Date: 2010100712
Docket: T-1267-09
Citation: 2010 FC 1007
BETWEEN:
ATTORNEY
GENERAL OF CANADA
Applicant
and
GEORGE
CHURCHER
Respondent
REASONS FOR JUDGMENT
[1]
This
is an application pursuant to section 18.1 of the Federal Courts Act,
R.S.C. 1985, c. F-7, for judicial review of a decision of an adjudicator of the
Public Service Labour Relations Board, allowing in part a grievance by George
Churcher (the respondent) and ordering the Department of Fisheries and Oceans
(DFO) to reimburse him $2,868.93.
[2]
The
applicant requests that the adjudicator’s decision be set aside to the extent
that it orders DFO to reimburse the respondent and that the Court confirm that
the respondent was overpaid by $11,957.41. In the alternative, the applicant
requests that the matter be remitted to the adjudicator with direction that the
amount of overpayment was $11,957.41 and that the respondent must repay it in
its entirety. The applicant also requests the costs of the application.
[3]
The
respondent requests that the application be dismissed with costs. In the
alternative, he requests that the matter be remitted to the adjudicator to hear
submissions as to the amount of overpayment that DFO is entitled to recover
from the respondent.
[4]
The
question underpinning this case is whether an employee must reimburse a net or
a gross amount of overpayment to the employer.
Background
[5]
The
respondent is an engineer with DFO. Over the course of several years, he had
received overpayments of vacation pay for reasons that are not material to this
application. It is agreed that the gross total of those overpayments was
$11,957.41. It is also not disputed that, after deductions of income tax,
employment insurance, and other amounts, the net amount received and cashed by
the respondent was $9,088.48.
[6]
When
DFO discovered the overpayments, it notified the respondent that it would
withhold from him $11,957.41. The respondent submitted a grievance. He argued
that the collective agreement as well as the doctrine of estoppel prevented DFO
from recovering such overpayments and demanded reimbursement of the amounts
recovered. He summarized the remedies he requested as follows:
(1) That the employer cease and desist
with any and all recovery actions; (2) that no further recovery actions be
pursued; (3) that any monies collected as a result of these inappropriate
recovery actions be restored to me; and (4) that I be made whole in every way.
[7]
This
grievance, along with another one, was heard by the adjudicator from March 3 to
March 6, 2009. The adjudicator found that DFO was entitled to recover its
overpayments from the respondent. This finding is not challenged in the present
application.
[8]
As
the adjudicator noted at paragraph 7 of his reasons, the parties had agreed “.
. . that the amounts reflected in Exhibit E-22 would be considered factual.”
Exhibit E-22, reproduced by the adjudicator following paragraph 7 of his
reasons, put the “Gross $ value of Overpayment” [sic] at $11,957.41. The
issue of the amount of overpayment which DFO was entitled to recover was not
otherwise raised before the adjudicator. The debate was rather on the question
whether DFO could recover at all. Concluding his analysis on this issue, the
adjudicator wrote, at paragraph 132 of his reasons:
I concur with the employer’s argument
that the $11,957.41 in overpayment is a debt to the Crown and that […] the
recovery of this debt is not prohibited [sic] clause 14.03 of the
collective agreement. I note that the net amount of the cheques cashed by the
grievor from 2001 to 2005 was $9088.48 based on Exhibits E-17 to E-20.
Therefore, I order the employer to reimburse the grievor $2863.93.
[9]
The
applicant is now challenging the validity of this order.
Issues
[10]
The
issues are as follows:
1. What is the standard
of review?
2. Did the adjudicator have
jurisdiction to determine the amount of overpayment that DFO could recover?
3. Did the adjudicator
err in his determination of the amount of overpayment which DFO was entitled to
recover, and if so, what is the appropriate remedy?
Applicant’s Written Submissions
[11]
The
applicant submits that the Court owes the adjudicator no deference on issues of
fairness and jurisdiction. The issue of the amount of overpayment that may be
recovered is one of mixed fact and law and the standard of review is
reasonableness.
[12]
The
applicant submits that the adjudicator has no jurisdiction to rule on issues
other than those raised by the grievance as filed or those on which both
parties agree. In this case, the grievance raised the issue whether the
collective agreement prevented DFO from recovering amounts overpaid to the
respondent, but not that of the amount of overpayment that could be recovered.
That issue was neither raised at the hearing nor consented to by the parties.
Furthermore, the respondent expressly agreed on the amount of the overpayment.
