscape maintenance.

[3]         The applicant's wife, Françoise Boulizon, is the president of Pelouse Gaspé Inc. ("Pelouse Gaspé"), which she founded in 1984; in January 1999, she held 99% of the shares. Mr. Allard held 10% of the shares in 1994, but only 1% in January 1999.

[4]         On August 30, 1991, Mr. Allard applied for employment insurance benefits, supplying a record of employment originating from Pelouse Gaspé for the period from January 14, 1991 to April 5, 1991. He said he was employed as a consulting technician. In his application form, he said he was married to his employer, had a business relationship with Pelouse Gaspé and had ceased working owing to a lack of work.

[5]         On September 19, 1991, the Commission asked Revenue Canada to determine whether Mr. Allard's employment by Pelouse Gaspé was insurable, since he had reported this share ownership. On October 21, 1991, Revenue Canada decided that his employment fulfilled the statutory requirements for the period from January 14, 1991 to April 5, 1991; benefits were paid to him by the Commission.

[6]         Mr. Allard subsequently filed new claims for benefit related to his employment with Pelouse Gaspé, which were accepted and paid; all indicate a cessation of employment owing to a lack of work with Pelouse Gaspé:

(1)         claim of December 9, 1992 for the period of employment from August 31, 1992 to November 28, 1992;

(2)         claim of September 16, 1993 for the period of employment from May 31, 1993 to August 20, 1993;

(3)         claim of January 6, 1994 for the period of employment from May 31, 1993 to August 20, 1993;

(4)         claim of September 12, 1994 for the period of employment from May 30, 1994 to September 2, 1994; and

(5)         claim of December 22, 1994 for the period of employment from May 30, 1994 to September 2, 1994.

[7]         There is no explanation in the record of why there was a duplication of claims for certain periods.

[8]         Claims for benefits are made on a form and require answers to a number of questions. I summarize the relevant answers by Mr. Allard:

(1)         he always indicated his marital relationship with his wife Françoise Boulizon, the owner of Pelouse Gaspé, and always said he had no majority ownership in either of the businesses for which he had worked;

(2)         in his claim of December 9, 1992, in response to the question "describe the other important jobs you have held (including as a volunteer)", he answered , "[Translation] Paysage Gaspésie -- CEO from 06/92 to 07/92" reason for leaving -- "replaced"; he said he was a volunteer. In each of the following claims there is no mention of his relation to Paysage Gaspésie.

(3)         in this same claim of December 9, 1992, on question 38 he answered that Paysage Gaspésie did not give him a record of employment during the relevant period because he was ineligible; he stated "[Translation] I am the majority shareholder." For each of the subsequent claims, there is no statement to this effect.

(4)         In response to the question "Do you have any business relations with your employer?", he stated "yes" but in all the subsequent claims he said "no".

(5)         Finally, in all the claims, he wrote "no" in reply to the question "Are you working for yourself?", but explained that for his claim in August 1991 he had stated "yes" but had changed it upon the advice of a Commission officer since he was not working for himself at the time of his claim.

[9]         On September 29, 1993, the Commission initiated an investigation into Mr. Allard's claims for benefits; an officer of the Commission had some doubts as to whether the applicant was unemployed and more particularly because he had not reported that he was working for himself. The Commission met with Mr. Allard on November 30, 1994.

[10]       In his statutory declaration of the same date, Mr. Allard testified as to the following facts:

(a)         Paysage Gaspésie Inc.

(i)          founded by him in 1983, he is president, consultant and principal shareholder at 90%, his wife Françoise Boulizon holding the balance;

(ii)         the company is situated at 33 York Street in Gaspé and includes an office and three small greenhouses worth $45,000. He is not paid in his employment;

(iii)        the company also has a storefront for the sale of gardening products, and in the past handled snow removal;

(iv)        sales of between $350,000 and $400,000 per year;

(b)         Pelouse Gaspé Inc.

