A-610-01
2002 FCA 298
Ray Budhai et al. (as identified in Schedule "A" attached to the Notice of Application) (Applicants)
v.
The Attorney General of Canada (Respondent)
Indexed as: Budhai v. Canada (Attorney General) (C.A.)
Court of Appeal, Linden, Evans and Malone JJ.A.-- Toronto, June 17; Ottawa, July 26, 2002.
Employment Insurance -- Applicant claiming employment insurance benefits after being laid off in September 1999 because of shortage of work -- Collective agreement concluded while in receipt of employment insurance benefits -- In letter of agreement, employer agreeing to pay $1,000 "signing bonus" to all active, inactive employees not terminated at date of agreement who had worked hours between January, October 1999 -- Payable only if collective agreement ratified -- Commission allocating bonus to week collective agreement ratified, resulting in overpayment of benefits -- Board of Referees applying Employment Insurance Regulations, s. 36(4) requiring allocation of "earnings payable under a contract of employment for the performance of services" to period in which services performed -- Not expressly providing amount payable to employee "for the performance of services" only if related to number of hours worked -- Board of Referees' conclusion "signing bonus" payable "for the performance of services" not unreasonable.
Administrative Law -- Judicial Review -- Certiorari -- Judicial review of Umpire's decision allowing appeal from decision of Board of Referees Employment Insurance Regulations, s. 36(4) applied to signing bonus -- Umpire ruling "signing bonus" earnings arising from transaction under s. 36(19)(b) -- Errors of law committed by Umpire including standard of review applied -- Expertise of boards of referees, umpires reviewed -- Principal issue decided by Board of Referees question of mixed fact and law -- Expertise of umpires (judges, former judges) prevailing over that of board of referees on question of statutory interpretation -- Procedure before board of referees, umpire informal -- Unreasonableness simpliciter appropriate standard of review where board of referees applying statute to facts -- Role of judicial appellate body to ensure correct law applied.
This was an application for judicial review of an Umpire's decision allowing an appeal from a decision of a Board of Referees. The applicant was laid off on September 24, 1999 because of a shortage of work, and claimed employment insurance benefits. He was still laid off, and in receipt of benefits, when his employer and the union concluded a collective agreement, effective October 25, 1999. In a letter of agreement dated October 19, 1999, less than a week before ratification of the collective agreement, the employer agreed to pay a $1,000 "signing bonus" to all active and inactive employees, including retirees, who had not been terminated at the date of the agreement and had worked hours between January 1 and October 19, 1999, only if the collective agreement was ratified. The Commission allocated the amount of the signing bonus paid to the applicant to the week beginning October 25, 1999. Allowing the appeal from that decision, the Board of Referees found that subsection 36(4) of the Employment Insurance Regulations could apply to earnings payable under a contract different from that under which the services had been performed, because it refers to earnings payable to a claimant under "a" contract of employment. Subsection 36(4) requires allocation of earnings under a contract of employment for the performance of services to the period in which services were performed. On appeal from the Board's decision, the Umpire cited decisions holding that a signing bonus constitutes earnings arising from a transaction, and concluded that paragraph 36(19)(b) of the Regulations applied. (Paragraph 36(19)(b) requires allocation of earnings to which none of subsections (1) to (18) apply to the week in which the transaction occurs if they are from a transaction.) Three main issues were raised herein: (1) the standard of review; (2) whether subsection 36(4) of the Regulations requires that an amount can be payable to an employee "for the performance of services" only if it is related to the number of hours worked, and (3) was the Board of Referees' conclusion that the "signing bonus" was payable "for the performance of services" unreasonable?
Held, the application should be allowed.
(1) The Court must determine on a standard of correctness whether the Umpire erred in his selection of the standard by which to review the Board's decision. The Umpire afforded no deference to the Board's decision: he allowed the appeal because he concluded that the signing bonus "arose from a transaction". In doing so, the Umpire committed three errors of law. First, he failed to consider whether the signing bonus constituted earnings "payable . . . for the performance of services" for the purpose of subsection 36(4). Only if it did not could the Umpire consider whether paragraph 36(19)(b) applied. Second, the Umpire erred in law to the extent that he inferred from the cases he cited that, as a matter of law, a signing bonus payable to employees who had worked hours for the employer cannot be payable "for the performance of services", but arises "from a transaction". The characterization of a signing bonus depends on the facts of each case. Third, the Umpire should have reviewed on a standard of unreasonableness the Board's characterization of the "signing bonus" as earnings payable "for the performance of services". The expertise of both boards of referees and umpires is circumscribed by the strictly adjudicative nature of their functions in the administration of the employment insurance scheme, and by the fact that they perform these functions ad hoc on a part-time basis. The principal issue decided by the Board of Referees was a question of mixed fact and law. The representative nature of boards of referees indicates that its area of expertise extends beyond mere fact-finding and can include the determination of questions of mixed fact and law involving the application of the employment insurance legislation to the facts of a given case. However, the general expertise of umpires (judges and former judges), as well as their knowledge of employment insurance legislation, indicate that their interpretation of the relevant statutory provisions should prevail over that of a board of referees. While there is a right of appeal from a board of referees to an umpire, the grounds of appeal contained in subsection 115(2) of the Employment Insurance Act are unusually narrow, indicating that Parliament did not intend umpires to review on a correctness standard matters that are not purely legal in nature. The procedure before the board of referees and the umpire is to be informal. Expeditious decision-making is also important in the context of this scheme. Umpires ought to show restraint when determining whether a board of referees has erred in law in applying the statute to the facts on a matter within their expertise. However, based on the absence of a strong privative clause, the adjudicative nature of the board's functions and its lack of legal expertise, unreasonableness simpliciter, not patent unreasonableness, is the appropriate standard of review. It is the role of a judicial appellate body to ensure that the correct law has been applied.
