Judgments

[1996] 3 F.C. 171

A-799-95

The Attorney General of Canada (Applicant)

v.

Michael Locke (Respondent)

Indexed as: Canada v. Locke (C.A.)

Court of Appeal, Marceau, MacGuigan and Robertson JJ.A.—Vancouver, May 14; Ottawa, June 3, 1996.

Unemployment insurance — Application to set aside Umpire’s decision loss of part-time employment not affecting benefits already obtained — Applicant receiving U.I. benefits based on loss of full-time employment — Subsequently securing part-time employment, but fired due to own misconduct — Disqualified from receipt of benefits — Unemployment Insurance Act, s. 28 disqualifying claimant from receiving benefits if losing employment because of own misconduct — Regulations, s. 59.1, when interpreted with Act, s. 30.1(2), providing inexcusable loss of any employment since beginning of qualifying period, triggering application of s. 28 disqualification.

This was an application to set aside the Umpire’s decision that the claimant’s loss of employment from a part-time position did not affect the permanent benefits already obtained. The respondent was laid off from full-time employment as a bell-boy, and began receiving unemployment insurance benefits. He subsequently secured part-time employment at a restaurant, which he reported, but he was fired on April 23, 1993 for his own misconduct (missing a shift without notifying his supervisor). He was thereafter disqualified from receiving benefits pursuant to Unemployment Insurance Act, sections 28 and 30.1 and Unemployment Insurance Regulations, subsection 59.1(1). Act, subsection 28(1) disqualifies a claimant from receiving benefits if employment was lost due to misconduct. Subsection 28(3) provides that “employment” refers to the employment immediately prior to the time the claim for benefit is made unless otherwise prescribed by the regulations. Subsection 30.1(2), which was added to the Act in 1993, provides that where the event giving rise to the disqualification occurs during a benefit period of the claimant, the disqualification does not include any week in that benefit period before the week in which the event occurs. Regulations, subsection 59.1(1), which was added to the Regulations in 1993, provides that “employment” refers to the last employment lost by the claimant by reason of his own misconduct.

The issue was whether the loss of employment contemplated in section 28 had to occur before the approval of a claim for benefit and the establishment of a benefit period.

Held, the application should be allowed.

The inexcusable loss of any employment by a claimant, since the beginning of his or her qualifying period, will trigger the application of the section 28 disqualification, regardless of whether it was a part-time job held concurrently with another or whether it occurred after the establishment of a benefit period based on a lay-off from some other regular employment.

Before 1993, the loss penalized by disqualification under section 28 had to have occurred before the making of a claim for benefit and the establishment of a benefit period. Subsection 30.1(2) rendered obsolete the proposition that a purposive analysis of the whole of the legislation lead to the conclusion that, for the application of section 28, a link between the unjustifiable loss of employment by the claimant and the payment of benefits to him or her was necessary. It gives full support to the submission that pursuant to section 59.1, the penal sanction of section 28 is applicable after, as well as before, the establishment of the benefit period and whether or not the unjustifiably lost employment had an effect on the payment of benefits. It is no longer possible to say that benefits actually payable on the basis of an on-going benefit period established, cannot be affected by the loss of employment from part-time work, however insignificant that employment may have been. The disqualification strikes unconditionally. The legislative amendment has had the unfortunate effect of fostering a system in which the best thing for anyone to do while in receipt of benefits is absolutely nothing. It encourages people not to take on part-time work.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Unemployment Insurance Act, R.S.C., 1985, c. U-1, ss. 27, 28(1),(3), 30(1) (as am. by S.C. 1993, c. 13, s. 20), 30.1 (as enacted idem, s. 21), 44(y).

Unemployment Insurance Regulations, C.R.C., c. 1576, ss. 59(1) (as am. by SOR/90-761, s. 17), (2) (as am. idem), (3) (as enacted by SOR/93-178, s. 3), 59.1 (as enacted idem, s. 4).

CASES JUDICIALLY CONSIDERED

CONSIDERED:

Skinner (1992), CUB 21951; Canada (Attorney General) v. Droege, [1996] F.C.J. No. 513 (C.A.) (QL).

REFERRED TO:

Canada v. Cymerman, [1996] 2 F.C. 593(C.A.); Canada (Attorney General) v. Jenkins (1995), 123 D.L.R. (4th) 639; 182 N.R. 388 (F.C.A.); leave to appeal to S.C.C. denied [1995] 4 S.C.R. v.

APPLICATION to set aside an Umpire’s decision that the claimant’s loss of part-time employment due to his own misconduct did not affect the permanent unemployment insurance benefits already obtained by him. Application allowed.

