CUB 28870
IN THE MATTER of the UNEMPLOYMENT INSURANCE ACT
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IN THE MATTER of a claim by
ALLAN TASCHUK
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IN THE MATTER of a claimant's appeal from a decision of the
Board of Referees, December 8, 1993, at Edmonton, Alberta
DÉCISION DE LA COUR D'APPEL FÉDÉRALE CORRESPONDANTE : A-616-95
DECISION
CAWSEY, J.
Taschuk worked at Culligan Water Conditioning from December of 1989 to July of 1990 when he was laid off. He filed for benefits on the 12th of July 1990. The claim commenced on the 8th of July 1990 and he was paid benefits until the 19th of May 1991.
While still working for Culligan, Taschuk who was a part-time hockey referee, developed the idea of having a neck protector for goalies and in July of 1990, after he left Culligan, Taschuk, together with Schweda and Rasmussen, incorporated Sensorware Incorporated with Taschuk owning 40% of the shares, Schweda owning 40% of the shares and Rasmussen owning 20%.
Taschuk invested $6,000.00 (most of it .borrowed) in the firm and an application was made to Alberta Opportunity Company for funds and in June of 1991 Alberta Opportunity Company advanced $100,000.00. After May of 1991 Taschuk was the main player in Sensorware.
Taschuk's evidence is that he was assisting Schweda in developing the company and marketing strategy of the company and although he made numerous job applications and responded to many ads , he kept no record of his job search.
After he left Culligan, Taschuk worked approximately 24 hours weekly for Sensorware and after December 1990 he was involved with Sensorware for five hours per day. It was his plan to make Sensorware his main source of income.
The insurance officer's decision based on s.33, s.8, s.10(l), s.40.1 and Regulation 43(l)(a) was that Taschuk could not be paid from the 22nd of July 1990 as he was considered to be working a full work week and not unemployed, because he operated a business on his own account or with others.
Taschuk appealed this decision and the appeal was dismissed. The Board of Referees considered the fact that the company was incorporated in July of 1990 and that Taschuk held 40% of the shares. The Board of Referees also considered that Taschuk had invested over $6,000.00 in the corporation.
Before the Board of Referees, Taschuk produced no records to support his claim of working only minimum hours per week. He acknowledges that the idea for the venture was his and therefore he had a vested interest to ensure the success of the venture.
The Board of Referees was not satisfied with the evidence of a job search for the period in question but the Board did not find evidence of specifics or if there was any follow-up on his job application.
The position taken by Taschuk before the Board of Referees was that he did not consider his work with the corporation as "work" for completion of his reporting cards. He stated that no pay was received while working for Sensorware. A minor amount was earned by Taschuk as a referee during the hockey season but it was declared by his wife and not by Taschuk since he considered such time was spent on a volunteer basis. It is interesting to note that the Board of Referees, although dismissing the appeal, commended Taschuk on his presentation but did observe that he failed to provide specifics to support his appeal.
In his appeal to the Umpire, Taschuk submitted five pages (single spaced and typewritten) in which he supports his request to have the Umpire reverse the decision of the Board of Referees. In his Notice to Appeal he states that when he was before the Board of Referees he directed his submissions based on ss. 8, 10(1) , and 40(1) of the Unemployment Insurance Act and s. 43(l)(a) of the unemployment insurance regulations, whereas part of the decision of the Board of Referees deals with s. 55(8) of the Unemployment Insurance Act and not on the section involving availability for work.
Taschuk was represented by counsel before the Umpire.
This appeal must be dealt with in two phases. Firstly, I will deal with the question of whether or not the activities of Taschuk during the relevant period are deemed to be work and only after analyzing this evidence will I deal with the second aspect which is whether or not he made false or misleading statements.
