Judgments

[1996] 1 F.C. 644

A-694-94

Attorney General of Canada (Applicant)

v.

Robert M. Purcell (Respondent)

Indexed as: Canada (Attorney General) v. Purcell (C.A.)

Court of Appeal, Stone, Strayer and Robertson JJ.A.— Halifax, October 5; Ottawa, December 21, 1995.

Unemployment insurance — Judicial review of Umpire’s dismissal of appeal from Board’s finding claimant not knowingly making false or misleading statements — Applicant driving taxi while receiving U.I. benefits — Answering “No” to question —Did you work during period of report?— on report cards — Commission determining not unemployed, imposing penalty pursuant to Act, s. 33 which gives Commission discretion to impose penalty when “in its opinion” claimant making statements “knew” to be false or misleading — “In its opinion” not insulating from review Commission’s decision — Discretionary power not of administrative nature — Once appearing from evidence claimant wrongly answering simple question on report card, burden shifting to claimant to explain why incorrect answers given — Umpire erred in requiring Commission to establish intention to deceive.

Administrative law — Judicial review — Certiorari — Unemployment Insurance Act, s. 33 giving Commission discretion to impose penalty where “in its opinion” made Statements “knew” to be false or misleading — Determination of whether claimant knowingly made false, misleading statement not of administrative nature — Parliament not intending such findings be final, conclusive because: (1) relating to finding of fact for which no particular expertise required; (2) Board empowered to engage in de novo review with respect to factual matters; (3) Board in better position to make objective findings of fact — Conclusion reinforced by reference to punitive nature of financial consequences flowing from decision to impose penalty.

This was an application for judicial review of the Umpire’s finding that the Board of Referees did not err in ruling that the claimant had not knowingly made false or misleading statements. The claimant was laid off because of a shortage of work at a shipyard. While in receipt of unemployment insurance benefits, he worked as a taxi driver, but did not report any of his earnings therefrom. The Canada Employment and Immigration Commission determined that the claimant was not unemployed and was therefore not entitled to any benefits, based on the fact that he controlled his own working hours as an independent taxi driver. The Commission also invoked Unemployment Insurance Act, subsection 33(1), which gives it the discretion to impose a penalty when “in its opinion” the facts establish that a claimant made statements or representations that he or she “knew” to be false or misleading, and imposed a penalty of $5,362. The Commission found that the claimant knowingly made false statements because he answered “Yes” to the question “Did you work during the period of this report?” on the bi-weekly report cards whenever he was called back to work at the shipyards, but answered “No” when filing report cards covering those weeks in which his work was limited to driving a taxi. The claimant had been informed at the time he made his claim that he would not be entitled to benefits if he held a taxi licence. He had minimal education and a friend completed the application for benefits. The Board upheld the determination that the claimant was not entitled to benefits on the ground that he was not unemployed, but concluded that he had not knowingly made false or misleading statements. The Umpire dismissed the appeals from both those findings, stating that the onus was on the Commission to prove that the claimant knowingly made false statements.

The issues were whether “in its opinion” had the effect of insulating from review by the Board of Referees the Commission’s decision to impose a penalty; and, whether the Board and Umpire erred in imposing on the Commission the burden of establishing an “intention to deceive” on the part of the claimant.

Held, the application should be allowed.

The phrase “in its opinion” does not have the legal effect of insulating from review the Commission’s decision with respect to whether a claimant has knowingly made a false or misleading statement. This aspect of the discretionary power outlined in subsection 33(1) is not of an administrative nature. Although “in its opinion”, when standing alone, supports the prima facie understanding that such findings of the Commission are final and conclusive, Parliament cannot be deemed to have intended that such findings of the Commission are final and conclusive because: (1) the opinion relates to a finding of fact for which no particular expertise is required; (2) the Board is empowered to engage in a de novo review with respect to factual matters; and (3) it is in a better position to make objective findings of fact. This conclusion is reinforced by reference to the punitive nature of the financial consequences which flow from a decision to impose a penalty under subsection 33(1). The Board possesses the requisite jurisdiction to assess de novo whether a claimant has knowingly made a false or misleading statement.

The initial onus is on the Commission to prove that a claimant knowingly made a false or misleading statement. Once it appears from the evidence that a claimant has wrongly answered a very simple question or questions on a report card, the burden shifts to the claimant to explain why the incorrect answers were given. The Umpire erred in requiring the Commission to establish “an intention to deceive”.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Federal Court Act, R.S.C., 1985, c. F-7, s. 28 (as am. by S.C. 1990, c. 8, s. 8).

Immigration Regulations, Part I, SOR/62-36, s. 34(3)f) (am. by SOR/67-434, s. 2)

Public Service Employment Act, R.S.C. 1970, c. P-32, s. 21.