COUNSEL:

Leigh A. Taylor for applicant.

No one appearing for respondent.

SOLICITORS:

Deputy Attorney General of Canada for applicant.

The following are the reasons for judgment rendered in English by

Marceau J.A.: It was, of course, to be expected that section 28 of the Unemployment Insurance Act [R.S.C., 1985, c. U-1] would give rise to an unending series of controversies. Section 28 is the provision that disqualifies a claimant from receiving benefits if that claimant leaves his or her employment without valid reason or loses it because of his or her misconduct. The notions of “valid reason” and “misconduct” are quite malleable when applied to real life and no one is inclined to accept without some resistance the imposition of a penalty that somehow affects his or her livelihood. This case is the latest to join the ranks of the numerous recent unemployment insurance cases in which this Court and umpires have struggled with problems of construction and application of section 28 and its related legislation.

The facts of the case are simple. The respondent held full-time employment as a bellboy with the Harbour Towers Hotel in Victoria. He was laid off from this employment on November 5, 1992, due to a shortage of work. He made an initial claim for benefits, had a benefit period established in his favour and he began receiving benefits. During the week of November 22, 1992, the respondent commenced working on an intermittent and casual basis for the Captain’s Palace Restaurant, in Victoria. In his weekly statements to the Commission, the respondent duly reported this part-time employment, but his right to receive benefits remained intact and he continued to receive benefits until June 1993. On January 26, 1994, he received a letter from the Commission advising him that he was disqualified from receiving benefits as of April 23, 1993, with the result that there had been an overpayment in excess of $4,000 which would have to be reimbursed. The reason for the disqualification was that, on April 23, 1993, he had lost his part-time employment with the Captain’s Palace Restaurant by reason of his own misconduct as he had been fired for having missed a shift without notifying his supervisor. The disqualification was said to be imposed pursuant to sections 28 and 30.1 [as enacted by S.C. 1993, c. 13, s. 21] of the Act and subsection 59.1(1) of the Unemployment Insurance Regulations [C.R.C., c. 1576 (as enacted by SOR/93-178, s. 4)].

The ruling of the Commission was upheld by the Board of Referees but the Umpire disagreed. The Umpire did not dispute the finding of the Board that there had been misconduct; he felt he did not have to address the issue since it was his view that “the loss of employment from a part-time position could not have affected the permanent benefits already obtained” by the claimant. In his application now before the Court, the Attorney General contends that the Umpire’s decision is based on a proposition that contradicts the law as it now stands.

The type of issue that the Umpire was faced with is far from being novel. Indeed, it is easy to realize that, in all these cases where a claimant has held two or more concurrent or successive employments, there may be a problem as to which of the various employments will be able to trigger the application of section 28. Although it is a type of issue that has long been the subject of analysis in the jurisprudence of umpires, there appears to be a renewed attention to it lately. This is due, no doubt, to the more frequent incidence of concurrent or successive employments following the recent growth in the marketplace of what is called non-standard employment such as part-time and temporary work and multiple job-holding. It is due also to the introduction in 1993 of new provisions in the Act and the Regulations aimed at broadening the application of the disqualification and, at the same time, making the penalty for an unjustified loss of employment considerably more severe.

Until 1993, the law that governed the disposition of these special issues was contained in subsections 28(3) and 30(1) [as am. by S.C. 1993, c. 13, s. 20] of the Act read in conjunction with subsection 28(1) of the Act and completed by subsections 59(1) [as am. by SOR/90-761, s. 17] and (2) [as am. idem] of the Regulations. These provisions are still in force and read as follows:

Act

28. (1) A claimant is disqualified from receiving benefits under this Part if he lost his employment by reason of his own misconduct or if he voluntarily left his employment without just cause.

…

(3) In this section, “employment” refers to the claimant’s last employment immediately prior to the time his claim for benefit is made unless otherwise prescribed by the regulations.

…

30. (1) Where a claimant is disqualified under section 27 from receiving benefit, the disqualification is for such weeks for which benefit would otherwise be payable following the claimant’s waiting period as are determined by the Commission.

Regulations

59. (1) Employment of a claimant that terminates more than 13 weeks prior to the time the claimant’s claim for benefit is made is not employment for the purpose of section 28 of the Act.

(2) For the purposes of section 28 of the Act, where the claimant’s last employment immediately prior to the time the claimant’s claim for benefit is made is for a period of less than five days, “employment” shall also refer to the employment of the claimant immediately prior to the claimant’s last employment.