(i)          founded in 1984 by Françoise Boulizon (they were married in 1987), this company too is situated at 33 York Street in Gaspé and includes 102 acres of land in Pointe St-Pierre, 24 of which are devoted to producing sod;

(ii)         the business has some sheds, some tractors (2), a sod harvester, a fertilizer spreader and sales in the last three years of $50,000 to $75,000 a year;

(iii)        the company's period of activity is from June to September each year;

(iv)        Paysage Gaspésie is a major customer of the company;

(v)         he has been employed by the company since 1991 and acts as a consulting technician; he does administration, handles the advertising and looks after customers and provides training courses in horticulture for which Pelouse Gaspé is the signatory of the contracts;

(vi)        his wife holds 90% of the shares, signs the cheques and legal documents; she works three days per week at the C.L.S.C. de la Pointe;

(vii)       the company employs one to three persons and two students part-time during the summer.

[11]       Françoise Boulizon also provided a statutory declaration during the investigation, on December 2, 1994. She acknowledged that she had no training in horticulture and that the house on York Street, Gaspé, belongs to her husband Bernard. She says that Pelouse Gaspé has a loan but does not know how much and she says there is some machinery but her husband Bernard looks after it.

[12]       The Commission, when its investigation ended, asked Revenue Canada to review the insurability of Mr. Allard's employment by Pelouse Gaspé for the aforesaid periods of employment on the ground that the claimant said he was working as a technical consultant for Pelouse Gaspé, in which he held 1% of the shares and his wife 99%, and held 90% of the shares in Cie Paysage Gaspésie. On February 2, 1995, Revenue Canada determined retroactively that his employment with Pelouse Gaspé was not insurable. This decision of Revenue Canada was based on paragraphs 3(1)(a) and 3(2)(c) of the Unemployment Insurance Act (the "Act") [now the Employment Insurance Act]. Mr. Allard appealed to the Appeals Division of Revenue Canada which, on December 13, 1995, notified him that he was not holding an insurable employment under paragraph 3(2)(c) of the Act.

[13]       On April 18, 1995, the Commission, pursuant to the Revenue Canada decision of February 2, 1995, retroactively cancelled the benefit periods established for Mr. Allard, thereby creating some overpayments totalling $48,183.00, an amount that was later reduced to $29,827.00 since a portion of the benefits had been paid out more than 36 months prior to the cancellation decision (see section 43 of the act), that is, the benefits paid in 1991 and a portion in 1992.

[14]       Furthermore, the Commission, after reviewing the benefit claims filed by Mr. Allard, imposed penalties on him under section 33 of the Act, since in its opinion he had knowingly made false or misleading statements by failing to report that he was operating his own business when he was unemployed with Pelouse Gaspé.

[15]       Mr. Allard appealed to a Board of Referees from the Commission decisions penalizing him for knowingly making false statements, and on May 23, 1996, the Board of Referees allowed his appeal on the following grounds:

[Translation]

If we refer to the various exhibits in the record, we find that Revenue Canada Taxation held that the claimant's employment was uninsurable for the periods in question. Throughout the hearing, Mr. Allard seemed to us to be a sincere and honest man, did not attempt to hide anything and told us he did not want to fool anyone.

If we refer to his statutory declaration, we find the same frankness. As to whether he knowingly made false or misleading statements therein, we refer to DPP 807, exhibit 2.2, questions 36 and 38 where he clearly states that he is the owner of Paysage Gaspésie. Similarly, in question 41, he says he is related to the owner (wife) of Pelouse Gaspé, who has a 99% ownership interest.

Faced with these facts, the Board of Referees unanimously allows the claimant's application and dismisses the Commission's decision.

[16]       The Commission did not appeal this decision to the umpire and the penalties imposed by the Commission were revoked.

[17]       Following this decision of the Board of Referees, Mr. Allard, on June 13, 1996, asked the Commission in a letter addressed to the attention of Mr. Marc Simoneau, Director General of the Human Resources Centre of the Department of Human Resources Development Canada in Gaspé (the "Department"), to write off the overpayments of benefits that he owed the Commission as a result of the cancellation of a number of benefit periods for the years 1991 to 1994.

