Federal Court of Appeal Decisions

Date: 20030218

Docket: A-24-01

Neutral citation: 2003 FCA 88

CORAM:        STONE J.A.

ROTHSTEIN J.A.

PELLETIER J.A.

BETWEEN:

                                                          THOMAS ALLAN SHEBIB

                                                                                                                                                       Applicant

                                                                                 and

                                            THE ATTORNEY GENERAL OF CANADA

                                                                                                                                                   Respondent

                                       Heard at Halifax, Nova Scotia, on November 7, 2002.

                                 Judgment delivered at Ottawa, Ontario, on February 18, 2003.

REASONS FOR JUDGMENT BY:                                                                              ROTHSTEIN J.A.

CONCURRED IN BY:                                                                                                             STONE J.A.

                                                                                                                                           PELLETIER J.A.

Date: 20030218

Docket: A-24-01

Neutral citation: 2003 FCA 88

CORAM:        STONE J.A.

ROTHSTEIN J.A.

PELLETIER J.A.

BETWEEN:

                                                          THOMAS ALLAN SHEBIB

                                                                                                                                                       Applicant

                                                                                 and

                                            THE ATTORNEY GENERAL OF CANADA

                                                                                                                                                   Respondent

                                                        REASONS FOR JUDGMENT

ROTHSTEIN J.A.

ISSUES

[1]                 This is an application for judicial review of a decision of an Umpire under the Employment Insurance Act, S.C. 1996, c. 23. The Umpire dismissed the applicant's appeal.

There are two issues:

1.         does the allocation of the applicant's severance payment extend his qualifying period; and

2.         if it does not, has the applicant established that he had good cause for his delay in claiming employment insurance benefits.

FACTS

[2]                 The applicant is an engineer. His employment was terminated on June 5, 1998. He received a severance payment of $70,000, the equivalent of 11 months' earnings for allocation purposes under the Employment Insurance Act. He did not file a claim for employment insurance benefits until April 9, 1999.

[3]                 At the relevant time, the applicant required 665 hours in the 52 week qualifying period in order to establish a claim for benefits. Based upon the date when he filed his claim for benefits, April 9, 1999, the Commission found that the applicant only had 444 hours of insurable employment during the qualifying period. On April 30, 1999, the Commission denied the applicant's claim for benefits because he did not have sufficient hours of insurable employment.

[4]                 The applicant filed a request with the Commission that his claim be antedated to June 8, 1998. If it was antedated, the 52 week qualifying period would have included the 52 weeks before he was terminated and he would have had approximately 2,700 hours of insurable employment in the qualifying period. He explained his delay on the basis that he could not collect employment insurance benefits until the expiry of 11 months following his termination

due to the allocation of his severance payment and further, he expected to be employed within that time period.

[5]                 By letter dated May 12, 1999, the Commission informed the applicant that his claim for benefits would not be antedated because he did not show that he had good cause for delay in filing his claim for benefits.

[6]                 The applicant's appeal to the Board of Referees was dismissed, as was his subsequent appeal to the Umpire.

ANALYSIS

Issue 1: Does the allocation of the applicant's severance payment extend his qualifying period?

[7]                 Subsection 8(1) of the Act defines the qualifying period as the 52 week period immediately before the beginning of a benefit period:

[8]                 Subsection 10(1) of the Act provides that a benefit period begins on the later of the Sunday of the week in which the interruption of earnings occurs and the Sunday of the week in which the initial claim for benefits is made. Subsection 10(1) provides:

Therefore, because the applicant did not apply for benefits until April 9, 1999, his benefit period did not begin until the Sunday of the week of April 9, 1999. His qualifying period was calculated as the 52 week period immediately before the Sunday of the week of April 9, 1999, during which period he only had 444 hours of insurable employment.

[9]                 Relying upon subsection 8(3) of the Act, the applicant argues that his qualifying period should be extended. He says that the allocation of his severance payments, namely the 11 month period following his termination, should be taken into account for purposes of extending his qualifying period. Subsection 8(3) of the Act provides:

[10]            If the applicant is correct, his qualifying period would be 52 weeks plus 11 months (say 44 weeks) for a total of 96 weeks prior to the Sunday of the week of April 9, 1999. That would have the effect of including in his qualifying period the 52 weeks prior to June 5, 1998, when he was actually working. As indicated above, during that 52 week period, the applicant had approximately 2,700 hours of insurable employment and would clearly qualify for employment insurance benefits.

