A-684-85
Joseph Granger (Applicant)
Employment and Immigration Commission
(Respondent)
and
Office of Dubé J., Umpire (Tribunal)
INDEXED AS: GRANGER V. CANADA EMPLOYMENT AND IMMI
GRATION COMMISSION
Court of Appeal, Pratte, Hugessen and Lacombe
B.—Montreal, March 13; Ottawa, April 11, 1986.
Judicial review — Applications to review — Pension ben
efits paid directly into RRSP not considered received, there
fore not deducted from labour adjustment benefits paid pursu
ant to s. 17 Labour Adjustment Benefits Act — Applicant
irrevocably electing to receive pension up to age 65, to be paid
directy into RRSP — Commission subsequently changing
interpretation of s. 17 — Pension benefits considered received
even if paid directly into RRSP — Umpire upholding Com
mission's decision — Different interpretation not infringing
rules of natural justice — Complaint turning on application of
law rather than equity — Court limited to ascertaining validi
ty of tribunal's decision based on grounds in s. 28 — Accept
ance of argument of estoppel by representation on ground of
equity would mean Court setting aside Commission's decision,
rather than Umpire's — Court not sitting in equity in connec
tion with remedy sought by applicant — Application dismissed
— Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28
Labour Adjustment Benefits Act, S.C. 1980-81-82-83, c. 89, s.
17.
Estoppel — Commission advising applicant pension benefits
paid directly into RRSP not deductible from labour adjust
ment benefits — Applicant relying on information in electing
manner of receipt of pension — Commission subsequently
changing interpretation of s. 17 Labour Adjustment Benefits
Act, resulting in deduction of pension benefits from labour
adjustment benefits — Applicant submitting estoppel by
representation on ground of equity — Commission not empow
ered to amend law, therefore interpretations of law not having
force of law — Commission without discretion in calculating
benefits and deductions — Crown not bound by Department's
representations if latter contrary to clear and peremptory
provisions of law — Labour Adjustment Benefits Act, S.C.
1980-81-82-83, c. 89, ss. 15, 17, 26.
Unemployment insurance — Labour Adjustment Benefits
Act providing for payment of benefits to employees under 65
who lost employment and received all unemployment insurance
benefits — Commission advising applicant pension benefits
paid directly into RRSP not deductible from labour adjust
ment benefits paid pursuant to s. 17 Act — Applicant irrevoc
ably electing to receive pension up to age 65, to be paid
directly into RRSP — Commission subsequently modifying
interpretation of s. 17 — Pension benefits considered received
therefore deductible even if paid directly into RRSP —
Labour Adjustment Benefits Act pari materia Unemployment
Insurance Act — Principle established in unemployment in
surance decisions to effect incorrect representations made to
claimants by Commission employees not binding on Commis
sion and not authorizing plea of estoppel, followed — Labour
Adjustment Benefits Act, S.C. 1980-81-82-83, c. 89, s. 17
Unemployment Insurance Act, 1971, S.C. 1970-71-72, c. 48.
This is an application to set aside the Umpire's decision. The
Labour Adjustment Benefits Act provides for the payment of
benefits to certain employees under sixty-five who have lost
their employment and received all the unemployment insurance
benefits to which they are entitled. After determining the
amount of benefits, the Commission must make the deductions
specified in subsection 17(1). The applicant took early retire
ment. The Commission advised the applicant that pension
benefits paid directly into an RRSP were not considered to
have been received, so that under section 17 they did not have
to be deducted from the labour adjustment benefits paid.
Relying on this information the applicant irrevocably elected to
receive a pension up to age sixty-five and made the necessary
arrangements for it to be paid directly into an RRSP. The
applicant received labour adjustment benefits for some weeks
without deductions being made for pension benefits which were
being paid into an RRSP. The Commission then informed the
applicant that it had changed its interpretation of section 17.
From that point on the pension benefits paid into an RRSP
would be deducted from labour adjustment benefits. The
Umpire upheld the Commission's decision.
The applicant argued that the initial interpretation that the
Commission had given of section 17 was not unreasonable, and
that the Umpire infringed the rules of natural justice by
allowing the Commission to change this interpretation, on
which the applicant had relied in choosing the manner of
receipt of his pension.
Held (Hugessen J. dissenting), the application should be
dismissed.
Per Pratte J.: The rules of natural justice have nothing to do
with this issue. The applicant's real complaint is that the
Umpire applied the law rather than applying equity. The
Commission has no power to amend the law, and therefore its
interpretations of the law do not themselves have the force of
law. Any commitment which the Commission may give wheth-
er in good or bad faith, to act in a way other than that
prescribed by the law would be void and contrary to public
order.
A judge is bound by the law. He cannot refuse to apply it,
even on grounds of equity. The applicant cited Sous -Ministre
du Revenu du Québec c. Transport Lessard (1976) Ltée and
Reg. v. Inland Revenue Comrs., Ex parte Preston, [1985] A.C.