[18]       After review, Mr. Simoneau, in a letter dated July 18, 1996, informed Mr. Allard of his refusal to recommend the write-off since in his opinion paragraph 60(1)(e) of the Regulations were inapplicable in this case.

[19]       In a letter sent October 25, 1996 to the Mouvement Action Chômage of Gaspé, Mr. Simoneau gave his interpretation of section 60 of the Regulations and its application in the circumstances to Mr. Allard:

[Translation]

The language of section 60(1)(e) of the Regulations is clear: the Commission may write off an overpayment if it does not result from a false or misleading statement or representation made by the debtor; this is an essential condition. It is not necessary that such statement or misrepresentation was made knowingly. It suffices that there be a false or misleading representation or statement.

In the present case, in order to be able to write it off, I would have to find that Mr. Allard had no real control over the events and played no role in them, other than to have applied for and received benefits in complete good faith.

I think it is impossible to reach this conclusion and I maintain my decision not to recommend the writing off of the overpayment.

It should be noted that the write-off is a discretionary power of the Commission and no appeal to the Board of Referees is possible.

In the present case, sections 60(2)(a) and 60(2)(b)(ii) and (v) do not apply. Rather, it is section 60(1)(e) of the Regulations that is at issue. Section 60(1)(e) is addressed to decisions or settlements of issues by Revenue Canada Taxation or the Tax Court of Canada. These decisions of Revenue Canada Taxation or of the Tax Court of Canada determine whether an employment or remuneration is or is not insurable.

Section 60(2) applies when the overpayment does not result from an error or a false or misleading statement or representation made by the claimant but arises as a result of a delay or error attributable to the Commission, an error made on the record of employment issued by the employer, the payment of workers compensation benefits in some special circumstances or in other special circumstances.

[20]       On January 29, 1998, Mr. Simoneau sent a letter to Mr. Allard's legal counsel, Mr. de Merchant, in which he confirmed his interpretation of section 60 of the Regulations. Here is what he wrote:

[Translation]

As it was stated in a reply given to "Le Mouvement action chômage" on October 25, 1996, a true copy of which was sent to Mr. Allard, I consider that it is impossible to reach a conclusion that I should recommend the writing off of the overpayment.

The language of section 56(1)(c) [previously 60(1)(e)] of the Regulations is clear: "The Commission may write off an overpayment if it does not result from a false or misleading statement or representation made by the debtor; this is an essential condition. It is not necessary that such statement or misrepresentation was made knowingly. It suffices that there be a false or misleading representation or statement."

In the present case, in order to be able to write it off, I would have to find that Mr. Allard had no real control over the events and played no role in them, other than to have applied for and received benefits in complete good faith.

Given that the facts on file do not allow me to reach this conclusion, I maintain my decision not to write off the overpayment.

It should be noted that the write-off is a discretionary power of the Commission and no appeal to the Board of Referees is possible.

[21]       Mr. Simoneau was counselled in his interpretation of section 60 of the Regulations by Jean-Yves Cronier of the Department. In a memorandum dated July 4, 1996, Mr. Cronier recommended as follows to Mr. Simoneau:

[Translation]

Section 60 of the Regulations was amended to promote fair and flexible treatment of claimants. For example, there was a desire to let the Commission write off debts that did not occur because of the claimant.

In the present case, section 60 of the Regulations does not apply. To be able to write off, it would be necessary to find that the claimant had no real control over the events and played no role in them, other than to have applied for and received benefits in complete good faith.

I think it is impossible to reach the conclusion that the claimant played no role and had no control over the events. The claimant was in the forefront, being a lawn specialist. Furthermore, in her statutory declaration of December 2, 1995, Ms. Françoise Boulizon states that she does not have any training in horticulture, that Pelouse Gaspé has a loan but she does not know the exact amount because there is some machinery and it is Bernard who looks after that.

On the other hand, the claimant states in his declaration of November 29, 1995 that it would be ideal if some day he could make this his major livelihood. All the details provided by the claimant in his declaration clearly illustrate his knowledge, his interest and the control he exercises in the company Pelouse Gaspé.

