Citation: 2012 TCC 306
Date: 20120829
Docket: 2009-2659(IT)G
BETWEEN:
JI-HWAN PARK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hershfield J.
[1] The Appellant
appeals the Minister of National Revenue’s (the “Minister”) assessment of his
2007 taxation year.
[2] In computing his
income for the 2007 taxation year, the Appellant reported employment income of $158,189
being the amount received by him as an officer with the Canadian Forces (the
“Employer”). The Appellant made a subsequent request to the Minister that, pursuant
to subsection 110.2(2) of the Income Tax Act (the “Act”), he be
allowed to claim a deduction for a lump-sum payment of $102,297 received by him
in 2007. That subsection together with section 120.31 allow for income
averaging for qualifying lump-sum payments.
[3] The Appellant
asserts his entitlement to this income averaging regime on the basis that the
lump-sum payment he received in 2007 was a qualifying amount as defined under
subsection 110.2(1) of the Act.
[4] The Minister
determined that the subject lump-sum payment was not a qualifying amount and
therefore the Appellant was denied his request. That is, the original assessment
denying him the benefit of the income averaging regime stands unchanged.
[5] The Appellant
objected to the assessment and the Minister confirmed it having made the
following assumptions of fact:
a) …
b)
the Appellant was
employed by the Department of National Defence (the “Employer”) as a reservist;
c)
upon applying for
regular service, the Appellant was accepted at a reduced pay grade;
d)
the Employer changed
its payment policy as a result of adverse decisions in a number of employee
grievances;
e)
the Appellant
received the Lump Sum Payment in 2007 as a result of the Employer’s change in
policy;
f)
the Appellant did not
file a grievance against his employer regarding his back pay;
g)
the Appellant did not
receive the Lump Sum Payment as a result of a grievance;
h)
the Appellant did not
receive the Lump Sum Payment pursuant to the order or judgment of a competent
tribunal, an arbitration award, or a contract to terminate a legal proceeding;
and
i)
the Appellant earned
employment income of $158,189.00 in 2007.
Issues and Statutory Provisions
[6] The issue is
whether the lump-sum payment is a qualifying amount as defined under subsection
110.2(1) which would thereby entitle the Appellant to claim such amount as a
deduction and recalculate his tax payable based on a special tax averaging calculation
under subsection 110.2(2).
[7] The relevant provisions
of the Act are:
110.2 [Lump-sum averaging]
–
(1) Definitions -- The definitions in this subsection apply in this section and section 120.31.
“eligible taxation year”, in respect of a qualifying
amount received by an individual, means a taxation
year
(a) that ended after 1977 and before the
year in which the individual received the qualifying
amount;
(b) throughout which the individual
was resident in Canada;
(c) that did not end in a calendar
year in which the individual became a bankrupt;
and
(d) that was not included in an
averaging period, within the meaning assigned by section 119 (as it read in its
application to the 1987 taxation year), pursuant to an election that
was made and not revoked by the individual under that
section.
“qualifying amount” received by an individual
in a taxation year means an amount (other than the
portion of the amount that can reasonably be considered to be
received as, on account of, in lieu of payment of or in satisfaction of,
interest) that is included in computing the individual's income for the
year and is
(a) an amount
(i) that is received pursuant to an
order or judgment of a competent tribunal, an arbitration award or a contract
by which the payor and the individual terminate a
legal proceeding, and
(ii) that is
(A) included in computing
the individual's income from an office or employment,
or
(B) received as, on account of, in lieu
of payment of or in satisfaction of, damages in respect of the individual's
loss of an office or employment,
(b) a superannuation or pension benefit
(other than a benefit referred to in clause 56(1)(a)(i)(B))
received on account of, in lieu of payment of or in satisfaction of, a series
of periodic payments (other than payments that would have otherwise been made
in the year or in a subsequent taxation year),
(c) an amount described in
paragraph 6(1)(f), subparagraph 56(1)(a)(iv) or
paragraph 56(1)(b), or
(d) a prescribed amount
or benefit,
except to the extent that the individual
may deduct for the year an amount under paragraph 8(1)(b), (n) or (n.1), 60(n) or (o.1) or 110(1)(f) in respect of the
amount
so included.
