A-178-73
Martin Service Station Ltd. (Appellant)
v.
Minister of National Revenue (Respondent)
Court of Appeal, Jackett C.J., Pratte J. and
Hyde D.J.—Montreal, February 5; Ottawa, Feb-
ruary 8, 1974.
Unemployment insurance—Reference by Umpire to Court
of Appeal—Whether provisions of Unemployment Insurance
Acts enabling Commission to make regulations including in
"insurable employment" employment not under contract of
service are ultra vires—Federal Court Act, s. 28(4)—Unem-
ployment Insurance Act, S.C. 1955, c. 50, s. 26(1Xd), Unem
ployment Insurance Act, 1971, S.C. 1970-71-72, c. 48, s.
4(1Xc).
The appellant corporation was assessed for unemploy
ment insurance premiums, in respect of persons driving its
taxicabs, in the total sum of $49,476, for the years 1969-71,
under the authority of section 26(lxd) of the Unemployment
Insurance Act, S.C. 1955, c. 50 and Regulation 64B; and for
the year 1972, under the authority of section 4(1)(c) of the
Unemployment Insurance Act, 1971, S.C. 1970-71-72, c. 48
and Regulation 53.
Under sections 75(2) and 84 of the Unemployment Insur
ance Act, 1971, the appeal was carried to the Minister and
then to the Umpire (Heald J.) who considered an Agreed
Statement of Facts and referred to the Court for hearing and
determination the question of law: whether the relevant
sections of the Unemployment Insurance Acts, (supra),
were ultra vires.
Held, 1. The question referred by the Umpire, a "federal
tribunal" within the meaning of that definition in section 2
of the Federal Court Act, as an appointee under section
92(1) of the Unemployment Insurance Act, 1971, was one
that could be properly referred to the Court under section
28(4) of the Federal Court Act.
Reference re Public Service Staff Relations Act [1973]
F.C. 604, applied.
2. The relevant provisions of the Unemployment Insur
ance Acts, (supra), authorizing the Unemployment Insur
ance Commission to include in "insurable employment"
employment which is not under a contract of service, were
not beyond the powers conferred on Parliament by section
91(2A) of The British North America Act, enacted 1940
(U.K.) c. 36.
Reference re Unemployment Insurance Act [1937] A.C.
355, referred to. The Queen v. Scheer Ltd. (1972) 27
D.L.R. (3d) 73, followed. Citizens Insurance Co. of
Canada v. Parsons (1881) 7 A.C. 96, Montreal v. Mont-
real Street Railway [1912] A.C. 333, A.G. Can. v. A.G.
Alberta [1916] 1 A.C. 588, A.G. British Columbia v.
Esquimalt and Nanaimo Ry. Co. [1950] A.C. 87,
considered.
REFERENCE.
COUNSEL:
James Robb, Q.C., and Peter O'Brien for
appellant.
Paul 011ivier, Q.C., and Wilfrid Lefebvre for
respondent.
SOLICITORS:
Stikeman, Elliott, Tamaki, Mercier & Robb,
Montreal, for appellant.
Deputy Attorney General of Canada for
respondent.
JACKETT C.J.—I am in agreement with the
Reasons for Judgment of my brother Pratte,
which I have had an opportunity to study. It is
necessary, however, that I state the manner
whereby I reached the conclusion that the ques
tion referred to us by the Umpire falls within
section 28(4) of the Federal Court Act, inas
much as I stated it in a general way during the
hearing of this Reference, with the concurrence
of the other members of the Court.
Before expressing the reasoning whereby I
reached that conclusion in this case, I deem it
advisable to repeat the conclusions as to the
effect of section 28(4) that I expressed in the
Reference re Public Service Staff Relations
Act.'
Section 28(4) reads as follows:
(4) A federal board, commission or other tribunal to
which subsection (1) applies may at any stage of its proceed
ings refer any question or issue of law, of jurisdiction or of
practice and procedure to the Court of Appeal for hearing
and determination.
It is important to note that this provision is
not authority to give an advisory opinion such
as is contained in section 55 of the Supreme
Court Act, under which a question is referred to
the Supreme Court of Canada for "hearing and
consideration" and that Court is required to
express its "opinion" upon a question so
referred. Section 28(4) contemplates a "ques-
tion or issue of law" arising at some "stage" of
a tribunal's "proceedings" being referred to this
Court by the tribunal for "hearing and determi-
1 [1973] F.C. 604 at page 615.
nation" (the underlining is mine). In my view,
such a reference can only be made by an order
of the tribunal in question that puts before this
Court such findings of fact, or other material, as
that tribunal would base itself on if it were
determining the question or issue of law itself.