[11]            In order to determine if subsection 8(3) avails to the benefit of the applicant, it is necessary to have regard to the Employment Insurance Regulations, SOR/96-332. Regulation 36(9) provides that all earnings paid or payable to a claimant by reason of a lay-off or separation, including severance payments, should be allocated to the number of weeks that begins with the week of the lay-off or separation. Regulation 36(9) provides:

However, regulation 35(6) provides that the earnings referred to in regulation 36(9) are not earnings which are to be taken into account for purposes of determining an interruption of earnings. Regulation 35(6) provides:

Regulation 14(1) defines when an interruption of earnings takes place:

[12]            Therefore, by reason of regulation 35(6), an interruption of earnings did occur at the time of the applicant's termination. The applicant was laid off, he performed no services, and the 11 months of severance payments that the applicant received were not earnings for the purposes of regulation 14(1). The allocation of the applicant's severance payment did not prevent the establishment of an interruption of earnings at the time of termination. According to these regulatory provisions, there is no basis for an extension of his qualifying period under subsection 8(3) of the Act.

[13]            The applicant alternatively argues that regulation 35(6) conflicts with subsection 8(3) of the Act and is, therefore, ultra vires.

[14]            Section 54 of the Act grants the Commission the authority to make regulations. In particular, paragraphs 54(s) and (u) of the Act read:

[15]            Subsection 2(1) of the Act anticipates that regulations will be made pursuant to paragraph 54(u):

[16]            The Commission, by regulation 35(6), excluded earnings referred to in regulation 36(9), including severance payments, from the definition of earnings for the purposes of finding an interruption of earnings under regulation 14(1). By virtue of paragraph 54(u), the Commission had the requisite power to make regulation 35(6).

[17]            Nonetheless, the applicant argues that regulation 35(6) is ultra vires because it, in effect, reads subsection 8(3) out of the Act. I agree with the applicant that the effect of regulation 35(6) essentially renders subsection 8(3) of the Act inoperable. The earnings referred to in subsection 8(3) are included in the earnings referred to in regulation 36(9). I say "essentially ... inoperable", because severance payments referred to in regulation 36(11) may still be considered in determining when an interruption of earnings occurs, although regulation 36(11) appears to contemplate an extremely narrow and infrequent circumstance.

[18]            As indicated, the definition of interruption of earnings in subsection 2(1) of the Act provides that the timing and circumstances of an interruption of earnings is to be determined by the regulations. Paragrpah 54(u) of the Act confers that regulation-making authority on the Commission. To find regulation 35(6) ultra vires is to read the definition in subsection 2(1) and the regulation-making authority in paragraph 54(u) as containing limitations not included in their words. That is because a finding of ultra vires would have the effect of preventing the making of a regulation that excludes allocated earnings payable by reason of a lay-off or separation from affecting the time of an interruption of earnings. Such a limitation is not found in the definition in subsection 2(1). Nor is it found in the regulation-making authority in paragraph 54(u).

[19]            The conflict to be resolved, therefore, is not between subsection 8(3) of the Act and regulation 35(6), but between subsection 8(3) of the Act on the one hand and the definition of interruption of earnings in subsection 2(1) and the regulation-making authority in paragraph 54(u) of the Act on the other.

[20]            I start with the presumption of coherence; the different provisions of the statute are intended to work together logically and rationally; and an enactment is presumed not to contain contradictions and inconsistencies. In R. Sullivan, Sullivan and Driedger on the Construction of Statutes, 4^th ed. (Toronto: Butterworths, 2002), Sullivan states at page 262:

     It is presumed that the provisions of legislation are meant to work together, both logically and teleologically, as parts of a functioning whole. The parts are presumed to fit together logically to form a rational, internally consistent framework; and because the framework has a purpose, the parts are also presumed to work together dynamically, each contributing something toward accomplishing the intended goal.

     The presumption of coherence is also expressed as a presumption against internal conflict. It is presumed that the body of legislation enacted by a legislature does not contain contradictions or inconsistencies, that each provision is capable of operating without coming into conflict with any other.

