CUB 33274
TRANSLATION
(Translation Bureau Canada)
IN THE MATTER OF THE UNEMPLOYMENT INSURANCE ACT
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IN THE MATTER of a claim for benefit by
PIERRE-ANDRE DROUIN
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IN THE MATTER of an appeal to the Umpire by the
Employment and Immigration Commission from the decision
of a Board of Referees given at
Thetford Mines, Quebec, on May 14, 1992
DECISION
ROULEAU, J.:
This is an appeal by the Commission from the unanimous decision of a Board of Referees reversing the determination of one of its officials to the effect that income derived from the claimant’s amusement machine business constituted earnings for benefit purposes and had to be allocated pursuant to sections 57(6)(c) and 58(6) of the Regulations.
The claimant filed three claims for benefit which became effective on September 3, 1989, September 23, 1990 and December 15, 1991 respectively. He declared that he was a 50% shareholder in an amusement machine company. He explained that he was responsible for emptying the money from the amusement machines. He gave 50% of this money to the handlers of the machines and divided the remainder into two equal shares for himself and the other shareholder in the company. He produced a copy of his company’s financial statements to September 30, 1991. He stated that he had owned the company for approximately 4 years and had invested $6,000 in it. He added that he had received a dividend of $2,000 in about October 1989 and another in about October 1990. Toward the end of October or beginning of November 1991, he had drawn $5,000 as a result of the redemption of common shares. He stated that he was available to work on a full-time basis as he could collect the money from the machines in the evening or on weekends.
In a notice dated February 28, 1992, the Commission advised the claimant that the income derived from his amusement machine business for the period beginning on December 16, 1991 had been determined to be $145.88 and that this amount was to be deducted from benefits payable. Subsequently, in a letter dated April 16, 1992, the Commission advised the claimant that the said income should be declared on his report cards pursuant to sections 57(6)(c) and 58(6) of the Regulations. In a notice dated March 2, 1992, the Commission advised the claimant that his income from his amusement machine business for the period beginning on September 24, 1990 had been determined to be $145.88 and that this amount was to be deducted from benefits payable. In a letter dated March 2, 1992, the Commission advised Mr. Drouin that his income from the amusement machine business for the period beginning on September 4, 1989 had been determined to be $290.10 and that this amount was to be deducted from benefits payable.
The claimant appeared before the Board of Referees and explained that he had always declared his employment income other than that derived from Compagnie 2540-3858 Québec Inc. He also explained that the moneys received between 1989 and 1991 had been dividends voted by the board of directors at the end of each fiscal year. He argued that such moneys were not subject to sections 57(6)(c) and 58(6) as they were derived from an investment in a company and were dividends paid, not profits or commissions. He moreover stated that he had never received dividends while receiving unemployment insurance benefits. Based on these facts, the Board unanimously allowed the claimant’s appeal.
The Commission appealed from this decision on the basis that the Board of Referees had erred in fact and in law. In fact, the Commission maintained that the decision of the Board of Referees was contrary to the case law applicable in the case. It argued that the claimant had admitted spending time on the operation of his business. It maintained that case law had established that personal participation in the operation of a business is necessary in order for the existence of employment income to be considered. The Commission argued that, in this case, it had had no alternative but to take into account the income derived from the amusement machine business.
The Commission referred to the decision in Janet Tremblay (CUB 10530), in which Dubé J. stated:
What is involved here, then, is not a mere investment as argued by counsel for the claimant, as though she had "simply bought shares in Bell Canada", but, rather, a business in which she was involved, even if only on a part-time basis. The Commission official and majority of the Board members were therefore correct in considering the income derived from this family business as earnings to be allocated in accordance with sections 57 and 58 of the Regulations.
The Commission also referred to the decision in Daniel Laforest (CUB 12019), in which Denault J. arrived at the same conclusion:
The activity that the claimant was engaged in must therefore be examined, and it is immaterial whether his business was registered or incorporated. It is true that normally earnings are drawn from a company either in the form of salary if one works there, or in the form of a dividend in the case of an investment, which the company has decided to pay to the shareholders. In this regard, retained earnings belong to the company and not to the shareholder, not even a single shareholder. However, the scope of s 57(6)(c) mentioned above cannot be restricted by considerations having to do with the corporate structure. With regard to this single shareholder, the Commission was therefore justified in considering the retained earnings as income and allocating it according to the provisions of s. 58, especially since the board of referees, as it was empowered to do, was of the opinion in its decision that "the claimant stayed very close to his business and his investment".
The Federal Court of Appeal upheld the Umpire’s decision on appeal, stating:
We are all of the view that the applicant, who was the sole shareholder and prime mover in a company which was in the business of selling ladies’ clothing, was a self-employed person engaged in the operation of a business on his own account as a corporation within the meaning of s 43(1)(a) of the Unemployment Insurance Regulations, and was thus engaged in employment described in para (b) of the definition contained in s 57(1). It follows that the undistributed net profits of that business could be regarded as income of the applicant within the meaning of s 57(1) and 6(c) of the Regulations. These profits were in fact income which the applicant received from his activity operating a business on his own account. The umpire’s review of the facts and conclusion were thus correct. The application will be dismissed.
After reviewing the instant case, I am of the view that the decision of the Board of Referees must be upheld.
Case law has over the years clearly established that it is for the Board of Referees to decide on the credibility of a claimant. In the instant case, the Board accepted the claimant’s explanations that he had never received dividends while receiving benefits. Paragraph 57(6)(b) of the Regulations is consequently not applicable. Moreover, the case law submitted by the Commission was not relevant in the instant case since the claimant had not drawn any income from the amusement machine business while receiving unemployment insurance benefits.
Furthermore, my intervention would be warranted only if the decision of the Board of Referees was vitiated by an error in law or in fact. I am of the view that there was sufficient evidence on file in the instant case to permit the Board to decide as it did.
For these reasons, this appeal is dismissed.
"P. ROULEAU"
UMPIRE
OTTAWA, Ontario
March 22, 1996