False And Misleading Statements

I. The Legislation

Sections 38 and 39 of the Employment Insurance Act allow the Commission to impose a penalty on a claimant, employer or any person who, on their behalf, makes a false or misleading statement or representation or who provides false information to the Commission.

The maximum penalty which may be imposed on a claimant per false statement is three times the claimant’s weekly rate of benefit. The maximum penalty which may be imposed on an employer is nine times the maximum weekly rate of benefit in effect when the penalty is imposed.

A penalty may not be imposed after thirty-six months from the date on which the false or misleading statement is made. However, where the Commission is of the opinion that a false or misleading statement has been made in relation to a claim, it has seventy-two months to reconsider the claim for the purpose of requiring a claimant to repay any benefits received to which he or she was not entitled.

Sections 38, 39, 40, 52(5), 135 Employment Insurance Act

The Commission may rescind the imposition of a penalty, or reduce the penalty, on the presentation of new facts or on being satisfied that the penalty was imposed without knowledge of, or on the basis of, a mistake as to some material fact

Section 41 Employment Insurance Act

The Commission may issue a warning instead of setting the amount of a penalty for a false statement under

subsection 38(2) or 39(2) of the Employment Insurance Act.
Subsection 41.1(1) Employment Insurance Act

An insured person who accumulates one or more violations in the 260 weeks before making his or her initial claim for benefit will have the number of hours required to qualify for benefits increased.

Section 7.1 Employment Insurance Act

II. What is a false and misleading statement

In order for a penalty to be imposed, it must be shown that the claimant intended to make a false and misleading statement. The intention must have existed at the time the statement was made. It is essential that the false statement was made knowingly.

Martel v. C.E.I.C. (1989) 29 F.T.R. 96 (F.C.T.D.) T-2416-87
Courty v. C.E.I.C. (1987) 16 F.T.R. 36 (F.C.T.D.) T-713-87

The requirement that a false statement be made knowingly means that innocent misrepresentations are not subject to a penalty. It is necessary that the claimant or individual who made the statement knew that it was false. By allowing for the imposition of a financial penalty, the sections imply that some improper conduct has taken place, that is knowingly misrepresenting facts.

Mootoo v. Canada (Minister of Human Resources Development),[2003] F.C.J. No. 724 (F.C.A.)A-438-02
Bajwa v. Canada, [2003] F.C.J. No. 1365 (F.C.A.) A-89-02
Canada (A.G.) v. Purcell, [1996] 1 F.C. 644 (F.C.A.)A-694-94
Canada (A.G.) v. Gates, [1995] 3 F.C. 17 (F.C.A.) A-600-94

The mere fact that a legally false statement is made does not necessarily mean that it was made knowing that it was false. Neither does the repetition of a false statement make it knowingly false. There must be subjective knowledge of falsity. In other words, before a penalty can be imposed it must be determined that the claimant acted in bad faith, or in other words, dishonestly. For example, where a claimant honestly believes that he was not “working” and, in good faith, gives that answer to a question which is ambiguous to him, it cannot be automatically assumed that he subjectively knew it was a false statement. It is possible for honest confusion to arise as to the meaning of the word “work”.

Mootoo v. Canada (Minister of Human Resources Development), [2003] F.C.J. No. 724 (F.C.A.) A-438-02
Demers v. Canada (Employment Insurance Commission), A-171-98,December 1, 1998 (F.C.A.)
Moretto v. Canada (Attorney General), A-667-96,March 24, 1998 (F.C.A.)
Canada (A.G.) v. Gates, [1995] 3 F.C. 17 (F.C.A.) A-600-94

However, this does not mean that a claimant will be able to avoid the imposition of a penalty by merely professing lack of knowledge. Boards of Referees are required to use common sense and take into consideration objective factors in deciding whether there was subjective knowledge on the claimant’s part. For example, if a claimant professes ignorance of a very obvious fact, this may lead to an inference that he or she was lying.

Canada (A.G.) v. Gates, [1995] 3 F.C. 17 (F.C.A.)A-600-94

III. Proving a false and misleading statement

The onus is initially on the Commission to prove that a claimant knowingly made a false or misleading statement. The onus of proof that rests on the Commission is to establish on a balance of probabilities, not beyond a reasonable doubt, that the claimant made a statement or representation that he or she knew was false.

Canada (A.G.) v. Purcell, [1996] 1 F.C. 644 (F.C.A.) A-694-94
Canada (A.G.) v. Gates, [1995] 3 F.C. 17 (F.C.A.) A-600-94
Canada (A.G.) v. Corner, A-18-93, December 9, 1993 (F.C.A.)
McDonald v. C.E.I.C. (1991), 131 N.R. 389 (F.C.A.) A-897-90

This onus can only be discharged by the Commission adducing evidence of both the actual questions asked as well as the answers given. In cases where a claimant has used the Teledec system to file a report there must be evidence of the actual questions which were posed to the claimant.