Furthermore, in my view, section 28(4), in so
far as questions of law are concerned, contem
plates only the determination of a question of
law that must be determined for the purpose of
dealing with the matter that is before the tri
bunal making the reference and does not con
template determination of a question of law
expressed in academic terms.
The question that is the subject of this Refer
ence is not a question as to how the appeal to
the Umpire, or some part of it, should be decid
ed by the Umpire when the law is applied to the
facts relevant to liability as found by the
Umpire or agreed upon by the parties for the
purposes of the appeal.
Nevertheless, that question may, in my view,
be a question that falls under section 28(4) if it
is a question that was ready for determination
by the Umpire himself, if he had not referred it
to the Court.
Looking at it from that point of view, we find
that the Minister had, in effect, conceded:
(a) that the assessments under appeal to the
Umpire were based on specified regulations,
(b) that the assessments cannot -be upheld
unless those regulations extend to self-
employment or employment not under a con
tract of service and are, to that extent, intra
vires, and
(c) that the regulations were made under the
provisions in the Unemployment Insurance
Acts that are the subject matter of the
Umpire's question;
and that the appellant, basing himself on those
concessions, claims that the appeals should be
allowed and the assessments set aside.
In the absence of any inconsistent procedural
regulations, I am of opinion that the Umpire
could have heard a preliminary application,
based on such concessions, for a judgment
allowing the appeals and setting aside the
assessments; and could have granted such an
application if he had concluded that section
91(2A) of The British North America Act does
not authorize an "unemployment insurance"
law that includes "self-employment or employ
ment not under a contract of service" in insur-
able employment. It follows that I am of opinion
that this Court has jurisdiction under section
28(4) to determine the question referred by the
Umpire in a manner related to the disposition of
such a preliminary application to the Umpire to
allow the appeals• 2
* * *
PRATTE J.—On September 24, 1973, Mr. Jus
tice Heald, acting as an Umpire under the
Unemployment Insurance Act, 1971, referred a
question of law to this Court for hearing and
determination. This reference raises the prob
lem of the constitutionality of section 26(1)(0
of the Unemployment Insurance Act of 1955 3
and of section 4(1)(c) of the Unemployment
Insurance Act, 1971 4 .
In order to understand the circumstances in
which this reference was made, it is necessary
to have in mind certain facts and statutory
provisions:
1. In 1971, the Unemployment Insurance Act
of 1955 was repealed and replaced by the
Unemployment Insurance Act, 1971. Both Acts
establish a system of unemployment insurance
for the benefit of persons engaged in "insurable
employment", an "insurable employment"
being, as a rule, an employment under a con
tract of service. Both Acts contain provisions,
however, enabling the Unemployment Insur
ance Commission to make regulations for
including in "insurable employment" employ
ment which is not under a contract of service.
2 If our conclusion had been that The British North
America Act did not authorize the regulations, our answer,
in my view, could not have been a simple affirmative.
3 S.C.1955, c. 50.
4 S.C. 1970-71-72, c. 48.
Such a provision is found in section 26(1) of the
Act of 1955:
26. (1) The Commission may, with the approval of the
Governor in Council, make regulations for including in
insurable employment,
(d) any employment if it appears to the Commission that
the nature of the work performed by persons employed in
that employment is similar to the nature of the work
performed by persons employed in insurable employment.
The corresponding provision of the Unemploy
ment Insurance Act, 1971, reads as follows:
4. (1) The Commission may, with the approval of the
Governor in Council, make regulations for including in
insurable employment,
(c) any employment that is not employment under a
contract of service if it appears to the Commission that
the terms and conditions of service of and the nature of
the work performed by persons employed in that employ
ment are similar to the terms and conditions of service of
and the nature of the work performed by persons
employed under a contract of service.
Pursuant to these provisions, the Unemploy
ment Insurance Commission adopted, in 1966
and in 1971, regulations which, according to the
Minister of National Revenue, would include in
"insurable employment" the employment of
those who drive the taxicabs owned by the
appellant.
2. Under the Unemployment Insurance Acts
of 1955 and 1971, the employer of a person
employed in "insurable employment" must pay
certain "premiums" to the Receiver General of
Canada. Sections 70 and 153 of the Act of 1971
provide that the Minister of National Revenue
may assess any employer for any amount pay
able by him under that Act or under the Act of
1955. When such an assessment is made, the
employer may, under section 75(2), "appeal to
the Minister for a reconsideration of the assess
ment". From the decision of the Minister, sec
tion 84 gives a further right of appeal to an
umpire appointed under section 92 of the Act.