Two partially related issues were left unresolved by these provisions. The first was whether the employment to be considered was only the one on the basis of which the claim for benefit was made or any other that the claimant could have held concurrently. Until recently, the prevailing opinion appeared to be that the wording of subsection 30(1), coupled with a purposive analysis of the disqualification provisions, led to the conclusion that a causal nexus had to exist between the improperly lost employment susceptible of giving rise to disqualification and the claim for benefit against which it would have to be imposed. It was felt that, if the possible misbehaviour of workers in the marketplace was the legitimate concern of the unemployment insurance scheme, it was only in so far as it had some effect on the payment of benefits. But the majority decision of this Court in Canada v. Cymerman, [1996] 2 F.C. 593(C.A.) appears to disapprove of such a conclusion.

The second issue that was not completely resolved by the pre-1993 legislation is precisely the one here involved. Was the loss of employment contemplated by the legislator in section 28 one that had to occur before the approval of a claim for benefit by the claimant and the establishment of a benefit period in his or her favour? The CUB jurisprudence contains opinions that, since a claimant had to file report cards establishing his continued entitlement even after the establishment of the benefit period, the phrase “prior to the time his claim for benefit is made” in subsection 28(3) of the Act could refer to any of these reports called “continuing claims”. But these opinions appeared to most as being unsupported by a proper analysis of the legislation as a whole and developed without regard to the fundamental difference between the basic initial claim, aimed at establishing a right to be paid benefits during a certain time, and the so-called continuing ones, aimed at satisfying the Commission that the right to receive payment still exists, namely the persistence of unemployment in spite of efforts to put an end to it. A passage of the Umpire’s reasons in [Skinner ] CUB 21951 [at pages 6-7] referred to in the decision here before the Court is worth reproducing again because it expresses the position that was at the time, I think, the position accepted by most umpires and, in my opinion, the most consistent with the whole of the legislation and its spirit.

… it is my view that, in the context of subsection 28(1), the loss of employment contemplated by the legislature pertains to a situation where you are trying to establish your claim, as opposed to the present situation where the person has already been granted benefits and then there is an intervening act. This can be seen by reading subsection 28(3), where employment is defined as follows:

28. (3) In this section “employment” refers to the claimant’s last employment immediately prior to the time his claim for benefits is made unless otherwise prescribed by the regulations. [Emphasis added]

The working of this subsection indicates that the phrase “lost his employment” pertains to the loss of employment which gives rise to a claim for benefits. The time period, which the section of the Act is referring to, is the claimant’s last employment immediately prior to the time the claim for benefits was made. Once the claimant is granted benefits, as in the present case, he is deemed to have already lost his employment. As such, the claimant cannot lose his employment a second time for misconduct or any other cause (see Goulet v. C.E.I.C., [1984] 1 F.C. 653(FCA)).

Before 1993, therefore, it was for all practical purposes definitively settled that the loss penalized by disqualification under section 28 of the Act had to have occurred before the making of a claim for benefit and the establishment of a benefit period.[1]

If that was the case before 1993, submits counsel for the Attorney General, it is not so anymore. In 1993, new provisions were added to the Regulations concerning the meaning to be attributed to the words “last employment” in subsections 28(1) and (3) of the Act. Subsections 59(3) [as enacted by SOR/93-178, s. 3] and 59.1(1) [as enacted idem, s. 4], (2) [as enacted idem] and (3) [as enacted idem] of the Regulations were inserted as follows:

59. (1) …

(3) Subsections (1) and (2) apply in respect of a claimant who loses or leaves employment before April 4, 1993.

59.1 (1) Subject to subsection (2), for the purposes of section 28 of the Act, “employment” refers to the last employment lost by the claimant by reason of the claimant’s own misconduct, or employment that the claimant left voluntarily without just cause since the commencement of the qualifying period.

(2) Subsection (1) does not apply where the claimant has, since losing or leaving the employment referred to in subsection (1), been employed in insurable employment

(a) for the number of weeks required by paragraph 6(2)(a) of the Act or

(b) for 20 weeks where the claimant is a new entrant or re-entrant to the labour force, within the meaning of subsection 6(4) of the Act.

(3) Subsections (1) and (2) apply in respect of a claimant who loses or leaves employment on or after April 4, 1993.