Furthermore, Mr. Allard has owned a business (Paysage Gaspésie Inc.) since 1983; he is its president and he owns 90% of the shares.

With sales of $350,000 to $400,000 per year, the greenhouses, the storefront, it is almost certain that even if his employment by Pelouse Gaspé Inc. had been considered insurable, he would have been declared to be not unemployed or at least some earnings would have been taxed.

Given all these factors, and the Commission's interpretation of section 60 of the Regulations concerning write-off of benefit, it is recommended that the overpayment not be written off. It should be noted that write-off is a discretionary power of the Commission and no appeal to the Board of Referees is possible.

[Emphasis added]

[22]       Mr. Allard, for a second time, appealed to the Board of Referees from the Commission's decision not to write off the overpayments created by the retroactive decision of Revenue Canada in 1995 that his employment was not insurable after having decided, in 1991, that it was.

[23]       In a decision handed down on August 24, 1998, the Board of Referees found in favour of Mr. Allard. The Board provides the following reasons for its decision:

[Translation]

ISSUE: Should the claimant's overpayment be written off, having regard to s. 56 of the Regulations (formerly section 60 of the Regulations)?

FACTS: The claimant was present at his hearing accompanied by his representative, Mr. William De Merchant, advocate. The claimant and his counsel filed exhibits P-A and P-B, which are a request for insurability and a confirmation of insurability of the claimant dated September 19, 1991 (request) and October 23, 1991 (confirmation). In P-8 dated December 2, 1994 and P-9 dated February 10, 1995, the Commission decided to verify the claimant's insurability with Revenue Canada for 1991, 1992, 1993 and 1994. The P-16 confirms the non-insurability of the claimant's employment for the years 1991, 1992, 1993 and 1994. The Board is of the opinion that this is a retroactive review undertaken by the Commission and the Board writes off the claimant's overpayment in accordance with section 56(2)(b)(ii).

CONCLUSION: The Board unanimously allows the claimant's appeal and dismisses the Commission's decision.

[24]       On September 18, 1998, the Federal Court of Appeal rendered its judgment in Canada (Attorney General) v. Filiatreault (1998), 235 N.R. 274, and held that a Board of Referees constituted under the Act has no jurisdiction to hear and determine an appeal from a decision of the Commission refusing a write-off under section 60 of the Regulations. The appropriate proceeding in connection with such a decision is through judicial review under section 18.1 of the Federal Court Act, in the Trial Division.

[25]       Following Filiatreault, supra, on October 7, 1998, the Commission appealed the Board of Referees decision of August 24, 1998 to the umpire. The applicant consented in the circumstances that the appeal be allowed.

[26]       On January 7, 1999, the applicant, Bernard Allard, filed an application for judicial review and demanded that the decisions of September 23, 1996, October 25, 1996 and January 29, 1998 of Mr. Marc Simoneau be set aside and that the overpayments be written off.

[27]       Mr. Allard cites the following reasons, which were argued in this Court:

(a)         the Director of the regional office rendered a decision in a non-judicial way, taking into account some irrelevant factors in the record and failing to take into account some relevant factors;

(b)         the excess payment is not the result of an error by the applicant or of a false or misleading statement or representation by him, but results from a retroactive decision rendered under Part III of the Act.

LEGISLATION AND REGULATIONS

[28]       Subsections 33(1), 35(1) and (2), 43(1) and paragraph 44(i) of the Act, R.S.C. 1985, c. U-1, as amended by R.S. 1990, c. 40, read 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 statements 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.

. . .

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.

(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.

. . .

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.

. . .

