A-76-89
The Minister of Finance of Canada, the Minister
of National Health and Welfare of Canada and
the Attorney General of Canada (Appellants)
(Defendants)
v.
Robert James Finlay (Respondent) (Plaintiff)
and
The Attorney General of Manitoba (Intervenor)
INDEXED AS: FINIAY v. CANADA (MINISTER OF FINANCE)
(CA.)
Court of Appeal, Pratte, Hugessen and Mac-
Guigan JJ.A.—Winnipeg, May 29, 30 and 31;
Ottawa, July 6, 1990.
Health and welfare — Canada Assistance Plan (CAP) pro
viding for cost sharing by federal government of provincial
social assistance and welfare services — To recover debts due
to overpayments, Manitoba reducing payments to persons in
need below minimum level of "basic requirements" set by CAP
— Legality of payments made by federal Minister of Finance
and certificates given by federal Minister of National Health
and Welfare to Manitoba pursuant to Canada Assistance Plan,
s. 7 in view of Manitoba Social Allowances Act provisions
authorizing such reduction — Whether Minister of Finance
should be enjoined from making further payments to Manito-
ba under Plan or federal-provincial agreement thereunder
until provincial Act amended to ensure allowances not below
minimum basic requirements — Rates of welfare payments set
by municipalities — No requirement for Provincial approval
— Declaration rates must be established by designated provin
cial authority.
The Canada Assistance Plan (CAP) provides for cost shar
ing by the federal government of provincial social assistance
and welfare services for "persons in need". In 1967, the Minis
ter of National Health and Welfare and the Province of
Manitoba entered into an agreement under the CAP with
respect to such federal contributions.
In Manitoba, federally cost-shared payments to persons in
need were dealt with under two provincial statutes, the Social
Allowances Act and the Municipal Act. Manitoba was the only
province not requiring provincial approval of the rates of
welfare payments set by municipalities.
The respondent, a resident of Manitoba, qualified for social
assistance under the Manitoba Social Assistance Act because
of permanent disabilities, including severe epilepsy, which ren
dered him unable to provide for himself. He received overpay-
ments on three separate occasions, of $207.70, $109 and $796.
The Province's policy as to the quantum of recovery in the case
of overpayments was to recover 5% of the total allowance, or
the whole of that portion of the allowance intended to cover
"personal requirements".
The Trial Judge concluded that the recovery of overpayments
or part thereof from a recipient who is receiving the minimum
amount of assistance to cover basic requirements resulted in
undue hardship for the recipient and constituted a breach of the
agreement between Manitoba and the Government of Canada.
The payments of contributions by the Minister of Finance and
certificates by the Minister of National Health and Welfare
pursuant to subsection 7(1) of the CAP were declared to be
illegal so long as the Provincial legislation continued to author
ize reducing an allowance below the level of basic requirements
in order to collect debts for overpayments and, on that same
basis, the Minister of Finance was ordered to refrain from
making any further payments to the Province pursuant to the
CAP or its agreement. As to the setting of the rates of welfare
payments, the Trial Judge found that the Province did not have
to set the rates of welfare payments by a municipality nor did it
have to expressly approve that rate. The Province could allow a
municipality to set its own rates of welfare assistance as long as
the proper needs test was applied.
This was an appeal from the declaration and injunction and a
cross-appeal from the decision concerning the setting of rates
by municipalities.
Held, the appeal should be dismissed as to the declaration
and allowed as to the injunction. As to the cross-appeal, a
declaration should issue that all social assistance rates under
the CAP and the 1967 Canada-Manitoba Agreement are
required to be established by the designated provincial
authority.
The Declaration
Since public assistance and welfare fell under provincial
constitutional competence, Parliament's role was restricted to
advancing funds to assist the provinces in discharging their
responsibilities. Section 6 of the CAP, which established the
conditions to which all payments were subject, left to each
province the determination of the basic requirements of persons
in need. Under section 6, the amount of financial aid had to be
such as to enable the recipient to meet his/her basic require
ments, the exact amount depending on the recipient's income
and resources. This in no way lessened the fundamental juris
diction of each province to determine how to quantify the
"basic requirements" of a person in need. The only limit
imposed on the provinces was CAP's condition that, having
established a level of financial aid, they could not decrease that
aid below a recipient's basic requirements.
Manitoba did not use either of the federal terms "basic
requirements" or "budgetary requirements", but instead used
the phrase "basic necessities". However, the Province's defini-
tion of "basic necessities" was only the fulfilment of the federal
concept of "budgetary requirements". A drop below basic
necessities was therefore an infringement of paragraph 6(2)(b)
of the CAP.
Subsection 20(3) of the Manitoba legislation did not respect
the federally imposed minimum since it allowed the deduction
of an amount "that would not cause undue hardship to the
recipient". The test Manitoba used in determining what con
stituted undue hardship did not meet the conditions of the
CAP.
To make the recovery of overpayments subject to the strict
conditions of the CAP renders difficult such recovery. But it is
not necessarily in the public interest to bleed those who live at
or below the poverty line as a purgative for social health, even if
the bleeding is only a little at a time and only once a month.
Such disincentives to abuse may be as socially harmful as the
disease.
The Injunction
There was no need for an injunction. Its consequences would
have been out of proportion to the mischief to be remedied. It
would have jeopardized not only the entire social allowances
program in the Province, but would also have cut off federal
funding for all programs cost shared under CAP, including
child welfare.
Rate Setting by Municipalities
The definition of "person in need" in section 2 of the CAP
provided for a needs test "established by the provincial author
ity", in turn defined as "the provincial Minister or other official
body specified by the province" in the relevant agreement. The
Agreement in question designated the Minister of Welfare as
the provincial authority. The needs tests were therefore not
established by the proper authority. Since the Supreme Court
of Canada has recognized the cross-appellant as having public
interest standing herein, there is no question that he had the
right to challenge even matters of contract between the Federal
Government and the Province.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Canada Assistance Plan, R.S.C., 1985, c. C-1, Preamble,
ss. 1, 2, 3, 4, 6, 7.
Canada Assistance Plan Regulations, C.R.C., c. 382, ss.
2, 3.
Federal Court Rules, C.R.C., c. 663, R. 341A(4) (as
enacted by SOR/79-57, s. 8).
Social Allowances Regulations, S160-404/88R, s. 5, Sch.
A.
The Municipal Act, R.S.M., c. M225, ss.449, 450, 451,
452.
The Social Allowances Act, R.S.M. 1987, c. S160, ss. 1,
2, 3, 4, 6, 7, 9, 20.
CASES JUDICIALLY CONSIDERED
APPLIED:
Re Lofstrom and Murphy (1971), 22 D.L.R. (3d) 120
(Sask. C.A.); Osenton (Charles) & Co. v. Johnston,
[1942] A.C. 130 (H.L.).
