Date:19981106
Docket: T-1956-97
BETWEEN:
WILLIAM FREDRICK McCAGUE
Applicant
- and -
HER MAJESTY THE QUEEN, as represented by THE MINISTER OF NATIONAL DEFENCE
Respondent
REASONS FOR ORDER
RICHARD A.C.J.:
NATURE OF THE PROCEEDING
| [1] This is an application for a judicial review filed on September 5, 1997, under section 18.1 of the Federal Court Act, R.S.C. (1985) ch. F-7, to obtain an order directing the Directorate of Pay Services of the Department of National Defence to re-calculate the applicant"s pension in accordance with the Canadian Forces Superannuation Act , R.S.C. (1985), ch. C-17 ("CFSA"). |
| [2] The applicant based his application for judicial review on the following grounds: |
| 1.The Department of National Defence as represented by the Directorate of Pay Services erred in law by misapplying provisions of the Canadian Forces Superannuation Act in calculating the applicant"s pension; |
| 2.The Department of National Defence as represented by the Director (sic) of Pay Services, misinterpreted the interpretation of the Canadian Forces Superannuation Act; |
| 3.The applicant relied on the representations of the Department of National Defence to his detriment; |
| 4.The Department of National Defence improperly changed its method of pension calculations to the detriment of the applicant; |
| 5.The Department of National Defence is estopped from adopting any changes to the method of calculations and any changes in interpretation of the aforesaid Act; |
| 6.Such further and other grounds as counsel may advise and this Honourable Court permit; |
BACKGROUND
[3] The applicant retired from the regular component of the Canadian Armed Forces on November 18, 1981, after more than 20 years of service and began collecting a pension in accordance with the CFSA; at the same time, he completed a direct transfer to the reserve component of the Canadian Armed Forces; from November 1981 to February 1993 , he served in Toronto, on a part time basis averaging 80-100 days of service per year.
[4] By February 1989, the applicant was promoted to Colonel and appointed Commander 2 Wings until November 1992; in March 1993, he moved to Winnipeg to take up a full time position as Deputy Chief of Staff Training Plans and Development at Air Command Headquarters.
[5] The initial terms provided a two year contract until July 1995 with a possible extension for one year until the Compulsory Release Age (CRA) of 55 which he reached on August 20, 1996.
[6] The applicant began his last period of full time service on July 1, 1994. He remained full time until January 17, 1996 at which time he returned to part time reserve service until the date of his CRA, on August 20, 1996.
[7] In late 1993 and early 1994, the applicant spoke with a staff member from the Directorate of Pay Service to determine the effect on his pension if he were to complete a full year of service and re-enter the Canadian Forces Superannuation Plan in accordance with the terms of the CFSA.
[8] It appears from the record that the Directorate Pay Service personnel advised the applicant that it would be to his financial advantage to re-enter the pension plan and to elect to pay for prior pensionable service for the period beginning on November 18, 1981 until the date that he re-entered the pension plan. Following this advice, on July 1, 1994, the applicant elected to pay for his pensionable service for the period of November 18, 1981 to June 30, 1994 by monthly instalments to be deducted from his re-calculated pension.
[9] On March 13, 1996, the applicant forwarded a cheque to Directorate of Pay Service in the amount of $6, 763.05 representing his contributions for the period July 1, 1994 to January 17, 1996.
[10] Prior to January 17, 1996, the applicant received a notification through a Directorate of Pay Service Form B-2 advising him that his gross pension would be $31,657.31 per annum pursuant subparagraph 19(1)(c)(i) of the CFSA; this calculation is not being challenged.
[11] Two deductions have been made from the applicant"s gross pension of $31,657.31; first, an amount of $139.16 per mouth ceasing August 20, 2040 which represents payment for pension contribution arrears for pensionable service from November 18, 1981 to June 30, 1994. This calculation is not being challenged.
