Social Benefits Overpayment

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-24
CLNP Page ID:	2406
Page Categories:	Social Assistance
Citation:	Social Benefits Overpayment, CLNP 2406, <https://rvt.link/e2>, retrieved on 2024-11-24
Editor:	MKent
Last Updated:	2024/11/08

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Surdivall v. Ontario (Disability Support Program), 2014 ONCA 240 (CanLII)

[1] This appeal raises two important questions about the statutory authority of the Director of the Ontario Disability Support Program ("ODSP") and of the Social Benefits Tribunal.

[2] The first question is whether the Director has authority to forgo recovery of part or all of an overpayment of income support to a disabled recipient. Put differently, is the Director's discretion limited to how to collect an overpayment or does the Director also have discretion about when and, more importantly, whether to collect an overpayment? The answer to this question turns on the extent of the discretion conferred by the words "may be recovered" and "may" in the Ontario Disability Support Program Act, 1997, S.O. 1997, c. 25, Sch. B ("ODSPA" or the "Act").

[3] The second question is whether the tribunal, on appeal from a Director's decision, has the authority to restrict the Director's recovery of an overpayment and order that either part or all of an overpayment not be recovered. The answer to this question turns on the scope of the tribunal's appellate jurisdiction.

[4] The appellant, Glynn Surdivall, is a disabled senior. He received ODSP income support until he turned 65. Because he made an innocent reporting error, he received more income support than he was entitled to. He was assessed an overpayment of $3,050, which the Director ordered him to repay.

[5] Surdivall appealed the Director's decision to the tribunal. It held that the Director's decision assessing Surdivall with an overpayment was correct. However, the tribunal ordered the Director to collect only half of the overpayment -- $1,525 -- at the rate of $10 per month.

[6] The Director appealed the tribunal's decision to the Divisional Court. The Divisional Court allowed the Director's appeal. It concluded that neither the Director nor the tribunal had authority to forgive any part of an overpayment.

[7] I do not agree with the Divisional Court's decision. In my opinion, the Director has discretion to forgo recovery of part or all of an overpayment. As the Director has this discretion, so too did the tribunal have discretion to order that the Director collect only half of the overpayment Surdivall received. I would allow the appeal and reinstate the tribunal's decision. [page228]

B. Factual Background and History of the Proceedings

(a)   The Ontario Disability Support Program

[8] This program provides monthly support to eligible persons with disabilities. The program serves some of the province's most vulnerable individuals. The support they receive is intended to help them live as independently as possible.

[9] Under the regulations, disabled recipients must provide ongoing financial information as a condition of their eligibility for support. This requirement includes an obligation to report changes in their financial status. As I will outline, if their failure to report a change results in an overpayment of support, the Director may recover the overpayment by one of the methods specified in the statute.

(b)   The overpayment to Surdivall

[10] Surdivall is now 67 years old. His only sources of income are a small CPP pension and social benefits for low income seniors. Because of his long-term disabilities, before turning 65, he received income support from the ODSP. This income support included a "shelter allowance" equivalent to the cost of his rent (up to a maximum) for his principal residence.

[11] Beginning in November 2008, while receiving income support, Surdivall lived in an apartment with a friend. He paid rent of $444 per month and received an equivalent amount from the ODSP as a shelter allowance. In August 2009, Surdivall was offered his own apartment in public housing at a rent of only $139 per month. His friend, however, asked Surdivall not to leave until he found another roommate because he would not be able to pay the total rent on his own. So Surdivall stayed with his friend for another ten months until the end of May 2010, and paid rent for both apartments. In June 2010, Surdivall moved into his apartment in public housing and notified the ODSP of his reduced rent.

(c)   The Director's decision

[12] The Director took the position that beginning in August 2009, Surdivall's principal residence was his apartment in public housing. She assessed an overpayment of $3,050 ($444 x 10 - $139 x 10) and, to repay it, ordered monthly deductions of $35.85 from Surdivall's ODSP benefits. [page229]

[13] Surdivall appealed the Director's overpayment decision to the tribunal. Before his appeal was heard, he turned 65 and thus was no longer entitled to ODSP benefits.¹ The Director notified him that he should repay his overpayment by sending a cheque or money order payable to the Minister of Finance. If he could not repay the total amount at that time, he could discuss a repayment plan with the Director's office.

(d)   The tribunal's decision

[14] Surdivall appealed the Director's overpayment decision to the tribunal under s. 21(1) of the ODSPA. This section provides that any decision of the Director affecting eligibility for or the amount of income support may be appealed to the tribunal.