DISTINGUISHED:
LeBlanc v. City of Transcona, [1974] S.C.R. 1261;
(1973), 38 D.L.R. (3d) 549; [1973] 6 W.W.R. 484.
REFERRED TO:
Re Finlay and Director of Welfare (Winnipeg South/
West) (1976), 71 D.L.R. (3d) 597; 29 R.F.L. 395 (Man.
C.A.); Finlay v. Minister of Finance of Canada, [1984] 1
F.C. 516; (1983), 146 D.L.R. (3d) 704; 1 Admin. L.R.
76; 48 N.R. 126 (C.A.); affd by Finlay v. Canada
(Minister of Finance), [1986] 2 S.C.R. 607; (1986), 33
D.L.R. (4th) 321; [1987] 1 W.W.R. 603; 23 Admin. L.R.
197; 17 C.P.C. (2d) 289; 71 N.R. 338.
COUNSEL:
Harry Glinter for appellants (defendants).
G. Patrick S. Riley for respondent (plaintiff).
W. Glen McFetridge for Attorney General of
Manitoba.
Robert G. Richards for Attorney General of
Saskatchewan.
Arne Feltz for National Anti-Poverty Organi
zation.
Rebecca J. Givens for Minister of Community
and Social Services.
Jean-Claude Paquet for Attorney General of
Quebec.
SOLICITORS:
Deputy Attorney General of Canada for
appellants (defendants).
Taylor, McCaffrey, Chapman, Winnipeg, for
respondent (plaintiff).
Attorney General of Manitoba for Attorney
General of Manitoba.
Attorney General of Saskatchewan for Attor
ney General of Saskatchewan.
Legal Aid Manitoba, Winnipeg, for National
Anti-Poverty Organization.
Legal Services Branch, Toronto, for Minister
of Community and Social Services.
Attorney General of Quebec for Attorney
General of Quebec.
The following are the reasons for judgment
rendered in English by
MACGUIGAN J.A.: This is an appeal and a
cross-appeal from a judgment of the Trial Division
rendered on January 24, 1989 [(1989), 25 F.T.R.
45], by which Teitelbaum J. issued a declaration
that payments made by the federal Minister of
Finance and certificates given by the federal Min
ister of National Health and Welfare to the Prov
ince of Manitoba, both pursuant to section 7 of the
Canada Assistance Plan [R.S.C. 1970, c. C-1],
now R.S.C., 1985, c. C-1, were illegal so long as
the Manitoba Social Allowances Act, R.S.M.
1987, c. S160, authorized the reduction of social
allowances to "persons in need", for the purpose of
collecting debts arising from overpayments, below
the minimum level of "basic requirements" set by
the Plan. The Trial Judge also issued an injunction
against the Minister of Finance, enjoining him
from making any further payments to Manitoba
pursuant to the Canada Assistance Plan or the
federal-provincial agreement made under it until
the Social Allowances Act was amended to ensure
that allowances did not fall below the minimum
level of basic requirements. The judgment was
suspended pending the disposition of this appeal.
The Canada Assistance Plan ("CAP" or "the
Plan"), which came into effect in 1966, provides
for cost sharing by the federal government of
provincial social assistance and welfare services for
"persons in need". The Governor in Council,
acting pursuant to section 4 of the Plan, author
ized the Minister of National Health and Welfare
to enter into agreements with the provinces in
respect of such federal contributions, and on
March 20, 1967, the Minister of National Health
and Welfare and the Province of Manitoba entered
into such an agreement ("the 1967 Agreement").
The relevant provisions of CAP [R.S.C., 1985,
c. C-1] are as follows:
An Act to authorize the making of contributions by Canada
toward the cost of programs for the provision of assistance
and welfare services to and in respect of persons in need
WHEREAS the Parliament of Canada, recognizing that the
provision of adequate assistance to and in respect of persons in
need and the prevention and removal of the causes of poverty
and dependence on public assistance are the concern of all
Canadians, is desirous of encouraging the further development
and extension of assistance and welfare services programs
throughout Canada by sharing more fully with the provinces in
the cost thereof;
THEREFORE, Her Majesty, by and with the advice and
consent of the Senate and House of Commons of Canada,
enacts as follows:
SHORT TITLE
1. This Act may be cited as the Canada Assistance Plan.
INTERPRETATION
2. In this Act,
"assistance" means aid in any form to or in respect of persons
in need for the purpose of providing or providing for all or
any of the following:
(a) food, shelter, clothing, fuel, utilities, household supplies
and personal requirements (hereinafter referred to as "basic
requirements"),
(b) prescribed items incidental to carrying on a trade or
other employment and other prescribed special needs of any
kind,
(c) care in a home for special care,
(d) travel and transportation,
(e) funerals and burials,
(/) health care services,
(g) prescribed welfare services purchased by or at the
request of a provincially approved agency, and
(h) comfort allowances and other prescribed needs of resi
dents or patients in hospitals or other prescribed institutions;
"Minister" means the Minister of National Health and
Welfare;
"person in need" means
(a) a person who, by reason of inability to obtain employ
ment, loss of the principal family provider, illness, disability,
age or other cause of any kind acceptable to the provincial
authority, is found to be unable; on the basis of a test
established by the provincial authority that takes into
account that person's budgetary requirements and the
income and resources available to him to meet such require
ments, to provide adequately for himself, or for himself and
his dependants or any of them, or
(b) a person under the age of twenty-one years who is in the
care or custody or under the control or supervision of a child
welfare authority, or a person who is a foster-child as defined
by regulation,
and for the purposes of paragraph (e) of the definition "assist-
ance" includes a deceased person who was a person described in
paragraph (a) or (b) of this definition at the time of his death
or who, although not such a person at the time of his death,
would have been found to be such a person if an application for
assistance to or in respect of him had been made immediately
before his death;
"prescribed" means prescribed by regulation;
"provincial authority" means the provincial Minister or other
official or body specified by the province in an agreement
entered into under section 4 as being charged with the
administration of the provincial law;
"provincial law" means the Acts of the legislature of a province
that provide for
(a) assistance, or
(b) welfare services in the provinces,
under conditions consistent with the provisions of this Act
and the regulations, and includes any regulations made under
those Acts;
"provincially approved agency" means any department of gov
ernment, person or agency, including a private non-profit
agency, that is authorized by or under the provincial law or
by the provincial authority to accept applications for assist
ance, determine eligibility for assistancè, provide or pay
assistance or provide welfare services and that is listed in a
schedule to an agreement under section 4;
PART 1
GENERAL ASSISTANCE AND
WELFARE SERVICES
Interpretation
3. In. this Part
"agreement" means an agreement made under section 4;
"contribution" means an amount payable by Canada under an
agreement.
Agreement Authorized
4. Subject to this Act, the Minister may, with the approval
of the Governor in Council, enter into an agreement with any
province to provide for the payment by Canada to the province
of contributions in respect of the cost to the province and to
municipalities in the province of
(a) assistance provided by or at the request of provincially
approved agencies pursuant to the provincial law; and
(b) welfare services provided in the province by provincially
approved agencies pursuant to the provincial law.