Unemployment Insurance Act, R.S.C., 1985, c. U-1, ss. 8, 10 (as am. by S.C. 1990, c. 40, s. 8), 25(11), 27, 30(1) (as am. by S.C. 1990, c. 40, s. 22; 1993, c. 13, s. 20), 33(1) (as am. by S.C. 1990, c. 40, s. 25), 41(10), 79(1),(2).

Unemployment Insurance Regulations, C.R.C., c. 1576, s. 43.

CASES JUDICIALLY CONSIDERED

APPLIED:

Canada (Attorney General) v. Gates, [1995] 3 F.C. 17(C.A.).

DISTINGUISHED:

Nenn v. The Queen, [1981] 1 S.C.R. 631; (1981), 122 D.L.R. (3d) 577; 36 N.R. 487.

CONSIDERED:

Canada (Attorney General) v. Smith (1994), 167 N.R. 105 (F.C.A.); Dunham (1995), CUB 29211; Gana v. Minister of Manpower and Immigration, [1970] S.C.R. 699; (1970), 13 D.L.R. (3d) 699.

REFERRED TO:

Boulis v. Minister of Manpower and Immigration, [1974] S.C.R. 875; (1972), 26 D.L.R. (3d) 216; Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3; (1992), 88 D.L.R. (4th) 1; [1992] 2 W.W.R. 193; 84 Alta. L.R. (2d) 129; 3 Admin. L.R. (2d) 1; 7 C.E.L.R. (N.S.) 1; 132 N.R. 321; Roncarelli v. Duplessis, [1959] S.C.R. 121; (1959), 16 D.L.R. (2d) 689; Calgary Power Ltd. and Halmrast v. Copithorne, [1959] S.C.R. 24; (1958), 16 D.L.R. (2d) 241; Swain et al. v. Dennison et al., [1967] S.C.R. 7; (1966), 59 D.L.R. (2d) 357; 58 W.W.R. 232; Blachford v. Public Service Commission of Canada, [1983] 1 F.C. 109(T.D.); Kennedy v. Canada (Public Service Commission), [1990] 2 F.C. 181 (1990), 34 F.T.R. 52 (T.D.); Everett v. Canada (Minister of Fisheries and Oceans) (1994), 25 Admin. L.R. (2d) 112; 169 N.R. 100 (F.C.A.); Canada (Attorney General) v. Plourde, [1990] F.C.J. No. 944 (F.C.A.) (QL); Canada (Attorney General) v. Phung, [1994] F.C.J. No. 1754 (F.C.A.) (QL); Attorney General of Canada v. Desjardins, [1981] 1 F.C. 220(C.A.); Attorney General of Canada v. Findenigg, [1984] 1 F.C. 65(C.A.); Re The Queen and Harbour (1986), 26 D.L.R. (4th) 96; [1986] 3 W.W.R. 300; 86 CLLC 14,017; 67 N.R. 267 (F.C.A.); Brunet v. Canada (Employment and Immigration Commission), [1988] F.C.J. No. 829 (F.C.A.) (QL); Chartier v. Canada (Employment and Immigration Commission), [1990] F.C.J. No. 832 (F.C.A.) (QL); Canada (Attorney General) v. Simard, [1994] A.C.F. No. 290 (F.C.A.) (QL); Canada (Attorney General) v. Frew, [1994] F.C.J. No. 988 (F.C.A.) (QL); R. v. Friesen, [1994] F.C.J. No. 1363 (F.C.A.) (QL); Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536; (1984), 10 D.L.R. (4th) 1; [1984] CTC 294; 84 DTC 6305; 53 N.R. 241; Lor-Wes Contracting Ltd. v. The Queen, [1986] 1 F.C. 346 [1985] CTC 79; (1985), 85 DTC 5310; 60 N.R. 321 (C.A.); Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557; [1994] 7 W.W.R. 1; (1994), 92 B.C.L.R. (2d) 145; 4 C.C.L.S. 117; Mihai (1986), CUB 12720.

AUTHORS CITED

Evans, J. M. et al. Administrative Law: Cases, Texts and Materials, 3rd ed., Toronto: Emond Montgomery Publications Ltd., 1989.

Wade, H. W. R. Administrative Law, 5th ed., Oxford: Clarendon Press, 1982.

Wade, H. W. R. Administrative Law, 6th ed., Oxford: Clarendon Press, 1992.

APPLICATION for judicial review of the Umpire’s finding that the Board of Referees did not err in ruling that the claimant had not knowingly made false or misleading statements, as proscribed by Unemployment Insurance Act, subsection 33(1). Application allowed.

COUNSEL:

Anne-Marie Lévesque for applicant.

Kenneth MacInnis for respondent.

SOLICITORS:

Deputy Attorney General of Canada for applicant.

Kenneth MacInnis Associates, Halifax, for respondent.