[15] After a hearing at which Surdivall testified, the tribunal found that the Director correctly assessed Surdivall with an overpayment of $3,050 for the period August 1, 2009 to May 31, 2010 -- a period Surdivall could have lived in less expensive housing. The tribunal acknowledged that "helping a friend out may be an admirable thing to do" but held that it was not reasonable for Surdivall to do so when he was receiving public assistance at the expense of Ontario taxpayers.

[16] The tribunal found that Surdivall had a responsibility to report his new subsidized rent to the Director. However, the tribunal also found that Surdivall "did not understand or intentionally try to deceive the Director because he testified in a credible, honest and forthright manner as to his understanding that he was not required to inform the Director until he actually moved into his TCHC apartment".

[17] The tribunal concluded that the discretion to recover an overpayment should be "flexible", taking into account the circumstances of each case and the purposes of the Act. Surdivall would "experience financial hardship" if he had to repay the full amount of the overpayment; however, he had some responsibility to the taxpayers of Ontario to repay a portion of it. The tribunal ordered that he repay half, $1,525, at the rate of $10 per month.² [page230]

(e) The Divisional Court's decision

[18] The Director appealed the tribunal's decision to the Divisional Court under s. 31(1) of the ODSPA. That section provides for an appeal of a tribunal's decision on a question of law. The tribunal's authority to order that part of an overpayment not be recovered is a question of law. And the Divisional Court held that the standard of review on that question is correctness.

[19] In its reasons, the Divisional Court noted that an overpayment is a Crown debt. In its view, neither the Director nor the tribunal has any discretion to compromise a Crown debt. The tribunal's order amounted to a write-off of half of the debt. Neither it nor the Director has authority to make such an order. The Director's discretion under the legislation is limited to choosing how she will recover an overpayment [at para. 18]: "There is nothing in the statute which grants the Director the jurisdiction to forgive any part of the overpayment". The Divisional Court allowed the Director's appeal and set aside the tribunal's order limiting recovery of the overpayment.

C. Analysis

I. Does the Director have authority to forgo recovery of part or all of an overpayment of income support to a disabled recipient?

[20] Because s. 29(3) of the Act states that the tribunal on appeal cannot make a decision that the Director does not have the authority to make, we must first decide whether the Director has the authority to forgo recovery of part or all of an overpayment.

[21] Surdivall submits that the Director has broad discretion over overpayments, a discretion that includes forgoing or not recovering an overpayment. The intervenors support Surdivall's position. They submit that the ODSPA should be interpreted consistently with Canadian Charter of Rights and Freedoms values and human rights principles. The respondent submits that the Director's discretion is limited to choosing a method for recovering an overpayment. According to the respondent, the Director may defer collection of an overpayment, but may not forgo recovery of it altogether.

(a)   Relevant provisions of the ODSPA

[22] This first question is a question of statutory interpretation. The statute to be interpreted is the ODSPA. The following are its relevant provisions. [page231]

[23] Purpose and objectives. Section 1 states that the purpose of the Act is to establish a program that has four objectives:

1.   The purpose of this Act is to establish a program that,

(a)   provides income and employment supports to eligible persons with disabilities;

(b)   recognizes that government, communities, families and individuals share responsibility for providing such supports;

(c)   effectively serves persons with disabilities who need assistance; and

(d) is accountable to the taxpayers of Ontario.

Of these four objectives, the Divisional Court relied only on the last one -- to be accountable to the taxpayers of Ontario.

[24] The Director's powers and duties. The Director, who is responsible for administering the program, has broad powers and duties, which are listed in s. 38.³

The Director shall,

(a) receive applications for income support;

(b)   determine the eligibility of each applicant for income support;

(c)   if an applicant is found eligible for income support, determine the amount of the income support and direct its provision;

(d)   administer the provisions of this Act and the regulations;

(e)   determine how the payment of the costs of administering this Act and providing income support is to be allocated;

(f)   ensure that the appropriate payments are made or withheld, as the case may be; and

(g) exercise the prescribed powers and duties.

One of the Director's statutory duties is to recover overpayments.

[25] Overpayments. Section 14(1) of the Act defines an overpayment:

14(1) If an amount has been provided to a recipient under this Act in excess of the amount to which the recipient was entitled, the amount of the excess is an overpayment.

As Surdivall received an amount of income support in excess of the amount to which he was entitled, he was properly assessed an overpayment.

[26] Section 14(2.1). This section stipulates that an overpayment is a debt due to the Crown in right of Ontario. [page232]

[27] Section 14(4). This [is] a key provision on the appeal. It sets out three ways by which an overpayment may be recovered (emphasis added):

14(4) An overpayment may be recovered by one or more of reduction of income support under section 15, notice under section 16 or a proceeding under section 17.

