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More than 1,000 Canadians take CRA to court over pandemic payments—and some win

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In late 2021, Tressa Mitchell was dealing with doctor's appointments for her ailing mother when she got a call from the Canada Revenue Agency seeking information to verify her eligibility for the Canada Emergency Response Benefit.

After the COVID-19 pandemic hit, Mitchell, who has a lung condition, took time off work as a cashier in Saskatchewan. Like thousands of Canadians, she collected CERB for several months during the global public health crisis.

The rollout of the pandemic relief payments saw billions doled out to individuals and businesses on a pay-now-ask-questions-later basis.

But the verification process was far from perfect.

The government's subsequent attempts to claw back pandemic funds from those it now deems ineligible set the stage for more than 1,000 battles in Federal Court between claimants and the Canada Revenue Agency.

A review of dozens of such cases show many involve self-represented litigants, in what one law professor described as "profoundly unequal" contests against the legal might of the federal government.

But some, against the odds, have won.

Self-represented litigants who won another review of their cases have included an Ontario hospitality worker who demonstrated his joblessness was related to the pandemic by showing he went through three interviews for an airport position just before COVID-19's onset.

There was also a labourer and web designer who submitted a police report to prove that his tax and banking documents had been stolen from Union Station in Toronto, even managing to secure $800 in costs from the CRA.

A Quebec retiree, meanwhile, convinced a judge he had been doing odd jobs as a landscaper to make extra cash after the level of his pre-pandemic income was challenged by the CRA.

They also include Mitchell, a stay-at-home mother with no means to hire a lawyer, who embarked on a self-taught crash course in law after being ordered to repay $16,000 in CERB.

In hindsight, Mitchell says she wishes she hadn't answered the phone that day in 2021.

"She called me at a super hard time in my life," Mitchell said.

The CRA agent wanted detailed information about Mitchell's income and medical condition within a couple of weeks. The deadlines for the material had slipped Mitchell's mind, preoccupied with her mother's cancer diagnosis and her duties as a mother of three.

The CRA employee said Mitchell hadn't tried hard enough, would have to pay back thousands, and her case was being closed.

On the verge of tears, Mitchell asked what she could do. The only option was to go to the Federal Court of Canada for a judicial review.

"Then I started the whole review process and found out what a gong show it is," she said. "I struggled so hard getting everything done."

Mitchell filed her case in January 2022, and the court ruled in her favour on June 16, sending the matter back to another CRA officer for a third review.

The judge found the previous tax agent had "mischaracterized" Mitchell's evidence, wrongfully concluding she voluntarily quit her job.

Now Mitchell awaits the CRA's next move, hoping she won't have to repay the $16,000 she collected back in 2020.

"I still have to plead my case to the CRA," she said. "Even just to have that opened up, that I get that third review, is huge."

Others haven't been so lucky, and have been left feeling aggrieved that the government has pursued them.

Judy Sjogren, a former nurse in her early 60s who lives in Big River, Sask., survives off the Canada Pension Plan, and by selling drawings she makes with her one good hand. She lost a court fight after being ordered to repay $7,000 in CERB.

"The federal government just uses this system to rip people off," she said. "I didn't work all my life to do this."

The large bulk of pandemic handouts deemed unwarranted have gone to businesses, not individuals.

The Auditor General reported in 2022 that pandemic supports for individuals and businesses totalled $211 billion. While $4.6 billion went to ineligible individuals, more than $15 billion went to businesses whose revenue ultimately didn't decline enough to qualify for the Canada Emergency Wage Subsidy.

The auditor's report concluded "the Canada Revenue Agency and Employment and Social Development Canada did not manage the selected COVID-19 programs efficiently given the significant amount paid to ineligible recipients."

The auditor found the agencies' efforts to recover funds wrongly paid out were not "timely," warning that "significant unrecoverable amounts are likely to materialize."

A spokeswoman for the CRA said in an email that 1,046 individuals have filed court challenges over pandemic benefits, including cases that have been closed and those still pending.

Those who lost their cases have included a Toronto woman who fell short of the $5,000 pre-pandemic income requirement by just $7, a former Toronto Uber driver whose inability to drive was due to a disability and not the pandemic, and multiple Airbnb operators who were deemed to earn rental income rather than self-employment income.

Sjogren said she was injured more than a decade ago and went off work with a disability, but is still fighting the Sask. government over her designation as a disabled person.

When she applied for pandemic benefits, she thought she was in the clear with enough pre-pandemic self-employment income to make her eligible, but the CRA disagreed.

The agency wanted more than $7,000 back -- more than Sjogren makes in a typical year -- so she sought a judicial review without the help of a lawyer. She said she could neither find one, nor afford one.

The court denied her application, but the judge noted that a consequence of the judicial review system means courts don't reverse decisions and impose new results, but rather send them back for redetermination.

"This feature of judicial review may be surprising to those who do not have legal training and who expect the court to be able to settle their grievances," the judge wrote.

That was in January 2023, and the CRA has since sent Sjogren a bill for $7,200, which she says she can't pay.

"I have spots in my lungs and all I've been doing is sitting in court with no help, getting turned down for any type of money from the government that I've paid into for years and years," Sjogren said.

Stephen Pelland lives in Surrey, B.C., and the CRA wants him to pay back more than $25,000 he collected after the scrap metal business he started before the pandemic fizzled along with his income.

A former addict now in recovery, Pelland filed a judicial review in November 2022 and is awaiting a hearing into his application, which he filed on his own.

"I want to have my day in court and explain what's going on and it's been a real struggle because I've even tried to hire a lawyer," he said. "I paid to have a consultation and they wouldn't even take my case."

Jennifer Leitch, a law professor and executive director of the National Self-Represented Litigants Project, said she was previously unaware that many Canadians were going up against the CRA over pandemic benefit claw backs, but was "pleasantly surprised" some were winning their "profoundly unequal" contests.

"The outcomes are (usually) not great for self-represented litigants," she said.

She said the uneven nature of the CERB battles could lead to a perception of a two-tiered legal system -- one tier for those who can afford lawyers, and one for those who can't.

She said this was problematic because it deterred people from seeking their day in court.

"It also speaks to something that I think is really troubling, which is this idea that people want to pursue their case, that they feel that they want to be heard in court, that they feel that they were sort of righteous and had not done anything wrong, and yet feel that the system either doesn't hear them or doesn't welcome them, or doesn't accept them," she said.

"That's a really sort of sad thing for our society."

 

This report by The Canadian Press was first published July 12, 2023.

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