# 2011-094 Pay and Benefits, Imposed Restriction (IR), Recovery of Overpayment/Debt Write-Off, Separation Expense (SE)

Case Summary

F&R Date: 2011–11–30

The grievor received separation expense (SE) benefits for which it was later determined he had no entitlement. The grievor acknowledged that he did not meet the eligibility criteria set out in Compensation and Benefits Instructions article 209.997, since his spouse and children were not living at his residence and place of duty when he was posted. However, the grievor took issue with the decision to recover over $50,000 in SE benefits he received. He argued that he never actively sought permission for an imposed restriction (IR). Rather, it was his career manager (CM) who told him that he was likely eligible to claim IR benefits. Moreover, his CM authorized two further extensions of his IR status. The grievor explained that the large debt was a significant burden for him and his family and that, had his IR not been approved in the first place, he would have moved his family to his new place of duty. He sought relief from his debt.

The Board found that the grievor had suffered an injustice as a result of the poor and negligent administration of his SE benefit and that the recovery of such a large debt from the grievor was unfair. In the past, the Board has pursued the doctrine of negligent misrepresentation in cases where grievors relied upon information/advice to their detriment and were left with a financial debt owed to the Crown. However, the result for these cases has not been positive because the Chief of the Defence Staff (CDS) has no authority to accept liability on behalf of the Crown or to settle potential claims against the Crown. Therefore, the Board found that the only possible option currently available to give the grievor relief was remission of the debt under the Financial Administration Act (FAA).

The Board recently considered a series of cases involving debts owed to the Crown. It is apparent from these files that some Canadian Forces (CF) financial officials are under the impression that debts must always be recovered and that there is no option but repayment notwithstanding the circumstances that may be involved. In the Board's view, this interpretation is erroneous and all members of the CF have recourse to the remedial provisions of the FAA, which provides at subsection 23(2.1) that a debt can be remitted if it is “unreasonable”, “unjust” or “otherwise in the public interest”.

Because the Department of National Defence does not have published criteria or guidelines for the consideration of debts for remission, the Board looked elsewhere for examples of Departmental policy. The Board noted that the Canada Revenue Agency (CRA) has a well-developed and comprehensive policy on remission of debt. The CRA sets out the following criteria for remission: 1) Extreme hardship, 2) Incorrect action or advice, 3) Financial setback coupled with extenuating factors and 4) Unintended results of the legislation. The Board indicated that timeliness on the part of the Department in discovering the error would also be a factor in assessing the equities. In looking at the circumstances of this grievance, the Board recommended that the CDS apply the CRA policy as a guideline. The Board stressed that meeting just one of the elaborated criteria could be enough to find that the debt should be remitted.

The Board found that it was a very large debt to repay for anyone in the CF, that there was no evidence the grievor acted in bad faith, that he had been forthcoming to his superiors about his situation and, that he had not been enriched by the SE benefits received. Instead, that money was used to pay room and board while he was separated from his family.

The Board also found that the extensive delay should be considered an extenuating factor to remit the debt. The error should have been detected and corrected immediately. By its own error, the institution imposed greater and greater debt on the grievor.

The Board found that the grievor's circumstances and the actions of CF officials met the CRA criteria used as guidelines. The Board recommended that the CDS partially uphold the grievance, that he direct that further recovery from this grievor be ceased immediately, that he direct Departmental authorities to prepare a submission to the TB requesting support for the remission of this debt and finally, if TB supports the remission of the debt, that the CDS direct that all monies recovered be reimbursed to the grievor.

CDS Decision Summary

CDS Decision Date: 2014–06–10

The CDS agreed partially with the Committee's findings and recommendations. He agreed that the grievor had received the SE benefits in error, having received incorrect information. The CDS indicated that he was satisfied that the grievor had not knowingly collect SE in error and he also accepted that the recovering of the debt was a significant financial burden for the grievor. The CDS concluded that while he agreed that the grievor had been aggrieved, he could not grant redress and did not agree that obtaining a remission order was the solution in this case. However, he did note that the file had been reviewed by the Director Claims and Civil Litigation, who, the CDS understood had informally resolved the matter. The CDS therefore determined that the grievance had been adequately remedied.