835. These cases are distinguishable as they were based on the
assumption that the law gave the government a discretion in
choosing the methods that it would use to collect taxes. The
cases held that the government must not exercise this discretion
in a wrongful or manifestly unjust manner. The Commission
did not exercise its discretion improperly because the Commis
sion had no discretion.
Per Lacombe J.: Canadian courts have consistently held, in
fiscal matters, that the Crown is not bound by the representa
tions made by representatives of the Department, if such
representations are contrary to clear and peremptory provisions
of the law.
Arbitrators' awards are also unanimous in applying this
principle to unemployment insurance. As the Labour Adjust
ment Benefits Act is pari materia and provides the same
procedure for appealing decisions of the respondent Commis
sion, there is no necessity to go beyond this well-established line
of authority pursuant to the Unemployment Insurance Act,
1971. The Commission had no discretion in calculating the
benefits, adjustment and deductions. It had no authority to
initially grant an exemption which the Act had not given to the
applicant.
The Court's power to intervene in an application for judicial
review is limited to ascertaining the validity of the tribunal's
decision based on any of the grounds in section 28. In accepting
the applicant's argument of estoppel by representation on
grounds of equity, the Court would be setting aside the decision
of the respondent Commission rather than that of the Umpire,
and the Court is not sitting in equity in connection with the
remedy currently being sought by the applicant.
Per Hugessen J. (dissenting): The application should be
allowed on the basis that the Commission's decision was an
unlawful abuse of power. The courts used to say that however
unfair the results might be Parliament intended that the statute
should always be applied. Recently the English courts have
recognized that in some circumstances, the theory of estoppel
could be applied to bar government from acting in a way which
would otherwise be permissible. The House of Lords has held
that even the exercise of a statutory duty is open to judicial
review if it occurs in circumstances where the application of the
law itself might constitute an abuse of power.
If the Commission were a private person, the doctrine of
estoppel by representation would apply to bar it from changing
its position. As it is a government body, its decision, notwith
standing that it is in accordance with the text of the statute,
constitutes an abuse of power and is subject to judicial review.
The decision is unlawful and the Umpire should not have
revised the decision of the Board of Referees to the effect that
the Commission's first interpretation was correct.
This is not a refusal by a court to apply the law. Because of
the exceptional circumstances, another legal principle, that of
the abuse of power, bars the authorities from applying certain
of its provisions.
If the Umpire's decision were upheld, the circumstances of
the case at bar would give rise to an action in damages against
the Crown.
CASES JUDICIALLY CONSIDERED
APPLIED:
M.N.R. v. Inland Industries Limited, [1974] S.C.R. 514.
DISTINGUISHED:
Sous -Ministre du Revenu du Québec c. Transport Les-
sard (1976) Ltée, indexed at [1985] R.D.F.Q. 322 (C.A.);
Reg. v. Inland Revenue Comrs., Ex parte Preston, [1985]
A.C. 835 (H.L.).
CONSIDERED:
Reg. v. Inland Revenue Comrs., Ex parte National Fed
eration of Self-Employed and Small Businesses Ltd.,
[1982] A.C. 617 (H.L.); Municipal Council of Peterboro
and Victoria v. The Grand Trunk Railway Co. (1859),
18 U.C.Q.B. 220; Rothwell v. The Queen, judgment
dated December 23, 1985, Federal Court, Trial Division,
T-1-83, not yet reported; Sydney J. Brookes, CUB 4909.
REFERRED TO:
R v Secretary of State for the Home Dept, ex p Khan,
[ 1985] 1 All ER 40 (C.A.); Robertson v. Minister of
Pensions, [1948] 2 All E.R. 767 (K.B.D.); Falmouth
Boat Construction, Ltd. v. Howell, [1950] 1 All E.R. 538
(C.A.); Wells v. Minister of Housing and Local Govern
ment, [1967] 2 All E.R. 1041 (C.A.); Lever (Finance) Ltd
v Westminster Corpn, [1970] 3 All ER 496 (C.A.); Re L
(A C) (an infant), [1971] 3 All ER 743 (Ch. D.); H.T.V.
Ltd. v. Price Commission, [1976] I.C.R. 170 (C.A.);
Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd.,
[1964] A.C. 465 (H.L.); Windsor Motors Ltd. v. District
of Powell River (1969), 4 D.L.R. (3d) 155 (B.C.C.A.);
Woon, Bert W. v. Minister of National Revenue, [1951]
Ex.C.R. 18; Stickel v. Minister of National Revenue,
[1972] F.C. 672 (T.D.); rev'd [1973] F.C. 259 (C.A.);
[1975] 2 S.C.R. 233.
COUNSEL:
Georges Campeau for applicant.
Guy LeBlanc and Carole Bureau for respon
dent.
SOLICITORS:
Campeau, Cousineau & Ouellet, Montreal,
for applicant.
Deputy Attorney General of Canada for
respondent.