The following are the reasons for judgment rendered in English by

Robertson J.A.: This judicial review application raises two issues bearing upon the proper construction and application of subsection 33(1) of the Unemployment Insurance Act, R.S.C., 1985, c. U-1 as amended [by S.C. 1990, c. 40, s. 25] (the Act). Under that subsection the Canada Employment and Immigration Commission (the Commission) possesses the discretionary power to impose a penalty when “in its opinion” the facts establish that a claimant has made statements or representations that he or she “knew” to be false or misleading. The full text of subsection 33(1) reads as follows:

33. (1) Where the Commission becomes aware of facts that in its opinion establish that a claimant or any person on the claimant’s behalf has, in relation to a claim for benefit, made statements or representations that the claimant or person knew to be false or misleading or, being required under this Act or the regulations to furnish information, furnished information or made statements or representations that the claimant or person knew to be false or misleading, the Commission may impose on the claimant a penalty in respect of each false or misleading statement, representation or piece of information, but the penalty shall be not greater than an amount equal to three times the claimant’s weekly rate of benefit.

The first, and pivotal, issue is whether the phrase “in its opinion” has the effect of insulating the Commission’s decision to impose a penalty from review by the Board of Referees (the Board). The Commission urges that such decisions can be set aside only where it is established that the discretionary power was not exercised “judicially”. Subject to this limitation, the Commission maintains that it is the sole judge of whether a claimant has knowingly made a false or misleading statement. The Board’s appellate review function is simply to determine whether the Commission formulated the requisite opinion.

In the present case, the Commission maintains that the Board fell into error by setting aside the Commission’s decision after concluding that the claimant, Mr. Purcell, had not knowingly made any false or misleading statements. The Umpire is alleged to have compounded that error by dismissing the Commission’s appeal. I do not agree. For the reasons which follow, I am of the opinion that the Board possesses the requisite jurisdiction to formulate its own opinion with respect to whether a claimant has knowingly made a false or misleading statement. That conclusion, however, does not dispose of this judicial review application.

The second and alternative issue relates to the imposition and application of the proper standard of proof. The Commission argues that both the Board and the Umpire erred in law by imposing on the Commission the burden of establishing an “intention to deceive” on the part of the claimant. It is the Commission’s position that that is not the proper standard of proof and, accordingly, both reviewing authorities erred in law. I accept this argument. As will be explained, the recent decision of this Court in Canada (Attorney General) v. Gates, [1995] 3 F.C. 17fully supports that conclusion.

It is clear that the Commission’s first argument represents a fundamental change from the position heretofore taken by it. If the argument were accepted, then it necessarily follows that the existing legal requirements imposed by this Court on the Commission’s exercise of its discretionary power, with respect to the imposition of a penalty under subsection 33(1) of the Act, must be jettisoned. Given these special circumstances, the fact that this particular issue was not raised below, and that the claimant was unrepresented at the oral hearing of this matter, this Court took the unprecedented step of ordering the Commission to assist the claimant in retaining and paying the costs of independent legal counsel. We did so solely for the purpose of having available written representations in response to the Commission’s arguments on this issue. I hasten to add that we were satisfied that the claimant was not in a position to retain counsel. Under the terms of our order the Commission was given an opportunity to submit a reply memorandum by December 15, 1995. It was agreed that this section 28 [Federal Court Act, R.S.C., 1985, c. F-7 (as am. by S.C. 1990, c. 8, s. 8)] application would be disposed of on the basis of the written materials filed, unless further oral argument was deemed necessary. That need did not materialize. My analysis begins with the customary recitation of relevant facts.

The claimant filed an application for unemployment insurance benefits after being laid off because of a shortage of work at the Halifax shipyards. While in receipt of benefits, the claimant worked for a period of time as a taxi driver. However, he failed to report any of his earnings derived from that occupation. Ultimately, the Commission determined that the claimant was not unemployed within the meaning of the Act and Regulations [Unemployment Insurance Regulations, C.R.C., c. 1576] and, therefore, not entitled to any benefits. That determination turned on the fact that the claimant controlled his own working hours as an independent taxi driver: see sections 8 and 10 [as am. by S.C. 1990, c. 40, s. 8] of the Act and section 43 of the Regulations. The Commission also invoked subsection 33(1) of the Act and imposed a penalty of $5,362 because of the claimant’s failure to report all earnings. As well, the claimant is under the additional obligation to reimburse the Commission for overpayments made by it as a result of the false statements.

