Public Service Alliance of Canada et al. v. Canada Revenue Agency et al., (2012) 428 N.R. 240 (FCA)

• Judge: Létourneau, Noël and Gauthier, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: January 10, 2012
• Jurisdiction: Canada (Federal)
• Citations: (2012), 428 N.R. 240 (FCA);2012 FCA 7

PSAC v. CRA (2012), 428 N.R. 240 (FCA)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

Temp. Cite: [2012] N.R. TBEd. JA.020

Public Service Alliance of Canada and Cathy Murphy (appellants) v. Canada Revenue Agency (respondent) and Canadian Human Rights Commission (respondent)

(A-140-11; 2012 FCA 7; 2012 CAF 7)

Indexed As: Public Service Alliance of Canada et al. v. Canada Revenue Agency et al.

Federal Court of Appeal

Létourneau, Noël and Gauthier, JJ.A.

January 10, 2012.

Summary:

Murphy was a federal public servant from 1981 to 1984. Her union filed pay equity complaints under s. 11 of the Canadian Human Rights Act against the Treasury Board of Canada, asserting that employees in a number of female dominated occupational groups, including Murphy, were paid less than employees in male dominated groups for work of equal value. A tribunal allowed the complaint and ordered the Treasury Board to make retroactive wage adjustment payments to the affected employees from 1985 to the date of the decision. It also ordered the payment of simple interest calculated semi-annually at the Canada Savings Bonds rate on the wage adjustments. In 2000, the affected government departments made the wage adjustments and interest payments. The Canada Revenue Agency issued a 2000 notice of assessment to Murphy, advising her that she was eligible for a qualifying retroactive lump payment tax calculation. The qualifying retroactive lump sum payment mechanism allowed income from qualifying lump sum payments to be taxed in the year that the income in question should have been received, if that was advantageous to the individual. The Agency subsequently notified Murphy that the calculation did not benefit her and that the regular tax calculation was more beneficial even though her marginal tax rate was now higher than when she worked for the public service. The lump sum payments were deemed for income tax purposes to be employment income in 2000 even though they related to employment that had occurred years earlier. Murphy and her union filed human rights complaints on behalf of all pay equity recipients who were subject to the payments, asserting that the Agency had discriminated against them by charging compound interest on notional tax arrears which the Agency had stated were owed to it from the date at which the income was earned. The union asserted that the conduct reduced the actual value of the payments ordered by the tribunal, perpetuating the pay gap that had been the subject of the prior complaints and was in violation of ss. 5 and 7(b) of the Act. The tribunal held that the complainants had not established a prima facie case of discrimination. The tribunal also concluded that the complainants had not demonstrated that the alleged discrimination resulted from the "provision of a service customarily available to the public" or "in the course of employment". Instead, it found that the assessment of the tax liability of the equity lump sum recipients came from the application of the Income Tax Act. Accordingly, the tribunal concluded that the complaints did not engage s. 5 or s. 7(b) of the Canadian Human Rights Act. The complainants applied for judicial review.

The Federal Court, in a decision reported at 384 F.T.R. 295, dismissed the application. Murphy and her union appealed.

The Federal Court of Appeal dismissed the appeal.

Civil Rights - Topic 933

Discrimination - Government programs - Taxation - At issue included whether a human rights tribunal erred in its appreciation of the evidence in regard to the application of s. 5 of the Canadian Human Rights Act and whether the tribunal erred in holding that recipients of retroactive pay equity lump sum benefits had not suffered adverse differential treatment - The complainants asserted that the tribunal erred in concluding that the complaint was beyond the Act's jurisdiction - They asserted that, inter alia, the tribunal's conclusion that the Agency could not exercise any discretion under ss. 110.2 and 120.31 of the Income Tax Act was directly contradicted by caselaw which identified the Agency discretion to waive the interest pursuant to s. 220(3.1) - The applications judge held the tribunal's finding respecting its assessment on whether the Agency's actions could be described as "services" within the meaning of s. 5 was reasonable - The complainants appealed, asserting, in the alternative, that parts of the amounts assessed could have been waived through the exercise of ministerial discretion pursuant to s. 220(3.1) and that the Minister engaged in a discriminatory practice in failing to exercise that discretion in their favour - The Federal Court of Appeal rejected the assertion - No relief was sought pursuant to s. 220(3.1) - Moreover, s. 120.31 made it clear that the amounts assessed pursuant to that provision were taxes and therefore could not be waived by the Minister - That the tax included an amount intended to reflect the notional interest shortfall resulting from the fact that the tax was not paid in the years in which it ought to have been paid according to the assumption underlying the retroactive lump sum payment mechanism did not alter its nature - Also, s. 120.31(3)(b)(ii) was clear - The Minister had to apply the prescribed rate pursuant to s. 164(3) in computing the notional interest shortfall - Section 248(11) required that the rate be compounded daily with the result that, again, the Minister had no discretion in that regard - See paragraphs 8 to 12.