(2) Under the letter of agreement, only employees who had worked hours between January 1 and October 19, 1999 qualified for the "signing bonus". The extent to which an amount is related to the number of hours worked is relevant to whether it can be characterized as payable "for the performance of services". Subsection 36(4) of the Regulations does not expressly require that an amount is payable "for the performance of services" only if an employee has worked a minimum number of hours. Implying such a restriction could cause serious practical problems. Moreover, it would be inconsistent with the direction of the Supreme Court of Canada to interpret employment insurance legislation in a liberal manner to read into subsection 36(4) such a vague and possibly variable condition in order to reduce or remove the employment insurance benefits to which an insured person would otherwise be entitled. A provision in a collective agreement should be given its intended effect, even though it was structured to enable employees both to receive a contractual payment and to retain their employment insurance benefits. Therefore, the Board did not err in law in assuming that subsection 36(4) does not require an agreement to specify how many hours an employee must have worked in order for the promised amount to be payable "for the performance of services", or otherwise to relate the amount of the bonus to the number of hours worked by individual employees.
(3) The Umpire ought to have asked himself whether it was unreasonable for the Board to have concluded that the "signing bonus" provided under this particular agreement was payable "for the performance of services" earlier in the year. The unreasonableness standard of review requires a determination of whether the decision under review withstands a somewhat probing examination. The respondent did not meet the burden of establishing that it was unreasonable for the Board to conclude that the "signing bonus" was payable "for the performance of services". The Board's conclusion was not based on either an invalid inference drawn from the evidence or inconsistent premises. The terms on which the "signing bonus" was payable suggested that it was intended to reward employees for work already done, and to induce those employees to vote for ratification of the new collective agreement. The presence of the latter intention does not necessarily remove the "signing bonus" from subsection 36(4) unless, perhaps, it may be inferred that this was the dominant intention, which is precisely the kind of issue that boards of referees are well suited to decide, subject only to review for unreasonableness.
statutes and regulations judicially
considered
Canada Labour Code, R.S.C., 1985, c. L-2, s. 3(1).
| Employment Insurance Act, S.C. 1996, c. 23, ss. 111(1),(2),(3),(4)(a),(b),(c), 112(1),(2) (as am. by S.C. 1998, c. 19, s. 270), (7),(8), 113, 114(3), 115(2)(a),(b),(c). |
| Employment Insurance Regulations, SOR/96-332, ss. 36(4),(19)(b), 78(1), 79, 80, 83(1), 85, 86. |
| Federal Court Act, R.S.C., 1985, c. F-7, ss. 18.1 (as enacted by S.C. 1990, c. 8, s. 5), 28 (as am. idem, s. 8). |
cases judicially considered
applied:
Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748; (1997), 144 D.L.R. (4th) 1; 50 Admin. L.R. (2d) 199; 71 C.P.R. (3d) 417; 209 N.R. 20; Housen v. Nikolaisen (2002), 211 D.L.R. (4th) 577; 10 C.C.L.T. (3d) 157; 286 N.R. 1 (S.C.C.).
distinguished:
Ostonal v. Canada (Unemployment Insurance Commission) (1991), 139 N.R. 75 (F.C.A.); Unemploy-ment Benefits Commission v. United Steelworkers of America (1994), CUB 27135.
considered:
Gill (1998), CUB 41845; Pleau v. Canada (Employment and Immigration Commission) (1996), 144 D.L.R. (4th) 473; 209 N.R. 243 (F.C.A.).
referred to:
Canada (Attorney General) v. Mossop, [1993] 1 S.C.R. 554; (1993), 100 D.L.R. (4th) 658; 13 Admin. L.R. (2d) 1; 46 C.C.E.L. 1; 17 C.H.R.R. D/349; 93 CLLC 17,006; 149 N.R.1; Abrahams v. Attorney General of Canada, [1983] 1 S.C.R. 2; (1983), 142 D.L.R. (3d) 1; 83 CLLC 14,010; 46 N.R. 185; Hills v. Canada (Attorney General), [1988] 1 S.C.R. 513; (1988), 48 D.L.R. (4th) 193; 30 Admin. L.R. 187; 88 CLLC 14,011; 84 N.R. 86; Continental Bank Leasing Corp. v. Canada, [1998] 2 S.C.R. 298; (1998), 163 D.L.R. (4th) 385; [1998] 4 C.T.C. 119; 98 DTC 6505; 229 N.R. 58; Shell Canada Ltd. v. Canada, [1999] 3 S.C.R. 622; (1999), 178 D.L.R. (4th) 26; 99 DTC 5669; 247 N.R. 19.
authors cited
Law Reform Commission of Canada. Unemployment Insurance Benefits: A Study of Administrative Procedure in the Unemployment Insurance Commission. Ottawa: Supply and Services Canada, 1977.
