Date: 20050531
Docket: T-124-04
OTTAWA, Ontario, May 31st, 2005
Present: THE HONOURABLE MR. JUSTICE KELEN
BETWEEN:
NEIL MCFADYEN
Applicant
and
THE ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR ORDER AND ORDER
[1] This is an application for judicial review of a decision of the Canadian Human Rights Commission (Commission) dated December 15, 2003 dismissing the applicant's complaint made pursuant to paragraph 44(3)(b) of the Canadian Human Rights Act, R.S.C. 1985, c. H-6 as amended (Act). In his complaint to the Commission, the applicant alleged that the goods and services tax (GST) credit program set out in section 122.5 of the Income Tax Act (ITA) discriminates on the basis of marital status.
FACTS
[2] The applicant applied for a GST credit under section 122.5 of the ITA for the 1996 taxation year. By notice dated July 11, 1997, the Minister of National Revenue advised the applicant that he was not entitled to the credit because his "adjusted income" exceeded the maximum eligibility limit of $33,880. The applicant's adjusted income for the year was calculated by adding the applicant's net income of $3,873 to his spouse's net income of $41,670. It is not disputed that if the applicant had been assessed as an unmarried individual he would have been entitled to a credit of $199.
[3] The applicant appealed the Minister's decision to the Tax Court of Canada. He argued that section 122.5 of the ITA violates the equality provision in the Canadian Charter of Rights and Freedoms because it discriminates on the basis of marital status. Mr. Justice Bowie dismissed the application, finding that the distinction in section 122.5 is not between persons who are married or single, but between those whose aggregate family income exceeds the threshold established by the Act and those whose aggregate family income falls below it. Mr. Justice Bowie also held, in the alternative, that if the distinction is based on marital status, it is not discriminatory given the remedial nature of the GST credit. In McFadyen v. Canada, [2000] T.C.J. No. 145 per Bowie T.C.J. at paragraphs 10 and 11:
¶ 10 ... The credit is made available on the basis of family income, in recognition of the fact that much of the spending on the basic necessities of life is done on the basis of the family unit, rather than at the individual level. For this reason, the GST credit is given on a family unit, means tested basis. The distinction made by Parliament in section 122.5 is not between persons who are married and those who are single, but between those who belong to a family whose aggregate income exceeds the threshold established by the Act, and those whose aggregate family income falls below it. In other words, the distinction is based not on marital status, but on aggregate family income level. ...
¶ 11 If I am wrong in my conclusion that this appeal fails because the ground of distinction in section 122.5 is family income rather than marital status, then I nevertheless conclude that it cannot succeed because the distinction is not a discriminatory one. ...
[4] The applicant appealed this decision to the Federal Court of Appeal. In McFayden v. Canada, [2000] F.C.J. No. 2018 per Stone J.A., the Federal Court dismissed the appeal and held at paragraph 1 per Stone J.A.:
We have not been persuaded that paragraphs 122.5(1)(b) and 122.5(5)(a) of the Income Tax Act violate the applicant's equality rights enshrined in section 15 of the Canadian Charter of Rights and Freedoms.
[5] On December 10, 1998 and February 22, 2001, the applicant filed complaints with the Commission alleging discrimination by the Department of Finance and the Canada Customs and Revenue Agency (now Canada Revenue Agency or CRA) through the application of section 122.5 of the ITA. The applicant also complained that the Fuel Tax Rebate program was discriminatory because it was based on eligibility for the GST tax credit.
THE REPORT OF THE INVESTIGATOR
[6] In a report dated June 13, 2003, an investigator appointed by the Commission recommended that the applicant's complaints be dismissed. With respect to the complaint against the Department of Finance, she found that the differentiation in section 122.5 of the ITA was based on aggregate family income level, not marital status. As a result, the differentiation did not fall within the prohibited grounds listed in section 3 of the Act. The Investigator was also of the view that there was a bona fide justification for the differentiation within the meaning of paragraph 15(1)(g) of the Act. Following the test set out by the Supreme Court of Canada in British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868, the Investigator found that there was sufficient evidence to demonstrate that: (1) the GST credit program was rationally connected to the purpose of giving financial relief to those at the lowest income levels and their family, (2) that the Department of Finance had implemented the program in good faith, and (3) that accommodating the applicant, and other persons in his situation, would cause undue hardship on the Department of Finance as it would defeat the intent of the credit program.
