Docket: T-1028-13
Citation: 2014 FC 488
Ottawa, Ontario, May 23, 2014
PRESENT: The
Honourable Mr. Justice Mosley
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BETWEEN:
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MARCUS BRAUER
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Applicant
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and
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ATTORNEY GENERAL OF CANADA
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Respondent
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JUDGMENT AND REASONS
[1]
Major Marcus Brauer has served in the Canadian
Forces (CF) since 1988. Over those 26 years, he has been posted to Sault Ste.
Marie, Ottawa, St-Jean-sur-Richelieu, Petawawa, Afghanistan, Borden, Edmonton
and Halifax. He and his wife have five children who range in age from 4 to 13.
Their last move to Halifax resulted in an $88,000 loss to the family on the
sale of their home in a community, Bon Accord, outside Edmonton. That loss was partially
offset by a payment of $15,000 under the Canadian Forces Integrated Relocation
Program Directive (2009) (CFIRP Directive). Major Brauer contends that the full
amount of the family’s loss should be covered under the CFIRP Directive as Bon
Accord was a “depressed market area”, as specified
in section 8.2.13 of the CFIRP Directive, when they had to sell their home
because of his transfer to Halifax.
[2]
This is Major Brauer’s application for judicial
review, pursuant to section 18.1 of the Federal Courts Act, RSC 1985, c
F-7, of a July 17, 2012 decision by the Treasury Board of Canada Secretariat
(TBS), which declined to designate Bon Accord as a “depressed market area” and
thereby authorize full compensation for the family’s financial loss.
[3]
For the reasons that follow, the application is
granted.
I.
BACKGROUND:
[4]
The posting to Canadian Forces Base (CFB)
Edmonton occurred in 2007 when the applicant was stationed at CFB Borden. It
was in conjunction with a promotion to the rank of Major. At the time, the
applicant and his wife had three children and she was pregnant. He was concerned
about the cost of housing in Edmonton and wrote to his career manager
requesting a posting in Ontario or the East Coast:
I have done an initial assessment of the impact
on my family with a posting to EDMONTON and it revealed several issues which
would be minimized if a posting closer to home were available. They are as
follows:
[…]
d. Cost of housing in EDMONTON, a suitable home
will cost no less than $400,000-$450,000 for three children and 2 pets, this is
beyond our means and PMQs [private married quarters] are not currently
available (long waiting list). This financial strain would add to an already
stressful situation.
[5]
Major Brauer was advised in response that if he
did not move to Alberta he would not be able to keep his rank and would likely
be posted to CFB Edmonton regardless. In preparation for the move, he applied
for on-base rental accommodations, but there was a two-year waiting list for
private married quarters (PMQs). Civilian rentals cost more per month than a
mortgage. Major Brauer and his wife considered that buying a home was the only
viable option. On June 5, 2007 they bought a modest two-story house in Bon
Accord, Alberta for $405,000.
[6]
Bon Accord is located 40 kilometres north of
Edmonton. Major Brauer’s uncontradicted evidence is that “the municipality of Bon Accord has a population of
approximately 1,500 and its own municipal town council, mayor and civic
services.”
[7]
In 2010, Major Brauer was relocated to CFB
Halifax. On April 26, 2010, the Bon Accord house was listed with a real estate
agent for the suggested price of $349,000. This list price was $46,000 less
than what the family had paid. On May 4, 2010, the list price was reduced to
$329,000. The reason, provided by Major Brauer and his real estate agent, is
that the housing market in Bon Accord had dramatically declined since 2008
based on announcements that multi-billion dollar industrial projects in the
region were on hold, potentially permanently. The house was eventually sold for
$317,000, resulting in an $88,000 loss for Major Brauer and his family. The
loss was financially devastating to the family and beyond their capacity to
absorb.
[8]
On May 10, 2010, Major Brauer sent a request to
the CF Director of Compensation and Benefits Administration (DCBA) for Home
Equity Assistance (HEA) beyond the generally applicable $15,000 maximum under
the CFIRP Directive. In accordance with the CFIRP Directive (see attached Annex
A), Major Brauer included a Bon Accord market analysis prepared by a member of
his realtor team, Mr Brad Redekopp, who indicated that the market in Bon Accord
had suffered a 23.11% decline due to reasons particular to the area. He noted
that while 30 houses had sold in Bon Accord in 2007 and 40 in 2008, only 6 had
been sold as of May 2010. The realtor reviewed the local economic factors that
had depressed the real estate market in Bon Accord in 2010. These included
postponement of local pipeline development and construction of the Suncore and
Petro-Canada upgraders, attributed to the global credit crunch, plunging crude
oil prices and cost increases.
[9]
On June 1, 2010, Major Brauer’s request was forwarded
to a DCBA Adjudicator. On July 9, 2010, the DCBA Adjudicator denied Major
Brauer’s request for reimbursement of 100% of his equity loss through HEA. The
DCBA Adjudicator noted that “… TBS has advised DCBA that
there are/were no designated depressed markets in Canada. As such, the
[grievor’s] req for 100% HEA loss from Core is denied.”
[10]
Major Brauer submitted a grievance from this
decision to the Director General Canadian Forces Grievance Authority (DGCFGA)
on July 13, 2010. He sought a reversal of the DCBA decision arguing in part
that he had been provided with a generic denial and that his request had not
been assessed by the TBS, as it should have been in accordance with the CFIRP
Directive.
[11]
In a letter dated September 15, 2010, the
initial authority (IA) noted that the Department had no authority to amend the
CFIRP Directive or extend a benefit beyond its prescribed margins, and
explained that no locations in Canada had been designated with depressed market
status for 2010. The IA also stated:
Since the member’s grievance pertains to a
matter prescribed by the Governor in Council in regulations, the subject
grievance is hereby returned without further action. The grievor should be
advised that a request to amend a policy or a TBS decision should be staffed
administratively through his chain of command.
[12]
On October 10, 2010, Major Brauer requested
adjudication by the final authority (FA), the Chief of the Defence Staff (CDS).