“specified portion”, in relation to an eligible
taxation year, of a qualifying amount received
by an individual means the portion of the qualifying
amount that relates to the year, to the extent that the individual's
eligibility to receive the portion existed in the year.
(2) Deduction for lump-sum payments -- There may be deducted in computing the taxable
income of an individual (other than a trust) for a
particular taxation year the total of all amounts each of which is a specified
portion of a qualifying amount received by the individual
in the particular year, if that total is $3,000 or more.
120.31 Lump-sum payments [averaging] --
(1) Definitions -- The definitions in subsection 110.2(1) apply in this
section.
(2) Addition to tax payable -- There shall be added in computing an individual's
tax payable under this Part for a particular taxation year the total of all
amounts each of which is the amount, if any, by which
(a) the individual's notional tax payable for an
eligible taxation year to which a specified portion of a qualifying amount
received by the individual relates and in respect of which an amount is
deducted under section 110.2 in computing the individual's taxable income for
the particular year
exceeds
(b) the individual's tax payable under this Part for
the eligible taxation year.
(3) Notional tax payable -- For the purpose of subsection (2), an individual's
notional tax payable for an eligible taxation year, calculated for the purpose of
computing the individual's tax payable under this Part for a taxation year (in
this subsection referred to as “the year of receipt ”) in which the individual
received a qualifying amount , is the total of
(a) the amount, if any, by which
(i) the amount that would be the individual's tax
payable under this Part for the eligible taxation year if the total of all
amounts, each of which is the specified portion, in relation to the eligible
taxation year, of a qualifying amount received by the individual before the end
of the year of receipt, were added in computing the individual's taxable income
for the eligible taxation year
exceeds
(ii) the total of all amounts each of which is an
amount, in respect of a qualifying amount received by the individual before the
year of receipt, that was included because of this paragraph in computing the
individual's notional tax payable under this Part for the eligible taxation
year, and
(b) where the eligible taxation year ended before
the taxation year preceding the year of receipt, an amount equal to the amount
that would be calculated as interest payable on the amount determined under
paragraph (a) if it were so calculated
(i) for the period that began on May 1 of the year
following the eligible taxation year and that ended immediately before the year
of receipt, and
(ii) at
the prescribed rate that is applicable for the purpose of subsection 164(3)
with respect to the period.
[8] While these
provisions illustrate the complexities of a drafting style aimed at a precise
methodological approach to spreading the tax impact of some lump-sum payments,
its objective is straightforward. In a marginal rate system, taxing a lump-sum
in the year received may attract greater tax payable than if it was received
and taxed on a spread-out basis. In certain cases, and only in certain cases,
Parliament provides relief from such result. In those cases, the lump-sum
amount is removed from income in the year of receipt and apportioned over the
years to which it relates. A notional tax is then computed on that basis for
each of the years over which the income was spread. The total of all such
notionally calculated amounts (plus any interest that would have accrued if the
notional tax amount were actually payable in the year to which the portion of
the lump-sum relates) is then added to tax payable in the year the lump-sum was
received.
[9] This is the
averaging regime that the Appellant wants applied to the calculation of his tax
payable in the subject year.
[10] Drafting complexities
aside, the issue here is simply whether the lump-sum payment received by the
Appellant in 2007 was a “qualifying amount”. Not all lump-sum receipts qualify
for the income averaging regime that these provisions allow. To qualify the
amount has to be:
… received pursuant to an order or
judgment of a competent tribunal, an arbitration award or a contract by which
the payor and the individual terminate a legal proceeding.
[11] The Respondent submits that the Appellant’s receipt in this
case was not “pursuant” to any of the required directives set out in this
provision. There was no order or judgment of a competent tribunal, no
arbitration award and no legal proceeding in respect of which the receipt could
be attributed. Acknowledging that a grievance procedure could qualify as a
legal proceeding, the Respondent submits, as stated in the Minister’s
assumptions set out above, that the back-pay entitlement in this case did not
arise from the filing of a grievance against the Employer, but rather arose
from a change in the Employer’s pay grade entitlement policies.
[12] The Appellant asserts
that he did file a grievance that was effectively terminated by the Employer’s
acceptance of his entitlement. As well, it is asserted that the lump-sum
payment he received reflected a direction or order of a competent tribunal.
