FPSLREB Decisions

Individual grievance referred to adjudication

1 On March 31, 2010, Julia Murphy (“the grievor”) filed a grievance alleging that the Department of Fisheries and Oceans (“the employer”) violated the National Joint Council (NJC) Integrated Relocation Directive (“the relocation directive”), which is deemed part of the collective agreement between the Treasury Board and the Public Service Alliance of Canada for the Technical Services Group bargaining unit (expiry date: June 21, 2011) (“the collective agreement”).

2 In September 2008, the grievor was promoted from a position in Halifax to a new position at a higher level in Ottawa. During the same period, her husband was also promoted to a position at a higher level with the employer in Ottawa. The grievor alleged that the employer should have calculated some of her relocation entitlements on the basis of her husband’s salary, which was higher than hers. That first claim totals $475.38 and contests the fact that the grievor’s salary, rather than her husband’s, was used to calculate the transfer allowance. The grievor also alleged that the employer did not have the right to recover from her an overpayment of $2328.59 for an error in calculating the transfer allowance. She wants that money back.

Summary of the evidence

3 The parties presented a joint statement of facts with 20 documents. They also adduced five other documents in evidence. The grievor testified. She also called her husband, Gary Ivany, as a witness. The employer did not call any witnesses.

4 Mr. Ivany began an assignment with the Canadian Coast Guard (CCG) in Ottawa in early 2008. He was then on travel status and was compensated in accordance with the NJC Travel Directive. In July 2008, the employer verbally informed the grievor that she would be made an offer of indeterminate employment with the CCG in Ottawa. The employer and the grievor agreed that it would be in the grievor’s best interests to delay that offer by a few weeks in order to extend her husband’s travel status and to allow the grievor and her husband more time for planning their relocation to Ottawa.

5 On August 26, 2008, the grievor received her employment offer for a position in Ottawa effective September 2, 2008. The same day, she accepted the offer. That started the relocation process and the application of the relocation directive. The services provided to employees under the relocation directive are offered by a third-party service provider, in this case, Brookfield Global Relocation Services (“Brookfield”).

6 On August 27, 2008, the grievor received an email from Brookfield including general information about her upcoming relocation. The relocation directive was attached to that email. The 2008 version of the directive was 77 pages long. The grievor did not read the directive. She was more preoccupied at the time with arranging for her upcoming move and making arrangements with a real estate agent to put her house up for sale. She had less than a week before her work in Ottawa was to start, on September 2, 2008.

7 On August 28, 2008, the grievor and Mr. Ivany had a telephone conversation with Chris Hiltz, a relocation consultant with Brookfield, who counseled them on the benefits available under the relation directive. Following that conversation, the grievor signed a checklist confirmation that she had been counseled on all the items on the list, including her eligibility for the transfer allowance and its amount.

8 On September 4, 2008, Mr. Ivany received and accepted a written offer of indeterminate employment with the CCG in Ottawa. For the application of the relocation directive, the grievor was considered the employee to be relocated. and Mr. Ivany was considered her spouse. According to the documents adduced in evidence, the relocation file and documents were in her name, even though on some emails Mr. Ivany’s name was also included. Nothing was presented in evidence to support that the grievor did not agree that the relocation support was for her and that Mr. Ivany was to be considered as her spouse for benefits purposes.

9 The grievor and her spouse received funding, including a transfer allowance, as per paragraph 3.4.2.1.1 of the relocation directive. That allowance is calculated as per the relevant part of that paragraph, which reads as follows:

• Non EX/GIC employees shall receive a Transfer Allowance equivalent to two (2) weeks salary. The allowance is based on the annual salary effective on the date of appointment at the new location.

10  In administering the grievor’s relocation file, errors occurred in calculating the transfer allowance, resulting in an overpayment of $2328.59. Brookfield paid the grievor an allowance equal to one month of salary rather than two weeks. It also used the last increment of the salary range rather than the one to which the grievor was entitled. As a result of those errors, Brookfield paid the grievor $5440, instead of what she was entitled to.

11 In October 2009, Brookfield reviewed the grievor’s relocation file, to proceed with its closing. It then found out that errors had occurred in the calculation of the transfer allowance. It asked the grievor to reimburse the overpayment. The grievor was reminded of paragraph 2.2.2.10 of the relocation directive, which reads as follows:

2.2.2.10 In the event that funds have been advanced and at the conclusion of the file it has been identified that such funds should not have been provided, the employee must make full restitution immediately upon notification, to the Contracted Third Party Service Provider.

12 The grievor did not agree that she should reimburse part of the transfer allowance already paid to her. She clearly expressed her views as much to Brookfield and to the employer. She did not repay the overpayment and continued to argue that she made relocation and financial decisions based on the misinformation provided by the employer and the third-party experts. She trusted the experts. She expressed to the employer that she would not have made the same decisions had she been provided with the correct information. As a result, she should not be held responsible for the amount at issue. On March 30, 2010, the employer’s compensation branch advised the grievor that the overpayment would be recovered from her two paycheques of April 2010. That decision was later reconsidered. Instead, the overpayment was recovered from the grievor’s next 10 paycheques, from April 14, 2010 to August 18, 2010.