The CDS referred the grievance to the CF Grievance Board (Board or CFGB) to
issue findings and recommendations. The Board requested further information
from the DCBA which indicated on March 11, 2011:
To pay the benefit we would have to have a
document that says that Edmonton is a depressed market. The default
position of the policy is that nothing is a depressed market unless TBS so
determines. That no such document exists is proof that Edmonton is not a
depressed market. We did apply to have Edmonton declared a depressed market,
TBS reviewed our request and in view of the fact that the market in Edmonton
had declined less than 12% determined that it was not. They chose to advise of
this both verbally and in an e-mail. E-mail attached for your review. [Emphasis
in original]
[13]
As described by the Board:
The e-mail referred to by DCBA 2-2 is a brief
exchange between DCBA and an officer of the TBS dated 21 May 2009 wherein the
TBS officer stated that the “Edmonton Area is not considered a depressed
housing market area…”
DCBA 2-2 went on to say that, subsequent to the
21 May 2009 e-mail, TBS had advised them verbally that there are no areas in
Canada with Depressed Market status. No date was provided for this “verbal”
advisory from TBS but it is noted that two years have now passed since the
brief e-mail advisory was relayed to DCBA.
[14]
The Board found the following:
The grievor made a substantial submission to
DCBA requesting 100 percent reimbursement of his loss from Core funding rather
than being limited to the $15,000 limit. His submission included a
comprehensive depressed market analysis by his realtor (pp. 1-83). Based on the
evidence provided (pp.1-83), I am satisfied that the market analysis clearly
establishes that the community of Bon Accord was a depressed market; precisely
the type of depressed situation contemplated in the HEA policy. As such, it
should have qualified for depressed market status, entitling the grievor to
reimbursement of 100 percent of his loss.
[…]
A member of the Board’s staff requested a copy
of the TBS declaration that the Edmonton area was not a depressed market in
2010 and, in response, the DCBA 2-2 provided a copy of an e-mail from a member
of the TBS that states: “The Edmonton area is not considered a depressed
housing market area – please note that we do not declare a street or unit as
depressed, we declare the area if the marker [sic] has dropped below
20%” (p.202). I note that this e-mail, dated 21 May 2009, is simply not
up-to-date and cannot be used to justify conditions in 2010. I acknowledge that
the DCBA 2-2 also stated: “Subsequent to the aforementioned memorandum, TBS has
advised DCBA verbally that there are no areas in Canada with Depressed Market
status” (p.201). However, this verbal statement makes no reference as to what year
it applies and, in any event, an unattributed verbal statement from TBS staff
cannot have any probative value, nor, in my opinion, can a casual e-mail.
[…]
I realize that the word “community” is not
defined by the policy, and that the CDS has recognized this and asked DGCB to
work with TBS to rectify this deficiency. However, for the purpose of this
case, Bon Accord must certainly be said to be a community all its own, with a
Mayor and 1500 citizens, all living some 40 kilometres distant from Edmonton.
The grievor has presented a convincing case showing how prices had dropped by
more than 20 percent. In my view, the DGCB did not follow the TBS policy in
this case. There ought to have been a submission to TBS and, given the
grievor’s circumstances and the enormity of the loss, one would have thought
DGCB would have been advocating vigorously on behalf of the grievor.
[…]
In summation, this grievor claims to be out of
pocket over $90,000, a huge sum for any CF member. The devastating impact this
loss has had on his family is eloquently and compellingly described in the
impact statement written for the CDS by the grievor’s wife (pp.116-118). They
are on the verge of bankruptcy and the grievor has stated that if his
application is ultimately denied, he may no longer be able to remain in the CF
despite his clear wish to do so.
[15]
The Board determined that the DCBA had failed to
act on the case presented by Major Brauer and his realtor, as required by s
8.2.13 of the CFIRP Directive, by submitting it to the TBS for consideration.
The Board had previously addressed the HEA in a number of files and made a
systemic recommendation to the CDS that he “direct that
the HEA policy applicable to CF members […] be re-examined, taking into account
modern market conditions, with a view to reducing the impact of losses…”
It therefore partially upheld Major Brauer’s grievance and recommended amongst
other things that his HEA submission be forwarded to the TBS as set out in the
CFIRP Directive with the full support of the CF.
[16]
The CDS, General Walter Natynczyk, accepted this
recommendation. In a letter dated September 19, 2011, General Natynczyk granted
partial redress to Major Brauer’s grievance. He wrote that he did not have the
authority to grant Major Brauer relief from his situation, but would direct
DGCB to prepare and transmit his HEA submission to TBS in accordance with the
CFIRP Directive for evaluation of depressed market status. He also indicated
the following:
[…] I note that DCBA did not forward your
submission for TBS evaluation stating that the TBS had advised that there were
no locations in Canada designated with depressed market status in 2010.
However, I find that you made a very good case for depressed market status and
that it appears that your community of Bon Accord, which experienced a decline
of 23.11%, presents precisely the type of depressed situation contemplated in
the HEA policy. That being said, I also understand that the TBS evaluates
depressed market status based on “areas”, which in your case is the Edmonton
area. In 2009, TBS determined that the housing market in the Edmonton area had
declined by 12%, well short of the 20% decline required for full reimbursement
under the HEA program. However, other than a verbal advisory from the TBS that
there were no depressed markets in Canada in 2010, there is nothing concrete
regarding the market decline for that timeframe. Therefore, based on the case
you presented and the requirement of the policy, combined with the lack of
clarity regarding the status of the housing market in the Edmonton area in
2010, I find that there is sufficient justification to indicate that your
submission should have been forwarded to the TBS for evaluation and I will
direct DCBA to do so forthwith. This leads me to the next issue, which concerns
the definition of “community” as it applies to the CFIRP policy.
Definition of community. In your representation of 22 March 2011, you emphasize that Bon
Accord is not a suburb of Edmonton, in other words, that it is a community in
its own right. You explain that it is 40 kilometres away from Edmonton, has its
own mayor, charter, taxes and services and in fact, does not use any Edmonton
services. However, the TBS considers Bon Accord to be part of the Edmonton area
and as the Edmonton area apparently did not meet the 20% criteria for depressed
market status at the time in question, the TBS is not prepared to confer such
status on any particular location within that area. However, as has been
previously noted by both the CFGB and CFGA, although the CFIRP clearly refers
to a “community” with regard to the HEA program, the policy does not provide a
definition of the term. In fact the TBS’ broad application of the term
“community” has caused a number of service members in similar situations to
yours, to be impacted to an extent that may well never have been envisioned. As
indicated in the CFGB findings and recommendations, I am aware of the issue and
have asked the DGCB to work with the TBS to rectify this deficiency. Therefore,
based on my previous direction regarding the definition of “community,” I will
not address this issue any further in the context of your grievance but will
direct DGCB to use your situation to assist in its negotiations with the TBS as
it provides yet another example of a CF member/family placed in an untenable
situation with little recourse due to the confusion surrounding the term
“community.”
