Date: 19980626
Docket: A-836-97
MONTRÉAL, QUEBEC, THE 26th DAY OF JUNE 1998
CORAM: THE HONOURABLE MR. JUSTICE DENAULT
THE HONOURABLE MR. JUSTICE DÉCARY
THE HONOURABLE MR. JUSTICE LÉTOURNEAU
BETWEEN:
JACQUES LAUZON
Applicant
AND
CANADA EMPLOYMENT AND IMMIGRATION COMMISSION
-and-
ATTORNEY GENERAL OF CANADA
Respondents
J U D G M E N T
The application for judicial review is allowed, the Umpire"s decision is set aside and the matter referred back to the Chief Umpire or an umpire designated by him, with instructions to dismiss the claimant"s appeal with regard to the allocation, but to subtract the amount of $2,772.00 from the overpayment which must be repaid by the claimant.
Pierre Denault
J.A.
Certified true translation
M. Iveson
Date: 19980626
Docket: A-836-97
Coram: DENAULT J.A.
DÉCARY J.A.
LÉTOURNEAU J.A.
Between:
JACQUES LAUZON
Applicant
- and -
CANADA EMPLOYMENT AND
IMMIGRATION COMMISSION
- and -
ATTORNEY GENERAL OF CANADA
Respondents
Hearings held at Montréal, Quebec on Monday, June 22 and Friday, June 26, 1998.
Judgment delivered at Montréal, Quebec on Friday, June 26, 1998.
REASONS FOR JUDGMENT BY: DÉCARY J.A.
Date: 19980626
Docket: A-836-97
Coram: DENAULT J.A.
DÉCARY J.A.
LÉTOURNEAU J.A.
Between:
JACQUES LAUZON
Applicant
- and -
CANADA EMPLOYMENT AND
IMMIGRATION COMMISSION
- and -
ATTORNEY GENERAL OF CANADA
Respondents
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the bench at Montréal
on Friday, June 26, 1998)
DÉCARY J.A.
[1] Reduced to its simplest form, the issue raised in this application for judicial review is the following: who is responsible for repaying the benefit received by the claimant following his dismissal to the Receiver General, when the dismissal is found to be a wrongful dismissal for which the employer was required to pay, as compensation, a portion of the remuneration of which the claimant was deprived: the claimant-appellant or his employer?
[2] The relevant sections of the Unemployment Insurance Act, R.S.C., 1985, c. U-1, as amended (the Act) are sections 37 and 38, as follows:
| 37. Where a claimant receives benefit in respect of a period and, pursuant to a labour arbitration award or court judgment, or for any other reasons, an employer or any other person subsequently becomes liable to pay earnings, including damages for wrongful dismissal, to that claimant in respect of the same period and pays the earnings, that claimant shall pay to the Receiver General as repayment of an overpayment of benefit an amount equal to the benefits that would not have been paid if the earnings had been paid or payable at the time the benefit was paid.
38. (1) Where pursuant to a labour arbitration award or court judgment, or for any other reason, an employer or other person becomes liable to pay earnings, including damages for wrongful dismissal, to a claimant in respect of a period and has reason to believe that benefit has been paid to the claimant in respect of that period, that employer or other person shall ascertain whether an amount would be repayable under section 37 if the earnings were paid to the claimant and if so shall deduct that amount from the earnings payable to the claimant and remit that amount to the Receiver General as repayment of an overpayment of benefit.
(2) Where a claimant receives benefit in respect of a period and pursuant to a labour arbitration award or court judgment, or for any other reason, the liability of an employer to pay that claimant earnings, including damages for wrongful dismissal, in respect of the same period is or was reduced by the amount of the benefit or by a portion thereof, the employer shall remit that amount or portion thereof to the Receiver General as repayment of an overpayment of benefit.
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37. Lorsqu'un prestataire reçoit des prestations au titre d'une période et que, soit en application d'une sentence arbitrale ou d'un jugement d'un tribunal, soit pour toute autre raison, l'employeur ou une personne autre que l'employeur se trouve par la suite tenu de lui verser une rémunération, notamment des dommages-intérêts pour congédiement abusif, au titre de la même période et lui verse effectivement la rémunération, ce prestataire est tenu de rembourser au receveur général à titre de remboursement d'un versement excédentaire de prestations les prestations qui n'auraient pas été payées si, au moment où elles l'ont été, la rémunération avait été ou devait être versée.
