2970-7080 Quebec Inc. v. Canada (Attorney General), docket T-1879-98

     Date: 19990428

     Docket: T-1879-98

Between :

     2970-7080 QUEBEC INC.,

     GIUSEPPINA PETRACCONE,

     PASQUALE PETRACCONE,

     ANGELA RAMADORI,

     LORENZO RAMADORI,

     - and -

     SESTO RAMADORI,

     Applicants

     - and -

     THE ATTORNEY GENERAL OF CANADA

     Respondent

     REASONS FOR ORDER

PINARD, J. :

[1]      This is a judicial review of a September 2, 1998 decision by Mr. Pierre M. Paquette, Manager, Revenue Collections Directorate in the Department of National Revenue.

[2]      The applicants in this case are 2970-7080 Quebec Inc., owner of a restaurant known as Pasta Casareccia, and five employees of that restaurant: Angela Ramadori, Lorenzo Ramadori, Sesto Ramadori, Pasquale Petraccone and Giuseppina Petraccone. At the hearing before me, counsel for the applicants acknowledged that Angela Ramadori should not have been made an applicant, given the following facts.

[3]      All the individual applicants paid unemployment insurance premiums under the Unemployment Insurance Act, R.S.C. 1985, c. U-1, between 1986 and 1996.

[4]      In 1993, the applicant, Angela Ramadori ceased employment at Pasta Casareccia. She applied for and received unemployment insurance benefits.

[5]      In 1997, 2970-7080 Quebec Inc. sold Pasta Casareccia, resulting in the remainder of the individual applicants becoming unemployed.

[6]      Sesto Ramadori applied for unemployment insurance benefits but was denied on the basis that he was not employed in insurable employment. As a result of this ruling, all the applicants applied for a refund of their unemployment premiums paid between 1986 and 1996. No refund was given to Angela Ramadori, as her employment was ruled insurable and as she received benefits as a result of this decision. A refund for the years after 1994 was given to the remainder of the applicants, including Pasta Casareccia, based on subsection 96(1) of the Employment Insurance Act, S.C. 1996, c. 23. Subsection 96(1) states:

96. (1) If a person has made an overpayment on account of their employee's premiums, or has made a payment of employee's premiums during a year when the person was not employed in insurable employment, the Minister shall refund to the person the amount of the overpayment or payment if the person applies in writing to the Minister within three years after the end of that year.

96. (1) Lorsqu'une personne a effectué un versement excédentaire au titre de ses cotisations ouvrières pour une année ou a effectué un versement au titre de cotisations ouvrières pour une année alors qu'elle n'exerçait pas un emploi assurable, le ministre doit, si cette personne lui en fait la demande par écrit dans les trois ans qui suivent la fin de cette année, lui rembourser le trop-perçu.

[7]      As a result of the refusal to refund payments made for the years prior to 1994, the applicants applied for a refund of their benefit payments under the provisions of the Fairness package legislation contained in the Income Tax Act, R.S.C. 1985 (5^th Supp.), c. 1. This request was refused, however, on the basis that the Fairness package legislation only applies to income tax related applications. In his letter of refusal to the applicants, Mr. Pierre Paquette stated:

Refunds of employment insurance premiums are not issued under the Income Tax Act, but under Section 96 of the EIA which stipulates that the Minister may refund the amount that should not have been deducted or paid if the application is made within three years after the end of the year for which an overpayment was made. The Minister of National Revenue does not have the discretion to refund premiums for statute barred years. Furthermore, the provisions of the Fairness legislation only applies to income tax as it comes under the purview of the Income Tax legislation. Regretfully, it cannot be applied to the Canada Pension Plan nor the Employment Insurance Act as no similar measures exist under those legislations (sic).

[8]      It is this decision which is under judicial review in this case. The applicants wish to obtain the following remedies:

.      a declaration that subsection 96(1) of the EIA allows Revenue Canada to reimburse contributions that were made by or for employees that are not dealing at arm's length (as defined under subsection 5(3) and paragraph 5(1)(i) of the EIA) in previous years as long as the request is made within a reasonable time after Revenue Canada ruled that their employment was not insurable;

.      a reimbursement of the contributions that were made by the applicants during the period of November 18, 1990 to December 31, 1993.

[9]      No reimbursement is sought for the period from January 1, 1986 to November 18, 1990, presumably, because during that time, regardless of the time limit, the applicants would have been employed in insurable employment.

     * * * * * * * * * * * *

[10]      The real issue in this judicial review is whether Mr. Pierre Paquette erred in making his decision not to reimburse the premiums paid between November 18, 1990 and December 31, 1993.

     * * * * * * * * * * * *

[11]      The application for judicial review is dismissed on the following grounds:

1.      The reimbursement of contributions which were made by the applicants during that period of November 18, 1990 to December 31, 1993, is statute-barred by reason of subsection 96(1) of the Employment Insurance Act. This provision specifically gives the Minister the authority to refund any overpayment made by any person in a year, if an application for refund is made within three years of the end of that year. This is exactly what the Minister has done in this case. Had Mr. Paquette, for Revenue Canada, granted a refund beyond these defined prescriptions, he would have exceeded his jurisdiction. This case does not raise a question of statutory interpretation. The statute is clear on its face and this Court cannot make a finding that would be contrary to the express terms defined by law.