[7] In coming to her conclusions, the Investigator canvassed the submissions of both parties as well as the decision of the Tax Court of Canada in McFadyen v. Canada, [2000] T.C.J. No. 145 and the decision of the Federal Court of Appeal in Lister v. Canada, [1995] 1 F.C. 130. At issue in Lister was whether section 122.5 of the ITA is contrary to the equality provision in the Charter because it draws a distinction on the basis of age (only person 19 years of age or older can claim the tax credit for themselves). The Court of Appeal concluded that the distinction was not discriminatory. It found that the GST credit is not a taxing program, but rather a benefit program introduced to lessen the disproportionate impact of a regressive tax on lower-income Canadians. It also found that the government had considered a number of ways of implementing the credit and, in the end, selected a family-based system because it would best achieve the desired equity.
[8] With respect to the complaint against the Canada Revenue Agency, the Investigator recommended dismissal on the basis that CRA was not the proper respondent. In her view, the Department of Finance was the proper respondent because it is charged with the policy development and drafting of the ITA.
THE DECISION OF THE COMMISSION
[9] In a letter dated December 15, 2003, the Commission advised the applicant that his complaints against the Department of Finance and CRA were dismissed because:
i. the differentiation is based not on marital status, but on aggregate family income level, and
ii. there is a bona fide justification within the meaning of section 15 of the Act.
RELEVANT LEGISLATION
| Income Tax Act
122.5 The following definitions apply in this section.
"adjusted income" of an individual, for a taxation year in relation to a month specified for the taxation year, means the total of the individual's income for the taxation year and the income for the taxation year of the individual's qualified relation, if any, in relation to the specified month, both calculated as if no amount were included in respect of any gain from a disposition of property to which section 79 applies.
"qualified relation" of an individual, in relation to a month specified for a taxation year, means the person, if any, who, at the beginning of the specified month, is the individual's cohabiting spouse or common-law partner.
Canadian Human Rights Act
Prohibited grounds of discrimination 3. (1) For all purposes of this Act, the prohibited grounds of discrimination are race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, disability and conviction for which a pardon has been granted.
Denial of good, service, facility or accommodation 5. It is a discriminatory practice in the provision of goods, services, facilities or accommodation customarily available to the general public (a) to deny, or to deny access to, any such good, service, facility or accommodation to any individual, or (b) to differentiate adversely in relation to any individual, on a prohibited ground of discrimination.
Exceptions 15. (1) It is not a discriminatory practice if [...](g) in the circumstances described in section 5 or 6, an individual is denied any goods, services, facilities or accommodation or access thereto or occupancy of any commercial premises or residential accommodation or is a victim of any adverse differentiation and there is bona fide justification for that denial or differentiation. Accommodation of needs (2) For any practice mentioned in paragraph (1)(a) to be considered to be based on a bona fide occupational requirement and for any practice mentioned in paragraph (1)(g) to be considered to have a bona fide justification, it must be established that accommodation of the needs of an individual or a class of individuals affected would impose undue hardship on the person who would have to accommodate those needs, considering health, safety and cost. [...] Designation of investigator 43. (1) The Commission may designate a person, in this Part referred to as an "investigator", to investigate a complaint. [...] Report 44. (1) An investigator shall, as soon as possible after the conclusion of an investigation, submit to the Commission a report of the findings of the investigation.
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(3) On receipt of a report referred to in subsection (1), the Commission
[...] (b) shall dismiss the complaint to which the report relates if it is satisfied (i) that, having regard to all the circumstances of the complaint, an inquiry into the complaint is not warranted [...]
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Loi de l'impôt sur le revenue
122.5 Les définitions qui suivent s'appliquent au présent article.
« _revenu rajusté_ » En ce qui concerne un particulier pour une année d'imposition par rapport à un mois déterminé de l'année, la somme de son revenu pour l'année et du revenu de son proche admissible pour l'année par rapport à ce mois, calculés chacun comme si aucun montant n'était inclus au titre d'un gain provenant d'une disposition de bien à laquelle s'applique l'article 79.
« _proche admissible_ » Est un proche admissible d'un particulier par rapport à un mois déterminé d'une année d'imposition la personne qui, au début de ce mois, est l'époux ou le conjoint de fait visé du particulier.
Loi canadienne sur les droit de la personne
Motifs de distinction illicite 3. (1) Pour l'application de la présente loi, les motifs de distinction illicite sont ceux qui sont fondés sur la race, l'origine nationale ou ethnique, la couleur, la religion, l'âge, le sexe, l'orientation sexuelle, l'état matrimonial, la situation de famille, l'état de personne graciée ou la déficience.
Refus de biens, de services, d'installations ou d'hébergement 5. Constitue un acte discriminatoire, s'il est fondé sur un motif de distinction illicite, le fait, pour le fournisseur de biens, de services, d'installations ou de moyens d'hébergement destinés au public_:
a) d'en priver un individu;
b) de le défavoriser à l'occasion de leur fourniture.