44. The Commission may, with the approval of the Governor in Council, make regulations

(i) for the ratification of amounts paid to persons by way of benefit while they are not entitled thereto and for the writing-off of those amounts and any penalties under section 33 and amounts owing under sections 35, 37 and 38 and any costs recovered against those persons;

[Emphasis added]

[29]       Section 60 of the Regulations, SOR/90-208, as amended in 1994 by SOR/94-446, reads as follows:

ANALYSIS

(1)         Standard of review in this case

(i)          Context

[30]       I subscribe to the following legal framework proposed by the Attorney General of Canada concerning the writing off of a debt by the Commission under section 60 of the Regulations:

(a)         where the Commission finds, following a review of a claim for benefit, that a person has received benefits to which he or she was not entitled under the Act, that person shall accordingly repay that amount to the Commission (see sections 33 and 35 of the Act and Canada (Attorney General) v. Tjong (1996), 206 N.R. 149 (F.C.A.));

(b)         under section 35 of the Act, this sum constitutes a debt of Her Majesty and is the consequence of an ineligibility decision or, as is the case here, a decision of Revenue Canada which determined that the applicant's employment was not insurable under section 3 of the Act. Proceedings to recover this debt may be taken in the Federal Court, in accordance with the procedures prescribed by the Act, or in any other court of competent jurisdiction;

(c)         waivers of Crown debts pertain to the royal prerogative; however, Parliament has enacted, for example in the Financial Administration Act, that the Governor General in Council may, on the recommendation of the appropriate Minister or the Treasury Board, forgive a debt or, where applicable, release it;

(d)         similarly, Parliament has clearly prohibited, in section 24.1 of the Financial Administration Act, a full or partial waiver of debts other than by or under an Act of Parliament, including an appropriation Act;

(e)         the Act and the Regulations respectively provide, in paragraph 44(i) of the Act and section 60 of the Regulations, that the Commission may waive any debt in its favour, taking into account the conditions identified in section 60 of the Regulations;

(f)          a person seeking forgiveness of his or her debt does so not as a claimant but as a debtor;

(g)         the presence of one or more of the conditions set out in section 60 of the regulations allows the Commission to exercise its discretion and does not automatically guarantee the debtor that his debt will be written off;

(h)         as a condition precedent to the exercise of its discretion, the Commission may elect to write off its debt if the overpayments of unemployment benefits are not the result of false or misleading representations.

[31]       It is important to specify the scope of the condition precedent in paragraph 60(1)(e) of the Regulations to the exercise of the Commission's discretion to write off, that is, that "the overpayment does not arise from an error made by the debtor or as a result of a false or misleading statement or representation made by the debtor, whether the debtor knew it to be false or misleading or not." Two points emerge from a reading of the text:

(1)         It is irrelevant whether the false or misleading representations were made knowingly or with full knowledge since, as the Attorney General of Canada suggests, under section 60 of the Regulations, the presence alone of these false or misleading representations that resulted in the overpayments is sufficient to defeat any possible write-off. I note the absence of the word "knowingly", which is found, for example, in section 33 of the Act authorizing the Commission to impose penalties when it becomes aware of facts that in its opinion establish that a claimant has made a statement that the claimant knew to be false or misleading: see also Canada (Attorney General) v. Pilote (1998), 243 N.R. 203 (C.A.), par. 2;

(2)         The words "whether the debtor knew it to be false or misleading or not" eliminate the intentional, fraudulent or voluntary character of the false representation.

[32]       In my opinion, the existence of the condition precedent in paragraph 60(1)(e) of the Regulations, that is, an overpayment resulting from a false or misleading statement or representation of the debtor, must be found objectively. This clause introduces no subjective element. The intentional absence of the "knowingly" criterion in the Regulations compels this conclusion, which was considered by the Federal Court of Appeal in Canada (Attorney General) v. Gates, [1995] 3 F.C. 17 (C.A.).

(ii)         Test for evaluating whether the condition precedent in paragraph 60(1)(e) exists

[33]       Two judgments of the Federal Court of Appeal interpreting section 33 of the Act, Canada (Attorney General) v. Purcell, [1996] 1 F.C. 644 and Canada (Attorney General) v. Dunham, [1997] 1 F.C. 462, guide us on the test for the Court's intervention in opposition to this decision of the Commission that "the overpayment does not arise from an error made by the debtor or as a result of a false or misleading statement or representation made by the debtor. . . ."