[17]
By letter dated October 24, 2011 the DCBA
requested TBS approval for 100% reimbursement of HEA for Major Brauer in
accordance with the CFIRP Directive provisions. The letter specifically asked
for consideration of Bon Accord, Alberta as a depressed market area and stated
that this would be “fair, equitable and in line with
current CFIRP [Directive] benefits providing that Edmonton is deemed as a
depressed market.”
II.
DECISION UNDER REVIEW:
[18]
The TBS took seven months to render a decision
on the request submitted by the DCBA. TBS denied the request to have Bon
Accord, Alberta designated as a depressed market for 2010 in a letter to the
DCBA, dated July 17, 2012, signed by Edith Kehoe, Senior Director, National
Joint Council Support and Union Engagement, Compensation and Labour Relations. While
Ms Kehoe conveyed the decision in her letter it had been approved by
Michelle d’Auray, then Secretary to the Treasury Board, based on an internal
memorandum prepared by a Policy Analyst in Ms Kehoe’s directorate. Ms d’Auray
was the ultimate decision-maker.
[19]
Ms Kehoe’s letter noted that had the request
been granted, the CF would have been authorized to reimburse Major Brauer, “and potentially other similarly affected Canadian Forces
members up to 100% of the loss on the same of his home in 2010”. The decision
letter reads in part:
The review of Bon Accord for designation as a
depressed market has been completed. For the purposes of the review, Bon Accord
was considered to be part of the Edmonton metropolitan area. […]
Although Major Brauer personally lost more than
20% on the sale of his home, the average home cost in the Bon Accord/Edmonton
area for all homes only declined by 2.9% between 2007 and 2010. This indicates
a market adjustment from an inflated market to a more stable, balanced market
and falls far short of the 20% threshold necessary for a market to be
designated as depressed as articulated in the CFIRP Directive.
Analysis of all the data for the period in
question, including economic indicators such as the unemployment statistics and
housing starts, indicate that the economy in Bon Accord was stable and the
housing market was balanced. Accordingly, the Treasury Board Secretariat in its
capacity as Program Authority for the integrated relocation program has
determined that Bon Accord, Alberta shall not be designated as a depressed
market for 2010.
[20]
The internal TBS memorandum, dated May 31, 2012,
summarizes the request and describes the process for making determinations on
requests for depressed market designations. The Internal Memorandum notes that:
[…] an area is looked at in its entirety and
not as a specific neighbourhood. For example, Scarborough would not be
considered in isolation from the Toronto market.
It should be noted that CF members are subject
to relocation akin to “a forced relocation” and as such are often subjected
to absorbing an equity loss in the disposition of their principal residences
at origin.
[Emphasis added]
[21]
The internal memorandum analyzed the “Current Status” of Bon Accord and drew the following
conclusions, amongst others:
[…]
The material provided indicates MLS sales in
the area are on the increase and that the housing market is balanced. The
property in question is a five bedroom older home. The house was purchased in
2007 for $405,000 (average home cost as per Statistics Canada in Bon Accord for
2006 was $179,177). This home sold for $317,000 which is above the average home
purchase price of $275,000 for 2010 for Bon Accord. Although this represents a
loss of 21.7% from the original purchase price for the home owner, the average
home cost for Edmonton from 2007 to 2010 only decreased by 2.9% and the
provincial ratio was even lower at 1.4%.
While the individual lost slightly more than
20%, it is clear from the other factors that this was an exception and the
Edmonton area is not a depressed market.
III.
ISSUES:
[22]
The parties disagree on the standard of review
and on the materials that are appropriately part of the record before the Court
for consideration on this application. Accordingly, the issues are as follows:
1. What is the applicable standard of
review?
2. Which documents may this Court consider
on judicial review?
3. Did the TBS err in its decision that Bon
Accord was not a depressed market area?
IV.
ANALYSIS:
A.
Standard of Review
[23]
The applicant submits that the applicable
standard is correctness, while the respondent submits that it is
reasonableness. Both parties agree that there does not appear to be any
existing jurisprudence on the appropriate standard of review for the TBS decision.
This is not a case, therefore, where the level of deference to be accorded with
regard to the type of question raised on the application has been established
satisfactorily in the jurisprudence. The Court “must
proceed to an analysis of the factors making it possible to identify the proper
standard of review”: Dunsmuir v New Brunswick, 2008 SCC 9 [Dunsmuir]
at para 62. The Supreme Court also noted in Dunsmuir, above, at
para 64 that “[i]n many cases it will not be necessary to
consider all of the factors, as some of them may be determinative in the
application of the reasonableness standard in a specific case.”
[24]
The respondent contends that deference should be afforded a tribunal
that is interpreting its own statute or statutes closely connected to its
function: Alberta (Information and Privacy Commissioner) v. Alberta
Teachers' Association, 2011 SCC 61 at para 81.
[25]
Favouring the respondent’s position is the fact that
the substantive issue before the Court involves a question of mixed fact and
law which normally points to deference. The TBS was required to interpret the
terms of the CFIRP Directive, to consider the general context of the CFIRP
Directive, and apply the facts to the terms of the policy. As such, this is a
circumstance where the “legal and factual issues are
intertwined with and cannot be readily separated”: Dunsmuir,
above, at para 53. Nor can the interpretation of the statute be said to be an
element of central importance to the legal system as a whole: Dunsmuir,
at paras 55, 60.
[26]
Recent jurisprudence concerning “administrative
policies governing the employment of the public sector employees”
supports the respondent’s position that reasonableness is the standard
applicable to decisions “which interpret
and apply internal procedures and policies”: Khalid v National
Research Council of Canada, 2013 FC 438 [Khalid] at paras 36-40; Canada
(Attorney General) v Bearss, 2010 FC 299 at para 21; Backx v Canadian
Food Inspection Agency, 2013 FC 139 at paras 18-20. I note, however, that
other than Khalid, these cases do not arise in circumstances where the
relevant policy is or has become part of the employee’s terms and conditions of
employment as it is in this case.
