Citation: 2012 TCC 232
Date: 20120627
Docket: 2012-200(OAS)
BETWEEN:
SHARON KATZ,
Appellant,
and
THE MINISTER OF HUMAN RESOURCES AND
SKILLS DEVELOPMENT,
Respondent.
Docket: 2012-203(OAS)
AND BETWEEN:
THE ESTATE OF THE LATE ZENO WIONZEK,
Appellant,
and
THE MINISTER OF HUMAN RESOURCES AND
SKILLS DEVELOPMENT,
Respondent.
REASONS FOR JUDGMENT
Campbell J.
[1]
These appeals were heard together
on common evidence. The Appellants, Ms. Katz and the Estate of her late
husband, are appealing the decision of The Minister of Human Resources and
Skills Development Canada (the “Minister”) regarding the calculation of their
Guaranteed Income Supplements (“GIS”), in respect to the estate, and the
Allowance, in respect to Ms. Katz. The legislation, which is applicable and
under which the GIS and Allowance are payable, is the Old Age Security Act
(the “OAS”). This Act provides financial assistance to seniors and low
income Canadians. The GIS payments are calculated on the taxpayers’ income in a
“base calendar year”, which is defined as the last calendar year ending before
the current payment period. When an individual’s income suddenly reduces, section
14 provides exceptions to the general rule that GIS will be calculated on a
prior year’s income. Section 14 is therefore meant to address situations where
an individual ceases to hold an office or employment or ceases to operate a
business or where the income loss is due to termination or reduction in
“pension income”, a term defined in section 14 of the Regulations. Both
Respondent counsel and Ms. Katz agree that RRIF income is “pension income”
pursuant to the definition in Regulation 14.
[2]
Subsections 14(4) and
14(6) apply where the loss of income is due to a loss of or reduction in
pension income. These are the provisions under which the Appellants are seeking
the adjustments. Where relief is granted under section 14, adjustments to
income are calculated pursuant to section 18.
[3]
The Appellants are
seeking adjustments in respect to their entitlement to the GIS and Allowance
pursuant to subsection 14(4) and 14(6). The Minister denied those adjustments
because the Appellants did not suffer a loss of RRIF income. The reduction in
their pension income was not mandatory but was brought about due to their
discretionary withdrawals.
[4]
These appeals have a lengthy
history, peppered throughout by the many mistakes made by the Minister’s office.
The Minister’s decision that is being appealed is dated June 23, 2010. According
to the evidence of Ms. Katz, the Minister requested further information on June
9, 2010 and provided them with 90 days to respond. However, the Minister’s
decision was rendered prior to the termination of that 90 day period on June
23, 2010, just one of the many errors of the Minister sprinkled throughout
these appeals. There are two payment periods that are relevant and common to
these appeals: July, 2007 to June, 2008 and July, 2008 to June, 2009. The
June 23, 2010 decision denied the Appellants the adjustments for the period
July, 2008 to June, 2009.
[5]
The Appellants initially applied
for the GIS and Allowance in February, 2008. On the relevant application
form, an applicant could indicate whether there was a reduction in pension
income between January 1, 2006 and December 31, 2008. Mr. Wionzek
indicated that his maximum pension income for 2008 would be $2,529.76, which
was a combination of RRSP and RRIF amounts. He did not state what the balance
would be in each of these accounts. On March 4, 2008 the Minister requested
more details.
[6]
On March 10, 2008, Mr. Wionzek
replied and indicated, among other things, that the sum of $20,422.82 had been
withdrawn from the RRIF in 2007, that less than $2,600.00 remained in the RRSP
and RRIF accounts and that the Appellants’ 2008 income was not predictable. The
Appellants’ application was subsequently approved, although they received no
information on how the GIS was calculated.
[7]
When a new payment period commenced
in July, 2009, the payments that both Appellants were receiving increased
substantially. Realizing the Minister had not granted an “option” for the 2008 -
2009 payment period, the Appellants, on October 19, 2009, requested a review of
the amounts they were entitled to receive. This request was for the entire
period that the Appellants received the GIS and Allowance: January, 2008 to
June, 2009. Although the word “option” is not used either in the Act or
the Regulations, the Minister considers an “option” to be a
recalculation of estimated income based on a loss of either pension income or a
source of employment income under section 14 of the Act.