These provisions, argues counsel, render inapplicable the past jurisprudence and require that, from now on, in the event a claimant loses any employment due to misconduct or leaves any employment without just cause after the start of his or her qualifying period, the claimant will be disqualified from receiving benefits under any claim, regardless of whether the employment on which it is based is the employment irregularly lost or not and regardless of whether a benefit period has been established or not. It is so, according to counsel, because the only limitation established by the text is the starting point, namely the beginning of the qualifying period. It may be, concedes counsel, that so interpreted the new provision has the effect of bringing forward a definition of employment different from that initially contemplated in subsection 28(3) of the Act; it may be, more specifically and obviously, that the word “last” as used by Parliament in subsection 28(3) of the Act is rendered completely meaningless. But this Court, she notes, has held in Canada (Attorney General) v. Droege (Court file no. A-576-95, dated April 17, 1996) [[1996] F.C.J. No. 513 (QL)] that the new Regulations were not ultra vires as they did not go beyond the regulation-making power conferred upon the Commission by virtue of paragraph 44(y) of the Act.

I do not think that the new Regulations, standing alone, could support the whole of the appellant’s contention. In my view, the primary purpose of these new Regulations was to address the same type of concern that was behind the original subsections 59(1) and (2) of the original Regulations, that is: make sure that the section 28 sanction would not be evaded by the claimant finding a new temporary job before making his claim. In fact, it made full sense to require that, to be forgivable, a reproachable loss be followed, not only by a more than five-day employment as before, but by one long enough to give, by itself, entitlement to benefits. But I do not see how it can be said that the wording of the provisions in itself supports the view that the intention was also to transform the law as it was then understood and extend the possible application of section 28 beyond the establishment of the benefit period.

The fact is, however, that the new Regulations do not stand alone. They were not adopted in isolation. In 1993, Parliament intervened to amend the Act itself and, among the new provisions inserted, was subsection 30.1(2) which must be read in conjunction with subsection 30.1(1):

30.1 (1) Where a claimant is disqualified under section 28 from receiving benefit, the disqualification is for each week in the claimant’s benefit period for which benefit would otherwise be payable following the claimant’s waiting period.

(2) Where the event giving rise to the disqualification referred to in subsection (1) occurs during a benefit period of the claimant, the disqualification does not include any week in that benefit period before the week in which the event occurs.

It may be that the drafters of the 1993 amendments inserted subsection 30.1(2) with very special cases in mind, like that of a “renewal claim” after a suspension of the established benefit period, but the terms used do not even imply any limitation. The provision, on its face, renders obsolete and now to be rejected the proposition that a purposive analysis of the whole of the legislation leads to the conclusion that, for the application of section 28, a link between the unjustifiable loss of employment by the claimant and the payment of benefits to him or her was necessary. As seen above, subsection 59.1(1) of the Regulations took full advantage of that fact as regards a loss occurring before the establishment of a benefit period. But even more clearly and directly, the provision gives full support to the Attorney General’s submission that, pursuant to section 59.1, the penal sanction of section 28 is applicable after, as well as before, the establishment of the benefit period and whether or not the unjustifiably lost employment had an effect on the payment of benefits. It is obviously no longer possible to sustain that “permanent benefits already obtained”, to use the Umpire’s phrase, that is to say benefits actually payable to a claimant on the basis of an on-going benefit period established in his or her favour, cannot be affected by the loss of employment from part-time work, however insignificant that employment may have been. I must confess to having been taken aback by that provision to which counsel had not even referred. I doubt that its full import was fully appreciated. At a time when the penalty imposed by section 28 has been made the most severe possible, to make it applicable to any casual, minor, insignificant job a non-employed under benefits would try his or her hand at appears, to me quite unfortunate. It was said that the refusal of employment by a claimant could already give rise to disqualification under section 27 of the Act, but the point is ill-taken. There is a basic condition for the application of section 27, namely that the employment refused be “suitable”. The disqualification here strikes unconditionally. Its effect, it seems to me, is fostering a system in which the best thing for anyone to do while in receipt of benefits is absolutely nothing. Unless provided with employment that would be deemed “suitable” under the Act, the best course of action for a claimant in receipt of benefits is not to take any job at all. It merely encourages people not to take on part-time work.

Still, however draconian and ill-conceived the provision may appear, its application is, of course, unavoidable. There is no doubt that the new subsection 59.1(1) of the Regulations, when interpreted in conjunction with subsection 30.1(2) of the Act, compel one to accept that the inexcusable loss of any employment by a claimant, since the beginning of his or her qualifying period, will trigger the application of the section 28 disqualification regardless of whether it was a part-time job held concurrently with another or whether it occurred after the establishment of a benefit period based on a lay off from some other regular employment.

I think the Court has no choice, therefore, but to grant the application herein, set aside the impugned decision and send the matter back to the Umpire for a new decision on the basis that the ruling of the Commission, upheld by the Board of Referees, is required by the legislation as it now stands.

MacGuigan J.A.: I agree.

Robertson J.A.: I agree.

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