Having decided the issue raised by the grievance in favour of DFO, the
adjudicator exhausted his jurisdiction and ought not to have proceeded to
consider any further issues.
[13]
By
failing to conclude his decision at that time, the adjudicator breached the
rules of natural justice and procedural fairness because he did not give the
parties an opportunity to address the new issue he raised. The Federal Court of
Appeal, this Court, as well as other courts, have all found that an adjudicator
who raises an issue of his own volition, without giving the parties a chance to
make submissions, breaches his duty of fairness and commits a reviewable error.
In addition, in this case, the applicant could not know that the amount of
overpayment that could properly be recovered would be at issue because the
“grievance does not question the amount of the overpayment”, the parties agreed
on this amount and the adjudicator did not raise the issue.
[14]
The
adjudicator erred in fact on this issue by ignoring a statement of fact agreed
by the parties. The parties agreed that the amount of the overpayment was
$11,957.41 and it was unreasonable to find otherwise.
[15]
The
adjudicator also erred in law because ordering the respondent to pay back
anything less than the full amount of the overpayment he received puts him in a
better position than that which he would have been in but for the overpayment.
The respondent received $11,957.41 despite the fact that part of this amount
was deducted to his credit for income tax, employment insurance, etc.
[16]
The
applicant submits that the adjudicator’s order that DFO reimburse the
respondent $2,868.93 must be quashed. Furthermore, it is not necessary to remit
the matter to the adjudicator. The parties are agreed that the amount of the
overpayment was $11,957.41 and the Court should merely ratify this agreement.
In the alternative, the matter should be remitted but with direction that the
amount of overpayment is $11,957.41 and DFO was entitled to recover it all.
Respondent’s Written Submissions
[17]
The
respondent submits that the real issue in this application is simply whether
the remedy chosen by the adjudicator was rationally connected to the
entitlements of the parties and that the applicable standard of review is
reasonableness.
[18]
The
issue before the adjudicator was whether DFO could recover $11,957.41 from the
respondent. The adjudicator did not fully accept either party’s position and
held that DFO could recover some of its overpayment, but no more than the
respondent actually received. All the relevant evidence was before the
adjudicator. The parties were agreed on the gross amount of overpayment to the
respondent. There was also no dispute on the amounts actually received by the
respondent and DFO submitted cheques evidencing these amounts. However, the
parties did not agree on the amount which DFO was entitled to recover.
[19]
The
parties had an opportunity to be heard; there were four days of hearings. While
the parties made no submissions on the amount of overpayment recoverable, they
could have done so. It was their counsels’ decision not to and DFO having
chosen not to argue the point, the applicant cannot now complain that the
adjudicator made a decision on it.
[20]
Subsection
228(2) of the Public Service Labour Relations Act, S.C. 2003, c. 22,
(the PSLRA) authorizes an adjudicator to “make the order that he or she
considers appropriate in the circumstances.” The adjudicator did just that. He
was not bound, in crafting a remedy, by the submissions of either party.
[21]
The
remedy chosen by the adjudicator is reasonable and consistent with labour law
practice. The PSLRA grants adjudicators a broad discretion as to the choice of
a remedy and this discretion should not be fettered simply because neither
party suggested a particular remedy.
[22]
The
application for judicial review should be dismissed. If it is not, the Court
should remit the matter back to the adjudicator to hear submissions on the
issue of the amount of overpayment that DFO is entitled to recover. If the
problem with the adjudicator’s decision is that he failed to give the parties
an opportunity to be heard, the logical remedy is to make sure that the parties
have such an opportunity.
Analysis and Decision
[23]
Issue
1
What is the standard of review?
Administrative decisions on
true questions of jurisdiction, that is questions of whether or not the
tribunal had the authority to make the inquiry, are subject to review on the
standard of correctness (see Dunsmuir v. New Brunswick, 2008 SCC 9,
[2008] 1 S.C.R. 190, at paragraph 59). In reviewing such decisions, a court
will not show deference to the decision maker’s reasoning process. It will
rather undertake its own analysis of the question. Similarly, on issues of
procedural fairness, a reviewing court will not defer to the administrative
decision maker, because “[i]t is for the courts … to provide the legal answer
to procedural fairness questions” (see C.U.P.E. v. Ontario (Minister of
Labour),
2003 SCC 29, [2003] 1 S.C.R. 539, at paragraph 100).
[24]
As
for the substantive issue raised by the present application, it is one of mixed
fact and law and the applicable standard of review is that of reasonableness (see
Dunsmuir above, at paragraph 53).