The following is the English version of the
reasons for judgment rendered by
PRATTE J.: The applicant is asking the Court to
set aside a decision by an Umpire acting pursuant
to section 26 of the Labour Adjustment Benefits
Act (S.C. 1980-81-82-83, c. 89).
To understand the matter one must know some
thing of the Labour Adjustment Benefits Act. It
provides for the payment of "Labour adjustment
benefit" to certain employees under sixty-five
years of age who have lost their employment and
received all the unemployment insurance benefits
to which they are entitled. These benefits are paid
by the respondent Commission, which in each case
determines the amount in accordance with sections
15 et seq. However, the Commission must make
the deductions specified in subsection 17(1) from
the amount so determined:
17. (1) There shall be deducted from the weekly amount of
labour adjustment benefit payable to a qualified employee an
amount equal to
(b) one dollar for each dollar received that week by the
employee as
(i) benefits under an employer pension plan earned by the
employee as a result of any office or employment,
Decisions made by the Commission under this
Act may be appealed to a board of referees and an
umpire like decisions made pursuant to the Unem
ployment Insurance Act, 1971 [S.C. 1970-71-72,
c. 48].
The applicant had worked for Celanese Canada
Inc. for a number of years when he left his job in
February 1983. The pension plan covering him
entitled him to receive, at his option, a lump sum
to be paid to him immediately after his departure,
a pension for his lifetime or a larger pension up to
age sixty-five. Before making his decision (which
under the terms of the pension plan would be
irrevocable), the applicant consulted the respon
dent Commission. He knew he was entitled to
benefits under the Labour Adjustment Benefits
Act; he wanted to know whether the amounts he
would be receiving under his employer's pension
plan would be deducted from the amount of his
labour adjustment benefits if these amounts,
instead of being paid to him in the ordinary way,
were paid directly into his Registered Retirement
Savings Plan (RRSP) account. He was told that
the Commission considered that pension benefits
paid directly into an RRSP had not been received
by the employee so long as they continued to be
invested in this way; the Commission accordingly
concluded that, under section 17, pension benefits
paid into an RRSP did not have to be deducted
from the amount of labour adjustment benefits.
Relying on this information, the applicant chose to
receive a pension up to age sixty-five and made the
necessary arrangements for it to be paid directly
into an RRSP.
On February 4, 1984 the applicant became en
titled to receive labour adjustment benefits. The
Commission paid them to him for some weeks
without making any deduction for his pension
benefits which were being paid into RRSP. On
April 13, 1984, however, the Commission wrote
telling him that it had changed its interpretation of
section 17 and that it now considered that pension
benefits had been received by a claimant even if
they were paid directly into his RRSP account.
The Commission had therefore decided that from
now on it would deduct from the labour adjust
ment benefits payable to the applicant the pension
benefits which were paid into his RRSP by his
former employer's pension plan. The applicant
appealed this decision to a board of referees. The
Board found in his favour and decided that, under
section 17, pension benefit had not been received
by a claimant if it was paid directly into his RRSP
account. The Commission appealed to the Umpire,
who reversed the Board of Referees and restored
the Commission's decision. This decision by the
Umpire is the subject of the appeal at bar.
Counsel for the applicant did not dispute that
the interpretation given to section 17 by the
Umpire was correct. He admitted that, under sec-
tion 17, the Commission must deduct from the
amount of the labour adjustment benefits due the
applicant the amount of the pension benefits paid
into his RRSP account. He simply argued that the
different interpretation that the Commission had
initially given of section 17 was not unreasonable,
and that in the circumstances the Umpire had
infringed the rules of natural justice by allowing
the Commission to change this interpretation, on
which the applicant had relied in choosing to
receive a pension that would be paid to him up to
age sixty-five rather than for his lifetime. In sup
port of this argument he cited the decision of the
Quebec Court of Appeal in Sous -Ministre du
Revenu du Québec c. Transport Lessard (1976)
Ltée.'
That argument appears to me without merit.
To begin with, the rules of natural justice have
nothing to do with this issue. The phrase "rules of
natural justice" means the fundamental rules of
procedure which all who are required to make
quasi-judicial, and in many cases administrative,
' In that case, heard on August 28, 1985, [indexed at [1985]
R.D.F.Q. 322 (C.A.)] the Quebec Minister of Revenue was
claiming sales tax from a taxpayer who had purchased the
assets of a company. Before making the purchase, the taxpayer
had contacted a senior officer of the Department of Revenue
for information, and been told that the proposed purchase
would not be subject to the payment of any tax because it was a
wholesale transaction which was not regarded as a retail sale
within the meaning of the Act. The taxpayer made the pur
chase in reliance on this interpretation. Shortly thereafter, the
Minister of Revenue altered his interpretation of the Act and
claimed the tax from the taxpayer. The Court of Appeal
dismissed the claim: after finding that the first interpretation of
the Act given by the Minister, though it may have been wrong,
was not unreasonable, the Court held that in the circumstances
the Minister could not claim the tax from the taxpayer without
infringing the rules of natural justice. In arriving at this
equitable conclusion, the Court relied on a recent judgment of
the British Court of Appeal concerning the exercise of a purely
discretionary power, R v Secretary of State for the Home Dept,
ex p Khan, [1985] 1 All ER 40. It might also have relied on the
even more recent decision of the House of Lords in Reg. v.