[27]
The Treasury Board, a statutory committee of the Queen’s Privy Council
for Canada, is responsible for the financial, personnel and administrative
management of the Government of Canada. By virtue of s 35 of
the National Defence Act, RSC 1985, c N-5 [NDA], these functions
include the full authority to establish and regulate the pay and allowances of
CF members. Pursuant to ss 5 to 13 of the Financial
Administration Act, RSC 1985, c F-11 [FAA] the TBS supports the Treasury Board in this management role.
TBS cannot be said to be independent of the employer as would an adjudicative
tribunal. Members of the CF are employees of the Crown in right of Canada. The
Board serves as management with respect to Crown employees and with the support
of the TBS, is the guardian of the Crown’s purse.
[28]
There is support in the jurisprudence for the applicant’s position that
deference is not appropriate where the decision maker is not independent of the
employer: see for example Canada (Attorney General) v Assh, 2006 FCA 358
[Assh] at paras 44, 50-51; Appleby-Ostroff v Canada (Attorney
General), 2010 FC 479 rev’d on other grounds in 2011 FCA 84, at paras 52,
56. Here, Ms d’Auray was clearly not independent of the employer, the Crown. As
the head of the Agency supporting the Board, she was responsible for administration
of the policies governing the pay and benefits of CF members. This lack of
independence points to a standard of review of correctness.
[29]
There is no privative clause pertaining to the TBS’s
decision in either the NDA, or the FAA, which also supports the
conclusion that the TBS should not be afforded deference on its decision. The
purpose of the CFIRP Directive is, amongst other things, to protect CF members
from the financial consequences of regular forced relocations. This also
supports a finding of minimal deference.
[30]
The Court is as well-equipped to determine this
question as is the TBS. The decision under review involves the
interpretation of the CFIRP Directive, in particular on the question of whether
the term “community” applies to Bon Accord or to the
entire Edmonton metropolitan area. As stated in Assh,
above at para 42:
Here, the question is whether the Court is as
well equipped as the administrative decision-maker to decide the questions
raised by the application for judicial review. The questions in dispute in this
appeal concern the interpretation and application of the relevant aspects of
the Conflict of Interest Code.
[31]
In this instance, there is no issue of
credibility with regard to witness testimony and all the materials before the
Court are in the same format as those before the TBS: in writing. I agree with
the applicant that on the basis of the record before the Court, as discussed
below, the TBS has not demonstrated any particular expertise in the
determination of depressed market areas or in the interpretation of the term
“community”. This is reflected in the sparse analysis and minimal documentation
supporting its decision.
[32]
The Supreme Court has given direction that where
the question is one of the exercise of discretion or policy, deference will
usually apply: Agraira v Canada (Minister of Public Safety and Emergency
Preparedness), 2013 SCC 36, [2013] SCJ no 36 at para 50. On that basis, and
not without doubt about the matter, I find that the standard of review is
reasonableness. In reaching that conclusion, the following statement by the
majority of the Supreme Court in McLean v British Columbia (Securities
Commission), 2013 SCC 67 [McLean] at para 38, offers some comfort:
It will not always be the case that a
particular provision permits multiple reasonable interpretations. Where the
ordinary tools of statutory interpretation lead to a single reasonable
interpretation and the administrative decision maker adopts a different
interpretation, its interpretation will necessarily be unreasonable -- no
degree of deference can justify its acceptance; see, e.g., Dunsmuir, at
para. 75; Mowat, at para. 34. In those cases, the "range of
reasonable outcomes" (Canada (Citizenship and Immigration) v. Khosa,
2009 SCC 12, [2009] 1 S.C.R. 339, at para. 4) will necessarily be limited to a
single reasonable interpretation -- and the administrative decision maker must
adopt it.
B.
Which documents may this Court consider on
judicial review?
[33]
As a preliminary matter, the respondent submits
that the applicant’s affidavit and memorandum relies extensively on information
that was not before the TBS. This Court has held that it is inappropriate to
consider evidence that was not before the decision-maker: Ochapowace First
Nation v Canada (Attorney General), 2007 FC 920 at paras 9-10, aff’d 2009
FCA 124, leave to appeal to SCC ref’d [2009] SCCA no 262.
[34]
In particular, the respondent submits that Exhibits
B, E, F, G, I and K to the applicant’s affidavit are inadmissible except to the
extent that they provide general background information. They should therefore
be disregarded by the Court in its consideration of the reasonableness of the
impugned decision. These exhibits consist of a document from Royal LePage
Relocation Services entitled “Planning Your Move”
(Ex B); the Findings and Recommendations of the Vice-Chairperson of the CF
Grievance Board dated April 29, 2011 (Ex E); an article from a journal entitled
“Perspectives” published by the Grievance Board dated May 2011 (Ex F); the
letter of September 19, 2011 conveying the decision of the CDS as final
authority on the grievance (Ex G); a letter from the Secretary of the Treasury
Board to Mr Robert Chisholm, M.P. dated August 31, 2012 (Ex I); and a letter
from the CF and National Defence Ombudsman to the Minister of National Defence
dated September 10, 2013 (Ex K).
[35]
The sole document that appears to have been
before the decision-maker is the internal memorandum accompanied by a
transmittal sheet. I note that the respondent has included in its record materials
from the file that were not before the decision-maker but were referenced by or,
in the case of some hand-written notes, created by the analyst who prepared the
memorandum. I consider the analyst’s notes to be part of the reasons for the
decision and the other materials to be admissible as part of the supporting
record.
[36]
I agree with the respondent that documents
included in the applicant’s supporting affidavit that were not before the
decision maker or post-date the decision cannot be considered except to the
extent that they provide general background information that would assist the
Court. In that regard, I considered Exhibits E and G to be helpful as
contextual information and disregarded the other documents objected to by the
respondent.
C.
Did the TBS err in its decision that Bon Accord
was not a depressed market area?
[37]
The applicant submits that the form and
substance of the HEA policy supports his position.
[38]
Citing several dictionaries, the applicant
submits that Bon Accord meets the definition of “community” set out in the
policy:
Black’s Law Dictionary (9th ed) (St Paul, Minn:
West Publishing Co, 2009), defines “community” as a neighbourhood, vicinity or
locality.