Terms of Agreement
6....
(2) An agreement shall provide that the province
(a) will provide financial aid or other assistance to or in
respect of any person in the province who is a person in need
described in paragraph (a) of the definition "person in need"
in section 2, in an amount or manner that takes into account
the basic requirements of that person;
(b) will, in determining whether a person is a person
described in paragraph (a) and the assistance to be provided
to that person, take into account the budgetary requirements
of that person and the income and resources available to that
person to meet those requirements;
(c) will continue, as may be necessary and expedient, the
development and extension of welfare services ' in the
province;
(d) will not require a period of residence in the province as a
condition of eligibility for assistance or for the receipt or
continued receipt thereof;
(e) will ensure the provision by law, not later than one year
from the effective date of the agreement, of a procedure for
appeals from decisions of provincially approved agencies with
respect to applications for assistance or the granting or
providing of assistance by persons directly affected by those
decisions;
(/) will ensure the maintenance and availability, for exami
nation and audit by the Minister or any person designated by
him, of such records and accounts respecting the provision of
assistance and welfare services in the province as the agree
ment or the regulations may require; and
(g) will provide the Minister with copies of all Acts of the
legislature of the province referred to in the definition "pro-
vincial law" in section 2 and of all regulations made under
those Acts.
Payment of Contributions
7. Contributions or advances on account thereof shall be
paid, upon the certificate of the Minister, out of the Consolidat
ed Revenue Fund at such times and in such manner as may be
prescribed, but all such payments are subject to the conditions
specified in this Part and in the regulations and to the observ
ance of the agreements and undertakings contained in an
agreement.
The relevant provisions of the 1967 Agreement
are as follows (Appeal Book, I, at pages 33-34):
2. The Province agrees
(a) to provide financial aid or other assistance to or in
respect of any person in the province of Manitoba who is
a person in need described in subparagraph (i) of para-.
graph (g) of Section 2 of the Act in an amount or
manner that takes into account his basic requirements;
(b) in determining whether a person is a person described in
subclause (a) of this clause and the assistance to be
provided to, such. person,
(i) except prior to April 1st, 1967, to obtain from such
person or -from a responsible person on his behalf,
an application fbr assistance in form and content
satisfactory to the provincial authority, and
(ii) to take into account that person's budgetary
requirements and the income and resources avail
able to him to meet those requirements,
provided that
(iii) in taking into account that person's income and
resources, The Province may determine the income
and resources of that person on a daily, weekly,
monthly or other periodic basis acceptable to the
provincial authority but in calculating that income
shall include as income the whole of any income
maintenance payment ...
An early problem under CAP was the realiza
tion that the Plan did not allow the Federal Gov
ernment to make contributions to the provinces
with respect to overpayments to assistance or wel
fare recipients. The Deputy Minister of National
Health and Welfare alerted the provinces to that
fact in letters of August 6, 1968, (Appeal Book, II,
at pages 273-274) and April 22, 1969 (Appeal
Book, III, at pages 405-406). In March 1971 the
Canada Assistance Plan Regulations were amend
ed to allow for federal cost sharing in respect of
overpayments to persons subsequently found to be
ineligible for all or part of such assistance. On
November 24, 1971, the Federal Government
approved the Manitoba plan for preventing and
recovering overpayments (Appeal Book, II, at
pages 286-287) on certain conditions. Manitoba
subsequently informed Ottawa that the conditions
had been fulfilled (Appeal Book, II, at pages
288-289), and final federal approval was issued on
February 29, 1972 (Appeal Book, II, at page 290).
The relevant provisions of the Canada Assist
ance Plan Regulations, now C.R.C., c. 382, are as
follows:
2....
(2) For the purposes of the Act and these Regulations,
"budgetary requirements" means the basic requirements of a
person and his dependants, if any, and any other of the items
and services described in paragraphs (b) to (h) of the defini
tion "assistance" in section 2 of the Act that, in the opinion
of the provincial authority, are essential to the health or
well-being of that person and his dependants, if any;
"personal requirements" means items of a minor nature, other
than the ordinary requirements of food, shelter, clothing,
fuel, utilities and household supplies, that are necessary in
day to day living to a person's health or well-being, and,
without limiting the generality of the foregoing, includes
items relating to
(a) personal care, cleanliness and grooming,
(b) the observance of religious obligations, and
(c) recreation;
Expressions Defined for the Purposes of Particular Provisions
of the Act
3. For the purposes of
(b) paragraph 5(1)(a) of the Act, "cost to the province and
to municipalities in the province" in a year means payments
made in the year
(i) by the province, and
(ii) by municipalities in the province,
and includes
(iii) depreciation allowances, and
(iv) payments by way of assistance provided by or at the
request of a provincially approved agency to persons who
were considered to be persons in need and who are subse
quently found to have been ineligible for all or part of such
assistance, where the provincially approved agency has
implemented a plan to prevent any such payments and to
recover any such payments and the plan is satisfactory to
the Minister or a person designated by him ...
In Manitoba, federally cost-shared payments to
persons in need are dealt with under two provincial
statutes, the Social Allowances Act ("SAA") and
The Municipal Act, R.S.M. 1988, c. M225. The
SAA provides assistance to single-parent families,
to persons with long-term medical disabilities and
to persons who are generally unable to provide. for
themselves (in brief, it was said, to "unemployable
persons"). The Municipal Act provides assistance
to persons who are employable but have been
unable to find employment, to persons with short-
term disabilities, and to single parents who have
been separated from marriage for less than 90
days.
In July, 1980, the SAA was amended, adding
subsection 20(3) [S.M. 1980, c. 37, s. 10], which
authorizes the deduction of overpayments. How
ever, such deductions were also made prior to this
amendment pursuant to subsection 9(1).
The relevant provisions of the SAA are as
follows:
Definitions.
1 In this Act,
"basic necessities" means the things and services to which
reference is made in section 2 ...
"cost of the basic necessities" or "cost of his basic necessities".
means the cost, as established in the regulations, of those basic
necessities with respect to which a regulation is made under
section 6 ...
Provision of essential supplies services, and care.
2 Subject as herein provided, the Government of Manitoba
and each of the several municipalities in the province may take
such measures as are necessary for the purpose of ensuring that
no resident of Manitoba, lacks
(a) such things, goods, and services as are essential to his
health and well-being, including food, clothing, shelter, and
essential surgical, medical, optical, dental, and other remedi
al treatment, care, and attention; and
(b) an adequate funeral upon his death.
Payment of monthly social allowance.
3 For the purpose mentioned in section 2 the government,
through and at the discretion of, the director, may, out of -the
Consolidated Fund with moneys authorized by an Act of the
Legislature to be so paid and applied, grant and pay to or for a
recipient monthly or more frequently, an amount in money
sufficient to pay the cost of the basic necessities of himself and
his dependants.