[13] The Appellant
testified at the hearing. The Appellant is currently a naval logistics officer
with the Canadian Forces. His rank is Lieutenant, Navy. He was the only witness
giving evidence. I accept his evidence as honestly and fairly given.
[14] Prior to entering the
Canadian Forces Regular Officer Training Program as an Officer Cadet in 2001, he
was a Private in the reserve forces. On entering the officer training program
his rate of pay was decreased from that which it had been as a Private.
[15] Other reservists, in
similar circumstances, challenged their decreased pay as an unfair pay
reduction and as a result of these challenges the Employer recognized its
obligation not to reduce an Officer Cadet’s rate of pay to less than their rate
of pay prior to entering into the training program. Accordingly, the Appellant emailed
the Canadian Forces Recruiting Group (the “CFRG”) seeking a review of his pay.
[16] The Appellant was
advised that he was required to make a formal request for a review in a
memorandum and seek the approval of his commanding officer. The request to the
CFRG was formalized in a memorandum and his commanding officer supported the
request. A decision by the CFRG was made on May 7, 2007 approving the lump-sum
payment to the Appellant to reflect his pay entitlement since his enrolment as
an Officer Cadet.
[17] There was, as well, an
email record that the Appellant submitted at the hearing which was replete with
military anachronisms that the parties graciously “translated” for me in a
consent document filed after the hearing.
[18] What the emails appear
to reflect are not only the various operational groups that needed to be
informed of decisions affecting military operations and military personnel but
the need for a hierarchical chain of command to be included and informed. So,
for example, a CFRG inquiry was copied to: National Defence Headquarters
Director General Finance Operations Ottawa//Director Account Processing Pay and
Pension Military Pay Operations//National Defence Headquarters Assistant Chief
of Military Personnel Ottawa ---. As well, there were information notices to National
Defence Headquarter Director General Recruiting Military Careers and others
groups. As well, reference is made to the Assistant Deputy Minister (Human
Resource – Military) Instruction July/2005 which might well be the authority
that resolved the grievances referred to above by recognizing the Employer’s
obligations to respect a higher pay grade. Or, as the Respondent would say, it
might well be the authority reflecting the Employer’s policy clarification. In
any event, the timing of this “Instruction” appears to correspond with the time
that the Respondent asserts there to have been a policy change. Regardless, the
Minister has the onus to clarify any chain of command decision procedures and
that onus has not been addressed.
Appellant’s Submissions
[19] The Appellant
describes the subject lump-sum payment averaging provisions as being remedial
and as such must be given a large and liberal interpretation to attain its
object. The Appellant cites R. v. 974649 Ontario Inc.; section 12 of the Interpretation
Act
and Bell Express Vu Limited Partnership v. Rex.
[20] The Appellant asserts
that the CFRG is a competent tribunal and in making that submission recommends
that I embrace the meaning of “tribunal” as defined very broadly in subsection
2(1) of the Federal Courts Act.
That subsection defines the term “tribunal” under the following definition:
“Federal board, commission or other tribunal” means
any body, person or persons having, exercising or purporting to exercise
jurisdiction or powers conferred by or under an Act of Parliament or by or
under an order made pursuant to a prerogative of the Crown, other than the Tax
Court of Canada or any of its judges, any such body constituted or established
by or under a law of a province or any such person or persons appointed under
or in accordance with a law of a province or under section 96 of the Constitution
Act, 1867;
[21] The Appellant submits
that using this definition, the Federal Court routinely decides judicial review
applications based on the decision of a single administrative decision maker
that has relatively limited authority. For example, in a tax context, the
Federal Court will often, or so it is suggested by the Appellant, decide a
judicial review application submitted under subsection 18.1(2) of the Federal
Courts Act on the decision of a CRA officer on a tax relief application for
waiver of interest and/or penalties.
[22] Further, the
Appellant relies on the decision in Bozzer v. The Queen, where the Federal Court of
Appeal decided a judicial review application, submitted under subsection
18.1(2) of the Federal Courts Act, regarding the decision of a CRA officer
on a taxpayer relief application. Despite the absence of any court or
quasi-judicial trappings, the CRA officer was considered by definition a
“federal board, commission or other tribunal”.
[23] The Appellant further
makes reference to the 2010 Supreme Court of Canada decision in Canada (Attorney General) v. TeleZone Inc..