Both the Commission and the Applicant referred to jurisprudence on the subject of work and the decision which is closest to the present factual situation and the reasoning which appeals to me is contained in C.U.B. 14752 (Tremblay) which involved the notion of operation of a business as per s. 43(1)(a) of the regulations under the Unemployment insurance Act. In Tremblay, the complainant and two companies agreed to set up their own business and for this purpose they incorporated M.T.C. Suspension Incorporated in December of 1985 or January of 1989, and the claimant invested the sum of $75,000.00. The Commission determined that the claimant had not proved that he was unemployed within the meaning of ss. 19 and 21 of the Act and found that the claimant was operating a company under the name of M.T.C. Suspension Incorporated so he was regarded as working a full working week.
This was appealed to a Board of Referees and the decision of the commission was unanimously confirmed in very brief reasons and held that the claimant did not prove that he was unemployed.
In Tremblay, the Umpire held that the preliminary steps involved in starting a business, namely incorporation and construction of a building where the business will eventually be carried on must be considered as forming part of the operation of a business but they do not form part of the operation of a business as such. In the translation of Umpire Denault's decision, he translates the French word "exploiter" (to operate) to mean "to cause to function or to make the most of" or "to turn to practical account".
The English version of s. 43(l) refers to a person "engaged in the operation of a business".
In Tremblay, the Umpire goes on to say:
"It seems clear to me that it is not possible to be engaged in an industry or to turn it to a practical account until it is in a position to produce or render the services for which it was designed. I have already had occasion to mention (C.U.B. 11807A) that a business is carried on within the meaning of subsection 43(l) of the regulations as soon as it provides the public with the services for which it was created. In the instant case this did not happen until late June 1986. The earlier steps were devoted to establishing the business but not operating it."
In C.U.B. 5454 Mr. Justice Dubé enumerated some of the factors to be considered in determining whether the operation of a business is of minor extent. These are:
1. the time spent;
2. the capital and resources invested;
3. the financial success or failure of the enterprise;
4. the continuity of the business;
5. the nature of the employment - "is it the type of business that would normally occupy the claimant?"; and
6. the willingness of the claimant to accept or seek other employment.
In its decision the Board of Referees considers only items 1 and 2 and in my opinion the Board erred in law in not considering the four other factors. It also did not consider the additional factor that the Appellant drew no money from Sensorware during the period he received benefits.
I consider that the Board of Referees made an error in law when it concluded that after July 22, 1990 Taschuk was considered as employed when in fact all he was doing was taking preliminary steps in starting a business.
The second aspect of this case is whether or not the Board of Referees erred in upholding the Commission's decision that he made 22 false or misleading statements in relation to his claim for benefits.
I would rely on the decision of Chief Umpire James A. Jerome in Ledesma (C.U.B. 11791) where under similar circumstances he was concerned that the Board erred in law in determining that the claimant had knowingly made false or misleading statements in relation to his claim for benefits and therefore subject to a penalty. He stated:
"In order for a penalty to be imposed pursuant to subsection 47(1) the claimant must have made a statement or representation that he knew to be false or misleading. Here the claimant reported on 26 report cards that he had not worked. It appears that the Board having made the correct legal determination that during that period the claimant was employed, concluded that his statements were false and that section 47 was applicable. What the Board failed to consider is whether, at the time the claimant made those statements, he knew them to be false. The claimant's evidence is that since he did not receive any remuneration from the business which he regarded as a family investment, he did not consider any services he performed in relation to it as work. Rather, the claimant was of the opinion that the question did you work was referrable to the type of work or employment he held at the Olympic Hotel or other establishments while at the same time devoting time to the family business. At the time the claimant made the statements, therefore, it appears that he considered them to be true, so it cannot be said that he made a statement or representation that he knew to be false or misleading It also appears that no effort was made to conceal his participation from the Commission."
Since I have already held that he was not engaged in the operation of a business, it follows that he was not working and therefore the reasoning in Ledesma applies.
A disturbing aspect of this case is that Schweda who was involved in Sensorware whose situation was almost identical to that of the Appellant, received unemployment insurance benefits. I would therefore allow the appeal on the basis that the Board erred in law in considering the Appellant to be employed and further that he made 22 false or misleading statements in relation to his claim for benefits.
CAWSEY
UMPIRE,
EDMONTON, Alberta
July 17, 1995