13 In October 2008, the grievor used $4700 of the $5440 that she received as a transfer allowance as a mortgage interest buydown. As a result of that buydown, she and her husband obtained a five-year mortgage to buy their new house in Ottawa at a lower fixed interest rate than the one they would have obtained at the time without the buydown. The grievor testified that the buydown reduced the mortgage interest rate by two or three tenths of a percent. Had she known at the time that she was only entitled to a lower transfer allowance, she would not have bought down a lower interest rate for a five-year closed mortgage from the bank. According to her, it would not have been worthwhile with a smaller transfer allowance.

Summary of the arguments

14 The grievor argued that her transfer allowance should have been paid based on her husband’s salary, which was higher than hers. Both of them moved at the same time. They both obtained permanent employment in Ottawa in early September 2008. By calculating the allowance on the basis of the grievor’s salary, the employer deprived her and her husband of $475.38.

15 The grievor referred me to several provisions of the relocation directive, pointing out the responsibilities of the employer, the employee and the third party providing the relocation services. According to the grievor, the employer and the third party did not clearly explain to her what she was entitled to. They did not fulfill their responsibilities.

16 The grievor argued that she trusted the employer and that she made financial decisions based on what she was told that she was entitled to. She relied on the amounts that she received. Had she known that she was not entitled to those amounts, she would not have made the same financial decisions.

17 The grievor argued that the doctrine of estoppel applies to this case. The third party represented to the grievor that she was entitled to a $5440 allowance. She acted on those representations and bought a lower fixed interest rate for her mortgage. Had those representations not been made, she would have acted differently. The grievor argued that the case law supports that the doctrine of estoppel applies in this case.

18 The grievor referred me to section 2:2200 of Brown and Beatty, Canadian Labour Arbitration, fourth edition. She also referred me to the following cases: Defoy v. Treasury Board (Employment and Immigration Canada), PSSRB File No. 166-02-25506 (19941025); Molbak v. Treasury Board (Revenue Canada - Taxation), PSSRB File No. 166-02-26472 (19950928); Canada (Attorney General) v. Molbak, [1996] F.C.J. No. 892; Conlon et al. v. Treasury Board (Public Works and Government Services Canada), PSSRB File Nos. 166-02-25629 to 25631 (19970604); Murchison v. Treasury Board (Department of Human Resources and Skills Development), 2010 PSLRB 93; and Lapointe v. Treasury Board (Department of Human Resources and Skills Development), 2011 PSLRB 57.

19 The employer admitted that an error was made in calculating the grievor’s transfer allowance. However, it argued that the doctrine of estoppel does not apply to this case. Had the grievor consulted the relocation directive, she would have known that she was entitled to two weeks of salary for her transfer allowance, not $5440. The employer argued that the grievor was never promised that paragraph 2.2.2.10 of the relocation directive would not apply to her and that she would be exempted from reimbursing any overpayment made to her.

20 The employer also argued that the grievor did not suffer any detrimental effect from the error that was made in the calculation of the transfer allowance. She used the money to buy a lower interest rate on a fixed mortgage. Even though she had to reimburse part of the allowance, the fixed interest rate continued to apply.

21 The employer argued that the grievor did not present any evidence to support her claim that her transfer allowance should have been calculated on the basis of her husband’s salary. She was relocated, and her husband was considered as the spouse who was relocated. The grievor never indicated at the time that she wanted her husband relocated and that she wanted to be considered as his spouse. The employer argued that the allowance must be calculated on her salary, not on her husband’s salary.

22 The employer referred me to the following cases: Maracle v. Travellers Indemnity Company of Canada, [1991] 2 S.C.R. 50; Canada (Treasury Board) v. Canadian Air Traffic Control Association, [1984] 1 F.C. 1081 (C.A.); Salie v. Canada (Attorney General), 2013 FC 122; Dubé v. Canada (Attorney General), 2006 FC 796; Telus Communications Inc. v. Telecommunications Workers Union, 2010 BCSC 1429; Watson v. Treasury Board (Department of National Defence), 2012 PSLRB 105; Pilon v. Canada Revenue Agency, 2012 PSLRB 62; Baranyi v. Deputy Head (Canada Border Services Agency), 2012 PSLRB 55; Prosper v. Treasury Board (Canada Border Services Agency), 2011 PSLRB 140; Lapointe; Pronovost v. Treasury Board (Department of Human Resources and Skills Development), 2007 PSLRB 93; and Bolton v. Treasury Board (Indian and Northern Affairs Canada), 2003 PSSRB 39.

Reasons

23 The grievor asked that her transfer allowance be calculated based on her husband’s salary. On the basis of promissory estoppel, she also asked that she be reimbursed the overpayment of $2328.59 that the employer recovered from her wages in 2010 as a result of errors in the calculation of her transfer allowance.