APPLICATION for judicial review of an Umpire's decision (Budhai 2001, CUB 52055) dismissing a decision of a Board of Referees which had allowed an appeal from a determination by the Canada Employment Insurance Commission that a bonus for signing the collective agreement paid while the applicant was laid-off and in receipt of employment insurance benefits had to be included in earnings for the week in which the collective agreement was ratified. Application allowed.
appearances:
Lewis N. Gottheil for applicants.
Derek Edwards for respondent.
solicitors of record:
CAW -- Canada Legal Department, Toronto, for applicants.
Deputy Attorney General of Canada for respondent.
The following are the reasons for judgment rendered in English by
Evans J.A.:
A. INTRODUCTION
[1]This is an application for judicial review by Ray Budhai to set aside a decision (CUB 52055), dated July 10, 2001, in which an Umpire allowed an appeal by the Canada Employment Insurance Commission against a decision of a Board of Referees, dated December 5, 2000. The Board had allowed an appeal by Mr. Budhai from a determination by the Commission that he had been overpaid employment insurance benefits during a period of lay-off.
[2]Mr. Budhai brings this application on behalf of himself and 150 others who are similarly situated and have agreed to be bound by the result. Another 110 employees will also benefit if Mr. Budhai's application is successful. As a result of a motion made at the hearing of the application, the style of cause was amended by naming the Attorney General of Canada as the respondent, instead of the Minister of Human Resources Development.
[3]The substantive issue in this application is the characterization of a $1,000 "signing bonus" that Mr. Budhai's employer, General Motors of Canada Limited (GM), had agreed to pay to employees if they ratified the collective agreement that the Canadian Auto Workers (CAW) had negotiated with it on behalf of, among others, Mr. Budhai's bargaining agent, CAW, Local 222.
[4]If the "signing bonus" falls under subsection 36(4) of the Employment Insurance Regulations, SOR/96-332, (Regulations) as "[e]arnings . . . payable . . . under a contract of employment for the performance of services", as the Board of Referees found, it must be allocated to the period in which the services were performed. In this eventuality, Mr. Budhai did not receive an overpayment of benefits at the time that the collective agreement was ratified.
[5]However, if, as the Umpire held, paragraph 36(19)(b) applies, the $1,000 "signing bonus" arose "from a transaction" (namely, the ratification of the collective agreement), in which case it is allocated to the period when the collective agreement was ratified, October 25, 1999, and Mr. Budhai must repay the overpayment of benefits that he was receiving at that time.
B. FACTUAL BACKGROUND
[6]Mr. Budhai was laid off by GM on September 24, 1999, because of a shortage of work. He established a claim for employment insurance benefits on September 26, 1999. He was still laid off, and in receipt of benefits, when GM and CAW concluded a collective agreement, effective October 25, 1999. The "signing bonus" agreed to in the letter of agreement also became payable on that date, although it was not actually paid to inactive employees, such as Mr. Budhai, until February 24, 2000.
[7]In a letter dated March 21, 2000, the Commission advised Mr. Budhai that, on the basis of information received from GM, the total earnings allocated to him for the week beginning October 25, 1999, had been increased from $0 to $1,000, the amount of the signing bonus that he had received. Accordingly, Mr. Budhai was required to repay benefits that he should not have received following the ratification of the agreement. The Commission proposed to recover the overpayment by deducting 50% of his weekly benefit.
[8]Mr. Budhai's appeal of this decision to the Board of Referees was allowed on December 5, 2000. In a unanimous decision, the Board found that subsection 36(4) could apply to earnings payable under a contract different from that under which the services had been performed, because it refers to earnings payable to a claimant under "a" contract of employment.
[9]The Board inferred from the fact that employees who had worked in the relevant period were eligible for the "signing bonus", while those who had not were ineligible, that the agreement was "a legitimate contract of employment" for the purpose of subsection 36(4). Further, since subsection 36(4) was applicable, and subsection 36(19) only applies "[w]here a claimant has earnings to which none of subsections (1) to (18) apply", it was unnecessary to determine whether paragraph 36(19)(b) applied.
[10]Central to this dispute are the terms of the unpublished letter of agreement, dated October 19, 1999, that is, less than a week before ratification of the collective agreement. In that letter, GM agreed to pay a $1,000 "signing bonus" to all active and inactive employees, including retirees, in the specified bargaining units (including Mr. Budhai's), who had not been terminated at the date of the agreement and had worked hours between January 1 and October 19, 1999. The "signing bonus" only became payable if the collective agreement was ratified.