Determination of amount.
4 The amount to be paid to or for any recipient under
section 3, shall be determined after consideration of, and shall
be based on the requirements in respect of, his basic necessities
and those of his dependants, if he has dependants.
Establishment of cost of basic necessities.
6 The Lieutenant Governor in Council may, by regulation
made by order in council, establish, for the purpose of this Act
and as at the time of the making of the regulation, the cost of
the several basic necessities or of those the cost of which should,
in his opinion, be established from time to time.
Fixing of amount by director.
7(1) If he deems that an applicant should receive a social
allowance, the director shall, in accordance with the regulations
and subject to subsection (2), by his written order fix the
amount of the social allowance that shall be paid to him.
Sufficient for basic necessities.
7(2) In accordance with the regulations, the director shall
fix an amount that, in his opinion, will be sufficient to provide
the applicant with an income sufficient to pay the cost of his
basic necessities.
Discontinuance, reduction, suspension or increase in allow
ance.
9(1) Where, on the basis of information received by the
director, the director is of the opinion that the social allowance
being paid to a recipient
(a) should be discontinued; or
(b) should be reduced; or
(c) should be suspended; or
(d) should be increased;
the director, may by written order direct that the social assist
ance be discontinued, reduced, suspended or increased, as the
case may require.
Right of appeal.
9(3) An applicant or a recipient or a person who has applied
for, or is or was receiving, municipal assistance from a munici
pality may appeal to the appeal board where he feels his
treatment was unfair because
(a) he was not allowed to apply or re-apply for social
allowance or municipal assistance;
(b) his request for social allowance or municipal assistance
or increase in social allowance or municipal assistance was
not decided upon within a reasonable time;
(c) his application for social allowance or municipal assist
ance was denied;
(d) his social allowance or municipal assistance was can
celled, suspended, varied or withheld; or
(e) the amount of social allowance or municipal assistance
granted is insufficient to meet his needs.
Recovery of payments made in error or on false statements.
20(1) Where the government has provided or paid assistance
or any social allowance to or for a person, if the assistance or
social allowance, or any part thereof, would not have been
provided or paid except for
(a) a false statement or misrepresentation made by the
person; or
(b) an error;
the government may recover from the person, or his executors
or administrators, or his spouse, or the executors or administra
tors of his spouse, and, if the person is an infant, his parent or
guardian or any person legally liable to pay his expenses, the
amount of that assistance or social allowance or that part
thereof as a debt due and owing from the person to the Crown.
Deductions from recipients.
20(3) Notwithstanding any other provision of this Act or the
regulations, where under subsection (1) or (2), a person who is
liable to pay an amount of social allowance paid to him as a
debt to the Crown in right of Manitoba, is a recipient the
director may authorize the deduction of an amount that would
not cause undue hardship to the recipient from each subsequent
payment of social allowance to that person until the amount of
the indebtedness of that person is discharged.
The relevant provisions of the Municipal Act are
as follows:
PART VII
MUNICIPAL ASSISTANCE
DIVISION I
AID TO NEEDY PERSONS
Powers under Social Allowances Act.
449 Every municipality has the powers and authority set out
in section 2 of The Social Allowances Act.
Definitions.
450(1) Subject to Rule 1 set out in Schedule 7, in this
Division
"assistance" means assistance as defined in The Social Ser
vices Administration Act; ("aide")
"basic necessities" means things, goods and services that are
essential to a person's health and well-being, including food,
clothing, shelter, household and personal requirements, medi
cal, hospital, optical, dental and other remedial treatment,
care and attention, and an adequate funeral on death;...
"municipal assistance" means assistance provided by a mu
nicipality to a person in need who is a resident of, or found
in, the municipality; ...
"person in need" means a person who lacks the basic necessi
ties and includes a dependant of a person in need .. .
Municipal assistance.
451(1) The council of each municipality shall, by by-law,
provide
(a) for granting municipal assistance to any person in need
who is a resident of, or is found in, the municipality, who
lacks the basic necessities, and who is not qualified to receive
a social allowance; and
(b) for regulating and prescribing the conditions under
which municipal assistance is to be given to ensure that basic
necessities of persons in need are met.
Appeal under Social Allowance Act.
451(4) Where a municipality has passed a by-law under
subsection (1), any person who has applied for, or is or was
receiving, municipal assistance from the municipality may
appeal any decision affecting his application or varying or
terminating the municipal assistance in accordance with section
9 of The Social Allowances Act and that section applies to the
appeal and to the municipality.
Municipality fails to assist.
452 Where a municipality responsible for the provision of
municipal assistance to a person in need fails or refuses to grant
the municipal assistance, the person may apply to the director
under The Social Allowances Act who may grant assistance
under that Act in lieu of municipal assistance; and the amounts
paid under this section as assistance under that Act is a debt
due to the government by the municipality and may be recov
ered by the government from the municipality by withholding
from grants payable to the municipality from the government
amounts equivalent to the amounts paid under this section as
assistance under that Act.
The Manitoba Social Allowances Regulations,
404/88 R provides in Schedule A to section 5 for
the costs of basic necessities, according to the
number of adult persons and the number and ages
of the children. The monthly rate for "food, cloth
ing, personal needs for adult recipients and
household supplies" for one adult person without
dependents is set at $213.40, an amount that was
much referred to in the course of argument, since
the respondent is such a person. The Trial Judge
found that the Province's policy as to the quantum
of recovery in the case of overpayments was to
recover 5% of the total allowance, or the whole of
that portion of the allowance intended to cover
"personal requirements", whichever is less (Appeal
Book, IV, at page 684).
The respondent is a resident of Manitoba who
qualifies for social assistance under the SAA
because of lifelong disabilities, including severe
epilepsy, which render him unable to provide for
himself. He was declared to have received overpay-
ments under the Act on three separate occasions,
the first for $207.70, the second for $109, the third
for $796. The third overpayment was declared
because of a Provincial Employment Program
("PEP") grant which had been given to him for
the purpose of developing a small retail business in
leathercraft and related activities, in spite of the
fact that the grant was in no way intended to
supplement or provide for his living expenses
(Appeal Sbok, IV, at page 533). The respondent
testified that he filed 23 appeals to the Social
Services Advisory Committee pursuant to subsec
tion 9(3) of the SAA, including some 20 appeals of
overpayment deductions, but that all of his appeals
were dismissed (Proceedings, at page 55). One of
his appeals reached the Manitoba Court of
Appeal, which unanimously held that the Province
was entitled to recover an overpayment, even
where the deduction reduced the recipient's allow
ance below the minimum level intended to cover
"basic necessities": Re Finlay and Director of
Welfare (Winnipeg South/West) (1976), 71
D.L.R. (3d) 597 (Man. C.A.). The Court was not
asked to consider whether the PEP grant could be
taken into account in determining whether there
had been an overpayment, nor of course was it
asked to consider the terms of CAP or of the 1967
Agreement.