3. An umpire appointed under section 92(1)
of the Unemployment Insurance Act, 1971,
being a "federal tribunal" to which subsection
(1) of section 28 of the Federal Court Act
applies, may refer a question of law to this
Court under subsection (4) of the same section
28, which reads as follows:
(4) A federal board, commission or other tribunal to which
subsection (1) applies may at any stage of its proceedings
refer any question or issue of law, of jurisdiction or of
practice and procedure to the Court of Appeal for hearing
and determination.
In December 1972, the appellant, Martin Ser
vice Station Ltd., was assessed by the Minister
of National Revenue for amounts allegedly pay
able by it under the Unemployment Insurance
Acts of 1955 and 1971. It appealed unsuccess
fully to the respondent Minister. Then, from the
decision of the Minister confirming the assess
ments, the appellant appealed to the Umpire.
That appeal came to be heard by Mr. Justice
Heald. At the hearing, the parties filed a docu
ment entitled "Agreed Statement of Facts",
which reads as follows:
1. Appellant owns a certain number of motor vehicles in
Montreal which are used for the purpose of carrying passen
gers for hire.
2. Pursuant to the provisions of the Unemployment Insur
ance Act, 1971, the Minister of National Revenue has
assessed the Appellant for unemployment insurance premi
ums with respect to the drivers of its motor vehicles in the
total sum of $49,476.92, including penalties for the years
1969, 1970, 1971 and 1972, the whole as appears from a
copy of the notices of assessments for the said years
attached hereto, as exhibit 1.
3. The amounts assessed for the years 1969, 1970 and 1971
are claimed as amounts owing by virtue of Regulation 64B
of the Unemployment Insurance Regulations approved by
Order-in-Council P.C. 1960-610 dated April 4, 1966 as
amended by Order-in-Council P.C. 1968-1181 dated June
19, 1968 which reads in part as follows:
64B. (1) Except for employment that is excepted
employment, the employment of every person who
a) is employed in driving any taxi, commercial bus,
school bus or other vehicle that is used by a business or
public authority for carrying passengers, and
b) is not the owner of the vehicle or the proprietor or
operator of the business or public authority that uses
the vehicles for carrying passengers,
shall be included in insurable employment notwithstand
ing that such employment may be self-employment or
employment not under a contract of service.
(2) The operator or proprietor of a business or a public
authority that uses a vehicle described in subsection (1)
for carrying passengers shall, for all the purposes of the
Act and these Regulations, be deemed to be the employer
of every person whose employment is included in insur-
able employment pursuant to subsection (1).
4. The said Regulation 64B was adopted under the authority
of section 26(1)(d) of the Unemployment Insurance Act of
1955, as amended (Statutes of Canada, 1955, c. 50).
5. The assessment for the year 1972 is based on Regulation
53(e) of the Unemployment Insurance Regulations adopted
on December 17th, 1971 (P.C. 1971-2795—SOR/DORS
657). It reads as follows:
53. Employment in any of the following employments,
unless it is excepted employment under subsection 3(2) of
the Act or excepted from insurable employment by any
other provision of these Regulations, is included in insur-
able employment:
e) employment of a person as a driver of any taxi,
commercial bus, school bus or any other vehicle that is
used by a business or public authority for carrying
passengers, where that person is not the owner of the
vehicle or the proprietor or operator of the business or
public authority.
6. The said Regulation 53 was adopted under the authority
of section 4(lXc) of the Unemployment Insurance Act,
1971.
7. It is the Appellant's main submission that section 26(lXt)
of the Unemployment Insurance Act of 1955 and section
4(1)(c) of the 1971 Act are ultra vires the Parliament of
Canada in that they authorize the Commission to make
regulations to include in insurable employment, self-employ
ment or employment not under a contract of service, and
that the assessments levied against it are for this reason null
and void.
8. Subsidiarily, Appellant submits that even if the provi
sions of the Acts on which the assessments are based are
intra vires, Regulations 64B and 53 are inapplicable to it
because it is not in the business of carrying passenger (sic)
within the meaning of the said Regulations but in the busi
ness of leasing motor vehicles for use as taxis.
9. The subsidiary argument of the Appellant raises issues of
fact which the parties would like to see left for determina
tion until the main constitutional issue has been finally
resolved.