[34]       I note that under section 33 of the Act the Commission may impose a penalty where it "becomes aware of facts that in its opinion establish that a claimant ... has ... made statements or representations that the claimant ... knew to be false or misleading or ... furnished information or made statements or representations that the claimant ... knew to be false or misleading."

[35]       Purcell, supra, clearly establishes that the Commission's decision to that effect is a finding of fact that does not require any special technical knowledge on the part of the Commission. Robertson J.A. adds that the onus is on the Commission to prove, on a balance of probabilities, that a claimant knowingly made a false or misleading statement.

[36]       In Dunham, supra, Marceau J.A. explains that Purcell did not involve the exercise of discretion, properly speaking, but rather the exercise of the Commission's power to give effect to the "opinion" it may form as to whether a situation exists. Here is what he says, at paragraph 11:

The issue was whether the condition precedent for a penalty to be imposed under subsection 33(1), the provision in question therein, was present, i.e. that the Commission be of the opinion that the claimant knew that the statements were false. However, forming an opinion is not the same as exercising a discretion. The question of extraneous or relevant considerations cannot arise in that situation. As the Court said, the condition precedent for intervention in these cases is simply a finding that the Commission formed the opinion to which it gave effect based on an incomplete view, or an inaccurate perception or interpretation, of the facts. [Emphasis added]

[37]       In my opinion, in the context of an application for judicial review of a Commission decision based on the existence of the condition precedent of a false or misleading statement by the debtor (which infringes the exercise of the Commission's discretionary power to write off the overpayment), Marceau J.A. in Dunham, supra, has identified the considerations in section 18.1(4(d) of the Federal Court Act that apply in the circumstances.

(iii)        Standards of review of the exercise of the discretionary power

[38]       There can be no doubt that, in applying section 60 of the Regulations, the Commission is exercising a discretionary power when it decides whether or not to waive a debt (from an overpayment).

[39]       The principles governing a court's intervention when a tribunal exercises a discretionary power are well known. I repeat what is said by Robertson J.A. in Purcell, supra, at page 653:

Counsel for the Commission acknowledges that a discretionary power must be exercised "judicially". I take that term to mean that if it can be established that the decision-maker acted in bad faith or for an improper purpose or motive, took into account an irrelevant factor or ignored a relevant factor or acted in a discriminatory manner, then any decision which flows from the exercise of a discretionary power will be set aside....

[40]       The recent decision of the Supreme Court of Canada in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, adds a second consideration, the Court's intervention on the merits of the exercise of the discretionary power, and the question is which circumstances warrant such intervention: a decision that is simply unfounded, an unreasonable decision, or a patently unreasonable decision.

[41]       The four factors in finding the appropriate standard of review that are considered by L'Heureux-Dubé J. are:

(1)         the presence or absence of a privative clause;

(2)         the expertise of the decision-maker;

(3)         the purpose of the provision in particular, and of the Act as a whole; and

(4)         the nature of the problem in question, especially whether it relates to the determination of law or facts.

[42]       In Baker, supra, L'Heureux-Dubé J. concludes, at paragraph 62:

These factors must be balanced to arrive at the appropriate standard of review. I conclude that considerable deference should be accorded to immigration officers exercising the powers conferred by the legislation, given the fact-specific nature of the inquiry, its role within the statutory scheme as an exception, the fact that the decision-maker is the Minister, and the considerable discretion evidenced by the statutory language. Yet the absence of a privative clause, the explicit contemplation of judicial review by the Federal Court -- Trial Division and the Federal Court of Appeal in certain circumstances, and the individual rather than polycentric nature of the decision, also suggest that the standard should not be as deferential as "patent unreasonableness". I conclude, weighing all these factors, that the appropriate standard of review is reasonableness simpliciter.

[43]       On the authority of L'Heureux-Dubé J., I find that the appropriate standard of review on the merits of the Commission's decision to write off or not to write off is reasonableness simpliciter.