[8]
On November 12, 2009, a Benefit
Officer verbally granted an option to the Appellants for the payment period of
July, 2007 to June, 2008, commencing January, 2008 and ending June, 2008, but
denied the option for the payment period July, 2008 to June, 2009. On January
14, 2010, Mr. Wionzek requested a written review of this verbal decision,
claiming that an option should also be granted for the payment period July,
2008 to June, 2009. It was not until Ms. Katz followed up with the “Office of
Client Satisfaction” in June, 2010 that an analysis of the January, 2010
decision was completed.
[9]
On June 9, 2010, the
Minister confirmed the granting of the option for the payment period January,
2008 to June, 2008. Mr. Wionzek received a payment of $1,472.00 while Ms. Katz
received $4,021.86. However, the Minister refused to consider the period
commencing July, 2008 to June, 2009 due to the recent implementation of a new
policy. This June 9, 2010 letter advised the Appellants that if they wished the
Minister to reconsider the decision, they had 90 days to request a review. Well
in advance of the 90 day period elapsing, the Minister, on June 23, 2010, again
confirmed the decision to not adjust the 2008 - 2009 amounts because the
Appellants had not submitted a “Statement of Estimated Income” for the 2008 –
2009 period. This June 23, 2010 letter also detailed the Minister’s error
respecting the calculation of the entitlement for the January to June, 2008
period and the forgiveness of the resulting overpayment.
[10]
That paragraph dealing
with the Minister’s error stated the following:
According to the information in your file, your
entitlement for the period of January to June 2008 was erroneously calculated
based on an estimate of your spouse’s 2008 income (combined with your actual
2006 income for the base calendar year).
As your spouse did not complete or submit a
signed 2008 Statement of Estimated Income (ISP3041) for the reported reduction
in RRIF income, the adjustment of your entitlement was erroneously made without
his or your consent or knowledge. Although you did receive a higher benefit
for this period, the adjustment rate was paid to you in error. Since your
spouse did not request an option at that time, and since you had no knowledge
of the matter in which your benefit was calculated, the resulting overpayment
for allowing the option will be forgiven.
[11]
During the hearing, Ms. Katz
referenced many of the errors committed by the Minister’s office. Her
frustration and exasperation were evident but understandably so. By the end of
June, 2010, the Minister had committed the following errors commencing in 2008:
(1)
Not promptly informing
the Appellants that their GIS and Allowance amounts were not based on their
2008 estimated income due to a lack of documentation;
(2)
No written decision
from the Minister documenting the November 12, 2009 decision;
(3)
No response to their
January 14, 2010 letter until Ms. Katz followed up with the Minister in June,
2010;
(4)
Shifting explanations
regarding the reasons why the option was denied. First it was because the law
changed as of July, 2008 (Bill C-36, now S.C. 2007, c. 11 which amended
subsection 14(6) and limited it to only pension or employment income. However,
these changes are not applicable to these appeals). Then the Minister’s
explanation stated that it was because there was no statement of income. And
then the explanation offered was because a new policy denied RRIF income as
pension income.
I am confident that
in dealing with these varied approaches by Service Canada, the Appellants at
times felt as if they were either walking through a field of land mines or
trying to keep their heads above quicksand.
[12]
Feeling they had no other avenue,
the Appellants appealed the decision of June 23, 2010 in September, 2010 to the
office of the Commissioner of Review Tribunals, which referred the matter to
this Court under subsection 28(2) because the appeals deal with a determination
of income.
The Appellants Argument
[13]
Ms. Katz was an impressive and
capable witness who displayed a remarkable handle on a complex piece of
legislation both through her documentation and her testimony. She is seeking,
on her own behalf as well as her late husband’s estate, an adjustment to the
GIS and Allowance amounts paid in the period, July, 2008 to June, 2009.
[14]
She is requesting that these
adjustments be based on their 2008 income, rather than their 2007 income. She
claims that they submitted a statement of estimated income as required by
subsection 14(4) and that they have suffered a loss of pension income due to
the reduction in the RRIF. In addition, they are seeking a decision from this
Court that would strike down the Minister’s policy regarding the minimum annual
withdrawal that is required in an RRIF, as being inconsistent with the
legislation. Finally, the Appellants seek a directive from this Court that the
Minister’s withholding of policy information that should be otherwise available
to taxpayers, violates natural justice principles.
