# 2012-105 Pay and Benefits, Overpayment

Case Summary

F&R Date: 2012–12–21

The grievor submitted a grievance after being informed that she would have to reimburse an amount of almost $6,000 as a result of having received free rations and quarters (R&Q), as well as incidentals during the periof of 21 July 2009 to 30 June 2010. The grievor, an 18-year old reservist at the time, was led to believe that she was entitled to the benefits and relied on the information she was provided. Insisting that her home unit should be held accountable for the errors and lack of due diligence, the grievor requested that she be reimbursed all monies recovered.

The initial authority (IA) found that the decision to recover was appropriate and justified since the grievor had no entitlement to R&Q and incidentals at Crown expense for the period in question. The IA further determined that the grievor owed an additional amount for the R&Q and incidentals she received for the period 1 April 2008 to 31 March 2009 and ruled that recovery action should have to be initiated for those benefits as well. However, the IA added that since the grievor had been posted on 1 April 2008, she should have received relocation benefits at that time, as well as the Reserve Relocation Allowance (RRA). The IA denied the grievance, but requested that the grievor be paid the RRA.

The Board noted that the grievor was posted on 1 April 2008 and that although subsequent messages indicated she was attach posted, this was not the case. In fact, in the circumstances, the Board was of the view that there was simply no authority, on either posting or attach posting to grant the grievor free R&Q and incidentals. Based on the evidence, the Board agreed with the IA and found the grievor was not entitled to R&Q and incidentals at public expense during the periods of service for which recovery action was ordered.

That being said, in the Board's opinion, some other important facts had to be considered; the Canadian Forces (CF) authorized and provided R&Q and incidentals to the grievor during the various periods of service in question and the grievor made use of the R&Q and incidentals. As well, at a later date, once these errors were discovered, the Director Compensation and Benefits Administration explained that the origin of the errors was directly attributable to the misinterpretation of the applicable policies by CF experts. Nonetheless, the Board noted that the CF's position was that the grievor received benefits to which she was not entitled and the overpayment must be recovered.

On the other hand, the Board acknowledged the grievor's position that the CF represented to her that she was entitled to the benefits she received and because she relied on that information, she did not take action to avoid accumulating the debt at issue. The Board concluded that, in the circumstances, recovery action was unfair and that the doctrine of estoppel was applicable.

The Board pointed out that although the Crown has the right to recover an overpayment of salary or allowances to CF members, the provision of the Financial Administration Act granting that authority states that the Crown "may" rather than "shall" recover any overpayment. Consequently, in the Board's opinion, it does not preclude the application of estoppel in cases of overpayment to CF members. The Board added that the principle of estoppel has been applied in a number of cases involving the Crown in its capacity as employer and indicated that, in these cases, it was determined that the Crown may be estopped from recovering an overpayment in the following circumstances: the Crown must have made an erroneous representation and the other party must have relied on that representation to their detriment.

In the case at hand, the Board pointed out that the CF made erroneous representations to the grievor regarding the applicable benefits; these erroneous representations continued and resulted in significant financial hardship for the grievor. The Board found that the CF was estopped from recovering the grievor's overpayment.

Although, in the Board's opinion, the doctrine of estoppel represented the most appropriate remedy in this case, the Board acknowledged that the Chief of the Defence Staff (CDS) could find differently. If that were to be the case, the Board was of the view that the CDS should exercise his discretion under Queen's Regulations and Orders for the Canadian Forces article 208.52 and remit the charges for R&Q. The Board added, however, that this alternative would only provide limited redress as the CDS would not be able to remit the amount relating to the incidentals.

The Board recommended that the CDS uphold the grievance.

The Board recommended to the CDS that he direct the reimbursement of all monies recovered from the grievor to date and that no recovery action be taken for the R&Q and incidentals the grievor received during the period of 1 April 2008 to 31 March 2009.

In the alternative, the Board recommended that the CDS remit the R&Q charges for the contested periods.

CDS Decision Summary

The CDS, the Final Authority (FA), agreed with the Board's finding that the grievor had not been entitled to free Rations & Quarters (R&Q) in relation to the service in question. The FA also agreed that the erroneous provision of free R&Q was the direct result of the misinterpretation of the applicable policies on the part of Canadian Armed Forces (CAF) subject matter experts.

In light of the CAF's errors and the fact that the grievor could not retroactively avail herself of the relocation benefits she ought to have been granted, the FA directed that the R&Q charges paid by the grievor be wholly remitted.

The FA noted that the grievor had accepted a settlement offer from the Director Claims and Civil Litigation regarding her incidental claim.