Public Service Alliance of Canada et al. v. Canada Revenue Agency et al., (2011) 384 F.T.R. 295 (FC)

• Judge: Beaudry, J.
• Court: Federal Court (Canada)
• Case Date: January 11, 2011
• Jurisdiction: Canada (Federal)
• Citations: (2011), 384 F.T.R. 295 (FC);2011 FC 207

PSAC v. CRA (2011), 384 F.T.R. 295 (FC)

MLB headnote and full text

Temp. Cite: [2011] F.T.R. TBEd. FE.035

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

(T-808-10; 2011 FC 207)

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

Federal Court

Beaudry, J.

February 22, 2011.

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 dismissed the application.

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, they asserted that 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 - They further asserted that 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 interests pursuant to s. 220(3.1) - The Federal Court 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 - 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 - See paragraphs 25 to 49.

Civil Rights - Topic 982

Discrimination - Employment - Employer, employee and employment defined - At issue included whether a human rights tribunal erred in its appreciation of the evidence in regard to the application of s. 7(a) of the Canadian Human Rights Act (employment discrimination) and whether the tribunal erred in holding that federal government female employees (the complainants) who were recipients of retroactive pay equity lump sum benefits had not suffered adverse differential treatment - The complaint concerned the respondent Canada Revenue Agency's tax treatment of the retroactive payments - The complainants asserted that the tribunal erred in concluding that their complaint had not arisen in the course of employment - The complainants asserted that even where an entity was not an employer of an individual, it could, nonetheless, have a discriminatory impact on the employment of that individual - They further asserted that the Agency's treatment of the qualifying retroactive lump sum payments perpetuated the wage discrimination in the female dominated groups still retaining a lower percentage of their earned employment income than male dominated groups who received their income in the year in question - The Federal Court rejected the assertions - The tribunal's conclusion that the complainants' allegations, even if believed, could not engage the Agency's liability under s. 7(b) stemmed from the application of Canada (Attorney General) v. Bouvier et al. (F.C.A.) in which it was said that a government could not be held accountable to the Human Rights Commission for a questionable provision of a Regulation simply because Parliament had given it the responsibility of administering the Act on the authority of which the Regulation was validly enacted by the Governor in Council - As such, the court agreed that although the Agency had pay equity recipients among its employees, the Agency did not assess their tax returns in its capacity as an employer - See paragraphs 50 to 61.

Civil Rights - Topic 983

Discrimination - Employment - What constitutes discrimination - [See Civil Rights - Topic 982 ].

Civil Rights - Topic 992

Discrimination - Employment - Adverse effect, indirect or constructive discrimination - At issue included whether a human rights tribunal erred in holding that federal government employees (the complainants) who were recipients of retroactive pay equity lump sum benefits had not suffered adverse differential treatment - The complaint concerned Canada Revenue Agency's tax treatment of the payments - The complainants referred to the tribunal's determination that the interest that they received adequately compensated them for the additional tax burden - They asserted that they were awarded interest to compensate them for the time use of money, which was distinct and therefore the prima facie case of discrimination stood - They also asserted that the tribunal's statement that the complaint was not the "kind of inconsistency" that should be addressed under the Canadian Human Rights Act was unfounded - The Federal Court stated that there was evidence that the interest payments more than offset the effect of inflation and increased tax liability resulted from receiving the principal lump sum - It was reasonable for the tribunal to consider all the factors that related to the question of whether the complainants had been financially disadvantaged - One of those factors was the interest awarded and whether it was initially intended for that specific purpose - If the loss was more than entirely covered by the interest, it did not make sense for the complainants to assert that they were disadvantaged - Further, the tax consequence had neither been unforeseen nor unforeseeable - See paragraphs 62 to 80.

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 Federal Court 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 - See paragraphs 17 to 24.

Cases Noticed:

Canada (Attorney General) v. Watkin (2008), 378 N.R. 268; 2008 FCA 170, refd to. [para. 17].