24 I reject the grievor’s first claim that the employer should have used Mr. Ivany’s salary to calculate her transfer allowance. The grievor did not submit anything to support that claim. The relocation was made in her name, not in her husband’s name. He was then considered the spouse of the employee relocating. The grievor did not ask that to be changed at the time. It was too late to do so in March 2010, when she grieved. I should add that she was relocated to Ottawa on September 2, 2008 and that her husband was relocated on September 4, 2008.

25 According to paragraph 2.4.1 of the relocation directive, if spouses are relocated to the same location, the directive applies to one of them and the other is considered the spouse. The directive does not apply to them as two separate employees. Even if the spouse-employees are transferred on the same day, nothing would oblige the employer to use the highest salary to calculate the payable transfer allowance. I should also add that the grievor did not submit any jurisprudence to support her allegation that the employer violated the relocation directive or the collective agreement on this point. She did not point either to any provision of the directive itself to support her claim.

26 There is no dispute between the parties that the grievor was entitled to a transfer allowance equal to two weeks of salary and not to one month, as she was paid. Despite their disagreement on the salary to be used to calculate the allowance, the parties agreed that the overpayment recovered from the grievor was $2328.59. The only remaining issue is to decide whether the doctrine of promissory estoppel applies to this case; in other words, whether the employer was estopped from recovering $2328.59 from the grievor since it had told her that she was entitled to that money.

27 Applying the doctrine of estoppel, the Federal Court in Molbak stated that an employee who receives an overpayment may challenge the decision to recover the overpayment if he or she can establish detrimental reliance on the error. The evidence in the present case clearly shows that the grievor was promised, and I should add that she was paid, a transfer allowance of $5440. She made subsequent financial decisions on the basis that she was paid $5440. She stated that she would have made different decisions had she been paid a lesser amount. As such, the employer made a contractual promise. However, it is not enough to prove that a promise was made for the doctrine of estoppel to apply, nor is it enough to allege that your decisions might have been different had the error not occurred. The grievor must establish that the erroneous promise had a detrimental effect on her.

28 In Defoy, the adjudicator allowed the grievance on the basis of estoppel because the grievor was promised a bridging loan from the employer, and without that loan, she could not have purchased the house that she bought on the basis of that promise. As a result, the grievor was placed in a more onerous financial position than she otherwise would have been. In Molbak, the grievance was allowed on the basis of estoppel because the grievor had bought a house, believing that she would be paid at a certain level for a period of one year. The employer later rolled back her salary, which made it difficult for her to meet her financial obligations. In Murchison, the grievance was also allowed on the basis of estoppel. In that case, the employer claimed more than $11 000 for annual leave credits granted erroneously during the period of the past seven years. The adjudicator concluded that the employer had created an undue hardship on the grievor and that it was unreasonable. In Lapointe, the grievance was also allowed on the basis of estoppel. In that case, the grievor was paid in the wrong salary for four years, generating an overpayment of close to $10 000. The grievor made an irreversible personal financial commitment on the basis of the salary originally paid.

29 In this case, Brookfield, acting on behalf of the employer, miscalculated the grievor’s transfer allowance by $2328.59. In October 2008, the grievor used most of her transfer allowance, including the money overpaid, to buy a reduced fixed mortgage rate from the bank. In October 2009, Brookfield reviewed the grievor’s relocation file and realized that she had been overpaid. The procedures to recuperate the overpayment were started shortly after that.

30 The grievor testified that she would have acted differently had she not received the overpayment. However, she did enjoy a lower interest rate for her fixed-rate mortgage because of the overpayment. She believed that it represented a rate reduction of two or three tenth of one percent. She could not argue that, as in the decisions cited earlier, the error had a detrimental effect on her. She took that money and invested it in her mortgage. For the next 60 months, she paid a lower interest rate because of that investment. While the grievor claimed that she would have made a different decision had she not been overpaid, this statement, in and of itself, does not prove detrimental reliance. The grievor did not provide any evidence that the erroneous decision had a detrimental effect on her, unlike the grievors in Defoy, Murchison and Lapointe.

31 The grievor did not read the relocation directive, precisely paragraph 3.4.2.1.1, which states the formula to calculate the transfer allowance. It is a very simple formula. Had she reviewed the directive at the time, she would have realized that an error had been made. She could not at adjudication put the blame solely on the employer for not explaining to her in detail what she was entitled to. It seems to me that the parties were rushed at the time because of the short time available to relocate the grievor.

32 I should also add that paragraph 2.2.2.10 of the relocation directive cannot be completely ignored. According to that provision, employees must pay back funds that should not have been provided to them under the directive. That does not mean that the doctrine of estoppel can never apply to employer demands for repayment. However, it does serve as a warning to employees that in the absence of any estoppel, they will be liable to repay any excess payments. While the employer (through Brookfield) undeniably made errors, so did the grievor in not informing herself of her entitlements under the directive. Given the circumstances of this case, she is not entitled to have the employer overlook them and is subject to the application of paragraph 2.2.2.10 of the directive.

33 For all of the above reasons, I make the following order:

Order

34 The grievance is denied.

September 24, 2013.

Renaud Paquet,
adjudicator