[44]       We do not have a privative clause here limiting judicial review. The Commission has some expertise that the courts lack in matters concerning whether or not to write off a benefit. The purpose of the Regulations is to promote a more equitable and flexible treatment of claimants, allowing the Commission to write off debts that cannot be attributed to the debtor's action and, in particular, to write off debts resulting from retroactive decisions of Revenue Canada on insurability, which suggests a more limited deference. The decision whether or not to write off is primarily based on the assessment of the facts as they relate to an individual and does not pertain to the application or interpretation of specific legal rules, a factor that favours curial deference.

[45]       In Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748, Iacobucci J. explains to us what an unreasonable decision is. Here is what he says, at pages 776-77:

An unreasonable decision is one that, in the main, is not supported by any reasons that can stand up to a somewhat probing examination. Accordingly, a court reviewing a conclusion on the reasonableness standard must look to see whether any reasons support it. The defect, if there is one, could presumably be in the evidentiary foundation itself or in the logical process by which conclusions are sought to be drawn from it. An example of the former kind of defect would be an assumption that had no basis in the evidence, or that was contrary to the overwhelming weight of the evidence. An example of the latter kind of defect would be a contradiction in the premises or an invalid inference.

APPLICATION OF THE PRINCIPLES AND CONCLUSIONS

[46]       The applicant cannot succeed in his application for judicial review unless he overcomes two obstacles. The first is that he must persuade me that the overpayment does not result from a false or misleading statement or representation by the debtor, whether the debtor knew it to be false or misleading or not, since this is a condition precedent to the exercise of the Commission's discretionary power. Secondly, if successful at the first stage, the applicant must show that the Commission wrongly exercised its discretion when it refused to write off the overpayments.

(1)         The first stage -- condition precedent

[47]       The test is the one laid down by Marceau J.A. in Dunham, supra: Is the Commission's finding based on an incomplete view or an inaccurate perception or interpretation of the facts?

[48]       The essential facts originate in the claims for benefit submitted to the Commission by Mr. Allard and those facts determined after an investigation.

[49]       In my opinion, each of Mr. Allard's claims for benefit must be examined independently of each other, since the overpayment is specific to each benefit period and, in this case, was created by the cancellation of each as a result of Revenue Canada's decision that his employment by Pelouse Gaspé was not insurable, which triggered the exercise of the Commission's power to write off a debt owing to it.

[50]       I am also of the opinion that each of Mr. Allard's claims for benefit must be assessed as a whole, in order to find out whether or not we are, objectively speaking, confronted with a false or misleading statement. In the case at bar, the question is whether Mr. Allard's replies concealed the reality, that is, his operation of Paysage Gaspésie and his de facto involvement in Pelouse Gaspé while he was claiming and receiving employment insurance benefits as a result of a lack of work with Pelouse Gaspé.

[51]       According to the Larousse and Nouveau Petit Robert dictionaries, a false statement or representation is one that is contrary to the truth; a misleading statement or representation is one that causes to err.

[52]       According to The New English Oxford Dictionary and Webster's Third New International Dictionary, a false statement or representation is one not corresponding to the truth or reality, one which is erroneous, while a misleading statement or representation is one that leads somewhat astray, that causes error, confusion or deception.

[53]       It is also necessary to appreciate, as the Federal Court of Appeal said in Canada (Attorney General) v. Lai (1998), 229 N.R. 42, that the integrity of the employment insurance statutory scheme rests on the good faith of its beneficiaries.

[54]       In the case at bar, the claim of August 30, 1991 is not relevant since the Commission did not demand repayment of the benefits paid, being of the opinion that it was out of time under section 43 of the Act.

[55]       Considered as a whole, did the claim of December 9, 1992 mislead the Commission in regard to Paysage Gaspésie and the role played therein and in Pelouse Gaspé by Mr. Allard? I think not.

[56]       Mr. Allard disclosed his employment with Paysage Gaspésie (question 38) as volunteer president and the fact that his employment was not eligible for benefits since he was the majority shareholder. He also stated that he had a business relationship with his employer Pelouse Gaspé and a marital relationship with Françoise Boulizon, its president.

