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Manitoba Court of Appeal grants leave in case of partial clawback of CERB when on income assistance

Judge says lack of consultation from feds caused “patchwork of differing responses across Canada”

Manitoba Court of Appeal grants leave in case of partial clawback of CERB when on income assistance
Manitoba’s highest court gave leave to hear case on challenge to CERB clawback.

In granting leave to appeal a case involving the clawback of Canada Emergency Response Benefits  from a man living on social assistance, a Manitoba Court of Appeal judge says there is a “patchwork” of policies across Canada, with different provinces and territories creating their own rules for recovering what they believe are over-payments.

Because of the urgency to put money into Canadians’ hands as quickly as possible during the pandemic, one of the largest income support programs in Canadian history, Justice Christopher Mainella wrote there were no extensive consultations between the federal, provincial and territorial governments as to how the CERB would affect provincial and territorial social assistance programs.

“The result has been a patchwork of differing responses across Canada,” he wrote in Cann v Director, Fort Garry, River Heights, released earlier this month. He added the applicant raised important questions about whether the Manitoba’s Social Services Appeal Board erred in upholding a decision by the Director of Assistance to claw back $378 because of the applicant receiving CERB benefits.

There are three clawback models for the CERB across the provinces. British Columbia, Yukon and the Northwest Territories do not impose a clawback. Newfoundland and Labrador, Saskatchewan, New Brunswick, Nova Scotia, Prince Edward Island and Nunavut have a full-clawback model. Ontario, Alberta, Quebec and Manitoba have a partial clawback policy, though they are all different.

The Federal government has asked provinces to not impose a clawback.

The parties in the Manitoba case have “differing characterisations of the CERB,” Mainella wrote in his decision. “The Director describes the CERB as ‘earned income.’ The applicant sees it as something different. The CERB Act describes the CERB as an ‘income support payment.’ What, if any, are the consequences of this distinction for the purposes of the calculation of income assistance (or general assistance) is a question of statutory interpretation.”

Mainella added: “Because the Board is characterizing the CERB as earned income, the dispute here transcends the interests of the applicant. It is a question of general importance as many Manitobans similarly situated to the applicant are affected in a like manner by the Board’s reasoning.

“The real issue here is whether there is arguable merit to the applicant’s position that the CERB was not treated correctly by the Board for the purposes of the calculation of income assistance because the CERB is not truly ‘earned income’ given it is a temporary benefit to address the effects of the pandemic.”

The applicant, in this case, Nigel Cann, receives social assistance and a shelter allowance under the Manitoba Assistance Act, as he is unable to work due to his disability. In the spring, he applied for the CERB benefits through the Canada Revenue Agency website. He was approved, and he received a deposit for four weeks of assistance, totalling $2,000. The applicant reported his receipt of the CERB to the director.

In an affidavit filed on the leave application, the applicant said he applied for the CERB because “his understanding was that he was eligible.” He also said he was in desperate financial circumstances as the director had “withheld” an additional allowance for his service animal’s care. The affidavit included a receipt from a veterinary hospital for $189.84.

Cann kept $740 of the CERB payment and returned the remaining $1,260 to the federal government. On June 1, 2020, the director’s office wrote to the applicant advising he “[did] not qualify for CERB,” and he should return any such funds. He was told that because he had kept $740 in CERB payments, he had been overpaid $378 in income assistance, as any money he received from the CERB is “treated as earned income.”

The overpayment calculation was based on a formula of treating the first $200, plus 30 per cent of the remainder, as an exempt “work incentive.” The overpayment was to be recovered at $60 per month from the applicant’s income assistance.

In July, the applicant wrote to the director’s office and said that the $60-per-month reduction of his benefits presented a hardship. He later appealed to the Social Services Appeal Board.

The director’s report to the board advised that the applicant “did not meet the criteria for CERB and should not have applied for the benefit.”

In August, the board confirmed the director’s decision, ruling that:

  • The applicant was not eligible for the CERB.
  • There had been a correct assessment of the overpayment.
  • The applicant had not demonstrated that the $60-per-month recovery of the overpayment would cause him hardship.

Mainella wrote that two questions that need to be considered are whether the board erred by considering the applicant’s entitlement to the CERB, and did the board err in its treatment of the CERB for the calculation of the applicant’s income assistance benefits.

“In my judgment, it is in the public interest that there be clarity as to whether or not such an important legislative scheme is being administered within the confines of the law during a state of emergency that exists as a result of the pandemic,” Mainella wrote.

“Given that there are a large number of vulnerable persons being affected by the treatment of the CERB for the purposes of income assistance and general assistance based on a ‘policy,’ which the Board has not justified with any reviewable reasoning, I am not satisfied that the issue can be dismissed on a preliminary examination; it requires a more thorough inquiry by a panel of the Court of Appeal. I am satisfied that the applicant has a reasonable prospect of success on this important question of law if leave to appeal is granted.”

Mainella also wrote that there is “arguable merit’ to the applicant’s position that the wording of the CERB Act that the Minister of Employment and Social Development has the exclusive responsibility to determine eligibility for the CERB. “There is a reasonable prospect of the applicant satisfying a panel of this Court that his CERT entitlement is a matter between him and the minister.”

Mainella granted a stay of the order to recover any alleged overpayment at the rate of $60 a month until the court hears an appeal. He also noted that the applicant had represented himself until now and that it is in “everyone’s best interests” that he now obtains legal counsel and that Legal Aid should be sent a copy of the decision.

Lindsay Tedds with the school of public policy at the University of Calgary wrote in a recent paper she authored with colleague Gillian Petit that the treatment of the CERB across provincial and territorial income assistance programs is problematic. “There is no explanation as to why a recipient living in Canmore, Alberta should be treated differently than a Disability Assistance recipient living in Golden, BC, less than an hour away.”

Tedds wrote that because of the swiftness with which the CERB was put into place, there was “very little” technical guidance as to what CERB was.” Is it like Employment Insurance, meant to ensure workers and paid out of deferred earnings, and therefore not exempt for the purpose of income assistance? Or is a replacement for employment income and should be treated as such. Or, is it a tax benefit program, paid out of general revenue to supplement low income, and therefore should be exempt from clawbacks?

At the end of September, close to nine million applicants and about $80 billion had been handed out in CERB benefits.

“This highlights the importance of the federal government concisely defining a program and its objectives to minimize differential treatment of programs across jurisdictions,” she wrote. “It also demonstrates how important it is to clearly and consciously define programs and consider their effects on all socio-demographic groups.”

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