In support of the presumption of coherence, Sullivan cites a number of Supreme Court of Canada decisions, e.g. Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3 at 38, Murphy v. Welsh; Stoddard v. Watson, [1993] 2 S.C.R. 1069 at 1079.

[21]            The purpose of subsection 8(3) of the Act is to create a safeguard for claimants to ensure those who are in receipt of earnings paid because of a complete severance are able to include in their qualifying period the hours they worked in the 52 weeks prior to their termination. As I understand the legislative history, subsection 8(3) (previously s. 7(3), R.S.C. 1985, c. U-1) was enacted when, under the legislative scheme in place at that time, the allocation of earnings paid because of complete severance, e.g. severance pay, had the effect of postponing the time at which an interruption of earnings was deemed to occur. A claimant in receipt of a severance payment could not demonstrate an interruption of earnings until the period of allocation of severance pay had expired. This created situations in which the 52-week qualifying period, calculated as the 52-week period prior to the interruption of earnings, would largely be the allocation period. As a result, claimants could find themselves with fewer than the required number of qualifying hours to receive unemployment insurance benefits. This was not because they had not worked the required number of hours. Rather, it was because the legislative scheme prevented them from including all of the hours worked in the 52 weeks prior to termination.

[22]            Subsection 8(3) has the effect of extending the qualifying period so that, in effect, the 52 weeks prior to termination are added to the allocation period for the purpose of determining the qualifying period. In this way, hours actually worked in the 52-week period prior to termination would be taken into account in calculating the claimant's qualifying hours. That is the purpose of subsection 8(3).

[23]            However, the extension of the qualifying period under subsection 8(3) was no longer necessary once regulation 35(6) was brought into force. Regulation 35(6) excluded from the determination of the time of interruption of earnings, earnings received as a result of lay-off or separation from employment. Therefore, the time of the interruption of earnings occurred at, or within a few days after termination and, the 52-week qualifying period would be the 52 weeks prior to termination. This eliminated the problem which subsection 8(3) was enacted to cure.

[24]            However, regulation 35(6) also had the effect of requiring individuals to make their claims for employment insurance benefits immediately after they were terminated, regardless of whether they received earnings as a result of separation or lay-off. Provided they made their claims in a timely way, their qualifying period would be the 52 weeks prior to termination.

[25]            How, then, is the definition of interruption of earnings in subsection 2(1) and the regulation-making authority to determine the timing and the circumstances in which an interruption of earnings occurs in paragraph 54(u), to be reconciled with subsection 8(3)? Because of its purpose of safeguarding claimants, I am of the view that the safeguard provided by subsection 8(3) must be considered to operate only when it is necessary, that is, when allocation of earnings payable by reason of a complete severance postpone the date of interruption of earnings. Where, under the regulatory scheme, allocation does not postpone the date of interruption of earnings, subsection 8(3) does not have to operate.

[26]            In other words, to read the definition in subsection 2(1), the authority in paragraph 54(u) and subsection 8(3) coherently and consistently, subsection 8(3) must be read in a manner so as to recognize that regulations may make its operation unnecessary. If subsection 8(3) commenced with the words "Subject to Regulations made pursuant to the definition of 'interruption of earnings' in subsection 2(1) and the regulation-making authority in paragraph 54(u) of the Act ...", there would be no conflict. However, the definition in subsection 2(1) and paragraph 54(u) have this implicit effect. A coherent reading of the definition in subsection 2(1), paragraph 54(u) and subsection 8(3) requires this interpretation. This does not involve adding words to the statute. Rather, it only gives voice to Parliament's implicit intention. See Murphy v. Welsh; Stoddard v. Watson, supra, at 1078.

[27]            In retrospect, there is no doubt the legislative and regulatory scheme could have been more clearly drafted. However, the duty of the Court is to resolve apparent conflicts in statutes and in my view, the interpretation I have given to the relevant provisions does so.

[28]            For these reasons, I am unable to agree with the applicant's argument that regulation 35(6) is ultra vires.

[29]            The applicant further argues that his severance payment was one to which regulation 36(11) applied. Regulation 36(11) provides.