Under s. 15(1), the Director may reduce monthly benefits. By regulation, absent consent, the amount deducted cannot exceed ten per cent of a recipient's budgetary needs.

Under s. 16(1), the Director may give a recipient written notice of an overpayment. The notice is enforceable as if it were an order of the Superior Court of Justice.

Under s. 17, the Director may recover an overpayment as a debt due to the Crown in a court of competent jurisdiction.

[28] Section 14(5). In addition to the three methods of recovery of an overpayment listed in s. 14(4), under s. 14(5) an overpayment may be recovered "by any remedy or procedure available to the Crown by law".

(b) The extent of the Director's discretion

[29] The words "may be recovered" and the word "may" structure each of the statutory provisions for the recovery of an overpayment. The word "may" ordinarily confers discretion on a decision-maker and both sides agree that the Director has discretion over the recovery of overpayments. The primary question on this appeal is the extent of this discretion. Is the Director's discretion limited to choosing the method of recovering an overpayment, as the Divisional Court found and the respondent contends, or does the Director's discretion also include a choice about whether to recover an overpayment, as Surdivall contends?

[30] I have concluded that the Director has broad discretion over the recovery of overpayments. She may choose how to recover an overpayment, and if the circumstances of an individual case warrant it, may also choose not to recover part or all of an overpayment.

[31] The basic rule of statutory interpretation in Canada remains the rule formulated over 30 years ago by Elmer Driedger in the second edition of his book, Construction of Statutes, 2nd ed. (Toronto: Butterworths, 1983):

The words of an Act are to be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. [page233]

See, for example, Rizzo and Rizzo Shoes Ltd. (Re) (1998), 1998 CanLII 837 (SCC), 36 O.R. (3d) 418, [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2, at para. 21.

[32] This rule governs the extent of the Director's discretion under the ODSPA.

(i)     The word "may" and the phrase "may be recovered"

[33] As I have said, when the legislature confers a statutory power on a decision-maker using the word "may", the power is meant to be discretionary. And, typically, the decision-maker can lawfully decide whether to exercise the power or not to exercise the power -- in other words, typically, "may" impliedly means "may or may not": see R. Sullivan, Sullivan on the Construction of Statutes, 5th ed. (Markham, Ont.: LexisNexis, 2008), at pp. 68-74. However, the word "may" alone does not determine the extent of a decision-maker's discretion.

[34] So, in this case, the words "may" and "may be recovered" do not by themselves resolve whether the Director's discretion over the recovery of overpayments includes a decision not to recover part or all of an overpayment. As is apparent from Driedger's rule, these words must be considered in context, having regard to the scheme and objects of the ODSPA and the legislature's intent.

(ii) The scheme and objects of the ODSPA

[35] The ODSPA is social welfare legislation, serving some of the province's most impoverished and vulnerable residents. The statute contains a complex set of regulations, with detailed reporting requirements. And, as counsel for Surdivall noted, overpayments occur quite frequently, often for innocent reasons. The statutory scheme inevitably requires flexibility, as the tribunal held in this case, so that the Director can deal with overpayments in a "rational, reasonable and cost effective way": see Canada (Attorney General) v. Mavi (2011), 108 O.R. (3d) 240, [2011] 2 S.C.R. 504, [2011] S.C.J. No. 30, 2011 SCC 30, at para. 54.

[36] The objectives of the program under the ODSPA support giving the Director broad discretion over the recovery of overpayments. For convenience, I again list the four objectives, which are found in s. 1 of the Act: they are to establish a program that

provides income and employment supports to eligible persons with disabilities; [page234]

recognizes that government, communities, families and individuals share responsibility for providing such supports;

effectively serves persons with disabilities who need assistance; and

is accountable to the taxpayers of Ontario.

[37] Nothing can be gleaned about the extent of the Director's discretion from the first objective. It is merely descriptive. The second objective, however, does require a broad discretion. This objective recognizes that government together with communities, families and individuals shares responsibility for providing support. To meet this objective, flexibility in collection is needed. Especially when overpayments result from innocent mistakes, demanding recovery may impose an enormous hardship on persons already living well below the poverty line. In such cases, it is entirely appropriate, as the tribunal recognized in Surdivall's appeal, that government shares the responsibility for the overpayment.

[38] The third objective -- "to effectively serve persons with disabilities who need assistance" -- is especially significant. This objective cannot be met unless the Director has the flexibility not to recover overpayments in appropriate cases. Counsel for Surdivall gave two examples of tribunal decisions where recovery of overpayments would be most unfair to disabled recipients.