This action was instituted by the respondent in
1982, but was detoured by a lengthy controversy
over à motion to strike out the statement of claim
on the basis that the respondent lacked standing.
The respondent was awarded standing as a public
interest litigant by this Court in Finlay v. Minister
of Finance of Canada, [1984] 1 F.C. 516, and also
by the Supreme Court of Canada in Finlay v.
Canada (Minister of Finance), [1986] 2 S.C.R.
607.
When the action was finally heard at trial, the
Trial Judge concluded as follows (at pages 56-60):
It would seem to me that a person who is receiving a sum of
money which, at the very best, would only cover his or her basic
needs, would suffer undue hardship if, by the mere fact that a
sum is being deducted, he or she is no longer being provided
with sufficient funds to cover the basic needs of the individual.
In referring to the issue of deductions for the recovery of
overpayments, Mr. Sexsmith [the Director of Field Operations
for Social Allowance Operations for the Province] agrees that
as a result of these overpayment deductions, there are some
people in the Province of Manitoba who are not receiving a
portion of what's calculated to be their total needs, total basic
necessities. The witness admits that the Province of Manitoba,
by making deductions, causes a recipient hardship but tries to
avoid causing undue hardship. Trying to avoid causing undue
hardship is not sufficient. The Province must avoid causing
undue hardship. As I have stated and now repeat, I have
difficulty in distinguishing hardship and undue hardship when
the result is a lack of basic requirements such as food or shelter
or clothing. I am satisfied that a lack of basic requirements
causes undue hardship. A lack of budgetary requirements, that
is, care in a home for special care, travel and transportation or
the other items listed in ss. 2(b) to (h) of CAP may be
considered hardship and not undue hardship. A lack of the
items listed under s. 2(a) causes undue hardship.
"Q. So it is likely that there are people in this province today
who are not receiving their personal needs allocation as
a result of these deductions, and have no way of making
that up otherwise?
A. Well they're not receiving a portion of what's calculated
to be the total needs.
Q. Total basic necessities?
A. Yes.
Q. And you can't say that those people who are missing
some of their basic necessities of life are able to make
that up through their excess assets in any way?
A. No, I can't say that.
Q. Because there is no policy written down that says you
can only put these deductions in place when there are
excess assets or excess income?
A. No, we don't have any such policy. The only policy we
have is to allow the discretion to recover a lower amount
at the discretion of the director if it would create
hardship.
Q. Well, in fact you allow hardship, don't you, sir? It is
undue hardship you do not allow. Is that a fair
statement?
A. That's correct.
Q. Or try not to allow, correct?
A. That's correct."
(Questions and answers 301, 302, 303, 304, 305 and 306,
pages 145 and 146, transcript)
The issue is to determine, from the evidence submitted
whether the Province of Manitoba breached its agreement ...
with the Government of Canada by effectively not supplying to
recipients a portion of what was calculated to be their total
basic necessities. The issue is, as well, to determine if there is a
breach of the agreement by the Province of Manitoba by the
mere fact that the Province allows municipalities to set their
own rates for what are considered "basic necessities" where
each municipality can set at a different rate.
The evidence is such that I am satisfied that the Province of
Manitoba, by deducting a sum of up to 5% of the basic needs of
a social allowance or welfare recipient deprives that recipient of
his or her basic needs causing a breach in the agreement
between the Province of Manitoba and the Government of
Canada. I well understand that a method should and must be
found to ensure that recipients such as the present plaintiff do
not abuse the system to obtain overpayments. The solution to
this problem is a political one to be determined by the legisla
ture of the Province and by Parliament.
The evidence of Mr. Sexsmith seems to be very clear when,
after being questioned by myself, he finally, although reluctant
ly, admitted that by the Province recovering a portion of the
overpayment from the sum paid per month, to a recipient of
allowance or welfare, that person is or may well be denied some
of that individual's basic needs. This would seem quite obvious.
A recipient such as the plaintiff receives a sum of $213.40 per
month for his basic requirements. If a part of that is being
denied him for any particular month, then, for that months, his
basic requirements are not met if he has no other financial
resources. All the evidence indicated that when deductions were
being made, Finlay had no other financial resources.
I am satisfied that when an individual is receiving the
minimum amount of assistance to cover the basic requirements
and some of that amount of money is being withheld to repay
an overpayment more than mere "hardship" is caused. It is
undue hardship that is caused to a person who may not have
sufficient funds to feed himself or at least to look after himself
with the bare necessities one requires. There is really no
difference between hardship and undue hardship once a recipi
ent of social allowance or welfare is lacking basic requirements.
Counsel for plaintiff submits that there exists a breach of the
Canada Assistance Plan when, as in the present case, the
Province of Manitoba allows its municipalities to set its own
rates of assistance. I am not in agreement with the submission.
If a municipality, in setting the rates of welfare to be paid sets
a rate that meets the basic requirements in that municipality
there is no breach. I am satisfied that the province does not, in
virtue of the CAP or ... the agreement between the Province of
Manitoba and Canada, have to set the rate of welfare payment
by a municipality nor does it have to expressly approve the rate.
So long as the test for determining basic necessities in a
municipality is equivalent to that found in the Social Allowance
Act, then there can be no breach of CAP nor of the agreement
between the Province and Canada. This is apparent from the
Municipal Act enacted by the Province of Manitoba under Part
VII Municipal Assistance Division 1 Aid to Needy Persons
under the heading Definitions:
"450(1) Subject to Rule 1 set out in Schedule 7, in this
Division
`assistance' means things, goods and services that are essen
tial to a person's health and well-being, including food,
clothing, shelter, household and personal requirements, medi
cal, hospital, optical, dental and other remedial treatment,
care and attention, and an adequate funeral on death;
(`besoins essentiels')
`municipal assistance' means assistance provided by a munic
ipality to a person in need who is a resident of, or found in,
the municipality; (`aide municipale')
`person in need' means a person who lacks the basic necessi
ties and includes a dependant of a person in need. (`personne
nécessiteuse')"
Furthermore, I am satisfied that since the administration
services of CAP are left to the province, the province can allow
a municipality to set its own rates of welfare assistance provid
ing the proper needs test is applied. No evidence was made to
show that the municipalities are not using a proper needs test.
Counsel for Canada in his final submission states that "basic
requirements" under CAP and the concept of "basic necessi
ties" under the Social Allowance Act are different. He contends
that those items listed in the Social Allowance Act Schedule
"A" as "basic necessities" include things beyond the definition
of "basic requirements" in CAP. He therefore submits that
even if a recipient may be deprived of "basic necessities" under
the Social Allowance Act (as admitted by Mr. Sexsmith) it is
not necessarily true that he is thereby deprived of "basic
requirements" under CAP.