[11]In addition, a schedule to the master agreement between GM and CAW provided for "special payments" which, unlike the "signing bonus", were only payable to employees who had worked a minimum of 1,000 hours that year and were prorated for every 50 hours less than 1,000 that an employee had worked. They were to be payable every year at a date to be agreed by the parties.
C. THE UMPIRE'S DECISION
[12]On the Commission's appeal of the Board's decision, the Umpire cited decisions that had held that a signing bonus constitutes earnings arising from a transaction, including a decision of this Court, Ostonal v. Canada (Unemployment Insurance Commission) (1991), 139 N.R. 75 (F.C.A.). Apparently on the basis of these authorities, and of his review of the material, the Umpire concluded that paragraph 36(19)(b) applied. Consequently, he allowed the appeal and restored the decision of the insurance officer.
D. LEGISLATIVE FRAMEWORK
[13]The following statutory provisions are relevant to this application.
Employment Insurance Act, S.C. 1996, c. 23
111. (1) There shall be boards of referees, consisting of a chairperson and one or more members chosen from employers or representatives of employers and an equal number of members chosen from insured persons or representatives of insured persons.
(2) The chairperson of a board of referees shall be appointed by the Governor in Council for a renewable term of three years and may be removed at any time by the Governor in Council for cause.
(3) Panels of employers and their representatives and insured persons and their representatives shall be established by the Commission, and the members of the boards of referees shall be selected from those panels in the prescribed manner.
(4) The following amounts, as approved by the Treasury Board, shall be paid:
(a) remuneration to the chairperson and members of a board of referees;
(b) travel, subsistence and other allowances, including compensation for loss of remunerative time, to the chairperson and members and to any other person required to attend before the board; and
(c) any other expenses in connection with the operation of the board.
. . .
114. . . .
(3) A decision of a board of referees shall be recorded in writing and shall include a statement of the findings of the board on questions of fact material to the decision.
. . .
115. . . .
(2) The only grounds of appeal are that
(a) the board of referees failed to observe a principle of natural justice or otherwise acted beyond or refused to exercise its jurisdiction;
(b) the board of referees erred in law in making its decision or order, whether or not the error appears on the face of the record; or
(c) the board of referees based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it.
Employment Insurance Regulations, SOR/96-332
36. . . .
(4) Earnings that are payable to a claimant under a contract of employment for the performance of services shall be allocated to the period in which the services were performed.
. . .
(19) Where a claimant has earnings to which none of subsections (1) to (18) apply, those earnings shall be allocated
(a) if they arise from the performance of services, to the period in which the services are performed; and
(b) if they arise from a transaction, to the week in which the transaction occurs.
E. ISSUES AND ANALYSIS
[14]I can identify at the outset what is not in dispute in this application. First, subsections 36(4) and 36(19) apply only to "earnings" and it is common ground that the "signing bonus" in the letter of agreement constitutes "earnings" for this purpose.
[15]Second, as a matter of statutory interpretation, subsection 36(4) is capable of applying to an agreement to pay an additional amount for services that a person had already rendered under another agreement. The authority for this proposition is Ostonal, supra, where Mahoney J.A. said (at page 76) that the predecessors of the provisions of the Regulations applicable to the case at bar "are cast in retrospective, not prospective terms; they refer to services already performed, not services to be performed". As the Board of Referees pointed out, this conclusion is supported by the fact that subsection 36(4) speaks of earnings payable under "a contract of employment", not the contract of employment under which the services had been performed.
[16]However, a different view seems to have been taken in Gill (1998), CUB 41845 by my colleague, Noël J. (as he then was), when sitting as an Umpire. In rejecting the employer's argument in that case that the bonus was payable for services that had been performed and, accordingly, should be allocated to that period, Noël J. said (at page 3):
While I agree that the payment was tied to the performance of past services, it is important to note that there was no entitlement to it when these services were actually performed. What created this entitlement is the subsequent agreement whereby Abitibi agreed to make the payment albeit by reference to prior services. It necessarily follows in my view that the payments "arise from" this agreement as it is the agreement that has created the entitlement.
[17]The decision in Ostonal, supra, was not discussed. If this passage means that a retroactive wage increase or any other kind of enhanced remuneration for work already done cannot be "for the performance of services" within the meaning of subsection 36(4), then, in my respectful opinion, it goes too far.
[18]Third, although the letter of agreement containing GM's promise to pay the $1,000 was not included in the main body of the master agreement, the signing bonus was contained in a "contract of employment" for the purpose of subsection 36(4). Counsel for Mr. Budhai submitted that, as a written agreement between an employer and a bargaining agent containing provisions respecting terms and conditions of employment, the letter of agreement was a "collective agreement" as defined in subsection 3(1) of the Canada Labour Code, R.S.C., 1985, c. L-2. A collective agreement is a contract of employment for the purpose of subsection 36(4).
| Issue 1 Did the Board of Referees err in law in failing to provide a "statement of the findings of the board on questions of fact material to the decision"? |
[19]In the memorandum of fact and law submitted on behalf of the respondent, it was argued that the Umpire was correct to allow the appeal because the Board had erred in law by failing to discharge its duty under subsection 114(3) of the Employment Insurance Act, to provide a "statement of the findings of the board on questions of fact material to the decision". In particular, it was said, the Board did not make a finding that the bonus was paid for the performance of services.