The Respondent’s Argument
[15]
Respondent counsel in her
submissions submitted that the issue of determination of entitlement to these
benefit amounts is a very narrow one based upon the answers to two questions: did
the Appellants suffer a loss of pension income and if so, when did the loss
occur. The Respondent relied upon the decision of this Court in Ward v.
Minister of Human Resources and Social Development, [2008] T.C.J. No. 21,
in submitting that the Appellants did not “suffer” the loss since their
withdrawals in 2007 were discretionary and not mandatory. In particular, the
Respondent argued that without documentation, especially bank statements, this
Court will be unable to verify if there was in fact a loss of pension income. Despite
Respondent’s requests, Ms. Katz over a four year period has not produced those
bank statements which would substantiate the RRIF value. Counsel also indicated
to the Court that if Ms. Katz had produced documentary evidence to establish
that the RRIF balance was reduced to zero, then the Minister would have
consented to judgment.
Analysis
[16]
During the hearing, Respondent
counsel, to her credit, offered Ms. Katz a further opportunity to produce the
bank statements in an effort to settle. Ms. Katz refused to produce those
documents and, although invited by counsel to do so, I refused to order the
Appellant, who had assumed carriage of her appeal before this Court, to produce
those documents. It must be remembered that Respondent counsel was not
undertaking to settle upon the production of those documents but to settle only
if those documents, when produced, contained the essential information upon
which the Minister could consent.
[17]
It must also be remembered that
the Appellants have the onus or burden of proof in these appeals and not the
Minister. In addition, the jurisdiction of this Court in respect to appeals
under the OAS is established in subsections 12(1) of the Tax Court of
Canada Act and 28(2) of the OAS Act. The majority of the Appellants’
requests to this Court are beyond its jurisdiction. Those requests include
correction of administrative errors; ordering Service Canada to pay certain
amounts, including interest; ordering Service Canada to disclose its policies
that govern how the Minister makes decisions; a declaration that Service
Canada’s actions violate the principles of natural justice; and a directive
that the new rules respecting GIS and Allowance will not apply to the
Appellants. In respect to this last request, it remains unclear which “rules”
the Appellants are referencing because the Minister has shifted the “rules”
many times throughout the history of these appeals to deny the Appellants the
remedy they seek.
[18]
The Appellant, Ms. Katz, references
in her materials to the Court, “issues in law which may have to be referred to
the Federal Court of Canada”. In making that statement, Ms. Katz may have
recognized that many of those issues which she placed before me where in fact
beyond my jurisdiction.
[19]
I must agree with Respondent
counsel in her assessment of the issues before me and, that is, the very narrow
questions of whether there is a loss of pension income that the Appellants
“suffered” and, if so, when did the loss occur.
[20]
The Respondent argued
that without appropriate documentation, the Appellants have failed to establish
that a loss in fact occurred, when it occurred and that such a loss, if it
occurred, was not at their discretion.
[21]
From the evidence
adduced, I believe some type of loss did occur but without those banking
documents, the Appellant has failed to establish the existence of a loss of
pension income, when it occurred, the amount of the loss and whether the
pension withdrawals were discretionary or not. Exhibits R-4 and R-5, which were
spreadsheets from the Appellants returns for taxation years 2008 and 2009, show
an entry of $1,445.00 on line 115 referenced as “other pension income” on Mr.
Wionzek’s 2008 return but there is no such entry on line 115 of his 2009 return.
Respondent counsel suspected that this omission of an entry on line 115 in the
2009 return meant a loss of pension income; however, it was only supposition.
[22]
Since the Appellants
did not produce documentation relating to the RRIF, despite offers both prior
to and during the hearing, I am unable to conclude that loss of pension income
occurred, which is a prerequisite to engaging sections 14(4) and 14(6) of the Act
for an adjustment to the GIS and Allowance. I would note also that if the
statements had been produced, I would have been prepared to ignore the
requirement respecting the Minister’s prescribed forms pursuant to section 35
of the Act.