38. (1) Lorsque, soit en application d'une sentence arbitrale ou d'un jugement d'un tribunal, soit pour toute autre raison, un employeur ou une personne autre que l'employeur se trouve tenu de verser une rémunération, notamment des dommages-intérêts pour congédiement abusif, à un prestataire au titre d'une période et a des motifs de croire que des prestations ont été versées à ce prestataire au titre de la même période, cet employeur ou cette autre personne doit vérifier si un remboursement serait dû en vertu de l'article 37, au cas où le prestataire aurait reçu la rémunération et, dans l'affirmative, il est tenu de retenir le montant du remboursement sur la rémunération qu'il doit payer au prestataire et de le verser au receveur général.
(2) Lorsqu'un prestataire a reçu des prestations au titre d'une période et que, soit en application d'une sentence arbitrale ou d'un jugement d'un tribunal soit pour toute autre raison, la somme ou une partie de ces prestations est ou a été retenue sur la rémunération, notamment des dommages-intérêts pour congédiement abusif, qu'un employeur de cette personne est tenu de lui verser au titre de la même période, cet employeur est tenu de verser cette somme ou cette partie des prestations au receveur général à titre de remboursement d'un versement excédentaire de prestations.
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[3] This Court was called upon to interpret these sections in A.G. Canada v. Ellis (1992), 145 N.R. 265 (F.C.A. English version only). In that case, the Court stated:
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. . . that, where the particular event contemplated by s. 38(2) of the Act is found to occur, whether or not liability to the Commission is explicitly regulated by the settlement, that subsection takes precedence over the general imposition of joint liability provided by ss. 35 and 37 . . . . |
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[4] The following is our reading of these sections and of this decision.
[5] A claimant who was wrongfully dismissed and who received benefits in respect of weeks for which compensation is paid by his or her employer must repay the amount of the benefits received. This is section 37.
[6] An employer who has reason to believe that benefits have been paid to an employee who was dismissed is required to ascertain from the Canada Employment and Immigration Commission (the Commission) whether an amount would be repayable by the employee, before paying compensation to him or her. Where applicable, the employer must deduct the amount of benefits repayable by the employee from the compensation and remit that amount to the Receiver General. This is subsection 38(1).
[7] An employer who pays compensation to its employee but who deducts an amount equivalent to the amount repayable by the claimant pursuant to section 37, in accordance with the employer"s obligation pursuant to subsection 38(1), must remit that amount to the Receiver General. This is subsection 38(2).
[8] An employer who fails to ascertain from the Commission whether an amount is payable and who accordingly does not deduct the amount of benefits which nevertheless were paid and remit that amount to the Receiver General, in breach of its obligation under subsection 38(1), becomes liable to pay a penalty which is not specified in the subsection, but which could very well be repayment of the amounts which the Receiver General lost due to the employer"s negligence. It is unnecessary, for the purposes of the instant reasons, to state what the penalty might be. What seems clear to us however, contrary to the submissions of counsel for the applicant, is that the breach of the employer"s obligation under section 38(1) to ascertain whether an amount would be repayable and to deduct the amounts in question, if necessary, does not serve to release the claimant from his obligation under section 37 to repay what he received.
[9] By definition, section 37 applies only if the employer failed to deduct the amount of the benefits. This section would become meaningless if the simple fact that an employer failed to fulfill its obligation to ascertain whether an amount would be repayable " in which case, the employer does not deduct anything and accordingly does not receive anything " allowed a claimant who actually received the money to keep what he or she improperly received. The decision in Ellis was simply that when an employer deducts an amount, the Receiver General must take action against the employer, rather than against the claimant who received nothing. Accordingly, it could be said that subsection 38(2) takes precedence, as the Court stated in Ellis, over section 37; however the issue is more about applicability than precedence: section 37 and subsection 38(2) refer to two separate situations and apply to their mutual exclusion, based on the circumstances: depending on whether or not the compensation paid takes into account the benefits received by the employee after being dismissed, either the employer or the claimant who has received money at government expense will have to repay it.
[10] That being said, how does it apply to the case at bar?
[11] On July 22, 1991, the claimant made a claim for benefits following his dismissal. The Commission immediately notified the employer of what its obligation would be if the dismissal were deemed to be a wrongful dismissal, to make a deduction pursuant to section 38 on the payment [TRANSLATION] "of any retroactive remuneration" which would be paid [TRANSLATION] "pursuant to the settlement or the labour arbitration award" (Application Record, at p. 31).
[12] On June 16, 1992, a labour commissioner allowed the complaint of unjust dismissal filed by the claimant and ordered the employer to reinstate him in his position and to pay him [TRANSLATION] "the equivalent of the remuneration and other benefits of which [he] was deprived by the dismissal" (Record, at p. 56).
[13] On August 7, 1992, the employer undertook to pay the claimant an amount to be negotiated by the parties under a general reinstatement agreement (Record, at p. 59).