[20]In oral argument, counsel did not press this point with much enthusiasm, and rightly so. Indeed, the Commission appears not to have raised it before the Umpire. The very issue considered by the Board was whether the "signing bonus" was payable for the performance of services for the purpose of subsection 36(4). After providing thoughtful reasons indicating a good grasp of the issues, the Board concluded that subsection 36(4) applied. In these circumstances, it was unnecessary for the Board to state expressly that it found that the bonus was paid for the performance of services.
[21]There is no merit in the respondent's position on this issue and the Umpire's decision cannot be supported on this ground.
| Issue 2 The Standard of Review |
[22]The decision under review in this application is, of course, that of the Umpire. However, in order to determine whether the Umpire committed a reviewable error, it is necessary to decide what standard of review the Umpire should have applied to the decision of the Board of Referees. The parties agree that the Court must determine on a standard of correctness whether the Umpire erred in his selection of the standard by which to review the Board's decision.
[23]Although the Umpire did not expressly advert to the applicable standard of review, it is clear that he afforded no deference to the Board's decision: he allowed the appeal because he concluded that the signing bonus "arose from a transaction". Inferentially, he seems to have decided that the Board had been wrong to characterize the signing bonus as payable "for the performance of services" and that the jurisprudence required the Board to reach a different result.
[24]In my respectful view, the Umpire committed three errors of law. First, he apparently failed to consider whether the signing bonus constituted earnings "payable . . . for the performance of services" for the purpose of subsection 36(4). Only if it did not could the Umpire consider whether paragraph 36(19)(b) applied. This was a methodological error in the approach to the application of the Act to the facts and as such is reviewable for correctness.
[25]Second, the Umpire erred in law to the extent that he inferred from the cases that he cited that, as a matter of law, a signing bonus payable to employees who had worked hours for the employer cannot be payable "for the performance of services", but arises "from a transaction". As counsel for the respondent conceded before us, the characterization of a signing bonus depends on the facts of each individual case.
[26]Third, on the basis of a pragmatic or functional analysis I have concluded that the Umpire should have reviewed on a standard of unreasonableness the Board's characterization of the "signing bonus" as earnings payable "for the performance of services". While normally applied to determine the standard of review to be applied by a generalist court to a specialist administrative agency, the pragmatic or functional approach seems to me to be equally apt for determining the proper decision-making roles of umpires and boards of referees, and, hence, the appropriate standard of review to be applied by the former to decisions of the latter. After all, the ultimate task in both situations is the same: to determine legislative intent by considering which body is better suited to decide the issue in dispute.
(i) expertise of boards of referees and umpires
[27]A useful, if somewhat dated, description of the roles of boards of referees and umpires in the employment insurance appeal process is given by the Law Reform Commission of Canada, Unemployment Insurance Benefits: A Study of Administrative Procedure in the Unemployment Insurance Commission (Ottawa: Supply and Services Canada, 1977), chapters 4 and 5.
[28]Like other tribunals in the area of labour relations and employment, boards of referees are tripartite. They comprise three members: a chairperson, a nominee of employers or their representatives, and a nominee of insured persons or their representatives. Chairpersons are appointed by the Governor in Council for a renewable term of three years, subject to removal at any time by the Governor in Council for misconduct: Act, subsection 111(2). The Commission is required to maintain panels of persons nominated by employers and insured persons, or their representatives, and to select board members from each panel, normally on a rotational basis: Act, subsection 111(3); Regulations, subsection 78(1).
[29]Chairpersons and board members sit on a part-time basis, generally in the area where they live. They are remunerated, and have their costs reimbursed, in accordance with a scale established by the Treasury Board: Act, subsection 111(4).
[30]Appeals from the Commission to a board of referees are in writing, unless a request is made for an oral hearing: Regulations, sections 79 and 80. Chairpersons establish the procedure to be followed at hearings (Regulations, subsection 80(7)), subject to a duty to give "each of the parties interested in an appeal a reasonable opportunity to make representations concerning any matter before the board" (Regulations, subsection 83(1)).
[31]Umpires are judges or former judges and are assigned ad hoc to decide appeals from boards of referees: Act, subsections 112(1) and (2) [as am. by S.C. 1998, c. 19, s. 270]. The Governor in Council may appoint a chief umpire from among the umpires to supervise the work of the umpires: Act, subsections 112(7) and (8). Like boards of referees, umpires are part-time.
[32]Appeals to umpires from decisions of boards of referees are in writing, although an oral hearing is held when requested: Regulations, sections 85 and 86. The Act provides that the technical rules of evidence do not apply to these hearings, which must be conducted as informally and expeditiously as the circumstances and fairness permit: Act, section 113.
