FRANÇAIS

The claimant appeals a decision of the Board of Referees disentitling her to benefits because she was self-employed as an owner of a bar. It is conceded by all that the Board did not address the question of whether the claimant's involvement with the bar fell within the exception of regulation 43(2).

Regulations 43(l) and 43(2) provide:

There is considerable jurisprudence which establishes that it is an error of law if the Board of Referees merely finds that a claimant was engaged in self-employment and does not consider whether the activity was "so minor in extent that a person would not normally follow it as a principal means of livelihood". See, for example, CUB 10601 - Wong (May 27, 1985) and CUB 13687 - Hepner (April 23, 1987).

Counsel for the Commission argued, that, it was not an error of law to fail to consider this issue if the claimant had not raised it and had not attempted to establish that the activity fell into that category. Reference was made to the decision in CUB 18869 - David (October 23, 1990). In that case, Mr. Justice Pinard indicated:

I understand Mr. Justice Pinard's comment to have been made in the context of a situation where there was absolutely no evidence to support a regulation 43(2) claim. I do not take it as establishing a principle that the claimant has to expressly state to the Board of Referee that the activity fell within regulation 43(2). It is sufficient if there is some evidence on the file which indicates that this might be a possible characterization of the activity in question.

In my view, there is some obligation on the Board in such circumstances to question the claimant concerning the factors relevant to a regulation 43(2) exception, to see if that provision might apply. Claimants are not likely to even know that such an exception exists. They are not provided with copies of the relevant statutory provisions by the Commission, when they are disentitled. Compared with the claimants which appear before them, Boards of Referees are likely to be much better informed about the law and the relevant statutory provisions. In any event, it is sufficient for the purposes of this case to note that there was evidence being put forward by the claimant which raised the possibility that a regulation 43(2) exception might apply, but that issue was not considered.

There is another difficulty with the Board's decision, as well as the failure to consider the possibility of a regulation 43(2) exception, and that is the fact that it does not comply with the requirements set out in section 94(2) of the Unemployment Insurance Act. Subsection 94(2) provides:

This means that the Board should list those facts on which it relies for the decision it has reached, and preferably indicate where in the evidence before it, these facts are found. Put another way, the Board should single out for description those crucial facts which led it to come to one conclusion rather than another. Decisions which can be referred to for these principles and their application are, for example, CUB 9431 - Lee (September 25, 1984); CUB 9432 - Robertson (September 26, 1984); CUB 9433 - Dowell (September 26, 1984); CUB 13799 - Bogart (June 2, 1987); CUB 4349 - Laporte (October 25, 1976); CUB 10546 Prentice (May 16, 1985); CUB 16648A (Gomes (September 6, 1989).

It is accepted that Boards of Referees are not required to write lengthy and elaborate decisions, stating principles of law which they feel support their decision (CUB 14551 - Crawford). Boards of Referees are composed of lay members and their decisions are not to be read microscopically. This was set out in Roberts v. C.E.I.C. (1985), 60 N.R. 349 (F.C.A.). But this does not absolve Boards from the statutory obligation imposed upon them by subsection 94(2) of the Act. In this regard, two decisions of the Federal Court of Appeal are relevant: Matheodakis v. C.E.I.C., [19811 2 F.C. 813 and Davlut v. A.G. Canada (1982), 46 N.R. 518.

Counsel for the Commission argues that the Robert case stands for the proposition that all one has to do, is to be able to find enough evidence on the file to support the Board's decision. This is not a correct interpretation of that decision. The Board is required by subsection 94(2) to explain to the claimant why it reached the decision it did. Only in this way can claimants have any assurance that the Board really addressed its mind to the case before it. What is more, usually, there is far more evidence to be considered than that on the file. The claimant's oral evidence is to be assessed. A rule which says that an Umpire need only look to see if there is evidence on the file to support the Board's decision, would have the effect of treating the hearing before the Board as irrelevant.