Caverly v. The Minister of Human Resources, A-211-01, February 28, 2002 (F.C.A.)

Where the Commission does not provide the reporting cards as evidence that the claimant made a false statement, the issue becomes whether the Commission can otherwise establish what questions were asked of a claimant and what answers were given. The Commission should not attempt to prove false statements by way of indirect evidence.

Canada (A.G. ) v. Miller, [2002] F.C.J. No. 60 (F.C.A.)
Badra v. Canada (A.G.), [2002] F.C.J. No. 570 (F.C.A.)

Once it appears from the evidence that the claimant has made a false or misleading statement, the onus shifts to the claimant to provide an explanation that rebuts the inference that the false statements were knowingly made.

Nangle v. Canada (A.G.), [2003] F.C.J. NO. 740 (F.C.A.)A-194-02
Canada A.G.) v. Antonio, A-743-97,September 22, 1998 (F.C.A.)
Canada (A.G.) v. Purcell, [1996] 1 F.C. 644 (F.C.A.) A-694-94
Canada (A.G.) v. Gates, [1995] 3 F.C. 17 (F.C.A.)A-600-94

Whether the explanation offered by the claimant is acceptable depends on the evidence and the circumstances. The Commission and the Board of Referees may take into account common sense and objective factors. In other words, if a claimant claims to be ignorant of something that the whole world knows, the Commission or the Board could rightly disbelieve the claimant and find that there was in fact, subjective knowledge, despite the claimant’s denial. It is possible, though unlikely, for a claimant to be truly ignorant of some fact, even a simple one, when nearly everyone would know it.

Canada (A.G.) v. Gates, [1995] 3 F.C. 17 (F.C.A.)A-600-94

Merely disbelieving a claimant’s testimony is not a sufficient basis for the Board of Referees to conclude that he or she knowingly made a false or misleading statement. There is another element of proof required, relating to the claimant’s state of mind at the time the statement in question was made and the onus in that regard is on the Commission.

Canada v. Childs, A-418-97, May 26, 1998
Canada (A.G.) v. Gates, [1995] 3 F.C. 17 (F.C.A.)A-600-94
McDonald v. C.E.I.C. (1991), 131 N.R. 389 (F.C.A.)A-897-90

IV. Jurisdiction of Board of Referees and Umpire to Reduce The Penalty

The discretion to impose a penalty for false and misleading statements rests solely with the Commission. As long as the Commission exercises this discretionary power judicially, which means that it has taken all relevant considerations into account and has not been influenced by an improper ones, then neither the Board nor the Umpire is entitled to interfere.

Canada (A.G.) v. Lai, A-525-97, June 25, 1998 (F.C.A.)
Canada (A.G.) v. Rumbolt, A-387-99, November 28, 2000 (F.C.A.)

However, a Board of Referees and an Umpire do possess the authority to vary a penalty imposed by the Commission for false and misleading statements where they are of the opinion that the Commission has wrongly exercised its discretion in imposing that penalty. The Board and the Umpire must first conclude that the Commission exercised its discretionary power in a non-judicial manner when it imposed the penalty, that is to say, without taking into account of all relevant considerations.

Canada (A.G.) v. Tong, [2003] F.C.J. No. 1033 (F.C.A.) A-412-02
Canada (A.G.) v. Pyne, A-378-98, December 15, 1999 (F.C.A.)
Canada (A.G.) v. Antonio, A-743-97, September 22, 1998 (F.C.A.)
Gendron v. Canada (Employment Insurance Commission), A-926-96, October 8, 1997 (F.C.A.)
Mucciarone v. C.E.I.C., A-464-96, January 17, 1997 (F.C.A.)
Dunham v. Canada (A.G.), [1997] 1 F.C. 462 (F.C.A.) A-708-95
Morin v. C.E.I.C., (1996), 134 D.L.R. (4th) 724 (F.C.A.)A-453-95
Canada (A.G.) V. Longsworth, A-769-96, September 23, 1997 (F.C.A.)
Canada (A.G.) v. Lebreton, [1995] F.C.J. No. 176 (F.C.A.) A-623-94

The Board of Referees’ power to reduce the amount of a penalty where it is satisfied that there are mitigating circumstances does not allow it to reduce the penalty to zero. That amounts to no penalty at all and is a usurpation of the Commission’s power under

subsection 38(1) of the Employment Insurance Act.
Canada (A.G.) v. Gauley, [2002] F.C.J. No. 815 (F.C.A.) A-353-01

Neither a Board of Referees nor an Umpire have jurisdiction to write-off or waive a penalty. Only the Commission has that power and its exercise of that power is subject to judicial review in the Federal Court Trial Division.

Canada (A.G.). v. Idemudia, A-9-98, February 11, 1999 (F.C.A.)
Canada (A.G.) v. Filiatrault, A-874-97, September 18, 1998, (F.C.A.)

V. Violations