[23]
Respondent counsel
relied upon the decision in Ward in respect to whether the Appellants
“suffered” a loss. Hershfield, J. in discussing whether a loss was “suffered”
concluded that where an individual controlled the ability to suffer the loss:
[16]
Clearly then, the subject provision
contemplates something other than forecasted pension reductions control over
which is entirely in the discretion of the annuitant. The annuitant is required
to "suffer" a loss. The loss must be a "fait accompli". The
forecast of a loss over which the annuitant has control to suffer, or not, is
not a loss suffered. … (Paragraph 16)
The Appellants’ position regarding the Ward
decision is that it is incorrectly decided on both the facts and the law but in
any event the Appellants did in fact suffer a loss, regardless of whether or
not it was a “fait accompli”. The Appellants proposed a dictionary definition
of the word “suffer”. However, Ms. Katz did not address the potential abuse
arguments raised by Hershfield, J. in Ward respecting individuals who
artifically increase their RRIF’s to obtain an increased benefit. Although
“suffer’ is not defined in the Act, the term, as it is used in the
provision, must mean that the loss happens without any action on an individual’s
part respecting the minimum withdrawal amount per year. In other words, a
choice respecting whether a loss will occur or not occur, is not within the ambit
of this provision because choice implies some form of control over the
occurrence or non‑occurrence of the loss.
[24]
The Respondent also
submitted that the elimination of a RRIF and the consequent “loss” altogether of
RRIF payments could trigger an “option” as it would be beyond the taxpayer’s
control and therefore not discretionary. Again because of a lack of proper
documentation, there is no evidence, in these appeals, of the value of the RRIF,
or if the December, 2007 withdrawal depleted the RRIF.
[25]
The Appellants
submitted that the two decisions of Mattina v. Minister of Human Resources
Development [2006] T.C.J. No. 302 and of Henriques v. Minister of Human
Resources Development [2006] T.C.J. No. 397 were relevant to these appeals.
However, both can be easily distinguished based on the different investment
entities utilized in the cases. In both these decisions, access to the funds
was not controlled by the pensioners but instead they were defined payments
from a managed investment entity. A RRIF is a different investment animal
because it retains the element of control by the pensioner. These decisions
would be applicable to the present appeals only if RRIF payments could be
classified as pension payments under subregulation 14(f) and thus control would
be irrelevant. It is apparent, however, that Hershfield, J. was aware of these
cases as he referenced them but did not rely on them.
[26]
Finally, I want to
address the two payment periods, January 2008 to June 2008 and July, 2008
to June, 2009. The Appellants put only the second period, July 2008 to June,
2009 before this Court. The Respondent argued that both periods are in issue
for two reasons:
(1)
The Appellants
requested a reconsideration of the entire two periods that is the period of time
they received the GIS and;
(2)
The drop in pension
income in early 2008 would affect the 2007-2008 period.
As previously noted, the Minister has
already issued its decision for the 2007-2008 period (January 2008 - June 2008)
and although the Minister admits that decision was in error, the Appellants
liability for the overpayment has been forgiven. This was clearly evidenced in
the June 23, 2010 decision issued by the Minister. Since the Appellants did not
request a reconsideration of the 2007 – 2008 period, I must conclude that the
Minister cannot put this payment period into issue. If I allowed this period to
go forward, I would in effect, be permitting the Minister to appeal its own
decision. In an income tax context, the Minister of National Revenue would not
be permitted to appeal its own assessment and I see no reason not to extend
this principle to the matter before me to preclude the Minister from
challenging the 2007 – 2008 period.
[27]
In conclusion, I am
dismissing the Appellants’ appeals in respect to the July, 2008 to June,
2009 payment period because without the pertinent RRIF documentation, the
Appellants are unable to meet their burden which was to establish the
occurrence of a loss of pension income, the timing of that loss and whether it
was occasioned by discretionary or mandatory withdrawals. Consequently, the
Appellants cannot establish that they in fact “suffered” a loss in accordance
with the decision in Ward.
[28]
The Minister will not
be permitted to alter its decision respecting the first payment period, 2007 –
2008 and its request for a reconsideration of its decision affecting January
2008 to June, 2008 is denied. Although made in error, the Minister is simply
“stuck” with its own bad judgment call.
[29]
Lastly, although I have
no jurisdiction to declare certain Service Canada policies and practices as
unsatisfactory and/or illegal, I am in no way condoning the wholly unacceptable
and reprehensible tactics employed by Service Canada in their dealings with
these senior Appellants. The behaviour was highhanded and anything but
commendable. Taxpayers, particularly seniors, deserve better from government
departments in this country.
[30]
The appeals respecting
the payment period, July, 2008 to June, 2009 are dismissed, without costs.
Signed at Ottawa, Canada this 27th day of June 2012.
“Diane Campbell”
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