36(11) Where earnings are paid or payable in respect of an employment pursuant to a labour arbitration award or the judgment of a tribunal, or as a settlement of an issue that might otherwise have been determined by a labour arbitration award or the judgment of a tribunal, and the earnings are awarded in respect of specific weeks as a result of a finding or admission that disciplinary action was warranted, the earnings shall be allocated to a number of consecutive weeks, beginning with the first week in respect of which the earnings are awarded, in such a manner that the total earnings of the claimant from that employment are, in each week except the last week, equal to the claimant's normal weekly earnings from that employment.

36(11) Lorsqu'une rémunération est payée ou payable à l'égard d'un emploi en exécution d'une sentence arbitrale ou d'une ordonnance du tribunal, ou par suite du règlement d'un différend qui aurait pu être tranché par une sentence arbitrale ou une ordonnance du tribunal, et que cette rémunération est attribuée à l'égard de semaines précises à la suite de constatations ou d'aveux qui permettent de conclure à la nécessité de mesures disciplinaires, elle est répartie sur un nombre de semaines consécutives commençant par la première semaine à laquelle la rémunération est ainsi attribuée, de sorte que la rémunération totale tirée par le prestataire de cet emploi dans chaque semaine, sauf la dernière, soit égale à sa rémunération hebdomadaire normale provenant de cet emploi.

The applicant, therefore, says that his severance payment should be allocated in accordance with regulation 36(11) rather than 36(9). Since regulation 35(6) only refers to earnings under regulation 36(9), he should not be disentitled to an extension of his qualifying period under subsection 8(3) of the Act.

[30]            The applicant conceded that a labour arbitration award is not relevant here. However, he argues that he could have complained to the Labour Standards Tribunal of Nova Scotia under subsection 71(2) of the Labour Standards Code, R.S.N.S. 1989, c. 246. Under subsection 72(1) of the Labour Standards Code, an employee cannot be laid off without being given a certain minimum severance pay, depending upon the length of the period of employment that preceded the layoff. The applicant worked about 4 years, which would have made him eligible for a severance payment of 2 weeks, under the Labour Standards Code. Even if he had worked for 10 years or more, the Tribunal could only award him 8 weeks of severance. Because he actually received 11 months' severance, it is obvious that his severance payment was not in settlement of an award that might have been made by the Labour Standards Tribunal of Nova Scotia. In addition, there is no evidence of the type of disciplinary action referred to in regulation 36(11). Regulation 36(11) does not apply to the applicant. The earnings in question are those referred to in regulation 36(9).

Issue 2: Did the Applicant establish that he had good cause for his delay in claiming employment insurance benefits?

[31]            The applicant argues that he had good cause for delay in filing his claim for benefits. Subsection 10(4) of the Act provides:

10(4) An initial claim for benefits made after the day when the claimant was first qualified to make the claim shall be regarded as having been made on an earlier day if the claimant shows that the claimant qualified to receive benefits on the earlier day and that there was good cause for the delay throughout the period beginning on the earlier day and ending on the day when the initial claim was made.

10(4) Lorsque le prestataire présente une demande initiale de prestations après le premier jour où il remplissait les conditions requises pour la présenter, la demande doit être considérée comme ayant été présentée à une date antérieure si le prestataire démontre qu'à cette date antérieure il remplissait les conditions requises pour recevoir des prestations et qu'il avait, durant toute la période écoulée entre cette date antérieure et la date à laquelle il présente sa demande, un motif valable justifiant son retard.

[32]            The Umpire's reasons on this point state:

In order to establish "good cause" for the delay in filing his claim, a claimant must demonstrate that he or she did what a reasonable and prudent person would have done in the same circumstances, either to clarify the situation regarding their employment or to determine their rights and obligations under the Act. Each case must be judged on its own facts and to this extent no clear and easily applicable principle exists (Malitsky v. Canada (A.G.), A-205-96, September 3, 1997 (F.C.A.); Canada (A.G.) v. Albrecht, (1985) 1 F.C. 710 (F.C.A.)). To demonstrate good cause, it is not necessary for a claimant to show that there were circumstances over which he had no control and which prevented him from making a claim at an earlier date. The correct test is whether the claimant can demonstrate that he did what a reasonable and prudent person would have done in the same circumstances (Canada

(A.G.) v. Ehman, A-360-95, February 9, 1996 (F.C.A.). In addition, good cause may also include circumstances in which it is reasonable for a claimant to consciously delay in making a claim for benefits (Canada (A.G.) v. Gauthier, A-1789-83, October 4, 1984 (F.C.A.)). Even though ignorance of the law does not constitute "good cause", it does not necessarily preclude a finding of good cause. Many reasons, including ignorance of the law, may still constitute good cause, provided the claimant is able to establish that he acted as a reasonable and prudent person (Canada (A.G.) v. Caron (1986), 69 N.R. 132 (F.C.A.)).