The facts relevant to the finding by the Commission that the claimant had knowingly made false statements are as follows. From time to time the claimant was called back to work at the Halifax shipyards. During these periods he was still in receipt of benefits. On each occasion the claimant answered “Yes” to Question 1 of the bi-weekly report cards which he filed with the Commission. Question 1 asks: “Did you work during the period of this report?” The claimant also reported all earnings received from the Halifax shipyards. On the other hand, the claimant answered “No” to Question 1 when filing report cards covering those weeks in which his work was limited to driving a taxi. After receiving an anonymous phone call revealing that the claimant was working as a taxi driver, while in receipt of benefits, the Commission asked the claimant to attend at its offices. During the ensuing interview the claimant admitted to driving a taxi, on Friday and Saturday evenings only, and to being informed at the time he made his claim that he would not be entitled to unemployment benefits if he held a taxi licence (applicant’s application record, at pages 52-53). A friend of the claimant, Mr. Clarke, made submissions on his behalf before the Board. Mr. Clarke submitted that the claimant had only a minimal education and was not “competent” in filling out forms and that, in fact, his “application” for benefits was filled out by another person.

The Board upheld the Commission’s determination that the claimant was not entitled to benefits on the ground that he was not unemployed. However, contrary to the Commission’s determination, it concluded that the claimant had not knowingly made false or misleading statements. Specifically, the Board held (applicant’s application record, at page 99):

After reviewing all the evidence the Board finds the following. We find the claimant was driving a taxi even though it was a minimal number of hours per week. We also find that he did not report this on his cards. The question is did he intentional[ly] make false or misleading statements. His agent Mr. Clarke made informative submissions on his behalf. Mr. Clarke pointed out the claimant only has minimal education and is not completely competent when it comes to filling out forms, his application was in fact filled out by another person as the claimant had trouble filling it out himself.

Each of the parties appealed the respective negative decisions to an umpire. Both appeals were dismissed. This application is concerned only with the Umpire’s finding that the Board did not err in ruling that the claimant had not knowingly made false or misleading statements, as proscribed by subsection 33(1) of the Act. With respect to that issue, the learned Umpire concluded as follows (applicant’s application record, at page 121):

The Board of Referees were obviously not convinced that the claimant knowingly made false statements. The onus of proof in that regard is on the Commission. The Board of Referees were prepared and did in fact give to the claimant the benefit of the doubt. They obviously assessed his credibility in so determining and found in the claimant’s favour. I have not been convinced that I should interfere with the Board of Referees’ findings in that regard.

Counsel for the claimant is quick to distinguish between the right of the Board to determine whether a claimant has knowingly made false or misleading statements and the right of the Commission to determine whether a penalty should be imposed once it is satisfied that this condition precedent has been satisfied. For example, had the Board in this case concluded that the claimant had knowingly made false statements then counsel concedes that the Commission’s decision to impose a penalty could not have been set aside by the Board. In such circumstances the decision whether to impose or not to impose a penalty must rest with the Commission. I agree. To hold otherwise, in my view, would undermine significantly the responsibility of the Commission to protect against abuses of the legislative scheme. That conclusion, however, does not address the fact that the condition precedent to the exercise of the discretionary power in question is expressed in terms of the Commission forming an opinion, not the Board. Thus, the ultimate issue is whether the Commission’s opinion is to be treated as final and conclusive or whether the Board possesses the jurisdiction to formulate its own opinion with respect to what is essentially a question of fact.

The first step in making this decision is to acknowledge that the law simply does not recognize the concept of an unfettered discretion. All discretionary powers must be exercised “according to law” and, therefore, are subject to certain implied limitations. A decision based on a misapprehension of the facts, as opposed to inferences drawn from accepted facts, will be set aside as will decisions based on a palpable error: see Canada (Attorney General) v. Smith (1994), 167 N.R. 105 (F.C.A.) where the penalty imposed by the Commission exceeded the prescribed maximum.[1] Counsel for the Commission acknowledges that a discretionary power must be exercised “judicially”. I take that term to mean that if it can be established that the decision-maker acted in bad faith or for an improper purpose or motive, took into account an irrelevant factor or ignored a relevant factor or acted in a discriminatory manner, then any decision which flows from the exercise of a discretionary power will be set aside: see Boulis v. Minister of Manpower and Immigration, [1974] S.C.R. 875, at page 877; Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, at pages 76-77.

These common law limitations reflect the understanding that unreviewable discretionary powers are in conflict with the notion that all powers granted by Parliament to the executive are of an inherently limited nature: see W. Wade, Administrative Law, 5th ed. (Oxford: Clarendon Press, 1982) at page 355; and J. M. Evans et al., Administrative Law: Cases, Texts and Materials, 3d ed. (Toronto: Emond Montgomery, 1989) at page 653; and Roncarelli v. Duplessis, [1959] S.C.R. 121, per Rand J. at page 140.