The court in that case in referring to the definition of “federal board,
commission or other tribunal” found that the federal decision makers that are
included run the gamut from the Prime Minister and major boards and agencies to
the local border guard and customs official and everybody in between.
[24] In recommending the
adoption of this broad definition in the context of the Act the
Appellant refers to the decision of Kelen J. of the Federal Court (Trial
Division) in Canada (Information Commissioner) v. Canada (Minister of National Defence).
In that case the Federal Court held that the presumption that Parliament intends
to use language consistently applies not only within the statutes but across
statutes.
[25] The Supreme Court of
Canada in its hearing of that case
upheld the ruling of Kelen J. finding his analysis on the point contained no
error.
[26] It is submitted that
applying the Federal Court definition of “tribunal” would be particularly
appropriate given its relieving nature which would be consistent with the
nature of section 110.2 of the Act which itself is a relieving provision
that should be given a large and liberal construction.
[27] The Appellant points
out that there has been no suggestion or evidence whatsoever to suggest that
the CFRG acted ultra vires in reviewing the Appellant’s historic pay and
ultimately rendering its decision. Indeed, by the very act of rendering its
decision the recruiting group clearly “purported” to exercise jurisdiction of powers
conferred by or under an Act of Parliament bringing it within the definition of
a tribunal at least as set out in the Federal Courts Act.
[28] The Appellant also
argues that the term “tribunal” arises in the context of administrative law. As
such, authorities that should be regarded as reviewable tribunals should
correspond with current trends in administrative law. That trend is illustrated
in Dunsmuir v. New Brunswick,
where the Supreme Court of Canada recognized Nicholson v. Haldimand-Norfolk Regional
Board of Commissioners of Police,
as marking the turn to a less rigid approach of natural justice in Canada. Dunsmuir
contemplates that administrative powers are exercised by all kinds of
administrative actors in the context of assessing applications for judicial
review.
[29] The Court in Dunsmuir
uses the terms “decision maker” and “tribunal” in a flexible manner as
evidenced in paragraph 50 where, again in the context of judicial review, the
Supreme Court of Canada states that without question the standard of
correctness must be maintained to promote just decisions by not showing
deference to a decision maker’s reasoning process. In that same paragraph
50, the court goes on to say that from the outset the court must ask whether
the tribunal’s decision was correct.
[30] The Appellant also
points out that in Dunsmuir the court did not put emphasis on the
formalities or court-like procedures employed by the administrative body in the
making of its decision. As well, and in any event, the Appellant noted that
there was a degree of formality in the instant case evidenced by the recruiting
group requiring the Appellant to make a formal request and by giving a decision
in writing.
[31] The Appellant also
argues that the CFRG was not only a tribunal but a “competent” tribunal. It was
submitted that the recruiting group functions within the broad parameters of
subsection 17(1) of the National Defence Act, which states:
The Canadian Forces shall consist of such units and
other elements as are from time to time organized by or under the authority of
the Minister.
[32] The Appellant also
asserts that the exercise of authority by the recruiting group is authorized
because it is within the “custom of the service” which is empowered by section
49 of the National Defence Act which states:
Any power or jurisdiction given to, and any act or
thing to be done by, to or before any officer or non-commissioned member may be
exercised by, or done by, to or before any other officer or non-commissioned
member for the time being authorized in that behalf by regulations or according
to the custom of the service.
[33] Again, the Appellant
submits that there has been no suggestion that the decision of the CFRG was ultra
vires and thus by definition its decision was that of a “competent
tribunal”.
[34] The Appellant also
submits that if a different conclusion is warranted under the labyrinth of the hierarchical
inner-workings of the military or any particular government department or
branch, then it is up to the Respondent to bear the burden of establishing
same.
[35] The Appellant also
submits that while the decision of the CFRG may not appear to be an order or
judgment, giving a strict meaning to those terms would not be consistent with a
broad definition of the term “tribunal”. In any event, the written decision of
a tribunal can and has been referred to as a “judgment”. For example, the Supreme
Court of Canada did so in Quebec (Commission des droits de la personne et
des droits de la jeunesse) v. Maksteel Québec Inc..
[36] Again, in the context of the Federal Court Act,
this points out that subsection 18.1(2) of that Act refers to orders
from tribunals as corresponding to a decision.