In the present case, the Board of Referees' decision reads as follows:

The only reasons the Board gave for its decision were "after being questioned she answered that she was not working elsewhere at that time and that there was no research of employment". The first reason, with respect, does not make any sense: "she was not working elsewhere at the time". If the claimant had been working elsewhere (or anywhere), at the time, she would not have been receiving unemployment insurance benefits. The second reason, "the claimant's representative answered after being questioned ... that there was no research of employment", is directly contrary to the transcript. The claimant's representative, her bookkeeper/accountant, stated that to his knowledge, the claimant was seeking work during the time in question and indeed, had asked him if he knew anybody who was looking for someone with her job skills (secretarial and office work).

It is clear that the claimant's case should be referred back to a differently constituted Board of Referees for a rehearing.

It may be useful for the Board which rehears this case to have reference to the criteria which the jurisprudence has established as being relevant when considering a regulation 43(2) exception. The decision in CUB 5454 - Schwenk (February 15, 1979) is considered to be the leading case in this area. The Umpire in that decision set out six criteria to be considered: (1) the amount of time spent by the claimant in the enterprise; (2) the amount of capital and resources invested; (3) the financial success or failure of the enterprise; (4) the continuity of the enterprise - is it still on-going; (5) the nature of the employment - is it similar to the claimant's usual line of business; (6) was the claimant willing, during the time in question, to accept other employment. In any given situation, none of these factors is determinative in itself; they all must be weighed for the purpose of deciding whether the activity in which the claimant was engaged was "so minor in extent" that a person would not normally follow it as a principal means of livelihood. In addition, the extent of the claimant's involvement in the enterprise must be determined as of the time when she was receiving benefits and not at some later date.

I will turn, for a moment, to the six criteria set out in the Schwenk decision. It is clear that if the amount of time spent by the claimant is similar to a normal work week, especially when the person is locked into a fairly rigid 9:00 a.m. to 5:00 p.m. schedule, this would be a factor showing that the activity would not likely be able to fall under 43(2). The fewer the hours spent and, the more flexible the schedule (e.g. weekends and/or evenings), the more likely the activity will fall under regulation 43(2).

With respect to the second criterion, the greater the amount of capital and resources invested the more likely one would expect that a claimant would be looking to the business as his or her principal means of livelihood.

With respect to the third criterion, the financial success or failure of the business, if a claimant is obtaining either directly or indirectly revenue from the business, there is a greater likelihood that it is not an activity which falls under regulation 43(2). At the same time, failure to obtain remuneration from the activity does not necessarily mean that the activity is of a regulation 43(2) type: see, for example CUB 12353 - Marsh (July 11, 1986) and CUB 13693 - Atwal (April 23, 1987).

The fourth criterion, the continuity of the business, is a factor relevant in the sense that if the business continues and the claimant does not return to an employed status there is a presumption that the claimant's activities during the time he or she was receiving benefits was not of a regulation 43(2) nature. If. the reverse is the case, the opposite presumption applies. These presumptions, however, are just that, presumptions and the facts of a particular case may be such as to make them inapplicable. For example, in the present case, there seems to be evidence which establishes a reason for the claimant's changed status vis à vis the business after her benefit period ended. The fact that a claimant has incorporated a business is not in itself evidence that he or she should be disqualified from receiving benefits, see: CUB 16430 - Marshall (April 5, 1989) and CUB 18060 - Young (April 27, 1990).

The fifth criterion, whether the nature of the business activity is similar to the claimant's usual line of business, is one which may be used to assess the likelihood of the claimant intending that the enterprise will supplant a search for employment. If the self-employed activity is similar to the claimant's usual employment, there is a likelihood that the claimant intends that activity to become his or her main livelihood, and is devoting all his or her efforts and time to it; see for example, CUB 18060 - Young (April 27, 1990).

The sixth criterion, whether the claimant was looking for and prepared to accept employment, is another factor to consider in assessing the nature of the claimant's involvement in the enterprise.

It is clear from what has been said above, that a determination of the issue requires a weighing of various factors and an exercise of judgment by the Board. It is not a decision which can be made in a black and white manner by reference to one or two facts only. Also, the Commission's decision on the matter does not establish a presumption against the claimant. The Board must decide the issue for itself without giving a preference to the Commission's view.

For the reasons given this appeal is referred back to a differently constituted Board of Referees for rehearing.

OTTAWA, Ontario

February 11, 1991.