It may be correct to say that "not necessarily" one may be
deprived of "basic requirements" under CAP but the evidence
indicates to me from the testimony of Mr. Sexsmith that the
denial of some "basic requirements" does take place when a
part of an overpayment is recovered. The evidence of Mr.
Sexsmith leads me to believe that the items found under "basic
necessities" in the Social Allowance Act and not included in
"basic requirements" are usually items paid for directly by the
province to a third party. This payment is not made to the
recipient. Therefore, if such a recipient receives less cash
because of an overpayment, he is being deprived of some "basic
requirements" as listed in CAP.
Much was said by counsel for Canada and the Province as to
the "fairness" of the system. They submit that there is provi
sion in the Social Allowance Act for appeal of any deduction
for overpayment. The evidence is such that Finlay has certainly
availed himself of this process.
I do not have any disagreement with counsel when they say
that the system is fair in that it allows appeals from decisions
concerning recovery of an overpayment. That is not the issue.
The issue is the decision to withhold sums of money from the
monthly allowance as a result of an overpayment which causes
a recipient not to have sufficient funds for his "basic require
ments". A decision not necessarily made after a recipient has
lodged an appeal but made by a case worker who has no
discretion in determining if a lesser amount should or should
not be deducted for the overpayment.
A recipient who, through his own fault, whether by not
telling the truth or for some other reason receives an overpay-
ment should be penalized. Section 22 of the Social Allowance
Act clearly allows for such a penalty.
Conclusion
I therefore find that by the recovery of overpayments made
to the plaintiff there was a breach of the agreement between
the Province of Manitoba and the Government of Canada. I
understand that the Province of Manitoba had stopped the
recovery for overpayment from Finlay leaving a balance still
owing but which balance was forgiven by the Province.
I am also satisfied that a recovery of a part of an overpay-
ment from a recipient who has no other source of income than
that received from the provincial social allowance or municipal
welfare other than pursuant to s. 22 of the Social Allowance
Act would be contrary to the existing agreement.
In conclusion, I find that payments of contributions by the
Minister of Finance and certificates , by the Minister of Nation
al Health and Welfare pursuant to s. 7(1) of the Canada
Assistance Plan (CAP) to the Province of Manitoba are illegal
so long as the Social Allowances Act continues to authorize
reducing an allowance below the level of basic requirements to
collect debts for 'overpayments and I order the Minister of
Finance to refrain from making any further payments to the
Province of Manitoba pursuant to the Canada Assistance Plan
or its agreement filed as Exhibit 1-4 so long as the Social
Allowances Act continues to authorize reducing an allowance
below the level of basic requirements to collect debts for
overpayments.
This judgment shall not become executory for 31 days from
today's date or, in the event of an appeal, shall not become
executory until final judgment by the Federal Court of Appeal.
As previously stated, the overpayment to Mr. Finlay was
clearly caused by deliberate actions of Finlay himself. He
received sums of money, on three different occasions, when he
should not have. He was the author of his own misfortune.
For these reasons, I am not prepared to award costs to
Finlay. There shall be no order as to costs.
The Attorney General of Manitoba ("Manito-
ba") and the National Anti-Poverty Organization
("NAPO") were intervenors on both the 'appeal
and the cross-appeal. The Attorney General of
Saskatchewan ("Saskatchewan"), the Ministry of
Community and Social Services of Ontario
("Ontario") and Le Procureur Général du Québec
("Québec") were intervenors as to the appeal
alone.
* * *
The first matter in issue was the object of CAP, as
stated in the preamble to the Plan. The respondent
and NAPO emphasized the first part of the recital:
"recognizing that the provision of adequate assist
ance to and in respect of persons in need and the
prevention and removal of the causes of poverty
and dependence on public assistance are the con
cern of all Canadians" [Emphasis added.] The
stronger expression of the adequacy of assistance
to persons in need as the object of the statute was
that of NAPO, which asserted the following prin
ciple of statutory, construction as applied to CAP:
"faced with general language or contending inter
pretations due to ambiguity in statutory language,
the Court will favour that interpretation which
best assures adequacy of assistance to persons in
need" (Factum, paragraphs 15 and 37). In fact
NAPO was prepared to describe CAP as "a
Charter-like document of basic rights designed to
protect persons in need" (Factum, paragraph 78).
The appellant and Manitoba, on the other hand,
stressed the second part of the recital in the
preamble: "the Parliament of Canada . . . is
desirous of encouraging the further development
and extension of assistance and welfare services
programs throughout Canada by sharing more
fully with the provinces in the cost thereof'
[Emphasis added.] On this view the Federal Gov
ernment had only twelve clients: the ten provinces,
and the two territories.
This issue over the object of the statute is
resolved, it seems to me, as soon as one looks at the
relative jurisdictions of the parties. It was common
ground that the area- of public assistance and
welfare services was one that fell under the consti-
tutional competence of the provinces. The only
constitutionally permissible role for the Federal
Parliament, therefore, was to advance funds to the
provinces to assist them in carrying out their
responsibilities. As it was put by Culliton C.J.S. in
Re Lofstrom and Murphy et al. (1971), 22 D.L.R.
(3d) 120 (Sask. C.A.), at page 122, CAP "in no
way restricts the legislative competence of a pro
vincial Legislature in the field of social assist
ance." Parliament's motivation may well have
been to provide adequate assistance to the needy,
but the object of CAP was the more modest goal
of contributing to provincial costs with respect to
such assistance. The Act is therefore not one in
respect of public assistance, but as its full title
indicates, "An Act to authorize the making of
contributions by Canada toward the cost of pro
grams for the provision of assistance and welfare
services to and in respect of persons in need."
Nevertheless, although full jurisdiction remains
with the provinces as to public assistance, in sec
tion 6 CAP clearly establishes certain conditions to
which, as section 7 says, all CAP payments are
subject. Subsection 6(1) spells out provisions that
must be included in federal-provincial agreements,
and subsection 6(2) lists seven undertakings that
provinces must enter into in their respective agree
ments. Paragraphs (a) and (b) of subsection 6(2)
are at the heart of the controversy in the case at
bar. By paragraph (a) a province must agree that
it will provide financial aid to every person in need
"in an amount or manner that takes into account
the basic requirements of that person".
"Basic requirements" and "persons in need" are
both defined in the definition section, but in suf
ficiently general language that it is clearly left to
each province to determine in concrete terms what
are the basic requirements of persons in need. As I
read section 6, it also respects the constitutional
jurisdiction of the provinces.
The verbal phrase "takes into account" is, how
ever, one that requires exact definition, since it can
mean either "consider" or "meet". The French
version is of no help: dans une mesure ou d'une
manière compatibles avec ses besoins fondamen-
taux. The word compatible, which has a meaning
something like the English "compatible," is obvi
ously used in a strained and inexact way. More
over, in the very next line, in paragraph (b), "will
... take into account" is expressed by tiendra
compte. This variation in French expressions pro
vides no help in understanding the exact sense of
the phrase.