2.      By virtue of section 99 of the Employment Insurance Act, the Fairness legislation in the Income Tax Act does not apply to the case at bar. Section 99 reads as follows:

99. Section 160, subsections 161(11) and 220(3.1), sections 221.1 and 224 to 224.3 and subsections 227(9.1) and (10) and 248(7) and (11) of the Income Tax Act apply to all premiums, interest, penalties and other amounts payable by a person under this Part, with such modifications as the circumstances require, and for the purposes of this section, the reference in subsection 224(1.2) of that Act to "subsection 227(10.1) or a similar provision" shall be read as a reference to "section 85 of the Employment Insurance Act".

99. L'article 160, les paragraphes 161(11) et 220(3.1), les articles 221.1 et 224 à 224.3 et les paragraphes 227(9.1) et (10) et 248(7) et (11) de la Loi de l'impôt sur le revenu s'appliquent, avec les adaptations nécessaires, aux cotisations, intérêts, pénalités ou autres sommes payables par une personne en vertu de la présente partie. Pour l'application du présent article, le passage "de l'article 85 de la Loi sur l'assurance-emploi" vaut mention de "du paragraphe 227(10.1) ou d'une disposition semblable" au paragraphe 224(1.2) de cette loi.

The Fairness legislation, on its face, is explicit in referring only to overpayments which arose under provisions of the Income Tax Act. Subsection 126.1(6),1 to which the applicants referred, only applies to an "overpayment on account of the employer's liability under this Part" (emphasis added). "This Part" referred to in subsection 126.1(6) is Part I of the Income Tax Act and does not include overpayment on account of a determination that employment is uninsurable under the Employment Insurance Act.

The applicants argued in writing that the Minister has the discretion to apply provisions of the fairness package to refunds under the Employment Insurance Act. However, their only basis for this statement is the allegation that the Fairness legislation is a "discretionary relieving provision". It is clear that section 99 of the Employment Insurance Act has specifically incorporated by reference those provisions of the Income Tax Act which will apply to Employment Insurance. The Fairness legislation relied upon by the applicants has not been incorporated by reference in section 99 to grant discretion to the Minister to extend the application of the three-year limitation period under section 96 of the Employment Insurance Act.

Subsection 220(3.1)2, which is the only provision of the Fairness legislation in the Income Tax Act which applies to the Employment Insurance Act, was not referred to by the applicants. Regardless, it is not applicable in the present case.

In my opinion, therefore, it is clear that the fairness provisions do not apply to the three-year limitation under the Employment Insurance Act.

     * * * * * * * * * * * *

The applicants' unjust enrichment argument resulting from the scheme of the Employment Insurance Act and the Income Tax Act with respect to refunds of U.I. premiums ought to have been raised for proper consideration in an action, like was done in other analogous matters (see, for example, Michelin Tires (Canada) Ltd. and Her Majesty the Queen (November 26, 1998), T-871-93 (F.C.T.D.) and Forest Oil Corporation v. Her Majesty the Queen, [1997] 1 F.C. 624). As far as this application for judicial review is concerned, there is no evidence that Mr. Paquette, for Revenue Canada, acted in a manner outlined in subsection 18.1(4) of the Federal Court Act such that his actions could equate to a substantiated ground for judicial review.

[12]      Consequently, the application for judicial review is dismissed with costs.

                            

                                     JUDGE

OTTAWA, ONTARIO

April 28, 1999

__________________

     ¹      126.1 (6) Where an employer (other than a partnership) files with the Minister a prescribed form containing prescribed information, an overpayment on account of the employer's liability under this Part for the employer's last taxation year beginning before 1994 equal to the employer's UI premium tax credit shall be deemed to have arisen on the later of March 1, 1994 and the day on which the form is so filed.      126.1 (6) Lorsqu'un employeur, sauf une société de personnes, présente au ministre un formulaire prescrit contenant les renseignements prescrits, un paiement en trop au titre des sommes dont il est redevable en vertu de la présente partie pour sa dernière année d'imposition commençant avant 1994 - qui représente son crédit d'impôt pour cotisations d'assurance-chômage - est réputé se produire au dernier en date du 1^er mars 1994 et du jour où le formulaire est ainsi présenté.

     ²      220. (3.1) The Minister may at any time waive or cancel all or any portion of any penalty or interest otherwise payable under this Act by a taxpayer or partnership and, notwithstanding subsections 152(4) to (5), such assessment of the interest and penalties payable by the taxpayer or partnership shall be made as is necessary to take into account the cancellation of the penalty or interest.      220. (3.1) Le ministre peut, à tout moment, renoncer à tout ou partie de quelque pénalité ou intérêt payable par ailleurs par un contribuable, ou une société de personnes en application de la présente loi, ou l'annuler en tout ou en partie. Malgré les paragraphes 152(4) à (5), le ministre établit les cotisations voulues concernant les intérêts et pénalités payables par le contribuable ou la société de personnes pour tenir compte de pareille annulation.