[57]       Relying on these facts, albeit applying a different test, the Board of Referees concluded on May 16, 1996 that Mr. Allard had not knowingly made false or misleading statements. In my opinion, the replies given by Mr. Allard were essentially true and sufficiently precise to enable the Commission to decide on his claim for benefit or to probe further the issue of his eligibility for such benefits, which seems to have occurred, considering the questionnaire of February 11, 1993 on the state of unemployment at Pelouse Gaspé and Paysage Gaspésie (Respondent's Record, volume I, pages 52 to 59).

[58]       The claims of September 16, 1993, January 6, 1994, September 12, 1994 and December 22, 1994 are more problematic since Mr. Allard does not refer at all to Paysage Gaspésie and states that he has no business relationship with Pelouse Gaspé, which is not true. Viewed overall, these claims concealed his presence in Paysage Gaspésie and were likely to mislead the Commission. However, it must be kept in mind that the Commission was aware of all the relevant facts concerning Paysage Gaspésie, its business relationship with Pelouse Gaspé, and the facts disclosed in the replies to the aforementioned questionnaire and in Mr. Allard's statement of November 30, 1994. This knowledge breaks the chain of causation between the statements and the overpayments.

[59]       In this special and unique context, I am unable to find that the overpayments, taken together, result from false or misleading statements on the part of Mr. Allard, thereby constituting an obstacle to the exercise of the Commission's discretionary power.

(2)         Exercise of the discretionary power

[60]       Under section 60 of the Regulations, the Commission has discretion as to whether or not to write off an excess payment originating from a statement or representation that is true and not misleading.

[61]       The reasons for the refusal to write off the overpayments are contained in the letter of October 25, 1996 from Mr. Simoneau to Mouvement Action Chômage and his letter to Mr. de Merchant, Mr. Allard's attorney, of September 29, 1998, both based on Mr. Cronier's memorandum of July 4, 1996. The Commission refused a write-off because Mr. Allard controlled Pelouse Gaspé and owned a business (Paysage Gaspésie) with sales of $350,000 to $400,000 a year.

[62]       In my opinion these two factors are no doubt relevant considerations for the Commission in determining whether a debt arising out of overpayments owing to the Commission should be waived or repaid. On the merits, the refusal to write off in these circumstances is not an unreasonable decision.

[63]       Mr. de Merchant, Mr. Allard's counsel, argues that the Commission failed to consider some relevant material in the record, in particular Revenue Canada's decision in 1991, the Board of Referees decision in 1996, the applicant's statements on his employment insurance claims in 1991 and 1992, the requests for investigation of 1991 and 1992, and the statutory declaration of 1994. In my opinion these materials were all known by the Commission and constituted a part of the backdrop for the refusal to write off. In fact, what the applicant is asking me to do is to weigh anew some factors that were taken into consideration by the Commission and to substitute my opinion in place of its opinion, which I am not free to do.

[64]       Finally, I do not accept the applicant's argument that there was a breach of procedural fairness. Mr. Allard knows why the Commission is refusing the write-off and the record indicates that he made more than one representation to the Commission.

CONCLUSION

[65]       For all these reasons, this application for judicial review is dismissed.

                      "François Lemieux"

                                     J.

Ottawa, Ontario

July 12, 2001

Certified true translation

Suzanne M. Gauthier, LL.L., Trad. a.

FEDERAL COURT OF CANADA

TRIAL DIVISION

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET NO:                          T-27-99

STYLE:                                       Bernard Allard v. Attorney General of Canada   

PLACE OF HEARING:            Montréal, Quebec

DATE OF HEARING: November 30, 2000

REASONS FOR ORDER OF LEMIEUX J.

DATED:                                     July 12, 2001

APPEARANCES:

William de Merchant                                                                       FOR THE APPLICANT

Sylvie Martin                                                                                   FOR THE RESPONDENT

SOLICITORS OF RECORD:

Campeau, Ouellet, Nadon, Barabé, Cyr, de Merchant    FOR THE APPLICANT

Bernstein, Cousineau, Heap, Palardy

Montréal, Quebec

Morris Rosenberg                                                                           FOR THE RESPONDENT

Deputy Attorney General of Canada

Montréal, Quebec