[39] In the first example, an "incompetent" ODSP recipient living in a group home had his ODSP benefits paid to a trustee. The trustee misappropriated all the payments for her own benefit. An overpayment was assessed because the trustee failed to report a change in circumstances. Yet the ODSP recipient was responsible for the overpayment though he received no benefit and was neither competent nor personally required to report changes in circumstances to the program: see ON SBT 1105-03547 (2012); ON SBT 1012-11713 (2012).

[40] In the second example, an ODSP recipient lived with her son and had arranged for the program to pay her rent directly to her landlord because she was "incapable" of managing her finances. When her son moved out, she informed ODSP and her housing provider. ODSP ought to have decreased her shelter allowance but failed to do so even after she brought the error to her caseworker's attention. ODSP later sought to recover the $1,350 overpayment it had erroneously paid to her landlord, though the recipient had seen no benefit from the overpayment and would suffer hardship if forced to repay it: see ON SBT 1102-01061 (2011). [page235]

[41] The harshness and unfairness of debt recovery in these two examples are self-evident -- and I expect there are many similar cases. If the program is to serve disabled recipients effectively, then the Director must have discretion not only over how to collect an overpayment, but over whether to collect it at all.

[42] The final objective of the program and the one objective of the ODSP relied on by the Divisional Court and by the respondent is that of being accountable to the taxpayers of Ontario. According to the Divisional Court [at para. 18], "it would be virtually inconceivable given the requirements of accountability and transparency" that the Director would have discretion to forgo recovery of overpayments. According to the respondent, Surdivall's position would give the Director an open-ended discretion not to collect an overpayment regardless of the circumstances and would mean that there would be no accountability to the public for the loss of funds.

[43] I think that both the Divisional Court and the respondent have taken too narrow a view of the program's objective of accountability to Ontario's taxpayers. This objective does not require that overpayments always be recovered. It requires that they be recovered if circumstances warrant their recovery. Thus, for example, if the cost of recovering an overpayment would exceed the actual recovery of the overpayment, then insisting on recovery would not further the program's objective of accountability to Ontario's taxpayers. For this reason, the Director's own policy is not to recover overpayments of less than $2.50.

[44] In my view, the ODSP will be accountable to the taxpayers of Ontario if public funds are spent fairly, honestly and reasonably. The Director's discretion over the recovery of overpayments is not open-ended. It must be exercised reasonably taking account of a disabled recipient's individual circumstances. In some cases, it will not be reasonable for the Director to recover all or part of an overpayment. Forgoing recovery in these cases is still consistent with the program's objective of accountability to the province's taxpayers.

[45] Thus, the scheme of the statute and the objectives of the statute support conferring a broad discretion on the Director over the recovery of overpayments. I next turn to the context in which the words "may" and "may be recovered" are found in the Act.

...

2401-00011 (Re), 2024 ONSBT 3390 (CanLII)

...

[31]        In terms of assessing whether the overpayment should be recovered, I considered the guiding principles set out in Surdivall v. Ontario (Disability Support Program), 2014 ONCA 240.  The Tribunal finds no evidence of administrative error, infrequent communication, or delay in processing the information that would warrant forgiveness of the overpayment. The information was discovered during a file review that occurred within one year of the benefit approval.

2312-08370 (Re), 2024 ONSBT 3380 (CanLII)

[7]           The Director’s decision to assess a combined overpayment of $41,465.36 covering the period from January 2021 through September 2023 is correct. However, due to the factors giving rise to this overpayment, the Tribunal orders overpayment be reduced by 50%.

[8]           The Tribunal further finds there are insufficient factors giving rise to ongoing relief from recovery.

2310-06590 (Re), 2024 ONSBT 3230 (CanLII)

...

[21]        The next issue is whether I should grant the Appellant relief from the collection of this overpayment. In Surdivall v. Ontario (Disability Support Program), 2014 ONCA 240 (CA), the court addressed the need for flexibility in the collection of overpayments in order to meet the objectives of the legislation. The Court held that the Act provides the Director with a broad and flexible discretion as to whether to recover all, part, or none of an overpayment as well as the method by which to recover an overpayment. The discretion must be exercised reasonably taking account of the particular recipient’s individual circumstances. The Tribunal, on appeal, has the same broad and flexible discretion as the Director has at first instance.

[22]        The Tribunal often considers factors such as the reasons the overpayment occurred including the extent to which the actions of the appellant contributed to that state of affairs, whether the appellant’s actions were intentional or innocent, whether administrative error on behalf of the Director caused or contributed to the creation of the overpayment, and whether the recovery of the overpayment would cause extreme hardship to the appellant. Often the hardship under consideration is financial hardship, but there are other types of hardship that may be relevant.