[12] The second deduction of thirty per cent (30%), taken from the gross pension, is contested by the applicant on the basis of subsection 41(2) of the CFSA; this deduction is based on the previous pension calculation. When the applicant initially retired on November 17, 1981, he retired 6 years prior to his CRA and his pension was reduced, in accordance with the Act, by a penalty of 5% for each year prior to his CRA;
LEGISLATIVE PROVISIONS
[13] The following sections of the CFSA and of the National Defence Act, R.S.C. (1985) ch. N-5 ("NDA") are applicable in this matter.
| [14] Section 2 of the CFSA provides three (3) relevant definitions: |
| Definitions 2. (1) In this Act, "member of the regular force" "membre de la force régulière" "member of the regular force" means an officer or non-commissioned member of the regular force; "officer" "officier" "officer" means a commissioned or subordinate officer of the regular force; "retirement age" "âge de la retraite" "retirement age", as applied to any rank of contributor, means such age as is fixed by the regulations made under the National Defence Act as the retirement age applicable to that rank; |
| Définitions 2. (1) Les définitions qui suivent s'appliquent à la présente loi. "âge de la retraite" "retirement age" "âge de la retraite" Âge de la retraite applicable, conformément aux règlements pris sous le régime de la Loi sur la défense nationale, aux différents grades de contributeur. "membre de la force régulière" "member of the regular force" "membre de la force régulière" Officier ou militaire du rang de la force régulière. "officier" "officer" "officier" Officier breveté ou officier en sous-ordre de la force régulière. |
[15] Section 15 of the NDA provides the definition of a regular force officer and a reserve force officer:
| Regular force
Composition of regular force
Reserve force
Composition of reserve force
R.S., 1985, c. N-5, s. 15; R.S., 1985, c. 31 (1st Supp.), s. 60. |
| Force régulière
Composition
Force de réserve
Composition
L.R. (1985), ch. N-5, art. 15; L.R. (1985), ch. 31 (1er suppl.), art. 60. |
[16] Section 4 of the CFSA deals with eligibility and provides:
| Eligibility 4. (1) Subject to this Act, an annuity or other benefit hereinafter specified shall be paid to or in respect of every person who, being required to contribute to the Superannuation Account in accordance with this Act, ceases to be a member of the regular force or dies, and that annuity or other benefit shall, subject to this Act, be based on the number of years of pensionable service to the credit of that person. Superannuation Account (2) The Permanent Services Pension Account in the accounts of Canada, established pursuant to the former Act, is hereby continued under the name of the Canadian Forces Superannuation Account. R.S., c. C-9, s. 3. |
Admissibilité 4. (1) Sous réserve des autres dispositions de la présente loi, une annuité ou autre prestation ci-après spécifiée est versée à toute personne " ou à l'égard de celle-ci " qui, étant tenue de contribuer au compte de pension de retraite d'après la présente loi, cesse d'être membre de la force régulière ou meurt. Cette annuité ou autre prestation repose, sous réserve des autres dispositions de la présente loi, sur le nombre d'années de service ouvrant droit à pension au crédit de cette personne. Compte de pension de retraite (2) Le compte de pension des services permanents, ouvert parmi les comptes du Canada selon l'ancienne loi, est maintenu sous la désignation "compte de pension de retraite des Forces canadiennes". S.R., ch. C-9, art. 3. |
[17] Section 5 of the CFSA deals with contributions and provides:
| Persons required to contribute 5.(1) Every member of the regular force, except a person described in subsection (1.1), is required to contribute to the Superannuation Account, by reservation from pay or otherwise, six and one-half per cent of the member's pay minus an amount equal to the amount the member would be required to contribute under the Canada Pension Plan in respect of the member's salary for the period of that pay if the member's salary were the total amount of the member's income for the year from pensionable employment as defined in that Act. Exceptions (1.1) The exceptions are
Exception (2) Notwithstanding anything in this Act,
R.S., 1985, c. C-17, s. 5; 1992, c. 46, s. 33. |
Personnes tenues de contribuer 5. (1) Les membres de la force régulière, à l'exception des personnes visées au paragraphe (1.1), sont tenus de verser au compte de pension de retraite, par retenue sur la solde ou autrement, six et demi pour cent de leur solde moins un montant égal à celui qu'ils auraient été tenus de verser aux termes du Régime de pensions du Canada sur leur traitement pour la période de leur solde si leur traitement était le montant total de leur revenu pour l'année provenant d'un emploi ouvrant droit à pension tel que le définit cette loi. Exceptions (1.1) Font exception :
Exception (2) Nonobstant toute autre disposition de la présente loi : |
L.R. (1985), ch. C-17, art. 5; 1992, ch. 46, art. 33. |
[18] Sections to 16 to 22 of the CFSA deals with the payment of benefits, subparagraph 19 (1)(c)(i) provides:
| Retirement for other reasons 19. (1) A contributor who, not having reached retirement age, ceases to be a member of the regular force for any reason other than a reason described in subsection 17(1) or (2) or 18(1), (2) or (4) is, except as provided in section 20, entitled to a benefit determined as follows:
R.S., c. C-9, s. 10; 1974-75-76, c. 81, s. 37. |
Retraite attribuable à d'autres motifs 19. (1) Un contributeur qui, n'ayant pas atteint l'âge de retraite, cesse d'être membre de la force régulière pour un motif autre qu'un motif mentionné au paragraphe 17(1) ou (2) ou 18(1), (2) ou (4) a droit, sauf disposition contraire de l'article 20, à une prestation déterminée comme suit :
S.R., ch. C-9, art. 10; 1974-75-76, ch. 81, art. 37. |
[19] Section 41 of the CFSA deals with special cases of former members of the regular force; subsection (1) deals with persons who have re-enrolled or transferred while subsection (2) deals with persons who are deemed to have been re-enrolled or transferred and reads as follows:
| Persons deemed to have been re-enrolled or transferred 41.(2) For the purposes of this Act, a person who, before the day on which this subsection comes into force, has become entitled to an annuity under this Act or a pension under Part V of the former Act by virtue of having served in the regular force and who, after having become so entitled and before that day, is enrolled in or transferred to the reserve force shall, on the expiration of any continuous period of full-time service therein of one year, commencing before the day on which this subsection comes into force, be deemed to have been re-enrolled in the regular force at the commencement of that period, and, in any such case, section 5 shall be deemed to have applied in respect of that period but nothing in this section shall be held to require the repayment by the person of such part of that annuity or pension, as during that period, the person was entitled to receive under this Act or the former Act. |
Personnes réputées enrôlées de nouveau ou mutées 41.(2) Pour l'application de la présente loi, la personne qui, avant la date d'entrée en vigueur du présent paragraphe, est devenue admissible à une annuité selon la présente loi ou à une pension selon la partie V de l'ancienne loi pour avoir servi dans la force régulière et qui après l'être devenue et avant cette date s'enrôle dans la force de réserve ou y est mutée, est réputée, à l'expiration de toute période continue d'un an de service à plein temps dans cette force, commençant avant la date d'entrée en vigueur du présent paragraphe, s'être enrôlée de nouveau dans la force régulière au commencement de cette période, et, en pareil cas, les dispositions de l'article 5 sont réputées s'être appliquées pour cette période. Cependant, le présent article n'a pas pour effet d'exiger le remboursement par la personne de la fraction de cette annuité ou pension qu'elle avait le droit de recevoir durant cette période aux termes de la présente loi ou de l'ancienne loi. |
ISSUES
[20] Two issues were raised before this Court during the hearing. The first is the statutory interpretation of subsection 41(2) of the CFSA; the second, is whether issue estoppel applies against the Crown in this matter.
- ) Interpretation of subsection 41(2) of the Canadian Forces Superannuation Act
| Rule of statutory interpretation |
[21] In Verdun v. Toronto-Dominion Bank1
22, the Supreme Court of Canada established the relevant rule of statutory interpretation applicable to the matter raised before this Court, Mr Justice Iacobucci stated:
| "To state the obvious, the first step in a question of statutory interpretation is always an examination of the language of the statute itself. As E. A. Driedger wrote in his text, Construction of Statutes (2nd ed. 1983), at p. 87: |
| Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.... Lord Atkinson in Victoria (City) v. Bishop of Vancouver Island, [[1921] A.C. 384, at p. 387] put it this way: |
| In the construction of statutes their words must be interpreted in their ordinary grammatical sense, unless there be something in the context, or in the object of the statute in which they occur, or in the circumstances with reference to which they are used, to show that they were used in a special sense different from their ordinary grammatical sense. |
| This principle has been cited by our Court on numerous occasions: see, for example, Friesen v. Canada, [1995] 3 S.C.R. 103, Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536, and Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3." |
[22] Mme. Justice L"Heureux-Dubé commented as follows:
| "Courts should generally use the "modern contextual approach" as the standard, normative approach to statutory interpretation, and may exceptionally resort to the old "plain meaning" rule in appropriate circumstances. One example of the latter is statutory interpretation in the area of taxation, where the words and expressions used in legislative provisions quite often have a well-defined "plain meaning" within the business community. |
[...]
| Accordingly, the appropriate methodological reference would be Driedger on the Construction of Statutes (3rd ed. 1994), at p. 131: |
| There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with the legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just. [Emphasis added.]" |
[23] Accordingly, I must look at the text and the context of the legislation. As I have mentioned, the context includes other provisions of the CFSA and some provisions of the NDA.