[33]In summary, the expertise of both boards of referees and umpires is circumscribed by the strictly adjudicative nature of their functions in the administration of the employment insurance scheme, and by the fact that they perform these functions ad hoc on a part-time basis: compare Canada (Attorney General) v. Mossop, [1993] 1 S.C.R. 554, at pages 584-585. On the other hand, both are independent of the Commission and, when requested, must make their decisions on the basis of an informal but fully participatory oral hearing.
[34]However, differences in the composition of the two bodies point to different areas of expertise. Thus, because they are appointed from persons nominated by employers and insured persons, or their representatives, members of boards of referees may be expected to have a knowledge of employment and related matters which they are to use to assist them in making their decisions. The representative and local nature of boards is calculated to lend a degree of acceptability to their decisions. Umpires, however, can claim both the legal expertise that comes with their judicial experience, as well as a certain familiarity with this particular statutory scheme.
(ii) nature of the issues in dispute
[35]In my opinion, the principal issue decided by the Board of Referees in this case is properly characterized as a question of mixed fact and law because it involves the application of the words "payable . . . for the performance of services" to the facts of the case and, in particular, to the letter of agreement setting out the terms of the "signing bonus". See Canada (Director of Investigations & Research) v. Southam Inc., [1997] 1 S.C.R. 748, at paragraph 35; and Housen v. Nikolaisen (2002), 211 D.L.R. (4th) 577 (S.C.C.), at paragraph 26.
[36]In Pleau v. Canada (Employment and Immigration Commission) (1996), 144 D.L.R (4th) 473 (F.C.A.), at pages 476-477, Marceau J.A. similarly described as a question of mixed fact and law whether a lump sum payment should be characterized as made "on account of or in lieu of a pension". On the other hand, in Ostonal, supra, Mahoney J.A. said (at page 76) that the determination that a payment arose "from a transaction" was a question of fact. However, in my respectful opinion, this view has been overtaken by the analysis of the Supreme Court of Canada in Southam, supra, and Housen, supra.
[37]However, it is possible to disentangle two relatively general propositions of law from the application of the statute to the facts of this case. First, subsection 36(4) of the Regulations is capable of applying to a sum that is payable for services already rendered under an earlier contract, and is additional to the remuneration provided by that contract. However, as explained earlier in these reasons, counsel for the respondent does not take issue with the correctness of this general principle: see paragraphs 15-17.
[38]A second general principle that counsel for the respondent contends is implicated in the Board's decision is that money may be payable "for the performance of services", even though an employee need not have worked a minimum number of hours to be eligible for it. I agree that, even though not articulated in the Board's reasons, this proposition can fairly be said to be implicit in its decision.
(iii) relating the expertise of the tribunals to the issues decided
[39]In my opinion, the representative nature of boards of referees is an indication that its area of expertise extends beyond mere fact-finding and can include the determination of questions of mixed fact and law involving the application of the employment insurance legislation to the facts of a given case. Deciding on which side of a somewhat imprecise line the characterization of the the "signing bonus" falls engages the kind of industrial relations experience or knowledge that many board members can be expected to have.
[40]Boards of referees function, in effect, as the jury in the administrative structure of the employment insurance scheme, albeit one that renders its decisions without receiving instructions on the law from a judge. Their tripartite composition helps to make their decisions acceptable to the parties. While umpires are no doubt more familiar than most judges with employment insurance legislation, their principal expertise comes from their general judicial work and they should defer on those aspects of a decision that are properly the province of the specialist "jury".
[41]I should note that in Pleau, supra, the Court rejected the applicant's submission that the umpire ought not to have interfered with the board of referees' characterization of a payment because it involved an assessment of the evidence and was thus at the heart of the board's role. Having rightly concluded that the issue in dispute was not merely factual, but was a question of mixed fact and law, the Court appears to have assumed, without undertaking a pragmatic or functional analysis, that the umpire was entitled to review the board's conclusion on a correctness standard. In my respectful opinion, however, Pleau, supra, can no longer be regarded as authoritative on the standard of review in light of the analysis subsequently adopted by the Supreme Court of Canada in Southam, supra.
[42]While the factual element of the task of applying the law to the facts of a given case calls for deference to boards of referees, the general legal expertise of umpires, as well as their knowledge of employment insurance legislation, indicate that their interpretation of the relevant statutory provisions should prevail over that of a board of referees, an adjudicative body that does not necessarily include a lawyer and sits only part-time.
(iv) the statutory language
[43]A broad right of appeal from a specialist tribunal is normally regarded as an indicator that the legislature intended the appellate body to subject decisions of the first-level tribunal to closer scrutiny than might otherwise be the case. While there is a right of appeal from a board of referees to an umpire, the grounds of appeal are unusually narrow: Act, subsection 115(2). They are identical to the grounds on which this Court reviewed proceedings of federal administrative tribunals under the old section 28 [now am. by S.C. 1990, c. 8, s. 8] of the Federal Court Act [R.S.C., 1985, c. F-7]. Indeed, as a result of the expansion of the grounds of judicial review now contained in section 18.1 [as enacted by S.C. 1990, c. 8, s. 5], and generally applicable to proceedings in both divisions of the Federal Court (subsection 28(2)), decisions of umpires are now subject to a broader scope of review by this Court than decisions of boards of referees are by umpires.