Respondent’s
Submissions
[37] The Respondent submits that the relevant portion of the
definition of “qualifying amount” provides that the amount must have been
received pursuant to one of the three options set out in subparagraph (a)(i)
of that definition in subsection 110.2(1):
(a) an order or judgment of a competent
tribunal;
(b) an arbitration award or;
(c) a contract by which the
payor and the individual terminate a legal proceeding.
[38] The Respondent submits that a “competent tribunal” is
one with legal jurisdiction granted by a federal or provincial statute to make
an order or judgment. The Respondent relies on Bates v. The Queen
at paragraph 19.
[39] It is further submitted that an “arbitration award” must
be one resulting from a bona fide or formal arbitration process. As
well, it is submitted that a contract terminating a “legal proceeding” would
typically refer to an out of court settlement of a legal proceeding authorized
by law. The Respondent’s position is based on the asserted fact that the
Appellant was not a party to an order or judgment of a competent tribunal, an
arbitration award or a settlement of a legal proceeding. It is submitted that
the Appellant received the amount as a result of a clarification of his Employer’s
policy regarding past services.
[40] The Respondent acknowledges that there was uncertainty
in establishing the rate of pay for persons like the Appellant who went from
the reserve forces into the regular forces. It is acknowledged that such uncertainty
affected many members of the forces and that as a result of a number of
grievances filed by such other members of the Canadian Forces, the Department
of National Defence clarified its policy and as a result of that clarification
the Appellant received the lump-sum payment.
[41] The Respondent submits that the Appellant wants the
phrase “pursuant to” to be broadly interpreted to mean “as a result of”. The
Respondent submits that such an expansive interpretation is inappropriate based
on the facts of this case and the application of principles of statutory
interpretation.
[42] In respect of principles of statutory interpretation,
the Respondent relies on the findings of the Supreme Court of Canada in Canada
Trustco Mortgage Co. v. R..
In that decision the Supreme Court of Canada noted at paragraph 10 that when
the words of a provision are precise and unequivocal the ordinary meaning of
the words play a dominant role in the interpretive process. Where the words can
support more than one reasonable meaning, the ordinary meaning of the words plays
a lesser role. In all cases, the Court must seek to read the provisions of an Act
as a harmonious whole.
[43] It is submitted that the plain and ordinary meaning of
the phrase “pursuant to” means that the amount must be paid in conformance with
or under the terms of one of the three options noted above.
[44] It is further submitted that the phrase “pursuant to”
generally means “following upon, consequent and in conformance to; in
accordance with”. Black’s Law Dictionary,
(9th ed.) defines the phrase “pursuant to” as meaning:
1. In
compliance with; in accordance with, under …
2. As
authorized by ; under …
[45] These definitions require that the plain ordinary
meaning of the phrase “pursuant to” be understood as being more restrictive and
narrow than other possible terms such as “as a result of” or “as a consequence
of”. The phrase “pursuant to” requires a direct link between the amount
received and the order, arbitration award or legal proceeding. It is submitted that
the use of a more restrictive phrase reflects the intention of Parliament to
restrict the circumstances in respect of which lump-sum payments should be
afforded the benefit of the averaging calculation.
[46] Further, reliance is placed on the Supreme Court of
Canada decision in Minister of National Revenue v. Armstrong.
In that case, all three justices who wrote reasons agreed that the payment being
considered, namely a lump-sum payment, was not made pursuant to an order or
judgment in a divorce or separation action. In the words of Locke J. at page
449:
… It cannot … be properly said that this lump sum
was paid, in the words of the section, pursuant to the divorce decree.
It was, it is true, paid in consequence of the liability imposed by the
decree for the maintenance of the infant, but that does not fall within the
terms of the section. [Emphasis in original.]
[47] Similarly, Kerwin CJ stated at page 447:
… The test is whether it was paid in pursuance to a
decree, order or judgment, and not whether it was paid by reason of a legal obligation
imposed or undertaken. …
[48] It was submitted that a similar conclusion was also
reached by the Federal Court of Appeal in R. v. Melford Developments
Inc.
The Respondent also refers to the French version of the Act where the
words “en exécution” are used in place of “pursuant to”.