Applicant" s position
[24] The applicant argues that the words "be deemed to have been re-enrolled in the regular force" are determinative for all purposes and accordingly, not only is the applicant entitled to increased pension benefits, which is not disputed, but also to a new deemed retirement date, that is January 17, 1996. The result according to the applicant is that subparagraph 19(1)(c)(i) of the CFSA no longer applies to any of the annuity now payable to him.
Respondent" s position
[25] On the other hand, the respondent relies on the opening words of subsection 41(2) of the CFSA and argues that while the applicant became a contributor to the Superannuation Account under section 5 of the CFSA and became entitled to increased pensionable benefits under section 15 of the CFSA, the reduction of benefits mandated by subparagraph 19(1)(c)(i) of the CFSA remains unaffected because it is based on a retirement or retirement age which are not dealt with by either sections 5, 15, 19 or any other part of the CFSA.
[26] Retirement and retirement age are fixed by regulations made under the NDA and those regulations do not apply to an officer that is deemed to have been re-enrolled by operation of law by virtue of subsection 41(2) of the CFSA. The applicant retired from the regular force on November 18, 1981 pursuant to regulations made under the NDA. His deemed re-enrollment on July 1, 1994 did not alter this retirement date but did allow him to make further contributions and to increase his years of pensionable service.
Analysis
[27] It is to be noted that subsection 41(2) of the CFSA is prefaced by the words " For the purposes of this Act [...] "; the Act referred to is clearly the CFSA .
[28] By reasons of subsection 41(2) of the CFSA a person is not deemed to be a member of the regular force for all purposes but only for the purpose of the CFSA. The CFSA deals with contributions and benefits but does not fix the date of retirement.
[29] Section 2 of the CFSA provides that the retirement age is fixed by the regulations made under the NDA and these regulations are found in Queen"s Regulation and Orders for the Canadian Armed Forces (QR & O"s).
[30] Section 2, article 15.17 of the QR & O fixes compulsory the retirement age for an officer in the regular force, the CRA for officers of the primary reserve is fixed by the Canadian Forces Administrative Orders 49-10, Annex E;
[31] Section 2, article 15.17 of the QR & O which deals with the officers in the regular force provides:
"Section 2 "Officers
15.17"Release of officers " Age and length of service
| (1) Except where the Minister has otherwise prescribed under paragraph, (2), the retirement age of an officer is the first to occur of the following ages: |
| (a) the age for his rank set out in the table to this article that applies to him; or [...] |
| of full-time paid service, including service as a non-commissioned member, in any of Her Majesty"s Forces. |
[...]
| (4) Except as otherwise prescribed by the Chief of the Defence Staff, an officer of the Reserve Force shall be released upon reaching the appropriate age prescribed under subparagraph (1) (a) |
[...]
| (9) Table "G " applies to an officer of the Regular Force who is categorized under orders issued by the Chief of the Defence Staff, as a: [...]" |
| [32] The Chief of the Defence Staff has promulgated the Canadian Forces Administrative Orders 49-10, Annex E which deals with the officers in the primary reserve provides: |
"COMPULSORY RETIREMENT AGE (CRA)
| 16. The CRA for officers of the Primary Reserve is age 55. Extensions of service beyond CRA for Class A or B service up to 364 days, may be approved by commanders of commands or designated agencies. This applies only to ext 55 plus 364 days. Requests for extension to age 56 or above are to be forwarded to NDHQ for consideration. Extensions must be driven by service requirements and are subject to the CO"s concurrence having regard to the member"s medical status. Officers promoted to the rank of Colonel or aboved on or before 31 Dec 88 retain the right to serve to |
| a. For Cols, age 58; and |
| b. For brigadier-generals (Bgens) and above, age 60." |
[33] Therefore, the regulations made under the NDA apply only to members of the regular force as defined in the NDA, they do not apply to member of the primary reserve which are dealt with in an administrative order. The applicant retired from the regular force pursuant to the regulations in 1981. His retirement from the reserve force in 1996 was pursuant to the administrative order.
[34] It is by reason of the officer"s retirement from the regular force that the deeming provision is necessary in the CFSA to allow further contributions and increased pensionable benefits. However, that does not alter the fact of retirement from the regular force at an earlier date.