Exceptions
15. (1) Ne constituent pas des actes discriminatoires_: [...]
g) le fait qu'un fournisseur de biens, de services, d'installations ou de moyens d'hébergement destinés au public, ou de locaux commerciaux ou de logements en prive un individu ou le défavorise lors de leur fourniture pour un motif de distinction illicite, s'il a un motif justifiable de le faire.
Besoins des individus
(2) Les faits prévus à l'alinéa (1)a) sont des exigences professionnelles justifiées ou un motif justifiable, au sens de l'alinéa (1)g), s'il est démontré que les mesures destinées à répondre aux besoins d'une personne ou d'une catégorie de personnes visées constituent, pour la personne qui doit les prendre, une contrainte excessive en matière de coûts, de santé et de sécurité. [...]
Nomination de l'enquêteur
43. (1) La Commission peut charger une personne, appelée, dans la présente loi, « l'enquêteur » , d'enquêter sur une plainte. [...]
Rapport
44. (1) L'enquêteur présente son rapport à la Commission le plus tôt possible après la fin de l'enquête.
[...]
(3) Sur réception du rapport d'enquête prévu au paragraphe (1), la Commission_
[...]
b) rejette la plainte, si elle est convaincue_:
(i) soit que, compte tenu des circonstances relatives à la plainte, l'examen de celle-ci n'est pas justifié, [...]
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ISSUES
[10] The applicant raises the following issues:
1. Did the Investigator err in finding that section 122.5 of the ITA draws a distinction on the basis of aggregate family income as opposed to marital status.
2. Did the Investigator and the Commission exceed their jurisdiction by considering whether a bona fide justification exists under section 15 of the Act.
STANDARD OF REVIEW
[11] In MacLean v. Marine Atlantic Inc. , [2003] F.C.J. No. 1854, Justice O'Keefe, applying the pragmatic and functional approach, concluded that the standard to be applied when the Commission dismisses a complaint under paragraph 44(3)(b) of the Act is reasonableness simpliciter. In the course of his analysis, Justice O'Keefe made the following findings:
i. the Act does not contain a privative clause;
ii. the Commission's greater expertise in the fact-finding and screening of complaints favours judicial deference;
iii. the Commission's broad discretion to dismiss complaints militates towards greater deference; and
iv. the decision to dismiss a complaint involves applying facts to a statutory scheme, which is a question of mixed fact and law. However, the discretionary nature of the complaint screening function and the fact-intensive nature of the inquiry favour greater deference.
[12] The above analysis has been cited with approval in Gardner v. Canada (Attorney General), [2004] F.C.J. No. 616 (F.C.), Armoyan v. Canada (Attorney General), [2004] F.C.J. No. 877 (F.C.) and Canada (Attorney General) v. Grover, [2004] F.C.J. No. 865 (F.C.).It also accords with several earlier decisions including Gee v. Canada (Minister of National Revenue) (2002), 284 N.R. 321 (F.C.A.) and Dawe v. Canada (Royal Canadian Mounted Police), [2003] F.C.J. No. 1102 (F.C.).Accordingly, the standard of reasonableness will be used in the present case to review the conclusions reached by the Investigator and the Commission.
[13] A decision that is reviewed on a reasonableness simpliciter standard should only be interfered with if it is not supported by any reasons that can stand up to a somewhat probing examination. Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247.
Issue No. 1
Did the Investigator err in finding that section 122.5 of the ITA draws a distinction on the basis of aggregate family income as opposed to marital status
[14] The applicant points to a number of areas where he believes the Investigator erred in forming her conclusion. His principal argument is that section 122.5 of the ITA draws a clear distinction on the basis of marital status and that the Investigator erred in logic by concluding otherwise. He states that the fact that he would have been entitled to a credit if he had been assessed as unmarried is "conclusive proof" that section 122.5 differentiates on the basis of marital status.
[15] In my view, there was clear evidence before the Investigator to conclude that section 122.5 differentiates on the basis of aggregate family income and not marital status. The Tax Court of Canada made this finding based on the same facts. This criterion in the distribution of the GST tax credit is income level. The government has chosen to allocate the credit on the basis of the family unit because it considered it to be the most equitable option. The terms "cohabiting spouse" and "common-law partner" are used to determine what constitutes a family unit for the purpose of calculating a GST credit. However, the fact that these relationships are used to define a family unit does not mean that the credit program discriminates on basis of marital status. In Lister, supra, the Court of Appeal considered an analogous argument with respect to differentiation on the basis of age. Justice Létourneau held at paragraph 44:
In the present case, I believe the applicants misconstrued the nature of the relationship between age and the allocation of the GST credit. Age has not been invoked as a criterion to deny a benefit, but rather is being used to determine whether a child is likely to be dependent and, therefore, ought to be included in or excluded from the family unit for the purpose of receiving the benefit. It was linked to marital and parental status and had an obvious and logical connection with dependency. In turn, family status was linked to income since the availability and amount of the refundable credit depended on the level of income of the family itself.