The Oxford Canadian Dictionary defines
“community” as a specific locality.
Termium Plus [a reference for the Government of
Canada Translation Bureau] defines “community” as, amongst other things,
“usually composed of three to five neighbourhoods”. A section of a city,
primarily a residential area.
[39]
In the applicant’s view, a CF member reading the
CFIRP Directive would reasonably believe that Bon Accord would be the relevant
“community” for the purposes of the HEA. If the term “community” is at least
ambiguous, he argues, any ambiguity should be construed against the Treasury
Board as the drafter of the CFIRP Directive. The Treasury Board could have
specified that the entire metropolitan area in relation to bases such as
Edmonton would be considered, but it chose not to do so in drafting the policy.
The policy does not refer to “area”, as is the respondent’s interpretation but
“community”. As found by the CFGB, Bon Accord is “precisely
the type of depressed situation contemplated in the HEA policy.”
[40]
The respondent submits that the terms of the
CFIRP Directive support including the town of Bon Accord as part of Edmonton.
In particular, the respondent notes, the Directive contains specific
limitations:
1.3.01 Limitations
The benefits outlined in this policy are all
inclusive. It is designed to provide some degree of flexibility while remaining
within the intent of the policy. This will allow CF members to make choices
based on their specific needs; however, those choices shall not extend benefits
or create entitlements.
[…]
1.3.01 Restrictions
Les indemnités précisées dans la présente
politique sont toutes globales. Elles visent à offrir une certaine souplesse
tout en respectant le but de la politique. Ainsi, les membres des FC pourront
faire des choix en fonction de leurs besoins particuliers. Ces choix ne doivent
toutefois pas accroître les avantages ou créer des indemnités
[…]
[41]
In order to be eligible for 100% of an equity
loss on the sale of a home, the home in question must be located in a “depressed market area”, which is defined as “a community where the housing market has dropped more than 20%.”
[42]
For the purposes of the CFIRP Directive, CF
members’ place of duty is defined at s 1.4 as:
Place of duty
The place at which a CF member usually performs
normal military duties and includes any place in the surrounding geographical
area that is determined to be part thereof by the Chief of the Defence Staff or
such other officer as shall be designated.
Lieu de service
Endroit où un membre des FC accomplit
habituellement ses fonctions militaires ordinaires et qui comprend tout endroit
dans les régions géographiques avoisinantes que le Chef d'état-major de la
Défense, ou tout autre officier désigné, a déterminé comme faisant partie du
lieu en question
[43]
In the present case, the respondent submits, the
evidence is clear that the applicant’s place of duty was CFB Edmonton. In
addition, it is argued, there is no evidence that the applicant ever requested
or received the approval to reside outside the geographical boundaries of CFB
Edmonton. The respondent contends that it was reasonable to consider Bon Accord
as being within the geographical boundaries of CFB Edmonton. Therefore any
consideration of the housing market as it related to the applicant’s military
service at his place of duty would reasonably take this factor into account.
Nothing in the definitions of “community” found in the dictionaries would
exclude Bon Accord from being found to be part of the greater Edmonton
Metropolitan Area, the respondent argues. While the Town of Bon Accord is a
very small, satellite town 40 kilometres from a major urban centre, it markets
itself on the basis of its close proximity to Edmonton; to Alberta’s “Capital Region”; being “minutes”
away from Edmonton and being located on the northern boundary of Edmonton.
[44]
Moreover, the respondent submits, it is
unreasonable to consider only the data from distinct municipalities as evidence
of market depression. The applicant’s realtor’s real estate opinion indicated
that only six homes had sold in Bon Accord at the time of writing in 2010. With
a sample size this small, any variation in housing price would create a massive
fluctuation in the differential average price of a home. It was therefore
eminently reasonable for TBS to consider the broader economic conditions and
market data in a larger area, the respondent argues.
[45]
The respondent submits that when the matter was
referred to TBS, the DCBA requested that “Edmonton” be found to be a depressed
market area for the purposes of the CFIRP Directive. Thus, the respondent
argues, TBS was faced with a direct request from the CF to consider the housing
market in the Edmonton area in light of the HEA provisions.
[46]
This last argument reflects, I believe, a
misunderstanding of the request for approval of the 100% HEA compensation for Major
Brauer and is incorrect. The letter from the DCBA is quite brief – just three
paragraphs. Bon Accord is referenced in the first paragraph followed by
“Edmonton area” in parenthesis. The second paragraph cites “current CFIRP benefits providing that Edmonton is deemed as a
depressed market” but in the context of the situation in late 2011. The
third and final paragraph makes it clear that the request is for “consideration of Bon Accord, AB as a depressed market area.”
The Policy Analyst who prepared the internal memorandum for Ms d’Auray’s
consideration and decision clearly understood that the request was to consider
Bon Accord as a depressed market area, not Edmonton, at least when the analyst began
the task.
[47]
However, the analyst proceeded to treat Bon
Accord as part of Edmonton, much like in the example provided: “Scarborough would not be considered in isolation from the Toronto market.” Scarborough is, of course, a borough of the City of Toronto. Its
residents pay taxes to the City of Toronto, vote for the Mayor of Toronto and rely
on the Toronto bus and subway network to get to and from work and school. While
it may be reasonable not to consider Scarborough in isolation from the Toronto market, the same cannot be said of Bon Accord and Edmonton. They are distinct
municipalities. The analyst’s example reflects a mind-set, in my view, that
governed the rest of her analysis. By implication, Bon Accord was treated as
just another bedroom suburb of Edmonton. On the evidence submitted by Major
Brauer, that was not reasonable.
[48]
I think it important to consider what it meant
for Major Brauer and his family for him to be posted to CFB Edmonton from CFB Borden,
his former place of duty. This was not a transfer to a similar location. The
small town of Borden, which contains the base, is located in Simcoe County,
Ontario a rural area roughly 100 kilometres north of Toronto. The nearest city
is Barrie, some 20 minutes away by car. In contrast, CFB Edmonton is within the
boundaries of a major urban centre.
[49]
There is nothing in the record to suggest that
the CDS or other designated officer had determined any place in the
geographical area surrounding CFB Edmonton to be the place where Major Brauer
was to perform his military duties. He was posted to CFB Edmonton but had to
live with his family wherever they could find affordable housing.