After the filing of that document, Mr. Justice
Heald rendered the following decision:
Pursuant to the request of both counsel and in view of the
representations of counsel to the effect that there are a
number of similar cases pending involving the same point of
law, I have decided to refer the following point of law to the
Federal Court of Appeal for hearing and determination:
On the basis of the Agreed Statement of Facts filed
herein, bearing date September 24, 1973, and bearing the
signature of counsel for both parties, is section 26(lXd) of
the Unemployment Insurance Act of 1955 and section
4(1)(c) of the Unemployment Insurance Act, 1971, ultra
vires the Parliament of Canada in that they authorize the
Unemployment Insurance Commission to make Regula
tions to include in insurable employment, self employment
or employment, or employment not under a contract of
service?
The first question to be considered here is
whether the question that was referred to the
Court by Mr. Justice Heald is a question that
could properly be referred to the Court under
section 28(4) of the Federal Court Act.
It has already been decided that "... section
28(4), in so far as questions of law are con
cerned, contemplates only the determination of
a question of law that must be determined for
the purpose of dealing with the matter that is
before the tribunal making the reference and
does not contemplate determination of a ques
tion of law expressed in academic terms" 5 . In
the case at bar, I am of the view that the
decision of Mr. Justice Heald, when read with
the "Agreed Statement of Facts" to which it
refers, is a decision to refer a question that Mr.
Justice Heald had to decide for the purpose of
dealing with the appeal that was before him. Mr.
Justice Heald had to determine the validity of
certain assessments. It is agreed that these
assessments were made pursuant to regulations
adopted under the authority of section 26(1)(d)
of the Unemployment Insurance Act of 1955
and section 4(1Xc) of the Unemployment Insur
ance Act, 1971. If this Court, answering the
question referred to it by Mr. Justice Heald,
were to find that these two sections are invalid,
then Mr. Justice Heald would necessarily have
to allow the appellant's appeal, since it would
then be manifest that the assessments appealed
from have no legal foundation. It is true that, if
this Court were to decide that the two sections
of the Unemployment Insurance Acts are valid,
then, such a decision would not dispose of the
appeal before Mr. Justice Heald. However, in
my view, in order that a question of law be the
proper subject for a reference under section
28(4) of the Federal Court Act, it is not neces
sary that the answer to be given to that question
by this Court, whatever it may be, be decisive
5 Per Jackett C.J. in Reference re Public Service Staff
Relations Act [1973] F.C. 604 at p. 615.
of the litigation before the tribunal making the
reference; it is sufficient that the question be
such that a possible answer to it be decisive of
the matter. I also wish to add that I am in
complete agreement with what the Chief Justice
says on this subject in his Reasons for
Judgment.
I now turn to consider the problem of the
validity of the two sections of the Unemploy
ment Insurance Acts. These two sections
authorize the Unemployment Insurance Com
mission to include in "insurable employment"
employment which is not employment under a
contract of service. Counsel for the appellant
submits that these sections are invalid because,
says he, the exclusive power of Parliament
under section 91 of The British North America
Act, to enact laws in relation to "unemployment
insurance", must be construed as being limited
to the enactment of laws relating to systems of
unemployment insurance for the benefit of per
sons engaged in employment under contracts of
service.
Before considering the arguments put forward
in support of that position, it is necessary to
recall that the first Canadian statute dealing
with unemployment insurance was adopted in
1935 6 , at a time when section 91 of The British
North America Act contained no reference to
unemployment insurance. This statute was in
effect held to be ultra vires the Parliament of
Canada as being, in pith and substance, a law in
relation to civil rights of the employers and the
employed in each province.' In 1940, section 91
of The British North America Act was
amended 8 "by inserting therein, after item 2
'The Regulation of Trade and Commerce', the
following item:-
6 S.C. 1935, c. 38.
7 Reference re: The Unemployment Insurance Act, [1937]
A.C. 355, affirming [1936] S.C.R. 427.
8 3-4 Geo. VI, c. 36 (U.K.).
`2A. Unemployment Insurance'."
Soon after this amendment, the Unemployment
Insurance Act, 1940, was enacted. It is worth
mentioning that it did not contain any provision
similar to those now under attack. As Spence J.
said in The Queen v. Scheer Ltd., 9 "... the
statute was concerned only with those who
were bound as employers or employees under a
contract of service". In 1946, however, the stat
ute was amended t° and a provision similar to
those that are now under attack was added
thereto.
The appellant's contention is founded on the
assumption that the word "unemployment" has
two meanings which are the opposite of the two
meanings of the word "employment" to which
Spence J. referred in The Queen v. Scheer
Ltd.":
Definitions from dictionaries need not be quoted, sufficient
to say that it would seem to be the unanimous opinion of the
authors of all such works that the word "employment" has
two alternative meanings: either (a) a contract of service, or
(b) the occupation, business or trade in which a person is
engaged.