Inland Revenue Comrs., Ex parte Preston, [1985] A.C. 835. In
that case the House of Lords held, first, that the decision of the
Inland Revenue Commissioners to claim a tax from a taxpayer
could be reviewed and set aside by the courts if there had been
an abuse of power, and second, that there was an abuse of
power by the Commissioners when their earlier actions were
such that they made the decision to recover the tax a manifest
injustice.
decisions must observe. The applicant's real com
plaint against the Umpire is not that he infringed
the rules of natural justice, simply that he did not
apply equity rather than the law. It is beyond
question that the Commission and its representa
tives have no power to amend the law, and that
therefore the interpretations which they may give
of that law do not themselves have the force of
law. It is equally certain that any commitment
which the Commission or its representatives may
give, whether in good or bad faith, to act in a way
other than that prescribed by the law would be
absolutely void and contrary to public order. The
applicant's argument therefore comes down to this:
the Umpire erred because, so as to avoid causing
injury to the applicant, he should have refused to
apply the law.
Once the applicant's argument is seen in its true
light it is clear that it must be dismissed. A judge
is bound by the law. He cannot refuse to apply it,
even on grounds of equity. Of course, this funda
mental truth is difficult to reconcile with the judg
ment of the Quebec Court of Appeal in Transport
Lessard and the observations of the House of
Lords in Ex parte Preston. 2 That is why I am
inclined to think that those two judgments are not
beyond criticism; however, I do not have to decide
the point because, in my opinion, they have no
application in the case at bar. In those two cases it
was assumed that, in imposing on the government
an obligation to collect taxes, the law had given it
some discretion in choosing the methods that it
would use in doing so.' All that the Court of
Appeal and the House of Lords said was that the
government must not exercise this discretion in a
wrongful or manifestly unjust manner.
2 See preceding note.
3 I Reg. v. Inland Revenue Comrs., Ex parte National
Federation of Self-Employed and Small Businesses Ltd.,
[1982] A.C. 617 (H.L.), at p. 636, Lord Diplock wrote regard
ing the Inland Revenue Commissioners:
As respects the statutory powers and duties of the Board of
Inland Revenue, these are described and dealt with in several of
your Lordships' speeches. It would be wearisome if I were to
repeat what already has been, and later will be, better said by
(Continued on next page)
In the case at bar the applicant did not argue
that the Commission had exercised its discretion
improperly, because here the law gives the Com
mission no discretion: it simply imposes on it a
duty to calculate and pay the benefits in accord
ance with law.
In actual fact, the applicant would like to
receive higher labour adjustment benefits than
those to which he is entitled under the law in order
to compensate himself for the damage resulting
from the incorrect representations made to him by
the Commission. It is possible, though the record
does not definitely establish this, that the applicant
may have suffered such damage: I think it is clear,
however, that neither the Board of Referees nor
the Umpire has jurisdiction to order compensation
for such damage.
I would dismiss the application.
* * *
The following are the reasons for judgment
rendered in English by
HUGESSEN J. (dissenting): An individual
applies to the authorities responsible for adminis
tering a law whose reach is social in order to
determine what effect it will have upon him. They
give him incorrect information. Based on that
information, he takes an irrevocable step. Subse
quently the authorities change their mind and seek
to use against the individual the very action they
had themselves in large measure caused him to
take. Will the law permit this? In my view, the
answer must be no.
(Continued from previous page)
others. All that I need say here is that the board are charged by
statute with the care, management and collection on behalf of
the Crown of income tax, corporation tax and capital gains tax.
In the exercise of these functions the board have a wide
managerial discretion as to the best means of obtaining for the
national exchequer from the taxes committed to their charge,
the highest net return that is practicable having regard to the
staff available to them and the cost of collection.
In the same case, Lord Scarman said of the Commissioners (at
pp. 650-651):
The Taxes Management Act 1970 places income tax under
their care and management and for that purpose confers upon
them and inspectors of tax very considerable discretion in the
exercise of their powers.
The applicant had been employed by Celanese
Canada Inc. for well over thirty-five years. In 1982
the company (and the textile industry in general)
was going through a difficult period. So as to avoid
lay-offs it encouraged its most senior employees,
such as the applicant, to take early retirement. The
applicant accepted his employer's offer and left his
employment on February 4, 1983. He received
unemployment insurance benefits during the year
following his departure. At the end of that time,
that is as of February 4, 1984, he became eligible
for benefits pursuant to the Labour Adjustment
Benefits Act (S.C. 1980-81-82-83, c. 89). He was
also entitled to receive certain benefits from his
employer under the latter's pension plan. Those
benefits could, depending on an irrevocable choice
made by the applicant, take the form of a life
annuity, of a larger annuity paid to him until age
sixty-five, or of a lump sum. Quite naturally the
applicant wanted to know what impact these ben
efits might have on his adjustment benefits, and
whether that impact would differ according to the
type of payment chosen. Accordingly, before the
end of his unemployment insurance year and the
beginning of his period of eligibility for adjustment
benefits, he contacted the Canada Employment
and Immigration Commission, the body respon
sible for administering the Act.