This is not a case in which it can be said that the Commission did not act judicially. The issue before us is whether the Board has the jurisdiction to substitute its view for that of the Commission with respect to whether a claimant has knowingly made a false or misleading statement. There are two possible approaches to determining this issue which, for my purposes, are quite compatible. The first is to approach the issue of jurisdiction as a question of statutory construction, and in particular by construing the phrase “in its opinion”. The second is to follow the methodology of the Supreme Court by characterizing the discretionary power in order to determine whether it is subject to review. Of primary relevance is whether the power is “administrative” in nature. The jurisprudence of our Supreme Court reveals that reviewing bodies may not interfere with the exercise of an “administrative” discretion, unless of course there has been a breach of express or implied limitations. This much can be safely extracted from the case law: see Calgary Power Ltd. and Halmrast v. Copithorne , [1959] S.C.R. 24; Swain et al. v. Dennison et al., [1967] S.C.R. 7; Gana v. Minister of Manpower and Immigration, [1970] S.C.R. 699; and Nenn v. The Queen, [1981] 1 S.C.R. 631; with respect to the latter case see also Blachford v. Public Service Commission of Canada, [1983] 1 F.C. 109(T.D.); and Kennedy v. Canada (Public Service Commission), [1990] 2 F.C. 181(T.D.) per Strayer J., at page 187.

For purposes of this appeal it is sufficient to canvass briefly two of the Supreme Court’s decisions: Gana v. Minister of Manpower and Immigration, and Nenn v. The Queen. In Gana the Supreme Court had to decide whether the Immigration Appeal Board and a special inquiry officer possessed the jurisdiction to consider and vary the number of “units” allotted to the applicant, by an immigration officer, for purposes of determining admissibility to Canada. The argument advanced by the Minister was that a review of the immigration officer’s decision was prohibited by the opening words of paragraph 34(3)(f ) of the Immigration Regulations, Part I, SOR/62-36 as amended [SOR/67-434. s. 2], which reads: “in the opinion of an immigration officer”. The Supreme Court concluded otherwise. Writing for the Court, Spence J. stated at page 709:

In my opinion, the words [in the opinion of] simply mean that the immigration officer is to carry out an assessing duty not that his opinion becomes final and conclusive protected from any review. Counsel for the Minister cites Calgary Power Ltd. et al. v. Copithorne for the proposition that the decision of the immigration officer was not subject to review but in that case the decision of the Minister of the Crown was held to be an administrative decision and by statute the Minister was given the sole authority to decide with no provision for appeal. The present situation is very different. [Emphasis is mine]

The opposite conclusion was reached in Nenn v. The Queen, which brought into question the legal significance of the phrase “in the opinion of” as employed in section 21 of the Public Service Employment Act, R.S.C. 1970, c. P-32. The thrust of that provision is that a person who has been denied a position in the Public Service may appeal the appointment of the successful candidate to a board established by the Public Service Commission. In cases where the appointment was made “without competition” then the right to appeal such an appointment does not arise unless, “in the opinion of” the board, the unsuccessful candidate “has been prejudicially affected”. In Nenn the board had held that the appellant’s opportunity for advancement in the Public Service had not been prejudicially affected by the appointment of another candidate. The appellant sought to have that decision set aside. The Supreme Court concluded, inter alia, that the decision was of “an administrative nature not required by law to be made on a judicial or quasi-judicial basis.” (per Martland J., at page 636). In the present case, our task is simply to characterize the nature of the decision under review. The distinction between quasi-judicial and administrative acts has, for all intents and purposes, been laid to rest: see Everett v. Canada (Minister of Fisheries and Oceans) (1994), 25 Admin. L.R. (2d) 112 (F.C.A.), per MacGuigan J.A., at page 120.

It would be misleading to suggest that the Supreme Court has had the opportunity to outline a comprehensive analytical framework for characterizing discretionary powers. In my view, the best that can be said is that the following factors are frequently taken into account when reviewing the exercise of a discretionary power: (1) the wording of the discretionary power and, in particular, whether it is couched in subjective terms; (2) the character and role of the decision-maker; (3) the nature or character of the discretionary decision in so far as it relates to a specific as opposed to general purpose; and (4) the existence and scope of a right of appeal. It is only after having regard to these factors that one is able to characterize the discretionary power outlined in subsection 33(1) of the Act as administrative or not, and thereby determine whether the Board has jurisdiction to interfere with the Commission’s finding: see generally Evans, supra, at page 657 et seq.

The analytical approach outlined above does not form part of the Commission’s principal argument, which hinges primarily on this Court’s pronouncements stemming from the Commission’s exercise of other discretionary powers scattered throughout the Act. This is a convenient place to deal with the Commission’s argument.

Succinctly restated, the Commission posits that if it is not permissible for the Board to review discretionary decisions rendered by the Commission pursuant to other provisions of the Act, then surely the Board lacks the jurisdiction to do likewise with respect to those made under subsection 33(1) of the Act. In support of its argument the Commission refers specifically to the discretionary powers found in subsection 30(1) [as am. by S.C. 1990, c. 40, s. 22], 33(1), 41(10), and 79(1) of the Act, and the relevant jurisprudence.