[25]
Issue
2
Did the adjudicator have
jurisdiction to determine the amount of overpayment that DFO could recover?
I cannot agree with the
applicant’s argument that the issue of the amount of overpayment recoverable
was not raised by the grievance and that the adjudicator was acting beyond his
jurisdiction in deciding it. The grievance demanded that the respondent “be
made whole.” In order to make the respondent whole, the adjudicator had to
determine what injury, if any, he had suffered. The adjudicator was not limited
to deciding, as an abstract proposition, whether DFO could recover its
overpayment. Such a general ruling would have been of limited use to the
parties. The adjudicator was obliged to decide how much DFO could recover from
the respondent. It follows that the grievance conferred on him the jurisdiction
to answer that question.
[26]
Had
the parties agreed on the amount of overpayment recoverable, this agreement
would have limited the scope of the adjudicator’s jurisdiction. However, I do
not see the adjudicator’s reasons as indicating that they so agreed. I agree
with the respondent that while the parties agreed on the gross amount of
overpayment made by DFO and did not dispute the net amount received by the respondent,
they did not agree. Indeed, they appear not to have asked themselves which of
these two amounts DFO could recover if it could recover anything.
[27]
I
am also of the view that the adjudicator did not breach his duty of fairness in
answering that question despite not having received submissions from the
parties. Having decided that DFO could recover the amount it overpaid to the
respondent, the adjudicator inevitably had to determine what that amount was.
The parties had to anticipate that this question would arise and since all the
necessary evidence was already before the adjudicator, their failure to do so
or to present any arguments on the question, did not prevent him from making
this determination.
[28]
The
cases on which the applicant relied do not assist him. I note that none of the
cases deals with an adjudicator’s power to ascertain the quantum of the remedy
the entitlement to which was the principal object of the dispute between the
parties. The general proposition they support, that an adjudicator cannot of
his own volition raise a new or distinct issue not raised by the parties, is not
disputed. But the issue of the amount of the overpayment recoverable was not
distinct from those raised by the parties themselves. The parties disputed, in
effect, whether DFO had a remedy against the respondent. It follows, absent any
stipulation by the parties to the contrary, that they also disputed what that
remedy was.
[29]
Issue
3
Did the adjudicator err in
his determination of the amount of overpayment which DFO was entitled to
recover, and if so, what is the appropriate remedy?
The above
discussion disposes of the applicant’s contention that the adjudicator made an
error of fact by ignoring a statement of fact agreed by the parties. The amount
of overpayment recoverable which he chose was the total of the amounts received
by the respondent, as it appeared from the cheques put into evidence by the
applicant. This choice was not unreasonable, in that it was not “an erroneous
finding of fact that it made in a perverse or capricious manner or without
regard for the material before [the adjudicator].” (see Federal Courts Act,
R.S.C. 1985, c. F-7, paragraph 18.1(4)(d)).
[30]
I
do, however, find the adjudicator’s decision unreasonable because it lacks the
requisite transparency, intelligibility and justification. The adjudicator
found that “the $11,957.41 in overpayment is a debt to the Crown and that … the
recovery of this debt is not prohibited” (reasons for decision, paragraph 132).
He does not explain why the full amount of this debt could not be recovered.
While the adjudicator “note[d] that the net amount of the cheques cashed by
[the respondent] from 2001 to 2005 was $9,088.48,” and thus, seems to have
applied the principle nemo dat quod non habet.
[31]
I
cannot, from the decision of the adjudicator, determine why he ordered the
amount of $2,868.93 to be reimbursed to the respondent by DFO. Although I
believe that the respondent should not have to repay the $2,868.93 if he did
not receive a benefit from the payment, it is unclear from the decision whether
this was the case. There was no analysis, for example, about whether this
amount was set off against the respondent’s tax liability or his deductions for
benefits. I simply cannot tell from the decision whether the applicant received
a benefit from the funds.
[32]
As
the adjudicator’s decision is unreasonable only with respect to remedy relating
to the order for payment of the amount of $2,868.93, that portion of the
decision must be set aside. I am of the view that this matter should be
referred back to the same adjudicator to hear submissions and evidence, if necessary,
with respect to the status of the amount of $2,868.93. The adjudicator would
then make a decision with respect to whether DFO should reimburse the
respondent in the amount of $2,868.93.
[33]
There
shall be no order as to costs because of the nature of the issue in this case.
Neither party can be said to have caused the problem.
“John
A. O’Keefe”
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