The relevant provisions then in effect were sub-
paragraph 17(1)(b)(i) and subsection (3) [as am.
by S.C. 1980-81-82-83, c. 169, s. 7].
17. (1) There shall be deducted from the weekly amount of
labour adjustment benefit payable to a qualified employee an
amount equal to
(b) one dollar for each dollar received that week by the
employee as
(i) benefits under an employer pension plan earned by the
employee as a result of any office or employment,
(3) A qualified employee to whom labour adjustment ben
efits are being paid shall submit to the Commission a report, in
such form and manner and at such times as the Commission
may direct, setting out the amounts received by the employee in
the period to which the report relates as remuneration, income,
benefits, pension or allowance described in paragraph (1)(a) or
(b) and such other information as the Commission may require.
The Commission replied to the applicant and
gave him its interpretation of the legislation. This
interpretation was contained in a document dated
October 21, 1982, from the Director, Benefit Pro
grams, to District Directors and CEC Directors:
[TRANSLATION] (3) If the employee converted his employer
pension plan into a Registered Retirement Savings Plan
(RRSP), would his LABs be affected?
It should be noted that section 17 of the Act speaks of money
"received that week" and, in the French version, "un dollar Ã
chaque dollar que reçoit cet employé". Accordingly, the time
when the conversion occurs is not really important for the
purposes of the LAB Act. Rather, what must be considered is
the time when the benefits are or were paid. Thus, if the
payment is made before the person receives LABs, the amount
of the latter will not be affected. On the other hand, the total
amount will have to be recovered from subsequent LABs only if
the employee receives it at the same time as he receives LABs.
However, if at the employee's request the employer pays the
pension fund directly into a Registered Retirement Savings
Plan, at whatever time, this amount, as it is not received by the
employee, is not remuneration for the purpose of subsection
17(1)(b) of the Act. [Emphasis added.]
On the strength of this interpretation, the appli
cant acted. He filed his application for adjustment
benefits on November 22, 1983, and opted to
receive a monthly annuity from his employer's
pension plan payable from January 1984 until age
sixty-five (1989) and asked that the monthly pay
ments of this annuity, in the amount of $452.09,
be made directly into a Registered Retirement
Savings Plan (RRSP). Commencing February 4,
1984, he received, as planned, the full amount of
the adjustment benefits without any deduction for
the amount paid into his RRSP.
Shortly after, the Commission changed its mind.
In a directive dated March 23, 1984, the essence
of which was communicated to the applicant on
April 13, 1984, we find:
Labour Adjustment Benefits—Retirement Pension Paid Into a
Registered Retirement Saving Plan by an Employer.
The purpose of this memorandum is to inform you of a decision
taken with respect to the above-mentioned retirement pension
paid while the employee is in receipt of labour adjustment
benefits.
Sometime in the past, we had advised certain regions that a
retirement pension paid into a RRSP was not earnings for the
purpose of subparagraph 17(1)(b)(i) of the LAB Act when it
was paid directly by the employer.
At that time, we were of the opinion that such a retirement
pension was not received by the individual. Our Legal Counsel
does not agree with this interpretation. It is felt that the
individual is in fact in receipt of the pension even though it is
put into the plan and furthermore he/she exercises a control of
its use as he/she can at any time decide to retrieve his/her
investment. Due to this legal opinion, we are obliged to change
our previous directives.
For uniformity sake (sic), it was decided to notify all regions of
this modification. Therefore, as soon as the CEC's are made
aware of this new decision, they must immediately start deduct
ing from LAB all these future pension payments made into a
RRSP and this, in accordance with sub-paragraph 17(1)(b)(i)
of the LAB Act. However, in these cases, no overpayments
should be established for a period proceeding (sic) the applica
tion of this directive by the CEC's.
The applicant appealed the decision of the Com
mission applying this new policy to him. The
Board of Referees ruled in his favour, and that the
Commission's first interpretation was correct. This
decision by the Board of Referees was reversed by
the Umpire, who considered that only the second
interpretation of section 17 was correct: hence the
application to this Court pursuant to section 28 of
the Federal Court Act [R.S.C. 1970 (2nd Supp.),
c. 10].
It is common ground that the first interpretation
provided by the Commission is not supported by
the wording of the statute itself and that only the
second is valid. Accordingly, if the only question
before the Umpire was as to the meaning to be
given to section 17, he committed no error of law.
The Commission's position is, then, quite simple.