Until amended in 1993 [S.C. 1993, c. 13, s. 20], subsection 30(1) of the Act empowered the Commission to impose a disqualification period ranging from six to twelve weeks arising from breaches of section 27 of the Act. Subsection 33(1) empowers the Commission to fix the amount of the penalty for knowingly making a false or misleading statement, subject to a prescribed maximum. Subsection 41(10) [formerly subsection 55(10)] provides that the Commission may waive certain conditions and requirements when “in its opinion” the circumstances warrant such. Subsection 79(1) provides that where “special reasons” exist the Commission may extend the time limit in which to appeal its decision to the Board. I agree with counsel for the Commission that with respect to these subsections this Court has held that neither the Board nor an umpire may exercise these discretionary powers which Parliament has vested in the Commission and that a decision made in the exercise of such discretions may not be set aside unless made in a “non-judicial way”, or “vitiated by fundamental error”: see Canada (Attorney General) v. Plourde , [1990] F.C.J. No. 944 (F.C.A.) (QL); and Canada (Attorney General) v. Phung, [1994] F.C.J. No. 1754 (F.C.A.) (QL) respectively.

Without expressly stating so, this Court has treated decisions based on the above discretionary powers as an exercise of an administrative discretion, thereby restricting the Board’s appellate review jurisdiction while insulating the Commission’s decisions from review: with respect to subsection 30(1) see Canada (Attorney General) v. Phung, supra; with respect to subsection 41(10) see Attorney General of Canada v. Desjardins, [1981] 1 F.C. 220(C.A.); Attorney General of Canada v. Findenigg, [1984] 1 F.C. 65(C.A.); and Re The Queen and Harbour (1986), 26 D.L.R. (4th) 96 (F.C.A.); with respect to subsection 79(1) see Brunet v. Canada (Employment and Immigration Commission), [1988] F.C.J. No. 829 (F.C.A.) (QL); Chartier v. Canada (Employment and Immigration Commission), [1990] F.C.J. No. 832 (F.C.A.) (QL); and Canada (Attorney General) v. Plourde, supra; with respect to subsection 33(1) see: Canada (Attorney General) v. Simard, [1994] A.C.F. No. 290 (F.C.A.) (QL); Canada (Attorney General) v. Frew, [1994] F.C.J. No. 988 (F.C.A.) (QL); R. v. Friesen, [1994] F.C.J. No. 1363 (F.C.A.) (QL) and Canada (Attorney General) v. Smith, supra.

It does not follow, however, that absolute deference is owed the Commission on all other discretionary matters and, in particular, with respect to the question of whether a claimant knowingly made a false or misleading statement. This is not a proper case in which to argue by analogy. The phrase “in its opinion” cannot be construed in the abstract. Words must be read in their entire context along with the scheme and object of the Act: see Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536; and Lor-Wes Contracting Ltd. v. The Queen, [1986] 1 F.C. 346(C.A.), per MacGuigan J.A., at page 352. This canon of statutory construction forces us to pursue the analytical framework outlined earlier. Otherwise, my analysis would end with a literal reading, not of subsection 33(1) of the Act, but of the phrase “in its opinion”.

In summary, this judicial review application is not concerned with the judicial treatment accorded other discretionary powers exercisable by the Commission. Nor is it concerned with the amount of the penalty that was imposed by the Commission. Rather we are concerned with the authority of the Commission to impose it in the first instance and with the jurisdiction of the Board to review it, based on its own assessment of the facts. The starting point of my analysis is the wording of the discretionary power in question.

Standing by itself the phrase “in its opinion” supports the Commission’s argument that Parliament intended to limit the review jurisdiction of the Board. The use of subjective, as opposed to objective, language to describe the Commission’s discretionary power cannot be dismissed summarily. A brief explanation is all that is needed to highlight the legal significance between the two categories: see generally W. Wade, Administrative Law , 6th ed. (Oxford: Clarendon Press, 1992), at pages 445-446.

The jurisdiction to exercise a discretionary power may or may not be conditioned on the existence of a certain state of affairs or facts. In cases where the power is subject to one or more pre-conditions then it is possible to express such in either subjective or objective terms. Subsection 33(1) of the Act is presently cast in subjective terms: “If in the opinion of the Commission the claimant has made a false statement it may impose a penalty”. However, Parliament very easily could have framed the power in objective terms: “Where a claimant knowingly makes a false statement the Commission may impose a penalty”. The fact that it chose to employ subjective language is of legal significance.

As a general proposition, it may be said that where the discretionary power is framed in subjective terms the potential scope for review is, prima facie, narrower than when the power is framed in objective terms. The phrase “in its opinion” indicates that instead of judging objectively whether the pre-condition to the exercise of the statutory power is satisfied, the Board is restricted to ascertaining whether the Commission formed the requisite opinion before exercising its discretion to impose a penalty. However, the fact that Parliament cast the discretionary power under subsection 33(1) of the Act in subjective terms is not, in law, determinative of the issue at hand.