[14] On August 20, 1992, counsel for the claimant informed the employer of their client"s claim. The claimant was asking for $20,248.20, from which $3,540.12 was deducted for earnings received during the period of the dismissal and $2,772.00 for [TRANSLATION] "unemployment received" during that period. The claim was accordingly reduced to $13,936.08 (Record, at p. 63).
[15] On December 10, 1992, the employer and the claimant agreed on compensation in the amount of $8,000.00 by way of settlement, with no further details (Record, at p. 64).
[16] On January 12, 1993, the Commission allocated the eight thousand dollars received (without going into the details of certain additional amounts which are not in dispute) starting with the week beginning July 14, 1991. It also informed the claimant of his obligation to repay the benefits received during the period at issue (Record, at p. 66). The amount of the overpayment was eventually set at $4,500.00.
[17] The claimant objected to repaying the benefits received on the ground that it was his employer and not himself who was responsible for the repayment, pursuant to section 38. The Umpire came to the conclusion that there was no evidence in the record which would indicate that the employer deducted any amount whatsoever, and that accordingly subsection 38(2) did not apply. With regard to the letter dated August 20, 1992, the Umpire reached the following conclusion:
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[TRANSLATION] Although the union representative deducted the initial amount of the unemployment benefits received from his claim, this does not mean that the employer deducted that amount. |
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[Record, at p. 217]
[18] This inference does not stand up to analysis or to the evidence adduced of the circumstances leading to the establishment of the sum of $8,000.00 in final settlement of the claimant"s claim. In our view, the Umpire had no other choice but to apply Ellis , where the final settlement reached between the employer and the claimant was for all practical purposes the same as the one reached in the instant case.
[19] Counsel for the Commission submitted that the Court should only apply subsection 38(2) when there are documents in evidence that specifically state that the employer actually deducted the amount of the benefits repayable by its employee. This would amount to imposing much too heavy a burden on a claimant when he is fighting his battle alone and the employer is not involved in the case. In fact, the Court stated in Ellis that subsection 38(2) would apply "whether or not liability to the Commission is explicitly regulated by the settlement".
[20] The only inference which can be drawn from the evidence in the record is that the claimant reduced his claim against his employer because he knew that the employer was liable to repay the overpayment to the Commission. This is a case where it is impossible to believe that the employer, which was duly advised of its legal obligations by the Commission and duly informed by its employee that he had deducted the amount of the overpayment from his claim, did not know what it was doing when it settled its employee"s claim for a lower amount. Of course this conclusion applies only to the case at bar, to which the employer was not a party, and serves only to decide the merits of the claimant"s submissions as against those of the Commission with regard to whether section 37 or subsection 38(2) of the Act applies.
[21] The application for judicial review will be allowed in part, the Umpire"s decision will be set aside and the matter will be referred back to the Chief Umpire or an umpire designated by him, with instructions to dismiss the claimant"s appeal with regard to the allocation, but to subtract the amount of $2,772.00 from the overpayment which must be repaid by the claimant.
Robert Décary
J.A.
MONTRÉAL, QUEBEC
June 26, 1998
Certified true translation
M. Iveson
FEDERAL COURT OF APPEAL
Date: 19980626
Docket: A-836-97
Between:
JACQUES LAUZON
Applicant
- and -
CANADA EMPLOYMENT AND
IMMIGRATION COMMISSION
- and -
ATTORNEY GENERAL OF CANADA
Respondents
REASONS FOR JUDGMENT
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT NO. : A-836-97
STYLE OF CAUSE : JACQUES LAUZON
Applicant
- and -
CANADA EMPLOYMENT AND
IMMIGRATION COMMISSION
- and -
ATTORNEY GENERAL OF CANADA
Respondents
PLACE OF HEARING: Montréal, Quebec
DATES OF HEARING: June 22 and 26, 1998
REASONS FOR JUDGMENT OF THE COURT (THE HONOURABLE MR. JUSTICE DENAULT, THE HONOURABLE MR. JUSTICE DÉCARY AND THE HONOURABLE MR. JUSTICE LÉTOURNEAU)
DELIVERED FROM THE BENCH BY: The Honourable Mr. Justice Décary
Dated: June 26, 1998
APPEARANCES:
Marie Pépin for the applicant
Carole Bureau and for the respondents
Francisco Couto
SOLICITORS OF RECORD:
SAUVÉ ET RAY for the applicant
(Avocats, Service juridique CSN)
Montréal, Quebec
George Thomson for the respondents
Deputy Attorney General
of Canada
Ottawa, Ontario
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