[50]
CFB Edmonton has a limited quantity of
residential units (PMQs) available for the CF members posted to the base. I
think the Court may take judicial notice of the fact that the Government of
Canada has been reducing the stock of such housing across the country for
several decades by selling the property on which it is located. CFB Edmonton
was no exception. In the circumstances, CF members may have no choice but to
look to the private market to find housing for themselves and their families.
[51]
Major Brauer’s uncontradicted evidence is that
there was a two-year waiting list for a PMQ suitable for his family in Edmonton.
As a result, Major Brauer was being posted by his employer to a base where the
only available options to house his growing family were to find a home to rent
in the private market or to buy. His evidence, again uncontradicted, is that the
cost of renting a house in Edmonton at that time exceeded the cost of a mortgage
on a home in Bon Accord.
[52]
The respondent does not contend that the
family’s decision to buy in Bon Accord in 2007 was misguided or unreasonable. There
is a suggestion, however, in the TBS analysis that the family bought a house
which was valued above the average selling price for that town. The implication
is that Major Brauer gambled on the market remaining stable, or increasing, by
buying above the average market values in Bon Accord and lost. TBS considers
that he and his family should bear that loss, apart from an allowance of
$15,000 under the HEA policy. From the evidence in the record, including
photographs and descriptions of the home itself, there is nothing to suggest
that the house was anything other than a modest family home suitable for a
growing family.
[53]
The respondent’s record contains what is
characterized in its affidavit as the Policy Analyst’s “investigative
file”. This includes three pages of handwritten notes that refer, among
other thing, to average home prices in Alberta, Edmonton and Calgary taken from
a December 2011 report prepared by Scotia Bank. The relevance of house prices
in Calgary, or Alberta in general, is not explained. The notes briefly cite the
applicant’s submissions and the report from his realtor referring to the
decline in house prices in 2010. There is a statement that “Alberta is where the jobs are,
taxes are low, and many people immigrate to.”
[54]
It appears from these handwritten notes that the
analyst concluded that there was a correction in the market from a high in 2007
and that the result in 2010 in reference to Edmonton was “a balanced market, not a depressed market.” Included in
the file are a number of downloaded Internet pages extolling the virtues of living
in Edmonton; a copy of a April 2011 report entitled “Town
of Bon Accord – Community Profile” downloaded from the town’s website; a
page citing a CMHC report indicating that Edmonton house prices would be going
up in 2012; an Edmonton Realtor’s webpage downloaded on December 30, 2011
citing listings and prices in Edmonton; a page from an unknown and undated
source referring to the “Edmonton housing bust”
accessed on January 3, 2012; and a comment from an Edmonton real estate blog
posted on June 1, 2010 indicating that house prices were expected to rise later
in the year.
[55]
Aside from the Bon Accord Community Profile, all
of this material dealt with the Edmonton housing market. This suggests that the
analyst focused her research, such as it was, on house prices in that city.
There is no indication in the record as to what the analyst’s qualifications were
to conduct this research or to provide a thorough and accurate report on the
market conditions in Bon Accord, or Edmonton for that matter. It appears that
no consideration was given to the differences between Edmonton, a major urban
centre with a diversified economy and population of about 1 million and Bon
Accord, a small town linked to the oil industry. Nor does the respondent’s
record reflect that the community Major Brauer and his family belonged to was
Bon Accord, not Edmonton.
[56]
There appears to have been no attempt by TBS to
assess why the housing prices dropped so dramatically in Bon Accord, other than
to note that there were only a few homes sold there in 2010. That being the
case, why did it happen if not due to local economic factors which did not
seriously affect the Edmonton market?
[57]
The information assembled in the analyst’s
investigative file contrasts poorly with the organized, thorough and focused
material submitted by Major Brauer, which dealt directly with the situation in
Bon Accord. In my view, TBS relied on irrelevant, post-dated and
unsubstantiated information. The impression the Court is left with from the
investigative file material and the memorandum is of an after-the-fact
justification, not a fair minded evaluation. A case was made to justify the negative
conclusion previously delivered. As communicated verbally and by email to the
DCBA prior to the submission of Major Brauer’s request, TBS had already
determined that Edmonton was not a depressed housing market. The decision
extended that conclusion to Bon Accord without drawing a distinction between
the two communities when TBS was pressed to reconsider its earlier finding, as
a result of the Grievance Board and CDS findings.
[58]
The fact that the analyst’s memorandum passed
through the hands of several TBS officials, “exercising
their challenge function” as it is described in the respondent’s
evidence, on its way to Ms d’Auray does not rectify its deficits. There is
nothing in the record to suggest that these officials questioned the sources of
information relied upon, the quality of the analysis or added anything of value
other than their initials to the transmission cover sheet.
[59]
The memorandum presents a very positive picture
of the economic conditions in Alberta in general and Edmonton in particular. This
is in keeping with the analyst’s notation quoted above: “Alberta is where the jobs are, taxes are low, and many people immigrate to.” That
may well be true in general but does not explain what happened in Bon Accord
between 2007 and 2010.
[60]
The memorandum concludes:
The material provided indicates MLS sales in
the area are on the increase and that the housing market is balanced…Although
this [the sale price for the Brauer home] represents a loss of 21.7% from the
original purchase price for the home owner, the average home cost for Edmonton
from 2007 to 2010 only decreased by 2.9% and the provincial ratio was even
lower at 1.4%
While the individual lost slightly more than
20%, it is clear from the other factors that this was an exception and the
Edmonton area is not a depressed market.
Recommendation
That Bon Accord, Alberta not be declared as a
depressed housing market area for CF personnel subject to relocation.
[61]
It is clear from the record that while the
recommendation returns to the request to consider Bon Accord for designation,
the reasoning behind it relates solely to Edmonton rather than to the small
community 40 kilometres to the north. TBS did not need to consider Bon Accord
part of the Edmonton area. It chose to do so in order to exclude the town from
consideration as a “depressed housing market area”
for the purpose of the HEA policy.
[62]
As indicated above, the letter which conveyed
the decision to the DCBA, appears to reflect a concern that other military
personnel assigned to CFB Edmonton, (“and potentially
other similarly affected Canadian Forces members”) would seek to take
advantage of a positive decision in favour of Major Brauer. There is nothing in
the record to suggest that there were other CF members similarly affected in
Bon Accord. There are references to other CF members in possibly similar
situations elsewhere in Canada in the Grievance Board decision and CDS letter.