According to the appellant, the word "unem-
ployment" in head 2A of section 91 of The
British North America Act is used in its narrow
er sense and refers exclusively to the state of a
person who, formerly employed under a con
tract of service, is no longer working.
In my view, the word "unemployment" does
not have two meanings. I am of the opinion that
when this word is used in its normal sense with
reference to persons, it simply means "the state
or fact of being unoccupied" 12 . It is therefore
my view that in construing head 2A of section
91, the word "unemployment" should be given
that meaning unless there be cogent reasons to
believe that it is there used in a more restricted
sense.
Counsel for the appellant proposed three
arguments to show that the word "unemploy-
ment" in section 91 was used in a narrow sense.
9 (1972) 27 D.L.R. (3d) 73 at p. 76.
10 S.C. 1946, c. 68.
11 (1972) 27 D.L.R. (3d) 73 at p. 78.
12 See The Shorter Oxford Dictionary—Vbis: "unemploy-
ment" and "unemployed".
First, counsel said that, in amending The Brit-
ish North America Act in 1940 so as to give to
the federal Parliament the exclusive power to
enact laws in relation to "unemployment insur
ance", the Parliament of the United Kingdom
had in fact enacted an exception to the general
rule, laid down in section 92, that the legisla
tures of the provinces have the exclusive power
to enact laws in relation to "property and civil
rights in the province". Thus considering head
2A of section 91 as an exception to a general
rule, counsel inferred that it was to be interpret
ed restrictively. In support of this conclusion,
counsel referred to well-known decisions of the
Judicial Committee of the Privy Council on the
interpretation to be given to head 2 of section
91 which empowers the Parliament of Canada
to legislate in relation to "trade and
commerce" 13 . In my view, nothing that was said
in these decisions supports the proposition that
the heads of section 91 must be given a restric
tive interpretation when they give to the Parlia
ment of Canada the power to enact laws in
relation to a matter which, if it were not men
tioned in section 91, would come within the
exclusive power of the provinces to make laws
in relation to property and civil rights. The
general principle of interpretation that can be
extracted from these decisions is rather that, in
determining the meaning to be given to a par
ticular head of either section 91 or section 92,
consideration must be given to the whole of the
language employed in those two sections. This
principle does not help the appellant.
The second argument of the appellant is that
the expression "unemployment insurance" had
a definite meaning in 1940, at the time The
British North America Act was amended, and
referred only to a scheme of insurance against
unemployment which applied exclusively to per
sons who had been employed under a contract
of service. However, counsel for the appellant
could not substantiate this assertion otherwise
13 Citizens Insurance v. Parsons (1881) 7 A.C. 96; Mont-
real v. Montreal Street Railway [1912] A.C. 333; A.G. Can.
v. A.G. Alta. [1916] 1 A.C. 588.
than by stating that The British North America
Act of 1940 had been enacted to empower the
Canadian Parliament to re-enact the statute of
1935 which dealt only with situations where
there were master and servant relationships.
While it is no doubt true that the fact that the
statute of 1935 had been declared invalid result
ed in the 1940 amendment to The British North
America Act, this, in my view, does not lead to
the conclusion that the intention of the United
Kingdom Parliament, in amending The British
North America Act, was merely to empower the
Parliament of Canada to enact a statute within
the framework of the statute of 1935 that had
been declared invalid.
The last argument of the appellant is that it
would be contrary to the principles governing
the contract of insurance that a system of unem
ployment "insurance" covers employees other
than those engaged under a contract of service.
Risk, according to the appellant, is an essential
element of the insurance contract and there is
no risk of "unemployment" for one who is not
engaged under a contract of service. This argu
ment, in my opinion, must also be rejected. The
rules governing the validity of contracts do not
apply to statutes. 14 In any event, in my view, it
is simply not correct to say that those who are
self-employed are not subject to the risk of
being unemployed.
For these reasons, I would answer the ques
tion in the negative.
* * *
HYDE D.J.—I have read the reasons for judg
ment of the Chief Justice and Mr. Justice Pratte
and I am in full agreement with them.
14 See: Att. Gen. for British Columbia v. Esquimalt and
Nanaimo Ry. Co. [1950] A.C. 87, at p. 110, per Lord
Greene: "Legislation and contract are entirely different
methods of creating rights and liabilities and it is essential to
keep them distinct."
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.