A person may certainly take something into
account without entirely adopting it. As used with
a person, mere consideration may well be the
predominant meaning. But here the phrase is "an
amount or manner that takes into account his
basic requirements". For me this phrasing has
more the meaning of "fulfil" or "meet", since it is
hard to see how an amount, unlike a person, could
take something into account without more or less
satisfying it. On a textual basis, therefore, I am
inclined to the view that the amount of financial
aid must be such as to enable the recipient to meet
his/her basic requirements (the exact amount of
the aid obviously depending on the recipient's
income and resources).
It seems to me that this interpretation also
makes more sense of the sum total of paragraphs
(a) and (b). Paragraph (a) requires the payment
of financial aid in an amount meeting "basic
requirements"; paragraph (b) provides for a needs
test by subtracting a person-in-need's income and
resources from his "budgetary requirements".
Since budgetary requirements is defined by sub
section 2(2) of the CAP Regulations to mean
"basic requirements" plus other items and services
determined as "essential" by the provincial author
ity, paragraph (b) has a broader reach than para
graph (a), and on the alternative interpretation of
paragraph (a), it seems to me that (a) would be
redundant.
I should also observe that the concept I have just
interpreted in paragraph (b) as "subtract" is also
expressed in the text by the words "take into
account". Again, it seems to me that "take into
account" requires that full value be given to both
the person's "budgetary requirements" and "the
income and resources available to him to meet
them".
On this interpretation, paragraph (b) specifies
the manner of computation to be employed in
arriving at the financial aid to a person in need
provided for by paragraph (a), viz. the subtraction
of available income and resources from budgetary
requirements.
As I have emphasized, the interpretation I adopt
in no way lessens the fundamental jurisdiction of
each province to determine how to quantify the
"basic requirements" of a person in need. Manito-
ba has established, in Schedule A to section 5 of
the Social Allowances Regulations, a scale for the
costs of what it calls "basic necessities", according
to the number of dependant adult persons and the
number and ages of the children. Other provinces,
no doubt, establish different scales since the prov
inces are not limited as to their judgment of what
is required to sustain a person in need. All they are
limited by is CAP's condition that, having estab
lished a level of financial aid, they not then
decrease that aid below that person's basic
requirements.
The issue as to the recapture of overpayments is
fudged by the fact that in the SAA Manitoba "does
not use either of the federal terms "basic require
ments" or "budgetary requirements", but instead
makes use of the new phrase "basic necessities",
which is defined in sections 1 and 2 of the SAA. It
was argued that since the SAA authorizes the
payment of "basic necessities", which are said to
be. broader than "basic requirements", there is still
an excess over the federally stipulated minimum
from which deductions for overpayments can be
taken without infringing upon that minimum. In
other words, the deductions would be taken from
non-mandatory requirements. However, particu
larly if the condition as to "basic requirements" in
paragraph 6(2)(a) of CAP is coupled with the
condition as to "budgetary requirements" estab
lished by paragraph 6(2)(b), I find no higher-than-
the-federal standard in the Manitoba legislation.
Both the federal "budgetary requirements" and
Manitoba's "basic necessities" include food, cloth
ing, shelter, health care services, funerals and
"personal requirements".' Indeed, the federal con
cept is slightly larger in that it includes "pre-
scribed items incidental to carrying on a trade or
other employment and other prescribed needs of
any kind" and "travel and transportation". Of
course, a province is not required to provide for all
of these budgetary requirements, since by subsec
tion 2(2) of the CAP Regulations the -extent of
provincial incorporation of federal budgetary
requirements is left to the province for decision.
But given Manitoba's adoption of ' budgetary
requirements like "essential surgical, optical,
dental, and other remedial treatment care and
attention", I fail to find any surplus over the
federally required minimum from which recovery
could take place without imperiling that minimum.
The Province's definition of "basic necessities" is
only the fulfilment of the federal concept of
"budgetary requirements". A drop below basic
necessities is therefore an infringement of para
graph 6(2) (b).
' "Personal requirements", which are included in the defini
tion of "basic requirements" in section 2 of the CAP, are
defined in subsection 2(2) of the CAP Regulations to mean
"items of a minor nature ... that are necessary in day to day
living to a person's health or well-being". It may be presumed
that the phrasing of section 2 of the SAA, "such things, goods,
and services as are essential to his health and well-being»
[Emphasis added.] is intended to include personal requirements
in basic necessities.
In the specific case of the respondent, the sum of
$213.40 is not even for all basic requirements, but,
as indicated supra, only for "food, clothing, per
sonal needs and household supplies". This amounts
to an exact correlation with four of the seven
classes of the federal basic requirements, but
excludes shelter, fuel and utilities. Thus, at least as
far as that sum is concerned, Manitoba cannot be
heard to argue that any amount less than $213.40
could satisfy its obligations under CAP.
Subsection 20(3) of SAA does not in terms
respect the federally imposed minimum, since it
allows the deduction of an amount "that would not
cause undue hardship to the recipient". As the
learned Trial Judge put it (at pages 56-57):
I have difficulty in distinguishing hardship and undue
hardship when the result is a lack of basic requirements such as
food or shelter or clothing. I am satisfied that a lack of basic
requirements causes undue hardship. A lack of budgetary
requirements, that is, care in a home for special care, travel and
transportation or the other items listed in ss. (2)(b) to (h) of
CAP may be considered hardship and not undue hardship. A
lack of the items listed under s. 2(a) causes undue hardship.
In other words, the standard the Province is really
required to meet is not the subsection 20(3) stand
ard of undue hardship. Whatever is meant by
"undue hardship", that concept is not directly
relevant here. It is rather the standard CAP
imposes as a condition, viz., the meeting of basic
requirements, that must be fulfilled.
There is no evidentiary basis in this case for
pronouncing on the extent to which Manitoba has
actually made deductions below the level of basic
requirements in collecting debts for overpayments,
nor is there any need to do so. All that is necessary
to decide on this appeal is whether the test
Manitoba uses in so doing meets the conditions of
CAP. In my opinion it does not.
Saskatchewan, Ontario, and Quebec argued that
it was inappropriate to assess the adequacy of the
subsection 20(3) standard for overpayment deduc
tions by considering a single month in isolation.
After all, it was contended, viewed in a long
enough time span, the recovery process merely
takes back from a recipient of assistance the exact
amount of the excess in payments • he received. In
other words, there is an exact set-off, as seen over
a longer period. But it must not be imagined that
persons in need have continuing access to a surplus
pool of income remaining after their basic require
ments have been satisfied, and by paragraph
6(2)(b) of CAP it is only the "income and
resources available" to a person in need which can
be taken into account. Not only are human needs
not so neatly categorized and restrained, but the
unpredictable, even arbitrary, computations of
overpayments in the case of the respondent at bar
show how impossible it would be for a recipient to
plan his budget rationally in relation to such
adventitious events. Moreover, it is Manitoba itself
that has adopted a monthly unit of computation
for payment. Why should it have the option, in the
case of recapture, to recover over, say, a ten-year
period what has perhaps been received in a single
month?
