T-2805-74
The Queen (Judgment Creditor)
v.
Crawford Dudgeon Varnes (Judgment Debtor)
Trial Division, Collier J.—Winnipeg, May 12, 13
and 15, 1975.
Crown—Minister of National Revenue certifying amount
payable by debtor as overpayment of unemployment insurance
benefits—Execution proceedings—Whether Unemployment
Insurance Commission complying with statute—Whether
debtor entitled to notice—Unemployment Insurance Act, 1971,
S.C. 1970-71-72, c. 48, ss. 57(1) and 79(2)—Federal Court
Rules 2100, 2200 and 2300(6).
The Minister of National Revenue certified that $72,646 was
payable by debtor as overpayment of unemployment insurance
benefits. The certificate was registered, and execution proceed
ings immediately initiated, including seizure and sale of debt
or's chattels, and garnishment proceedings. Defendant moved
for a stay of execution, and creditor moved against the gar
nishee to show cause. During argument, debtor indicated that
the fieri facias proceedings were his first notice of liability.
Held, granting an order to stay, and discharging the garnish-
ment order, the Unemployment Insurance Commission never
gave debtor formal notice of any determination under section
57(1) of the Unemployment Insurance Act, 1971, thereby
depriving him of the opportunity of invoking appeal procedures
provided in the Act. As in the case of assessments under the
Income Tax Act, the Minister must first comply with the
statute before enforcing payment. The Crown has not complied
with the first essential steps under section 57(1). The Commis
sion, or Minister, cannot arbitrarily and secretly declare a
citizen liable, file a certificate, execute, and then maintain that
rights of appeal still exist when the citizen has had no statutory
or real notice of the alleged liability.
Lambert v. The Queen 75 DTC 5065, distinguished.
APPLICATION.
COUNSEL:
R. Fainstein for judgment creditor.
M. Phelps for judgment debtor.
W. Stovel for garnishee.
SOLICITORS:
Deputy Attorney General of Canada for judg
ment creditor.
Christie, Turner, De Graves, MacKay, Settle
& Kennedy, Winnipeg, for judgment debtor.
The following are the reasons for judgment
rendered in English by
COLLIER J.: Two applications came on for hear
ing on May 12 and 13, 1975, in Winnipeg. One
was on behalf of the defendant for an order stay
ing execution on a judgment. The other was on
behalf of the plaintiff calling on the garnishee, the
City of Winnipeg, to show cause why a debt
(salary) due to the debtor should not be paid to the
plaintiff judgment creditor towards satisfaction of
the judgment. It is necessary to set out the back
ground. Most of the facts are to be found in the
material filed in support of the applications, in the
court file, and in the examination in aid of execu
tion. Some came from statements made by
counsel.
On July 17, 1974, one Wakeman, on behalf of
the Minister of National Revenue, certified, pursu
ant to sections 79 and 112 of the Unemployment
Insurance Act, 1971, that the sum of $72,646 was
payable by the defendant. The particulars given
were:
Balance of overpayment of unemployment insurance benefit
$72,646.
The certificate was registered in this Court on July
18, 1974. Subsection 79(2) provides that on regis
tration of the certificate it has the same force and
effect as if it were a judgment
... and all proceedings may be taken thereon ... .
A writ of fieri facias was issued on the same
day. Subsequently two motor vehicles and a travel
trailer were seized and sold by the sheriff. The
present balance owing on the "judgment" is
$61,966.81. The defendant judgment debtor has
been examined pursuant to Rule 2200. A garnish-
ment order was obtained against his present
employer, the City of Winnipeg. The City of Win-
nipeg on the motion to show cause was prepared to
pay in the maximum amount permitted by Rule
2300(6) from the defendant's wages.
The defendant then moved for a stay of all
execution proceedings. Mr. Phelps stated the
application was brought pursuant to Rule 2100.
The grounds advanced were hardship, special cir
cumstances, and inability to pay.
The defendant is married with three children.