The comment in the TBS letter suggests that the decision was motivated, in
part, by oblique considerations related to potential claims by other CF members
and not to the applicant’s situation in Bon Accord.
[63]
I agree with the applicant that the TBS
interpretation of the term “community” is unreasonable. The Supreme Court has
confirmed that a purposive approach should be adopted in interpreting statutes:
Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27 at paras 21-22:
21 Although
much has been written about the interpretation of legislation (see, e.g., Ruth
Sullivan, Statutory Interpretation (1997); Ruth Sullivan, Driedger on
the Construction of Statutes (3rd ed. 1994) (hereinafter "Construction
of Statutes"); Pierre-André Côté, The Interpretation of Legislation
in Canada (2nd ed. 1991)), Elmer Driedger in Construction of Statutes
(2nd ed. 1983) best encapsulates the approach upon which I prefer to rely. He
recognizes that statutory interpretation cannot be founded on the wording of
the legislation alone. At p. 87 he states:
Today there is only one principle or
approach, namely, the words of an Act are to be read in their entire context
and in their grammatical and ordinary sense harmoniously with the scheme of the
Act, the object of the Act, and the intention of Parliament.
Recent cases which have cited the above passage
with approval include: R. v. Hydro-Québec, [1997] 1 S.C.R. 213; Royal
Bank of Canada v. Sparrow Electric Corp., [1997] 1 S.C.R. 411; Verdun v.
Toronto-Dominion Bank, [1996] 3 S.C.R. 550; Friesen v. Canada,
[1995] 3 S.C.R. 103.
22 I also
rely upon s. 10 of the Interpretation Act, R.S.O. 1980, c. 219, which
provides that every Act "shall be deemed to be remedial" and directs
that every Act shall "receive such fair, large and liberal construction
and interpretation as will best ensure the attainment of the object of the Act
according to its true intent, meaning and spirit".
[64]
The applicant’s situation seems to me to be precisely
the type of problem the CFIRP Directive was meant to remedy as indicated in the
views expressed by the Grievance Board and the CDS. As interpreted by TBS,
however, “CF members are subject to […] absorbing an
equity loss” upon “relocation akin to a “forced
relocation””. This cannot be what the Government of Canada intended for
its military personnel.
[65]
The TBS interpretation of the term “community”
can only be reasonable if it can be established that it does not render the
purpose of the CFIRP Directive meaningless by making it inapplicable in all but
the most exceptional circumstances. From information provided to the Court by
the respondent after the hearing, it appears that TBS has declared only two
communities, on one occasion each, to be depressed markets in relation to the
CFIRP Directive: Temiskaming, Quebec in 2008 and Port Maitland, Nova Scotia
(January 2010-December 2011). The declarations in these two cases contained no
finding that the entire housing market had declined by 20% or more. Rather they
dealt with the general economic conditions in both communities and the personal
circumstances of the individuals concerned. Thus it appears that the standard
required in this instance – a decline in the housing market of greater than 20%
- was not required in those cases.
[66]
The term “community” as defined in the Canadian
Oxford Dictionary, Toronto 2001, means first all of the people living in a
specific locality. “Communauté” as used in the French version of the policy
refers to a “groupe social dont les membres vivent ensemble”: Le Nouveau Petit
Robert, Paris 2002. In my view, the Brauer’s “community/communauté” was clearly
Bon Accord and not Edmonton. In interpreting the term, TBS chose to read
“community” as “area” and to interpret it as the Greater Edmonton Area for the
purposes of its depressed market analysis. No degree of deference justifies
that interpretation in the context of this case.
[67]
The transfer to Edmonton and subsequent posting
to Halifax were operational decisions made by the CF over which Major Brauer
had little or no control. He could refuse the posting only at the peril of his
career progression and even then may have been required to move or resign from
the Forces. In this regard, the choice of a place to live which many other
Canadians take for granted was largely at the discretion of his employer. It
was reasonable for him to expect that in making the move, he and his family would
be protected by the employer’s HEA policy. That expectation, as it turned out,
was not well-founded. The employer, through its agent, the TBS, expects the
family to bear most of the cost of a dramatic down-turn in the market value of
their home when they were again posted to a new base. This was clearly not what
was intended when the policy was devised by the government. But the effects of
its application in this instance on the Brauer family have been devastating.
[68]
I find that the TBS decision was unreasonable in
the sense that it was not justified and was outside the range of acceptable
outcomes defensible in light of the facts and the law.
[69]
For these reasons, the application is granted. I
consider it appropriate to remit the matter with a direction that on
reconsideration, the community to be considered for determination as to whether
it was a depressed market area in 2010 is Bon Accord. Considering the history
of this matter and the length of time the applicant has been attempting to
obtain a remedy, he is awarded his costs on a full indemnity basis.
JUDGMENT
THIS COURT’S JUDGMENT is that:
1.
the application is granted;
2.
the decision of the Treasury Board Secretariat
dated July 17, 2012 is quashed and the matter is remitted to the Secretariat
for reconsideration with the direction that the Town of Bon Accord be
considered the community for determination whether it was a depressed market in
2010, not Edmonton; and
3. the applicant is awarded his costs on a full indemnity basis.
“Richard G. Mosley”
ANNEX A
The following is
section 8.2.13 of the CFIRP Directive:
8.2.13 Home Equity Assistance (HEA)
As per the HEA calculation criteria listed below,
CF members who sell their home at a loss are entitled to reimbursement for up
to 100% of the difference between the original purchase price and the sale
price from specific funding envelopes as follows:
Core benefit:
▪ 80% of
the loss, to a maximum of $15,000; and
▪ 100% of
the loss, in places designated as depressed market areas by Treasury Board
Secretariat (TBS).
Custom benefit:
In excess of core entitlement.
Personalized benefit:
When all custom funds have been expended.
HEA calculation criteria:
▪
Properties selling for less than 95% of the market
value require DCBA approval prior to qualifying for this benefit. Market value
is to be based on the appraisal provided by CFIRP.
▪
Capital improvements shall not be included in the
calculation of HEA but may be claimed separately as per art 8.2.10.
▪
Any reductions of the sale price based upon
deferred maintenance shall not be included when calculating HEA.