The Umpire concluded that the applicant did not meet the good cause test.

[33]            The applicant says he intended to find new employment and not claim employment insurance benefits. He also says his lawyer advised him that he would not be entitled to receive employment insurance benefits during the 11 month severance pay allocation period and he inferred that he did not need to make a claim until the time when he would be entitled to receive employment insurance benefits.

[34]            The Umpire relied on applicable jurisprudence in his assessment of whether the applicant had good cause for delay. Indeed, this Court has found that, as laudable as it might be, an intention not to claim employment insurance benefits and seek alternative employment is not good cause for delay. See Canada (Attorney General) v. Smith (1993), 153 N.R. 317 at 318-19 (F.C.A.). Nor is reliance on legal advice considered to be good cause. See Canada (Attorney General) v. Ehman (1996), 193 N.R. 391 (F.C.A.). In any event, in this case, the legal advice the applicant received was only that he would not be entitled to employment insurance benefits until the end of the period of the allocation of the severance payment. It is not suggested that his lawyer advised him not to file his claim for employment insurance benefits upon termination.

[35]            The applicant says there is no need to apply for employment insurance benefits until an individual is ready to make a claim and, as reasonable as that sounds, it is not in accordance with the jurisprudence. Nor is it in accordance with the general approach of the Commission that it should know when a person becomes unemployed so that it has the opportunity to find out about an individual's availability for employment and his or her activity to find a new job as soon as unemployment occurs.

[36]            The applicant also says that employment insurance deductions were wrongly taken from his severance pay. While that may be the case, I do not see how that fact gives him good cause for delay.

[37]            Finally, the applicant says the jurisprudence that would deny his good cause arguments was wrongly decided. Save in exceptional circumstances, courts of intermediate appellate jurisdiction follow their prior decisions. The Court is responsible for the stability, consistency and predictability of the law. In order to establish that the Court should overrule its prior jurisprudence, it is insufficient to only argue that the prior jurisprudence was wrongly decided. There must be grounds to overrule prior jurisprudence. The applicant has not argued any such grounds in this case (Miller v. Canada (Attorney General), 2002 FCA 370).

[38]            Regrettably, it is often those who have little or no experience with employment insurance benefits and who have the best of intentions who get caught out in the maze of statutory and

regulatory provisions that Parliament and the Governor in Council seem to consider necessary to prevent abuse of the employment insurance system. I accept that the applicant has acted in good faith and with the best of intentions. Unfortunately, on the present state of the law, that does not constitute good cause for entitling him to an antedating of his claim for employment insurance benefits.

[39]            I would dismiss the application for judicial review. I would make no order as to costs.

                                                                                  "Marshall Rothstein"       

                                                                                                              J.A.

"I agree

A.J. Stone J.A."

"I agree

J.D. Denis Pelletier J.A."       

                          FEDERAL COURT OF APPEAL

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                   A-24-01

STYLE OF CAUSE: THOMAS ALLAN SHEBIB v.

ATTORNEY GENERAL OF CANADA

                                                         

PLACE OF HEARING:                                   HALIFAX, NOVA SCOTIA

DATE OF HEARING:                                     NOVEMBER 7, 2002

REASONS FOR JUDGMENT :                   ROTHSTEIN J.A.

CONCURRED IN BY:                                    STONE, PELLETIER JJ.A.

DATED:                      FEBRUARY 18, 2003

APPEARANCES:

DAVID G. COLES AND                                                FOR THE APPLICANT

KENNETH A. MacLEAN

SCOTT McCROSSIN                                                    FOR THE RESPONDENT

SOLICITORS OF RECORD:

BOYNE CLARKE                                              FOR THE APPLICANT

DARTMOUTH, NOVA SCOTIA

MORRIS ROSENBERG, DEPUTY                  FOR THE RESPONDENT

ATTORNEY GENERAL OF CANADA