[49] It is argued that the phrase “en exécution” used in the French
version of the subject provision is more restrictive than the phrase “conformément
à” which is used in other provisions of the Act. The French version of
the subject provision implies that there has to be a direct causal link between
the payment of the amount and the order, award or settlement agreement. Accordingly,
the Appellant’s suggestion that “pursuant to” in the English version should be
read broadly, creates a conflict of the plain meaning of the words used in the
French version.
[50] The Respondent also cites the Supreme Court of Canada
decision in Schreiber v. Canada (Attorney General)
where it was held that where one of two versions, English or French, is broader
than the other, the common meaning would favour the more restricted or limited
meaning.
[51] The Respondent also pursues arguments based on a
contextual interpretation as well as a purposive interpretation of the subject
provision. Contextually, there must be a direct link between the lump-sum
received and the order or judgment, the arbitration award or settlement upon
which the taxpayer relies. The individual entitled to the averaging must be the
same individual that was a party to the resolution of the dispute. Contextually,
it is further submitted that the definition of “qualifying amount” should only
include payments in respect of specific types of payments that were expressly
prescribed by Parliament including a superannuation of pension benefits,
spousal or child support amounts, employment insurance and the like. The
specific types of payments illustrate that lump-sum averaging is not available in
every situation where a lump-sum payment is received.
[52] A purposive interpretation can be drawn from the 1999 Budget
which included the “The Budget Plan 1999”, a document prepared by the Department
of Finance and tabled by the Minister of Finance. That document described retroactive
lump-sum payments as:
income from an office or employment or income
received because of termination of an office or employment, received under the
terms of a court judgment, arbitration, award or settlement of a law suit.
[53] The legislative proposals and explanatory notes which
followed the Budget and were published in September 1999 confirm this
explanation of the purpose. In particular, that document states:
A qualifying amount is the principal portion of
certain amounts included in income. Those amounts are: spousal or child support
amounts, superannuation or pension benefits otherwise payable on a periodic
basis, employment insurance benefits and benefits paid under wage loss
replacement plans. Also included is the income received from an office or
employment (or because of a termination of an office or employment) under
the terms of a court order or judgment, an arbitration award or in settlement
of a lawsuit.
[Emphasis added.]
[54] Lastly, the Respondent submits that the recruiting group
cannot be regarded as a competent tribunal since it is without legal
jurisdiction granted by federal or provincial statute to make an order or
judgment and since it is not an administrative tribunal possessing legal
jurisdiction to adjudicate disputes. The common theme amongst the three
possible circumstances allowing for a lump-sum payment to be a “qualifying
amount” is that it be received pursuant to the outcome or resolution of a
formal legal dispute. In the case at bar, it is submitted that there is and has
not been a formal legal dispute.
Analysis
[55] Resolution of the issue in this case requires answering
the following questions:
a) Is
the CFRG a competent tribunal? And if so,
b) Was payment received pursuant to an order of
that tribunal?
[56] While both parties have made excellent submissions on
both these questions, none of the authorities relied on are definitive in terms
of their application to this case. Nonetheless, I am persuaded that the CFRG
must be regarded as a competent tribunal and that the payment was received
pursuant to an order of that tribunal.
[57] As to both questions, I accept the Appellant’s arguments
and essentially adopt them as my own. They are well conceived, well supported
by the jurisprudence and are in total harmony with a construction of the
subject provisions which are clearly intended to relieve the marginal tax rate
disadvantage imposed in cases where past year’s employment income entitlements
have been corrected by a process that cannot be suspect of anything other than
arising from a dispute or grievance that has been genuinely resolved by
recourse to a formally recognized dispute or grievance resolution process. The
Appellant had a grievance that was resolved by recourse to a formally
recognized resolution process which gave rise to the decision of a statutorily
recognized authority.
[58] More specifically, as to whether the CFRG is a tribunal,
I accept that the meaning of “tribunal” in the context of the definition of
“qualifying amount” should, for the purposes of sections 110.2 and 120.31, be
no less broad than defined in subsection 2(1) of the Federal Courts Act.
While the principle of consistently applying language across statutes might
not, in and by itself, be a compelling argument to endorse the meaning of a
word carefully defined in one enactment but left undefined in another, as
applying to the latter enactment, it is in this case, an argument that I find
to be persuasive.