He earns $585 per month net in his present job.
His wife works part-time. The family lives in a
house estimated to be worth approximately
$40,000. The defendant's wife is asserted to be, for
practical purposes, the true owner of the home.
The defendant estimated his monthly expenses to
be in the neighbourhood of $425 per month. He
saves nothing. I can well understand that. I think
the estimate of expenses is probably an understate
ment. The defendant is said to have obtained the
$72,646 overpayment of unemployment benefit by
fraudulent means, using several false names and
making a number of false claims. Criminal
charges have been laid. The preliminary hearing is
to take place in June. During the course of argu
ment Mr. Phelps indicated that the first notice the
defendant had of any liability to the plaintiff was
the taking of steps by the sheriff under the fieri
facias proceedings. I raised some questions at that
stage and referred counsel to subsection 57(1) of
the Unemployment Insurance Act, 1971. I set it
out:
57. (1) The Commission may at any time within thirty-six
months after benefit has been paid under this Act or the former
Act reconsider claims made at a prior time and if the Commis
sion determines that a person has received money by way of
benefit thereunder for any period in respect of which he was not
qualified or any money by way of benefit to which he was not
entitled, the Commission shall calculate the amount so
received, and that amount is, subject to appeal under section
94, the amount repayable under section 49.
Mr. Fainstein made inquiries. He very candidly
informed me the Commission had never given the
defendant any formal notice of any determination
made pursuant to subsection 57(1). The defendant
has therefore never had the opportunity to invoke
the appeal procedures provided by the statute in
order to contest or have decided his liability to
make repayment of benefit to which he was
allegedly not entitled. That appeal procedure pro
vides for a hearing before a Board of Referees, and
in some circumstances a further appeal to an
Umpire. From an Umpire's decision, relief may, in
a proper case, be sought pursuant to section 28 of
the Federal Court Act.
Counsel for the plaintiff refers to Lambert v.
The Queen'. He contends the execution proceed
ings taken so far are valid and permitted by the
Act, even though the defendant may have out
standing certain remedies by way of appeal as
outlined above. I am unable to accept that conten
tion. I think the Lambert decision is distinguish
able. That case was under the Income Tax Act.
There the taxpayer had been assessed by the Min
ister of National Revenue and had been given the
required notification pursuant to section 46 of the
statute. The taxpayer had then invoked the appeal
procedure set out. The statute, however, stipulated
a taxpayer must forthwith pay the tax assessed,
regardless of appeals. The Minister is permitted,
even in the case of disputed assessments and before
the final outcome of appeals, to enforce payment
by all the methods allowed in the Income Tax Act.
The key distinction in the Lambert case is that the
Minister complied, actually and strictly, with the
statutory provisions. He issued an assessment and
notified the taxpayer of it. The taxpayer then had
statutory notice bringing into operation his rights
to appeal and at the same time his liability to
make payment in accordance with the assessment.
Here the Commission has not complied with the
first essential steps required by subsection 57(1) in
order to bring into operation:
(a) the defendant's liability to repay;
(b) the defendant's rights to appeal that liabili
ty; and
(c) the plaintiff's right to obtain what amounts
to a judgment and the consequential rights to
enforce it by execution proceedings.
The Commission, or the Minister, cannot arbi
trarily and secretly declare a citizen liable to repay
certain monies, file a certificate embodying that
declaration, execute on the basis of that certificate,
and then somehow say the citizen still has rights of
appeal, when the citizen has had no statutory or
real notice of the Commission's assertion there is
an alleged liability. There will therefore be an
order staying all execution proceedings, until fur
ther order of this Court. The defendant will have
30 days in which to take whatever proceedings he
may be advised to set aside the "judgment" and
the earlier execution proceedings. The garnish
1 75 DTC 5065.
ment order against the City of Winnipeg, on the
application to show cause, is discharged. The costs
of the two applications referred to in the first
paragraph of these reasons will be in the cause.
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.