▪
The original purchase price for new home
construction consists of costs:
o
identified in the Building Agreement, and
o
for initial landscaping which occurs within one
year of occupancy (when not identified in the Building Agreement).
Depressed market, as established by Treasury Board
Secretariat, is defined as a community where the housing market has dropped
more than 20%.
Depressed market status may be evaluated when:
A CF member and the Realtor build a case for
depressed market status by submitting the following documentation to DCBA
through the CF Relocation Coordinator for review, DCBA will forward it to IRP
Program Authority at Treasury Board Secretariat:
1. Personal introduction including an outline of changes in the local
economy evident during the time at origin.
2. All pertinent information with respect to the purchase of the subject
property. This would include the original purchase agreement, the current
appraisal report, list of the capital improvements made to the property and the
related costs. Also, the appraised value when originally purchased and any
property assessments since the time of purchase. Regarding cost of
construction, this will require submission of original receipts to confirm the
original purchase price, if a building contract was not used. Capital
improvements must be supported by original receipts only.
3. General and specific information on the geographic location and local
economic state; i.e. the circumstances that may be happening in the surrounding
areas such as mill closures, unemployment rate, school closures. Include
relative newspaper articles, memos, and objective evidence of market decline.
Also, include sale date, date offer received, listing date list price, lowered
list price and any home equity loss paid.
4. For real estate information:
a. Letter from Realtor expressing his/her professional opinion of the
overall decline in the market since time of purchase;
b. Copies of comparable sales (similar type homes) that were concluded
within the past 6 to 12 months;
c. Number of current listings in various price ranges and number of days
on the market;
d. Number of sales (year-to-date) in various price ranges and number of
days on the market;
e. Number of sales during previous 2 years in various price ranges and
number of days on the market;
f. Number of foreclosures (year-to-date) and same for previous 2 years;
and
g. Current vacancy rates, and similar information from previous years.
NOTE: All items must be labelled with a table of
contents.
8.2.13 Garantie de remboursement des pertes
immobilières
Conformément aux critères de calcul de la garantie
de remboursement ci-dessous, les membres des FC qui vendent leur maison à perte
ont droit au remboursement d'une portion ou de la totalité de la différence
entre le prix d'achat original et le prix de vente, par l'entremise d'une
enveloppe de financement spécifique, de la façon indiquée ci-dessous.
Indemnité de base
▪
Remboursement de 80 p. 100 des pertes jusqu'à
concurrence de 15 000 $.
▪
Remboursement de 100 p. 100 des pertes dans
les endroits désignés par le Secrétariat du Conseil du Trésor (SCT) comme des
secteurs où le marché de la vente de maisons est faible.
Indemnité sur mesure
Toute autre perte.
Indemnité personnalisée
Lorsque le financement sur mesure est épuisé.
Critères pour le calcul de la garantie de
remboursement des pertes immobilières
▪
Pour ce qui est des propriétés qui se vendent à
moins de 95 p. 100 de la valeur marchande, il faut obtenir l'approbation
du DRASA pour être admissible à cette indemnité. La valeur marchande doit être
fondée sur l'évaluation fournie par le PRIFC.
▪
Les améliorations apportées aux immobilisations ne
doivent pas entrer dans le calcul de cette garantie, mais leur remboursement
peut être demandé séparément en conformité avec l'article
8.2.10.
▪
Les réductions du prix de vente, le cas échéant, en
raison d'un entretien différé ne doivent pas entrer dans le calcul de la
garantie de remboursement des pertes immobilières.
▪
Le prix d'achat original d'une nouvelle
construction comprend les coûts :
o
indiqués dans le contrat de construction;
o
de l'aménagement paysager initial qui doit se faire
pendant la première année d'occupation de l'habitation (s'ils ne sont pas
indiqués dans le contrat de construction).
Le marché déprimé, comme établi par le secrétariat
du conseil du trésor (SCT), est défini en tant que communauté où le marché du
logement a baissé de plus de 20%.
La situation de marché déprimé peut être évaluée
lorsque:
Un membre des FC et son agent immobilier monte un
dossier de demande d'approbation pour situation de marché déprimé et soumettent
les documents suivants au coordonnateur des réinstallations des FC pour qu'il
les examine et les envoie au DRASA, qui les transmettra ensuite à l'autorité du
programme de PRI et au SCT:
1. Introduction personnelle incluant les grandes lignes des changements
évidents survenus dans l'économie locale durant le temps passé au lieu
d'origine.
2. Toute information pertinente à l'achat de la propriété en question,
notamment l'offre d'achat initiale, le rapport d'évaluation actuel, la liste
des améliorations apportées à la propriété et les frais associés. De plus, la
valeur estimative au moment de l'achat initial et toute évaluation faite à la
propriété depuis l'achat. En ce qui concerne les coûts de construction, il faut
produire les reçus originaux afin de confirmer le prix d'achat initial, si un
contrat de construction n'a pas été établi. Les améliorations doivent être
appuyées par des reçus originaux seulement.
3. Information générale et spécifique sur l'emplacement géographique et
l'état de l'économie locale, c.-à-d., les événements pouvant survenir dans les
secteurs avoisinants tels que la fermeture de moulins, le taux de chômage, la
fermeture d'écoles. Joindre les articles de journaux pertinents, les communications,
et toute preuve attestant d'un marché en baisse. Inclure également la date de
vente, la date de réception de l'offre d'achat, la date d'inscription et le
prix demandé, le prix revu à la baisse et toute indemnité pour pertes
immobilières reçues.
4. Information sur le marché immobilier :
a. lettre de l'agent immobilier donnant son opinion professionnelle sur la
baisse du marché depuis le moment de l'achat;
b. copies de ventes comparables (types de propriétés similaires) conclues
dans les six à douze derniers mois;
c. nombre d'inscriptions actuelles sous différentes échelles de prix et
nombre de jours sur le marché;
d. nombre de ventes (cumulatif de l'année) sous différentes échelles de
prix et nombre de jours sur le marché;
e. nombre de ventes au cours des deux dernières années sous différentes
échelles de prix et nombre de jours sur le marché;
f. nombre de saisies hypothécaires (cumulatif de l'année) ainsi que celles
des deux années précédentes; et
g. le taux d'inoccupation actuel ainsi que celui des deux années
précédentes.
NOTA: Tous les documents doivent être indiqués
dans une table des matières.
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