It frankly admits that its first interpretation was
wrong. It does not dispute the fact it gave this
interpretation to the applicant and others, and that
the applicant acted on the basis of such informa
tion. As this information was incorrect, the acts
which the applicant thought were to his advantage
were really to his detriment. If he had obtained
correct information at the proper time, he could
have made a different and a more advantageous
choice. However, it has not only the power but the
duty to apply the text of the statute in all its rigour
to the applicant's case: dura lex, sed lex—so much
the worse for him!
In my view, this attitude is not acceptable.
There may have been a time when the courts could
close their eyes to reality and say that, however
unfair the results might be, Parliament intended
that the satute should always be applied. The
individual relied at his peril on the interpretation
of the legislation given by the authorities.
... the doctrine of estoppel can never interfere with the proper
carrying out of the provisions of acts of parliament.
(Municipal Council of Peterboro and Victoria v.
The Grand Trunk Railway Co. (1859), 18
U.C.Q.B. 220, at page 224.)
Fortunately, this principle no longer applies. In
a series of judgments, mainly but not exclusively
by Lord Denning, the English courts have recog
nized that, in some circumstances, the theory of
estoppel could be applied to bar government from
acting in a way which would otherwise be permis
sible. (See, as to this: Robertson v. Minister of
Pensions, [1948] 2 All E.R. 767 (K.B.D.); Fal-
mouth Boat Construction, Ltd. v. Howell, [ 1950]
1 All E.R. 538 (C.A.); Wells v. Minister of Hous
ing and Local Government, [1967] 2 All E.R.
1041 (C.A.); Lever (Finance) Ltd v Westminster
Corpn, [1970] 3 All ER 496 (C.A.); Re L (A C)
(an infant), [1971] 3 All ER 743 (Ch. D.); H.T.V.
Ltd. v. Price Commission, [1976] I.C.R. 170
(C.A.).)
It is true that none of these decisions involved an
estoppel the effect of which was to relieve a public
body of a duty imposed on it by law.
Recently however, in a leading case, the British
House of Lords has held that even the exercise of a
statutory duty is open to judicial review if it occurs
in circumstances where the application of the law
itself might constitute an abuse of power.
In In re Preston, [1985] A.C. 835 (H.L.), a
taxpayer argued that, as a consequence of discus
sions with the Treasury, he had withdrawn certain
deductions claimed in his tax return on condition
that no further enquiries be made concerning share
sale transactions mentioned in the same return.
Several years later, when the taxpayer could no
longer claim the deductions he had thus given up,
the authorities started reassessment proceedings
relating to the said transactions. The taxpayer
filed an application for judicial review on the
ground that the action of the authorities was
unfair. In a unanimous judgment the House of
Lords held that, even when done in the perform
ance of a duty or the exercise of a power imposed
or conferred by law, official action might be illegal
as constituting an abuse. Speaking for all his
brethren, Lord Templeman said [at page 864]:
... a taxpayer cannot complain of unfairness, merely because
the commissioners decide to perform their statutory duties
including their duties under section 460 to make an assessment
and to enforce a liability to tax. The commissioners may decide
to abstain from exercising their powers and performing their
duties on grounds of unfairness, but the commissioners them
selves must bear in mind that their primary duty is to collect,
not to forgive, taxes. And if the commissioners decide to
proceed, the court cannot in the absence of exceptional circum
stances decide to be unfair that which the commissioners by
taking action against the taxpayer have determined to be fair.
The commissioners possess unique knowledge of fiscal practices
and policy. The commissioners are inhibited from presenting
full reasons to the court for their decisions because of the duty
of confidentiality owed by the commissioners to each and every
taxpayer.
The court can only intervene by judicial review to direct the
commissioners to abstain from performing their statutory
duties or from exercising their statutory powers if the court is
satisfied that "the unfairness" of which the applicant complains
renders the insistence by the commissioners on performing their
duties or exercising their powers an abuse of power by the
commissioners. [Emphasis added.]
The learned jurist then cited certain of the cases
which I have mentioned above and went on [at
pages 866-867]:
In the present case, the appellant does not allege that the
commissioners invoked section 460 for improper purposes or
motives or that the commissioners misconstrued their powers
and duties. However, the H.T.V. case and the authorities there
cited suggest that the commissioners are guilty of "unfairness"
amounting to an abuse of power if by taking action under
section 460 their conduct would, in the case of an authority
other than Crown authority, entitle the appellant to an injunc
tion or damages based on breach of contract or estoppel by
representation. In principle I see no reason why the appellant
should not be entitled to judicial review of a decision taken by
the commissioners if that decision is unfair to the appellant
because the conduct of the commissioners is equivalent to a
breach of contract or a breach of representation. Such a
decision falls within the ambit of an abuse of power for which
in the present case judicial review is the sole remedy and an
appropriate remedy. There may be cases in which conduct
which savours of breach of conduct or breach of representation
does not constitute an abuse of power; there may be circum
stances in which the court in its discretion might not grant
relief by judicial review notwithstanding conduct which savours
of breach of contract or breach of representation. In the present
case, however, I consider that the appellant is entitled to relief
by way of judicial review for "unfairness" amounting to abuse
of power if the commissioners have been guilty of conduct
equivalent to a breach of contract or breach of representations
on their part.