[16] Similarly, in the present case, the Commission concluded that marital status has not been invoked as a criterion to deny a benefit under section 122.5 of the ITA. Accordingly, the Investigator was entitled to recommend dismissal on the basis that the differentiation identified by the applicant did not fall within the prohibited grounds listed in the Act.
[17] Another argument raised by the applicant relates to the burden of proof applied by the Investigator. The applicant submits that once he proved that he would have received a credit if he been assessed as unmarried, he met his burden of establishing a prima facie case of discrimination. Accordingly, the burden should have shifted to the government to disprove discrimination. In framing his argument this way, the applicant confuses distinction with discrimination. The applicant demonstrated that the ITA draws a distinction in the manner in which it allocates the GST credit. However, not all distinctions result in a discriminatory practice. In the present case, the Investigator concluded that the distinction complained of by the applicant was not discriminatory since it was based on aggregate family income (not a prohibited ground under the Act).
Issue No. 2
Did the Investigator and the Commission exceed their jurisdiction by considering whether a bona fide justification exists under section 15 of the Act
[18] The applicant submits that the Commission (and correspondingly, the investigator) do not have jurisdiction to consider whether there is a bona fide justification under section 15 of the Act. He states that the Commission is limited to making findings of fact and that a section 15 analysis involves questions of law and mixed fact and law. The Commission and the Human Rights Tribunal have distinct roles and that the former is not an adjudicative body. As the Supreme Court of Canada held in Syndicat des employés de production du Québec et de l'Acadie v. Canada (Human Rights Commission), [1989] 2 S.C.R. 879 at paragraph 27:
It is not intended that this [the decision of the Commission to dismiss a complaint] be a determination where the evidence is weighed as in a judicial proceeding but rather the Commission must determine whether there is a reasonable basis in the evidence for proceeding to the next stage.
[19] It does not follow from this, however, that the Commission is precluded from considering evidence with respect to bona fide justification. Subparagraph 44(3)(b)(i) of the Act provides that the Commission "shall dismiss the complaint to which the report relates if it is satisfied that, having regard to all the circumstances of the complaint, an inquiry into the complaint is not warranted..." (emphasis added). This is broad language and provides the Commission with the jurisdiction to consider evidence of bona fide justification.
[20] In the case at bar, the evidence is clear that both the Tax Court and the Federal Court of Appeal have ruled on this very issue with respect to the applicant. Having regard to these circumstances, the Commission reasonably concluded that an inquiry into the applicant's complaint is not warranted.
COSTS
[21] The applicant submitted that no costs are to be awarded against him if the Court dismisses this application. The reason is that he plans to appeal this case to the Supreme Court of Canada because it is an important point of law which affects many people. The respondent disagrees and asks for its costs in this application because the respondent has already incurred costs on this same issue involving the applicant before the Tax Court, the Federal Court of Appeal, the Canadian Human Rights Commission, and now the Federal Court. In other cases, the respondent has not asked for costs against the applicant, but in this case the respondents seeks costs.
[22] The Court agrees that this issue has been thoroughly canvassed by the Tax Court of Canada. The Federal Court of Appeal has reviewed this decision and has upheld it. While this issue is not technically res judicata, the issue has been definitively settled by a judicial decision and the applicant has not shown the Court any reasonable argument for his case. In these circumstances, it is appropriate for the respondent to be awarded legal costs.
ORDER
THIS COURT ORDERS THAT:
This application for judicial review is dismissed with costs to the Respondent.
"Michael A. Kelen"
JUDGE
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-124-04
STYLE OF CAUSE: NEIL MCFADYEN v. THE ATTORNEY GENERAL OF CANADA
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: Thursday, May 19, 2005
REASONS FOR ORDER
AND ORDER: The Honourable Mr. Justice Kelen
DATED: Tuesday, May 31, 2005
APPEARANCES:
Mr. Neil McFadyen APPLICANT (self-represented)
Mr. Richard Casanova FOR RESPONDENT
SOLICITORS OF RECORD:
Neil McFadyen APPLICANT
Ottawa, Ontario
Mr. John H. Sims, Q.C. FOR RESPONDENT
Deputy Attorney General of Canada