The second factor within the framework outlined above requires us to focus on the character of the decision-maker. In the present case it is obvious that the Commission is not a regulatory agency nor an expert tribunal whose decisions should be accorded deference in accordance with the principles enunciated by the Supreme Court in Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557. Specifically, this is not a case where the decision-maker, the Commission, possesses a particular expertise necessary to formulate an opinion on what is essentially a question of fact. The present case contrasts sharply with the facts in Nenn. In that case the decision-maker, the Public Service Commission, was held to “possess the expertise to formulate an opinion as to whether the opportunity for advancement in the Public Service of an unsuccessful candidate has been prejudicially affected by the making of the appointment” (at page 637). It is self-evident that the question of whether or not a person has knowingly made one or more false or misleading statements does not require any special expertise on the part of the decision-maker. In this regard the Board of Referees is equally qualified to render such factual determinations. Moreover, as will be explained below, the Board is in a better position to make findings of fact than is the Commission.

As important as the character of the decision-maker is, so too is the third component of our framework, the nature or character of the discretionary decision being rendered in so far as it relates to a specific as opposed to general purpose, and its impact on those who are directly affected—unemployment insurance claimants. The decision to be made under subsection 33(1) of the Act is very specific in nature and scope, and the potential ramifications of the exercise of discretion are distinctly punitive. Furthermore, the financial consequences which flow from an adverse determination under that provision are simply devastating. Not only might a claimant be obligated to reimburse the Commission for overpayments, but the amount of the penalty could be of such magnitude that it is unlikely that it would ever be paid, thereby effectively preventing the claimant from collecting unemployment benefits in the future. Putting aside these dire consequences, it is also evident that if the Commission’s argument is accepted then it is entitled to act as prosecutor, judge and jury. The Commission is the one who makes the allegation of a breach under subsection 33(1). The Commission is the one who decides the culpability of a claimant. Finally, it is the Commission that determines the appropriate “punishment” over and above the restitutionary component of the “sentence”.

As a matter of statutory construction I am obliged to determine whether the Board possesses the jurisdiction to formulate an opinion which stands in contradistinction to that of the Commission. In the analytical framework outlined above, the first factor, the wording of the discretionary power, supports the Commission. The remaining three factors—the character of the decision-maker, the nature and character of the decision, and the existence and scope of a right of appeal—favour unemployment insurance claimants. The fact that there is an express right of appeal to the Board is, in my view, determinative of the issue.

Returning to the facts in Nenn, the Supreme Court took care to note that there was no statutory right of appeal from the Public Service Commission’s decision and that Parliament chose to limit the right of appeal to cases where that Commission concluded that an unsuccessful applicant’s opportunity for advancement was prejudicially affected (at page 637). In this particular case section 79 of the Act provides for a right of appeal to the Board. That section reads as follows:

79. (1) The claimant or an employer of the claimant may at any time within thirty days after the day on which a decision of the Commission is communicated to him, or within such further time as the Commission may in any particular case for special reasons allow, appeal to the board of referees in the manner prescribed.

(2) A decision of a board of referees shall be recorded in writing and shall include a statement of the findings of the board on questions of fact material to the decision. [Emphasis is mine.]

In my opinion, Parliament cannot be deemed to have intended to render the Commission’s opinion, as to whether a claimant has knowingly made a false or misleading statement, final and conclusive. I reach this conclusion on two additional grounds. First, it is not unreasonable to infer that had Parliament intended that deference be accorded this aspect of the Commission’s decision then it would not have granted an unqualified right of appeal. Parliamentary draftspersons are well aware of the means necessary to ensure that decisions are treated as final and conclusive. In this regard, I cannot help but note that Parliament has in one instance expressly prohibited the right to appeal a decision of the Commission to the Board. Subsection 25(11) of the Act provides that “[n]o decision of the Commission approving or disapproving any job creation project … is subject to appeal under section 79 or 80.” That subsection reinforces the belief that Parliament is acutely aware of the legislative means for insulating the Commission’s decisions from review by the Board and an umpire.

The second ground, in my view, is as compelling as the first. Having regard to the fact that an appeal to the Board is a de novo proceeding, the Board is in a better position to render a decision on the facts than the Commission itself. Unlike many appellate review bodies, the Board is called upon to hear and receive evidence from the parties to an appeal and is expressly required to make findings of fact pursuant to subsection 79(2) of the Act. Except where the statute places the exclusive authority or discretion for making a decision with the Commission or the Minister, the Board is obliged to undertake a de novo review: see Attorney General of Canada v. Findenigg, supra, per Thurlow C.J., at page 71; and Re The Queen and Harbour, supra, per Marceau J.A., at pages 105-106. As was stated by one umpire (CUB 12720 [Mihai]), the Board’s role is to [at page 2]:

… consider the evidence presented to it by both parties, to determine the facts relevant to the particular legal issue before it and to articulate, in its written decision, its own independent decision with respect thereto.