The sole question which now falls to be determined is wheth
er upon the true construction of the correspondence which
passed between the appellant and Mr. Thomas in 1978, the
commissioners, acting by Mr. Thomas, purported to contract or
purported to represent that they would not thereafter re-open
the tax assessments of the appellant for the years 1974-75 and
1975-76 if he withdrew his claims for interest relief and capital
loss for those years. [Emphasis added.]
Let us now examine how the principles stated in
Preston apply to the case at bar. The applicant
was entitled to apply to the Commission, and the
latter had a duty to give him information to the
best of its knowledge. In reliance on the informa
tion so obtained, he took irrevocable action to his
detriment. If the Commission were a private
person, the doctrine of estoppel by representation
would apply to bar it from changing its position
and now deciding to deduct from the adjustment
benefits payable to the applicant the amounts paid
into his RRSP. As it is a government body, its
decision, notwithstanding that it is in accordance
with the text of the statute, constitutes an abuse of
power and is subject to judicial review. The deci
sion is therefore unlawful and the Umpire should
not have revised the decision of the Board of
Referees.
Two comments before closing.
1. This is not a refusal by a court to apply the
law: on the contrary. The law is in effect and
applies to everyone. In particular it applies in all
its rigour to persons who, though they have
obtained incorrect information from the Commis
sion, have not as a result altered their position to
their detriment. In the applicant's case, however,
because of the exceptional circumstances another
legal principal, that of the abuse of power, bars the
authorities from applying certain of its provisions
to him.
2. In my opinion, if the Umpire's decision were
upheld, the circumstances of the case at bar would
give rise to an action in damages against the
Crown. (See Hedley Byrne & Co. Ltd. v. Heller &
Partners Ltd., [1964] A.C. 465 (H.L.), and Wind-
sor Motors Ltd. v. District of Powell River (1969),
4 D.L.R. (3d) 155 (B.C.C.A.). 4 ) I know of no
better way of compensating the damage the appli
cant may sustain than preventing it from happen
ing, and that is what I propose to do.
For these reasons, I would allow the application,
set aside the Umpire's decision and direct that the
case be referred back to him to be decided on the
basis that the Commission's decision was an
unlawful abuse of power.
* * *
The following is the English version of the
reasons for judgment rendered by
LACOMBE J.: I concur with the reasons of Pratte
J. for dismissing the appeal, and would add the
following few observations.
As regards the judgments of the Quebec Court
of Appeal and the House of Lords in Transport
Lessard and Ex parte Preston, I need only say that
those judgments were rendered in a different legis
lative context from that of the Labour Adjustment
Benefits Act (S.C. 1980-81-82-83, c. 89), which
makes them inapplicable to the facts of the case at
bar.
Both in Ex parte Preston and in its earlier
judgment, Reg. v. Inland Revenue Comrs., Ex
parte National Federation of Self-Employed and
Small Businesses Ltd., [1982] A.C. 617, the
A recent decision of the Trial Division in the case of
Rothwell v. The Queen, dated December 23, 1985, file No.
T-1-83, [not yet reported] provides another example. The plain
tiff had retired prematurely from the Public Service. Based on
incorrect information obtained from the authorities, he delayed
exercising his option as to the manner of payment of his
pension. Strayer J. granted him damages on the basis of
"negligent misrepresentation".
House of Lords indicated that the Inland Revenue
Commissioners have a statutory discretion in
administering fiscal legislation, which National
Revenue Department representatives in Canada do
not have.
In Canadian tax law, the courts have consistent
ly held that the Crown is not bound by the
representations made and interpretations given to
taxpayers by authorized representatives of the
Department, if such representations and interpre
tations are contrary to clear and peremptory provi
sions of the law: Woon, Bert W. v. Minister of
National Revenue, [1951] Ex.C.R. 18, Stickel v.
Minister of National Revenue, [1972] F.C. 672
(T.D.), 5 M.N.R. v. Inland Industries Limited,
[1974] S.C.R. 514. The decision of the Supreme
Court of Canada in the last case is still binding
and must be followed by this Court until the
Supreme Court itself has decided to overrule it.
The case concerned whether it was possible to
deduct certain contributions made to pension plans
which had been given the Minister's prior approv
al. The Minister later disallowed the deductions
and assessed the taxpayer accordingly. After
deciding that the pension plans did not meet the
requirements of the Income Tax Act [R.S.C. 1952,
c. 148], Pigeon J. disposed of the argument of
estoppel by saying, at page 523:
However, it seems clear to me that the Minister cannot be
bound by an approval given when the conditions prescribed by
the law were not met.