[59] The CFRG clearly acted or purported to act as the
responsible administrative decision maker in terms of granting the relief
sought by the Appellant. The Appellant’s reliance on Bozzer and TeleZone
confirm that neither the absence of judicial trappings nor the hierarchy of
authority are themselves determinative of the sufficiency of the authority
required to constitute a “tribunal”. If a border guard can be a “tribunal” for
administrative law purposes, the CFRG can be a “tribunal” for the purposes of sections
110.2 and 120.31 of the Act. Further, the Appellant’s reliance on Dunsmuir,
is not misplaced in my view in terms of my embracing his argument that as
relieving provisions, sections 110.2 and 120.31 should recognize a broad range
of administrative actors.
[60] I also accept that the CFRG is a “competent tribunal”.
Again, while the Respondent’s arguments on this point are more formidable, the
Appellant has established a prima facie case that the CFRG was competent
to make the determination and decision it made. I am impressed not only by the
references in email correspondence to the chain of command that was apprised of
the Appellant’s “grievance”, and thereby effectively part of the decision
making process, but as well by the Appellant’s reliance on section 49 of the National
Defence Act. The military exists in a world of its own. What happens at the
CFRG level might well be said to have been statutorily authorized or more
plainly put, section 49 of the National Defence Act might well be found
to statutorily empower the CFRG as a “competent tribunal” to make the order or
judgment that resulted in the subject payment being made to the Appellant.
[61] As well, I agree with Appellant’s counsel that the
burden has shifted at this point to the Respondent. The world of the military
cannot be better understood, explained or argued than by the Respondent. I have
heard nothing from the Respondent to answer the Appellant’s submissions as to
the competency ob authority of the CFRG to make a determination, order or
judgment requiring the payment in question to the Appellant.
[62] Indeed, the Respondent at this point relies on a well-framed
and well supported argument that the payment was not made “pursuant to” an
order or judgment by which the Employer terminated a “legal proceeding”.
[63] However, the Respondent does acknowledge that a
grievance is a “legal proceeding”. That concession should not be undermined nor
be taken issue with by this Court. It is consistent with the relieving nature
of the provisions at issue.
[64] Notwithstanding this acknowledgment, the Respondent argues
that the Appellant did not file a “grievance”. It is the Respondent’s position
that the Appellant’s entitlement to the payment was a result of a change in
policy caused by the prior grievances of others in similar circumstances as the
Appellant.
[65] The Respondent draws a fine line here between a
“grievance” procedure that ought to be accepted as a “legal proceeding” and a
procedure that falls short of that line. Again, there is the difficulty here of
understanding, in the context of the armed services, what might be a
“grievance” procedure and that, in turn, raises questions of which party has
the onus of proof. The Respondent has been of no assistance in this regard and
on that basis I am inclined to find that the formal request in this case was a
grievance that ought to be treated in a similar manner as the Minister treats
other grievances resolved by, as I have found in this case, a competent
authority.
[66] Further, and importantly in this case, there is a very
clear nexus between the acknowledged “grievances” of others, their resolution
and the resolution of the Appellant’s formal request for a decision that abided
by the decisions made in respect of those prior grievances. Precedents are the
basis for most decisions. That a decision maker relies on a precedent, does not
change a decision to compliance with a policy.
[67] In my view, it is simply unacceptable that the subject
provisions of the Act be read to require the advancement of certain
formal litigation steps before they allow the relief they are meant to provide.
This is especially true where there is a strong nexus between the settlement of
a prior claim and the claim of another in similar circumstances. The issue is
not the formality of the steps taken but whether there is a claim based on an
entitlement. In this context, legal proceedings might start with a filed claim,
a lawyer’s letter enclosing a draft claim or a complainant’s letter setting out
a genuine basis for a claim. If the latter approach leads to a resolution by a
competent authority, that should be sufficient to find that a “legal
proceeding” has been terminated. The early resolution of an issue should not
too readily be found to be a bar to a tax treatment that protracting that issue
with formalist legal trappings would permit.
[68] The formal “request” here was not asking for compliance
with a policy. It was a claim based on an assertion of an entitlement
established by prior competent tribunal pronouncements. The recognition of the
entitlement by a competent tribunal terminated the claim. That is sufficient in
my view.
[69] For these reasons the appeal is allowed, with costs.
Signed at Ottawa, Canada this 29th day of August 2012.
"J.E. Hershfield"
Email this Content