[35] For all other purposes the applicant remained a member of the reserve force as that term in defined in the NDA.
[36] It is by reason of his earlier service in the regular force that the applicant became entitled to additional benefits under the CFSA. However, this does not alter the fact of his earlier retirement and consequently the application of subparagraph 19(1)(c)(i) of the CFSA which determines the applicable penalty following the early retirement of a regular force member.
[37] The only time that the applicant retired from the Regular Force, within the meaning of subsection 19(1) of the CFSA, was in November of 1981 and the thirty per cent penalty is based on this retirement date. As the applicant"s leaving the Reserve Force in January 1996 did not constitute a further or new retirement within the meaning of the CFSA , the applicable penalty is not affected.
[38] Further, the interpretation of the Act advance by the applicant could lead either to windfall gains for contributors who had retired with a reduction or inequitable results for contributors who had retired without a penalty. The first could no longer be subject to a reduction of benefits, while the second could have the full amount of benefits subjected to a penalty.
- ) Issue estoppel
[39] The applicant submitted that following the advice given by the Directorate Pay Services personnel regarding the absence of a reduction on his annuity before their new interpretation of the subsection 41(2) was implemented on March 1, 1996, the respondent is estopped from applying the new policy to the applicant"s position since he ended his full-time service on January 17, 1996.
[40] The principle of issue estoppel was reviewed by Mr. Justice Denault in Husky Oil Ltd v. Canada (Minister of National Revenue)2
33:
| The established principle in case law is that the Crown cannot be estopped from exercising its statutory power or discretion. Counsel for the defendant has cited two Supreme Court of Canada decisions which establish the principle that estoppel does not bind the Crown (Bank of Montreal v. The King (1906), 38 S.C.R. 258; M.N.R. v. Inland Industries Ltd 72 D.T.C. 6013 (S.C.C.)). The policy behind the rule is that a public authority may not vary the scope of its statutory powers and duties as a result of its own errors or the conduct of others. The British Columbia Court of Appeal in Re Bella Vista Restaurant (1982), 41 B.C.L.R. 283 at page 290 stated the principle in the following manner: |
| ... The underlying principle is that the Crown cannot be estopped from exercising its powers, whether given in a statute or by common law, when it is doing so in the proper exercise of its duty to act for the public good, even though this may work some injustice or unfairness to a private individual. |
| On the issue of whether the Minister of Pensions was bound by the representation, Lord Denning had the following to say at page 231: |
| The next question is whether the assurance in the War Office letter is binding on the Crown. The Crown cannot escape by saying that estoppels do not bind the Crown for that doctrine has long been exploded. |
| The issue of whether estoppel applies against the Crown has also been considered in recent jurisprudence. In Johnson v. Ramsay Fishing Company (1987) 15 F.T.R. 106, Joyal, J. quoted Lord Denning at page 121: |
| Estoppel is not a rule of evidence. It is not a cause of action. It is a principle of justice and equity. It comes to this. When a man, by his words or conduct, had led another to believe in a particular state of affairs, he will not be allowed to go back on it when it would be unjust or inequitable for him to do so. |
And later, Joyal, J. quoted Lord Denning's decision again:
| "... It [the Crown] can, however, be estopped when it is not properly exercising its powers, but is misusing them; and it does misuses them if it exercises them in circumstances which work injustice or unfairness to the individual without any countervailing benefit for the public. |
| In summary, the case law indicates that the doctrine of estoppel does not apply to the Crown as it must be given the full capacity to implement its power. However, estoppel has been applied against the Crown in certain circumstances, as where a party relies to its detriment on a Crown statement, or where it is improperly exercising its powers and where that improper use works injustice to the individual without any injustice or countervailing benefit for the public." |
[41] In the present case, this matter is raised in the context of statutory interpretation. In these circumstances, the actions of the Crown cannot give rise to estoppel.
[42] Further, the applicant has failed to show any detriment resulting from the application of the CFSA. He never received an annuity without the discount of thirty per cent (30%) and was allowed to made additional contributions leading to increase pensionable benefits.
CONCLUSION
[43] This application for judicial review is dismissed without costs.
____________________________
Associate Chief Justice
Ottawa, Ontario
November 6, 1998
__________________1 Verdun v. Toronto-Dominion Bank
2 Husky Oil Ltd v. Canada (Minister of National Revenue)
(1991), 44 F.T.R. 18.(T.D.)