The arbitrators' awards are also unanimous in
applying this principle to unemployment insur
ance. They have held that incorrect information
which may be given by employees of the Employ
ment and Immigration Commission to claimants
on interpretation of the Act, and representations
which they may make to claimants regarding their
particular situations, which later turn out to be
against their interests, are not binding on the
Commission and do not authorize the claimants to
raise the plea of estoppel against it. The remedy of
a claimant who has been injured in this manner is
an action in damages, which he may bring directly
5 Reversed by this Court and the Supreme Court of Canada
on other grounds: [1973] F.C. 259 (C.A.); [1975] 2 S.C.R.
233.
in the ordinary courts of law, not through the
roundabout way of judicial review.
For example, in Sydney J. Brooks, CUB 4909,
Cattanach J., sitting as an Umpire, wrote:
This does not alter the bare and unadulterated fact that the
claimant is not qualified for unemployment insurance benefits.
His remedy, if it can be established, is to institute an action
in the Courts of the land against the officer of the Commission
who advised him as he did and against the Commission, if the
officer was acting within the scope of his employment, for
damages based on misrepresentation. His remedy does not lie in
an appeal to an umpire from the decision of the Board of
Referees.
As the Labour Adjustment Benefits Act is pari
materia, and provides the same procedure for
appealing decisions of the respondent Commission
to a board of referees, and thence to an umpire,
there is no necessity to go beyond this well-estab
lished line of authority pursuant to the Unemploy
ment Insurance Act, 1971.
In the case at bar, the respondent Commission
has no discretion in calculating the initial amount
of labour adjustment benefits, their payment to
claimants, their annual adjustment and the deduc
tions that must be made from them. It must of
necessity comply with the peremptory provisions of
sections 14, 15, 16 and 17 of the Labour Adjust
ment Benefits Act. This being so, it had no author
ity to initially grant the applicant an exemption
which the Act had not given him, through a misin
terpretation of subparagraph 17(1)(b)(i) and sub
section 17(3) of the Act.
In so doing, it may have caused an injury to the
applicant, as it was in reliance on this misinterpre
tation of the Act that he opted irrevocably, among
the other alternatives available to him at the time,
for the one which later turned out to be the least
advantageous. In its decision of April 13, 1984 the
respondent told him that it had changed its inter
pretation and that from then on it would be
deducting from his labour adjustment benefits the
monthly payments of his retirement pension which
his employer was paying to him directly into his
Registered Retirement Savings Plan (RRSP).
The applicant cited subsections 26(2) and (3) of
the Labour Adjustment Benefits Act as his basis
for challenging the decision of the respondent and
its new interpretation of the Act. The Board of
Referees ruled in his favour, finding essentially
that the respondent's first interpretation was in
keeping with the Act, while the Umpire came to a
diametrically opposite conclusion on the same
point.
At the hearing in this Court, counsel for the
applicant agreed that as a matter of analysis and
interpretation of the legislation, the Umpire's deci
sion was in law impeccable. By his application to
set aside made pursuant to section 28 of the Fed
eral Court Act, the applicant is asking this Court
to set it aside nonetheless on the ground that the
respondent Commission is now estopped from rais
ing its second interpretation of the Act against
him, because it is to his detriment.
The section 28 remedy cannot be used to effec
tuate a kind of sui generis compensation between,
on the one hand, the damage which the respondent
allegedly caused the applicant by implementing its
decision of April 13, 1984, and on the other, the
deductions which it had a legal duty to make from
the labour adjustment benefits pursuant to sub-
paragraph 17(1)(b)(i) of the Labour Adjustment
Benefits Act, when that provision is correctly inter
preted, as it was in the Umpire's decision. The
power of this Court to intervene in an application
for judicial review is limited to ascertaining the
validity of the decision of the tribunal in question
based on any of the grounds mentioned in section
28. Once it is certain, as in the case at bar, that the
Umpire's decision is unassailable in law, this Court
must uphold it. For it to allow the applicant's
application for review, it would have to find that
the Umpire should have prevented the respondent
Commission from applying the law in this case,
even though his decision is entirely correct in law.
In accepting the applicant's argument of estoppel
by representation on grounds of equity, the Court
would thereby be setting aside the decision of the
respondent Commission rather than that of the
Umpire, and the Court is not sitting in equity in
connection with the remedy currently being sought
by the applicant.
If necessary the applicant might, by a more
appropriate procedure, argue that by its decision
of April 13, 1984 the respondent Commission was
seeking to apply the law in a manner which in his
case was unfair, inequitable and indeed so wrong
ful as to constitute an abuse of power. Further
more, the evidence of the injury sustained is rather
slim and its deficiencies would have to be made up
by extrapolation and inferences which might be at
least partly conjectural. As it stands at present, the
record does not disclose the exact extent of the
damage suffered by the applicant. Clearly, there
fore, it is in any case premature to order compen
sation at this stage.
I would dismiss the applicant's application.
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.