[44]In short, I take the narrow grounds of appeal contained in subsection 115(2) to be an indication that Parliament did not intend umpires to review on a correctness standard matters that are not purely legal in nature.
(v) purposes of the statutory scheme
[45]All the indications are that Parliament intended to create a decision-making regime for the employment insurance scheme that is easy for insured persons to access without incurring the expense of legal representation. The procedure before both the board of referees and the umpire is to be informal. Moreover, expeditious decision-making is also important in the context of this scheme. Those appealing an adverse benefits decision by the Commission will often have limited financial resources and need any mistakes to be rectified quickly, without the delays likely to result from de novo appeals on questions that are not purely legal. Moreover, Parliament cannot have intended resources to be wasted by umpires duplicating the work of boards of referees.
[46]I regard this element of the pragmatic or functional analysis as indicative of Parliament's intention that umpires should not reverse a board simply because they disagree with an aspect of its decision that involves a question of mixed fact and law on which they cannot claim superior expertise, unless, of course, the board's application of the statute to the facts is unreasonable.
(vi) conclusion
[47]On the basis of the factors considered above, I conclude that umpires ought to show restraint when determining whether a board of referees has erred in law in applying the statute to the facts on a matter within their expertise. However, the absence of a strong privative clause, the adjudicative nature of the board's functions, and its lack of legal expertise, lead me to conclude that unreasonableness simpliciter, and not patent unreasonableness, is the appropriate standard of review.
[48]On the other hand, umpires should determine for themselves whether the board correctly decided questions of statutory interpretation that either arise on the face of a board of referees' decision, or can fairly be regarded as implicit in it. Apposite in this context is the observation of the Supreme Court of Canada in Housen v. Nikolaisen, supra, at paragraphs 8-10, that it is the role of a judicial appellate body to ensure that the correct law has been applied.
| Issue 3 Correctly interpreted, does subsection 36(4) require that an amount can only be payable to an employee "for the performance of services" if it is related to the number of hours worked? |
[49]It will be recalled that, under the letter of agreement, only GM employees who had worked hours between January 1 and October 19, 1999, qualified for the "signing bonus". However, counsel for the respondent submitted that, as a matter of law, this restriction could not bring the bonus within the words of subsection 36(4). In order to qualify as, in effect, a retroactive pay increase, the letter ought to have stipulated that only employees who had worked for a prescribed minimum number of hours were eligible for the $1,000, and that, if entitled to receive anything, those who had worked fewer hours should have received a proportionately smaller amount.
[50]I disagree. In my opinion, the extent to which an amount is related to the number of hours worked is relevant to whether it can be characterized as payable "for the performance of services". However, this is no more than one of the factors to be considered in determining whether a particular contractual promise to pay a specified sum falls within subsection 36(4).
[51]As counsel for Mr. Budhai pointed out in argument, subsection 36(4) does not expressly require that an amount can only be payable "for the performance of services" if an employee has worked a minimum number of hours. Moreover, it is not necessary to read in such a requirement in order to make the scheme efficacious. Indeed, there are good reasons for not doing so.
[52]First, implying such a restriction could cause serious practical problems. For example, what would be the minimum number of hours that an employee must have worked before a "signing bonus" can be characterized as paid "for the performance of services"? Would it vary according to the industry or employer concerned? If a "signing bonus" is available to those who have worked less than the minimum, how closely must the amount of the payment be related to the number of hours worked by an individual employee?
[53]Second, it would be inconsistent with the direction of the Supreme Court of Canada to interpret employment insurance legislation in a liberal manner to read into subsection 36(4) such a vague and possibly variable condition in order to reduce or remove the employment insurance benefits to which an insured person would otherwise be entitled: Abrahams v. Attorney General of Canada, [1983] 1 S.C.R. 2, at page 10; Hills v. Canada (Attorney General), [1988] 1 S.C.R. 513, at pages 536-537.
[54]Counsel for the respondent also submitted that a requirement that an employee must have worked a minimum number of hours should be implied into subsection 36(4) in order to prevent employers and employees from structuring agreements with a view to ensuring that employees in receipt of benefits could claim a bonus without jeopardizing their entitlement under the Act.
[55]This concern, while not necessarily fanciful, is not in my opinion sufficient to overcome the objections outlined above to implying the kind of limitation in subsection 36(4) proposed by the respondent. It was not alleged that the terms of the signing bonus in this case had been structured with an eye to the employment insurance implications.
[56]In any event, since tax planning motives are normally irrelevant to determining the tax consequences of a transaction (see Continental Bank Leasing Corp. v. Canada, [1998] 2 S.C.R. 298, at paragraph 21; Shell Canada Ltd. v. Canada, [1999] 3 S.C.R. 622, at paragraphs 38-39), I would have thought that a provision in a collective agreement should be given its intended effect, even though it was structured to enable employees both to receive a contractual payment and to retain their employment insurance benefits. Counsel for the respondent did not suggest that the letter of agreement under consideration in this case was a sham.