Civil Rights - Topic 964

Discrimination - Facilities and services customarily available to public - What constitutes a public service or facility - At issue included whether a human rights tribunal erred in its appreciation of the evidence in regard to the application of s. 5 of the Canadian Human Rights Act and whether the tribunal erred in holding that recipients of retroactive pay equity lump sum benefits had not suffered adverse differential treatment - The complainants asserted that the tribunal erred in concluding that the complaint was beyond the Act's jurisdiction - They asserted that the tribunal failed to find that the respondent Canada Revenue Agency's administration of the qualifying retroactive lump sum payments constituted a service customarily available to the public pursuant to s. 5 of the Act - They asserted that the tribunal interpreted s. 5 in a restricted manner and misunderstood the discretion available to the Agency in performing its functions - Further, the creation of the qualifying retroactive lump sum payment provisions of the Income Tax Act came about as a result of Parliament's recognition of the inherent unfairness of taxing a retroactive lump sum wage payment at a higher marginal rate in the year that it was received - Therefore, the determination as to whether or not a taxpayer would benefit from the application of the provisions was intended to provide a benefit to the public and that, accordingly, the Agency was providing a service to pay equity recipients - The applications judge stated that Canada (Attorney General) v. Watkin (F.C.A.) established that not every government activity was a service within the meaning of s. 5 of the Canadian Human Rights Act (CHRA) - The tribunal's finding respecting its assessment on whether the Agency's actions could be described as "services" within the meaning of s. 5 was reasonable - The Federal Court of Appeal dismissed an appeal - Pursuant to s. 152 of the ITA, the Minister had to assess taxes in conformity with the law - Even if the Minister's assessing actions could be viewed as services, the Minister had to assess all those in receipt of the payments in the same manner, regardless of their personal characteristics - Rather, the complaint was directed at the provisions of the ITA which provided for the taxation of the payment or, more precisely, precisely at the manner in which the payments were taxed - According to the complainants, that manner of taxation should not be applied to the payments, not because they failed to qualify under the relevant provisions of the ITA, but because giving effect to these provisions would compound the discrimination to which the complainants were subjected to by their employer - That was a direct attack on ss. 110.2 and 120.31 of the ITA, based on considerations that were wholly extrinsic to the ITA - That type of attack fell outside the scope of the CHRA since it was aimed at the legislation per se, and nothing else - The CHRA did not provide for the filing of a complaint directed against an act of Parliament - See paragraphs 3 to 7.

Civil Rights - Topic 7004

Federal, provincial or territorial legislation - General - Application of legislation - [See Civil Rights - Topic 964 ].

Civil Rights - Topic 7115

Federal, provincial or territorial legislation - Practice - Judicial review - Standard of review - At issue included whether a human rights tribunal erred in its appreciation of the evidence in regard to the application of ss. 5 and 7(a) of the Canadian Human Rights Act and whether the tribunal erred in holding that recipients of pay equity lump sum benefits had not suffered adverse differential treatment - The applications judge held that the questions should be reviewed on a standard of reasonableness - Although there had been cases whether the same issues were reviewed on a standard of correctness, Canadian Human Rights Commission v. Pankiw et al (F.C.) established that the tribunal was specifically empowered to determine questions of law and, moreover, when reviewing the tribunal's interpretation of a provision of its enabling statute, the standard of review was reasonableness - Applying the standard of reasonableness, the judge found no justification for intervention - The Federal Court of Appeal stated that it could detect no error as to the standard of review that was applied or the judge's conclusion that no there was no reviewable error - The court would have reached the same conclusion applying a standard of correctness - See paragraph 2.

Income Tax - Topic 7803

Returns, assessments, payment and appeals - Interest - Waiver - [See Civil Rights - Topic 933 ].

Cases Noticed:

Canada (Attorney General) v. Mowat (2011), 422 N.R. 248; 2011 SCC 53, refd to. [para. 2].

Alberta Teachers' Association v. Information and Privacy Commissioner (Alta.) et al. (2011), 424 N.R. 70; 519 A.R. 1; 539 W.A.C. 1; 2011 SCC 61, refd to. [para. 2].

Forward v. Canada (Minister of Citizenship and Immigration), 2008 CHRT 5, agreed with [para. 6].

Canadian Human Rights Commission v. Minister of National Revenue et al. (2003), 242 F.T.R. 175; 2003 FC 1280, agreed with [para. 6].

Druken et al. v. Canada (Attorney General), [1989] 2 F.C. 24; 88 N.R. 150 (F.C.A.), refd to. [para. 7].

Canada (Attorney General) v. McKenna et al., [1999] 1 F.C. 401; 233 N.R. 52 (F.C.A.), refd to. [para. 7].

Fetterly v. Minister of National Revenue, 2006 TCC 94, refd to. [para. 10].

Milliken v. Minister of National Revenue, [2002] T.C.J. No. 151 (T.C.C.), refd to. [para. 12].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 120(3.1) [para. 8 et seq.]; sect. 248(11) [para. 12].

Counsel:

David Yazbeck, for the appellants;

Catherine Lawrence and Craig Collins-Williams, for the respondent, Canada Revenue Agency;

Daniel Poulin, for the respondent, Canadian Human Rights Commission.

Solicitors of Record:

Raven, Cameron, Ballantyne & Yazbeck, LLP, Ottawa, Ontario, for the appellants;

Myles J. Kirvan, Deputy Attorney General of Canada, Ottawa, Ontario, for the respondent, Canada Revenue Agency;

C.H.R.C. Litigation Services Division, Ottawa, Ontario, for the respondent, Canadian Human Rights Commission.

This appeal was heard at Ottawa, Ontario, on January 10, 2012, by Létourneau, Noël and Gauthier, JJ.A., of the Federal Court of Appeal. Noël, J.A., delivered the following reasons for judgment orally for the court on the same date.