By contrast, the role of the Commission is limited to rendering a decision on the basis of evidence that it deems relevant. Before the Commission the claimant has neither any right to a hearing, nor any assurance that evidence presented to it will be given proper weight. This explains why a claimant is entitled to challenge a decision of the Commission on a de novo basis. It is the Board which functions as a quasi-judicial body not the Commission. It is the decisions of the Board turning on questions of fact which are owed deference, not those of the Commission.

In summary, I am of the view that the phrase “in its opinion” does not have the legal effect of insulating from review the Commission’s decision with respect to whether a claimant has knowingly made a false or misleading statement. This aspect of the discretionary power outlined in subsection 33(1) of the Act is not of an administrative nature. Admittedly, that phrase, when standing by itself, supports the prima facie understanding that such findings of the Commission are final and conclusive. In my opinion, however, Parliament cannot be deemed to have intended such a legal result for the following reasons: 1) the opinion in question relates to a finding of fact for which no particular expertise is required; 2) the Board is empowered to engage in a de novo review with respect to factual matters; and 3) it is in a better position to make objective findings of fact. This conclusion is reinforced by reference to the punitive nature of the financial consequences which flow from a decision to impose a penalty under subsection 33(1). Ultimately, I am driven to the unescapable conclusion that the Board possesses the requisite jurisdiction to assess, de novo, whether a claimant has knowingly made a false or misleading statement. This conclusion disposes of the Commission’s first argument. It remains to be decided whether the Board erred with respect to the burden of proof imposed on the Commission. I turn now to the Commission’s alternative argument.

As noted at the outset, the Commission maintains that the Board erred in requiring the former to establish an intention to deceive on the part of the claimant. The Commission relies on Canada (Attorney General) v. Gates, supra, in support of its argument. Therein, Linden J.A. writing for the Court found that as subsection 33(1) of the Act does not establish a criminal offence, the “onus of proof that rests upon 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 knew to be false or misleading’” (at page 19). Thus, innocent representations are not subject to a penalty. As well, Linden J.A. went on to explain that the test is a subjective one. The Board must decide on a balance of probabilities that the particular claimant subjectively knew that a false or misleading statement had been made. In other words, the standard is not what the so-called reasonable unemployment insurance claimant would know. Obviously there can be no such person. Linden J.A. went on to explain, at page 21:

In deciding whether there was subjective knowledge by a claimant, however, the Commission or Board 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 fact finder could rightly disbelieve that claimant and find that there was, in fact, subjective knowledge, despite the denial. Not to know the obvious, therefore, might properly lead to an inference that the claimant is lying. This does not make the test objective; it does, however, take into account objective matters in coming to a decision on subjective knowledge. If, in the end, the trier of fact is of the view that the claimant really did not know that the representation was false, there is no violation of subsection 33(1).

In Gates the Court also referred to the jurisprudence developed by umpires respecting the burden of proof. According to that jurisprudence, the initial onus is on the Commission to prove that a claimant knowingly made a false or misleading statement. Once it appears from the evidence, however, that a claimant has wrongly answered a very simple question or questions on a report card, the burden shifts to the claimant to explain why the incorrect answers were given. Accepting this alternative approach, Linden J.A. went on to explain at page 22:

… but the explanation offered may be readily acceptable. It depends on the evidence, the circumstances and the fact finders determination on the basis thereof. (See for example Zysman v. Canada (Employment and Immigration Commission), [[1994] F.C.J. No. 1357 (C.A.) (QL)]). Thus, the fact-finder must decide on the balance of probabilities that the claimant subjectively knew that the report was false in order to penalize him or her. 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.

In Gates, the Board was found to have erred by applying an objective standard when deciding whether there was knowledge on the part of the claimant. As well, the Umpire was held to have “added an element of confusion” when he required the Commission to establish “an intention to deceive” on the part of the claimant. Accordingly, the application was allowed and the matter remitted to the Board for reconsideration.

In my view, this judicial review application must succeed. The element of confusion that existed in the Board’s reasoning in Gates also exists in the decision of the Board herein, which was affirmed by the Umpire. I should also like to stress that in the present case the claimant provided incorrect answers to straightforward questions on his report cards and yet the evidence as to why those answers were given seems to conflict. On the one hand, he maintains that the cards were completed by a third party. On the other, he admits that he was advised that if he was in possession of a taxi licence he would not be entitled to benefits. Of course, it is not the role of this Court to resolve what are, arguably, inconsistencies. That is the role of the Board and that is where the issue should be addressed in determining whether the claimant subjectively knew that he was making false or misleading statements.

For the above reasons, I would allow the application, set aside the decision of the Umpire dated September 21, 1994, and remit the matter to the Chief Umpire or his designate on the basis that it be remitted to the Board for a rehearing and redetermination in a manner consistent with these reasons.

Stone J.A.: I agree.

Strayer J.A.: I agree.

---