[23]        In this case I find that the overpayment (except for January 2020) arose because of the caseworker’s error in processing the information she received from the Appellants at the 5 February 2020 meeting. Had she taken AK’s LTD benefits into account as income, she would have confirmed the Appellants’ understanding that they were no longer eligible for ODSP and closed their file. This would have prevented the creation of the overpayment. Instead, she incorrectly advised the Appellants that they could keep both the ODSP income support and the LTD benefits. The Appellants relied on this information to their detriment. If MM had been determined to be financially ineligible from February 2020 the Appellants could have adjusted their budget downward to reflect their income. Instead, they spent the extra money they received, reasonably believing that it was theirs to spend. They do not have liquid resources readily available to pay it back.

[24]        I also find that the Appellants proactively advised the Director, in good faith, of the relevant changes in their financial situation. They did not intentionally mislead the Director and there was no improper or blameworthy conduct on the Appellants’ part that caused the overpayment to arise. The Act and O. Reg. 222/98 are complicated in their administration and operation. The Director has employees whose only job is to administer the ODSP according to the Act and regulation. The recipient’s responsibility is to provide the Director with the prescribed information. It is then up to the Director to process that information correctly and pay the recipient the amount for which they are eligible. I find that the Appellants in this case upheld their part of the bargain. The Director did not, and negligently misled the Appellants to believe that MM was eligible for ongoing ODSP income support. I find it would be unfair to the Appellants to permit the Director to collect the overpayment for the period from February 2020 to July 2023 in these circumstances.

2312-08253 (Re), 2024 ONSBT 3276 (CanLII)

[13]        The Appellant testified that he recalled receiving a document in the past from a government agency that identified him as disabled for life.  The Appellant submits he could not recall the specific agency that provided the letter but that he believes he received it at least after his 2010 grant of ODSP.  He testified that based on this permanent disability status that he would continue to receive ODSP and that it would not be affected by his OAS.  He submitted he was not attempting to deliberately deceive or defraud anyone and was also under the impression that all government agencies communicated with one another.

[14]        The Appellant also argues administrative error on the part of the Director.  He testified that he had not any phone conversations or in-person meetings with his caseworker in 10 years.  He stated that his only communication with his caseworker came in the form of mailing in quotes/invoices for benefit requests.

[15]        The Tribunal found the Appellant genuine in his testimony.  The Tribunal is persuaded the Appellant did not deliberately try to deceive the Director and accepts his testimony that has had limited contact and or direction from his caseworker in recent years.

[16]        As such, the Tribunal is inclined to exercise its discretion and reduce the overpayment.  However, at the same time, the Tribunal finds the Appellant shares some of the responsibility.

[17]        The Appellant testified that he likely received the August 2020 and January 2021 letters advising him to apply for OAS however could not recall the specifics of the letters.

[18]        The Tribunal notes the August 2020 and January 2021 letters, which were included in the Director’s submissions, instruct the Appellant to provide confirmation to the local office that their OAS application has been received which the Appellant failed to do.

[19]        The Appellant also testified that he did not make any effort to contact his caseworker or report his acceptance for OAS or any changes to his income.

[20]        At the same time there is little evidence to suggest any follow up was undertaken by the Director between the period from January 2021 to September 2023 despite the knowledge the Appellant was turning 65 in July of 2021 and the probability that he would qualify for OAS.

[21]        As a result, the Tribunal finds both parties equally share in the responsibility of the overpayment.  The Appellant neglected to follow the instruction of the documentation he received on two occasions and declined to notify the Director of significant changes to his income which the Tribunal found unreasonable while the Director ought to have been reasonably aware the Appellant was likely to qualify for OAS as of mid 2021 and made insufficient efforts to follow up regarding the likely income.

2311-07964 (Re), 2024 ONSBT 3201 (CanLII)

[36]        The Tribunal notes that while the overpayment is valid that it occurred without intent to deceive the Director by the Appellant.  He made assumptions in terms of actions of the caseworker and did not question the amount of money he had received.  The overpayment is limited to two months as when the caseworker followed up, he acknowledged that he had indeed been receiving the federal benefits that led to the overpayment.

[37]        For these reasons, the Tribunal finds that the overpayment, while valid, should not be collected.

ORDER

[38]        The overpayment of $1,696.00 for the months of May and June 2023 is correct.

[39]        The Tribunal finds that there shall be no recovery of the overpayment.