[57]Consequently, the Board did not err in law by proceeding on the assumption that subsection 36(4) does not require an agreement to specify how many hours an employee must have worked in order for the promised amount to be payable "for the performance of services", or otherwise to relate the amount of the bonus to the number of hours worked by individual employees.
| Issue 4 Was the Board of Referees' conclusion that the "signing bonus" was payable "for the performance of services" unreasonable? |
[58]The question that the Umpire ought to have asked himself, but apparently did not, was whether it was unreasonable for the Board to have concluded that the "signing bonus" provided under this particular agreement was payable "for the performance of services" earlier in the year. The unreasonableness standard of review requires a determination of whether the decision under review withstands, in the words of Iacobucci J. in Southam Inc., supra, at paragraph 56, "a somewhat probing examination." Since this Court is in as good a position as the Umpire to answer this question, it should do so, rather than prolong the matter by sending it back.
[59]In concluding that the "signing bonus" was sufficiently related to past work to be payable "for the performance of services", the Board noted that only employees who had worked hours in that year were eligible for the bonus, even if they were laid off or were on maternity or parental leave when the agreement was ratified, regardless of whether they ever resumed active employment. The Board also observed that, because an employee who had not worked in that year, but had voted to ratify the agreement, did not receive the "signing bonus", it was not payable as future consideration.
[60]On the other hand, counsel for the respondent pointed to the fact that the "signing bonus" was not related to the number of hours that an employee had worked in the relevant period, with the result that a person who had worked only one eight-hour shift would receive the same bonus as an employee who had worked full-time from January to mid-October. In this and in some other respects, the "signing bonus" looked very different from the retroactive pay increase contained in the collective agreement.
[61]In addition, counsel argued, the "signing bonus" was not payable "for the performance of services" by GM employees because not all employees who had worked in 1999 were entitled to it, since the letter of agreement excluded employees who had been terminated prior to the ratification of the collective agreement. Finally, he submitted, it was relevant that the letter of agreement called the $1,000 a "signing bonus", not retroactive pay, and that an employee did not become entitled to it until the agreement was ratified.
[62]Counsel for Mr. Budhai responded by saying that it might be invidious for an employer to exclude from a "signing bonus" employees who, because of sickness, pregnancy, parental responsibilities or lay-off, had been able to work only relatively few hours in the relevant period. Further, a promise to pay a lump sum to all employees who had worked hours, and had not been terminated, was easier for the employer to administer than a scheme under which payments were related to the number of hours that individual employees actually worked. Hence, it could not be said that these features of the letter of agreement indicated that the "signing bonus" was not payable "for the performance of services". Finally, he submitted that what the bonus was called was of much less significance than its terms, and that even the "special payments", which clearly were payable "for the performance of services", only became payable when the collective agreement was ratified.
[63]I do not pretend that the question before the Board of Referees was easy. The facts of this case are distinguishable from those in the other signing bonus cases to which we have been referred. In particular, in the cases relied on by the Umpire (in particular, Ostonal, supra; Unemployment Benefits Commission v. United Steelworkers of America (1994), CUB 27135) as authority for the proposition that the "signing bonus" arose from a transaction, the bonus was not restricted to employees who had worked hours in the relevant period. They are therefore of little assistance to the respondent on the facts of this case.
[64]There is considerable force in the positions advanced by both parties to this application. However, the respondent has the burden of establishing that it was unreasonable for the Board to conclude that the "signing bonus" was payable "for the performance of services". That the facts could be found to have fallen on either side of the line is an indication that the decision is not unreasonable.
[65]In my view, for the reasons given by the Board and the arguments advanced on behalf of Mr. Budhai, the respondent has not satisfied me that the Board's conclusion that the "signing bonus" in this case came within subsection 36(4) was unreasonable. The Board's conclusion was not based on, for example, either an invalid inference that it had drawn from the evidence, or inconsistent premises: Southam Inc., supra, at para-graph 56. That another board might have characterized the bonus differently does not demonstrate that this Board's decision was unreasonable.
[66]Counsel for Mr. Budhai observed that all provisions of a collective agreement are to induce its acceptance and are conditional on ratification. I would only add that the terms on which the "signing bonus" in this case was payable suggest that it was intended both to reward employees for work already done, and to induce those employees to vote for ratification of the new collective agreement. The presence of the latter intention does not necessarily remove the "signing bonus" from subsection 36(4), unless, perhaps, it may be inferred from the terms of an agreement and the surrounding circumstances that this was the dominant intention. In my opinion, this is precisely the kind of issue that boards of referees are well suited to decide, subject only to review for unreasonableness.
F. CONCLUSIONS
[67]For these reasons, I would allow the application for judicial review with costs, set aside the Umpire's decision and restore the decision of the Board of Referees.
Linden J.A.: I agree.
Malone J.A.: I agree.