Hicks v. Canada (Attorney General) (2008), 334 F.T.R. 260; 2008 FCA 1059, refd to. [para. 17].

Powell v. TD Canada Trust (2007), 320 F.T.R. 17; 2007 FC 1227, refd to. [para. 17].

AZ Bus Tours Inc. v. Tanzos (2009), 353 F.T.R. 121; 2009 FC 1134, refd to. [para. 17].

Canadian Human Rights Commission v. Pankiw et al. (2010), 369 F.T.R. 84; 2010 FC 555, refd to. [para. 18].

National Capital Commission v. Brown et al. (2008), 330 F.T.R. 67; 2008 FC 733, refd to. [para. 18].

Canada Post Corp. v. Canadian Union of Postal Workers (2010), 364 F.T.R. 177; 2010 FC 154, refd to. [para. 21].

Vilven v. Air Canada et al., [2010] 2 F.C.R. 189; 344 F.T.R. 104; 2009 FC 367, refd to. [para. 23].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 24].

Bailey v. Minister of National Revenue (1980), 1 C.H.R.R. D/193 (Can. Hum. Rts. Trib.), dist. [para. 27].

Canada (Attorney General) v. Cumming, [1980] 2 F.C. 122 (T.D.), refd to. [para. 27].

Wignall v. Canada (Department of National Revenue Taxation), [2001] C.H.R.D. No. 9, refd to. [para. 27].

Fetterly v. Canada, 2006 TCC 94, dist. [para. 29].

Forward v. Canada (Minister of Citizenship and Immigration), 2008 CHRT 5, refd to. [para. 31].

Druken et al. v. Canada (Attorney General) (1988), 88 N.R. 150; 9 C.H.R.R. D/5359; 53 D.L.R.(4th) 29 (F.C.A.), refd to. [para. 31].

Gould v. Yukon Order of Pioneers, Dawson Lodge No. 1 et al., [1996] 1 S.C.R. 571; 194 N.R. 81; 72 B.C.A.C. 1; 119 W.A.C. 1, refd to. [para. 35].

Reference Re Marriage Act (2011), 366 Sask.R. 48; 2011 SKCA 3, refd to. [para. 36].

Canadian Pacific Ltd. v. Canadian Human Rights Commission and Fontaine, [1991] 1 F.C. 571; 120 N.R. 152 (F.C.A.), refd to. [para. 51].

Council of Licenced Practical Nurses (B.C.) v. Mans et al. (1990), 14 C.H.R.R. D/221 (B.C. Hum. Rts. Council), affd. [1991] B.C.T.C. Uned. A29 (S.C.), affd. (1993), 23 B.C.A.C. 246; 39 W.A.C. 246 (C.A.), refd to. [para. 53].

Canada (Attorney General) v. Bouvier et al. (1998), 223 N.R. 111; 98 C.L.L.C. 230-016 (F.C.A.), refd to. [para. 54].

Green v. Public Service Commission (Can.), 2003 CHRT 34 (Can. Hum. Rts. Trib.), refd to. [para. 65].

Burrows v. Canada, 2005 TCC 761, refd to. [para. 68].

Sveinson v. Canada (Attorney General), [2003] 4 F.C. 927; 305 N.R. 284; 2003 FCA 259, refd to. [para. 69].

Counsel:

David Yazbeck and Andrew Astritis, for the applicants;

Catherine A. Lawrence, for the respondent, Canada Revenue Agency;

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

Solicitors of Record:

Raven, Cameron, Ballantyne & Yazbeck, LLP/s.r.l., Ottawa, Ontario, for the applicants;

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

Daniel Poulin, Ottawa, Ontario, for the respondent, The Canadian Human Rights Commission.

This application was heard at Ottawa, Ontario, on January 11, 2011, before Beaudry, J., of the Federal Court, who delivered the following judgment on February 22, 2011.