Saskatchewan, Ontario and Quebec also said
that it would be illogical to forbid a province from
recovering overpayments when it could achieve the
same effect by simply lowering its assessment of
basic requirements in the province by 50%, or
indeed by any other proportion of the current level.
But whatever powers a province has in this respect
would have to be exercised generally, and not in
relation to a particular recipient. It can hardly be
supposed that a province would lower its general
rate to strike at a particular recipient or recipients,
or for any purpose other than a general and bona
fide one.
To hold that a province does not have the right
to recover overpayments from recipients of assist
ance on the basis of subsection 20(3) or on any
basis that does not satisfy the conditions of the
Canada Assistance Plan admittedly renders dif
ficult the recovery of overpayments, a recovery
which is in effect forced upon the province by the
Federal Government. 2 Of course, a province will
always have a remedy in the case of fraud,' or
where the recipient has access to other income or
resources. But it must not be blithely supposed
that it is necessarily in the public interest to bleed
those who live at or below the poverty line as a
purgative for social health, even if the bleeding is
only a little at a time and only once a month. Such
attempted disincentives to abuse may well be as
socially harmful as the reputed disease.
In one respect I believe this Court on appeal
must interfere with the discretion of the Trial
Judge, on the principle of Osenton (Charles) & Co.
v. Johnston, [1942] A.C. 130 (H.L.). The enjoin
ing of all payments to Manitoba under CAP would
not only jeopardize the entire social allowances
program in the province, but would also cut off
federal funding for all programs cost shared under
CAP, including child welfare. Such a consequence
would in my opinion be totally out of proportion to
the mischief sought to be remedied by the respond
ent. Moreover declarations are invariably
honoured by governments and I see no necessity
for other relief.
In the result, I would dismiss the appeal as to
the declaration and allow it as to the injunction.
The judgment of Teitelbaum J. should therefore be
varied to read that payments of contributions by
the Minister of Finance and certificates by the
Minister of National Health and Welfare pursuant
to section 7 of the Canada Assistance Plan to
Manitoba are illegal so long as the Social Allow
ances Act continues to authorize reducing an
allowance below the level of basic requirements to
collect debts and so long as Manitoba permits its
2 Manitoba's overpayment recovery plan was approved by the
Federal Government and effectively included in the 1967
Agreement.
3 I have in mind fraud charges under the Criminal Code or
quasi-criminal charges under the SAA.
municipalities to establish their own rates of assist
ance independently of the provincial authority.
* * *
The cross-appeal relates to the setting of rates of
social welfare by Manitoba municipalities and to
costs.
It was said in argument that Manitoba is one of
three provinces with a two-tier system of assistance
and welfare and the only one that does not require
provincial approval of rates set. Among its munici
palities the City of Brandon is apparently the only
one that establishes a rate as high as that of the
province.
The Trial Judge held on the question of rate-set
ting by municipalities (at page 58):.
I am satisfied that the province does not, in virtue of the CAP
or ... the agreement between the Province of Manitoba and
Canada, have to set the rate of welfare payment by a munici
pality nor does it have to expressly approve the rate. So long as
the test for determining basic necessities in a municipality is
equivalent to that found in the Social Allowances Act, then
there can be no breach of CAP nor of the agreement between
the Province and Canada.
Furthermore, I am satisfied that since the administration
services of CAP are left to the province, the province can allow
a municipality to set its own rates of welfare assistance provid
ing the proper needs test is applied.
There is, perhaps, no reason in principle the
Province could not have different rates for differ
ent municipalities or delegate the rate-setting to
the municipalities themselves, provided that the
level of , basic requirements were respected. The
numerous references in CAP itself to municipali
ties shows that they were intended to be a part of
the system.
However, the appellant on the cross-appeal
raised a much narrower issue, arguing that munic
ipal rate-setting amounts to a major breach of the
Province's undertaking to provide all persons in
need in the Province with their basic requirements
as determined by the authorized provincial
authority.
The definition of "person in need" in section 2
of CAP provides for a needs test "established by
the provincial authority". That term is in turn
defined as "the provincial Minister or other offi
cial or body specified by the province" in the
relevant agreement. The 1967 Agreement in para
graph 1(b) states that "The Minister of Welfare is
the provincial Minister charged with the adminis
tration of the provincial law".
The respondent on the cross-appeal and Manito-
ba argued that CAP effectively left the designation
of the provincial authority to the province, and
that designation was carried out by the 1967
Agreement. They did not deny that the Minister of
Welfare neither set nor approved the municipal
rates, and admitted that the municipal rates were
established on a different basis from those of the
Province, but they pointed out that even the pro
vincial rates were set not by the Minister, as
required by the Agreement, but by the Lieutenant
Governor in Council on the recommendation of the
Minister. In short, one violation was no worse than
the other. In effect, it was said, this is a matter of
contract, and since the two contracting parties are
satisfied, no one else has a right to complain. The
dictum of Spence J. for the majority in LeBlanc v.
City of Transcona, [1974] S.C.R. 1261, at page
1268, an action against a Manitoba municipality
for supplementary social welfare, was cited as
authority:
It may be argued that the Province of Manitoba when paying
a proportion of the municipal assistance paid out by the City of
Transcona is not providing for persons in need in accordance
with that requirement in the Canada Assistance Plan in that
the schedule applied is not a schedule made by the province.
That, in my view, is a matter which must be settled between the
Province of Manitoba and Canada and can have no application
to an appeal by the present appellant against the refusal of the
City of Transcona to grant him a municipal allowance.
It would seem to me, however, that in the case
at bar any question as to whether the cross-appel
lant has the right to challenge even matters of
contract between the Federal Government and the
Province has been preempted by the Supreme
Court of Canada, which recognized the cross-
appellant as having public interest standing for
purposes of this case: Finlay v. Canada (Minister
of Finance), supra.
NAPO also argued in the alternative that the
LeBlanc case, which held that Manitoba munici
palities could not be obliged to pay the provincial
rate of assistance where it is higher than their own,
should be overruled. However, in my opinion this
Court lacks the power to do so, and I need not deal
further with this issue.
I would, however, issue a declaration that all
social assistance rates under the Canada Assist
ance Plan and the 1967 Canada-Manitoba Agree
ment are required to be established by the desig
nated provincial authority. The arguments against
an injunction as well as a delaration are the same
as those on the main appeal.
Since I do not agree with the Trial Judge that
the overpayments to the respondent/cross-appel
lant were caused by his own deliberate actions, I
would grant him his costs both below and on the
combined appeal/cross-appeal. Moreover, as he
was recognized as having standing as a public
interest plaintiff, I would grant those costs on a
solicitor-client basis. One-half of these costs should
be paid by the appellants, the other half by the
Attorney General of Manitoba.
The judgment in this case should be suspended
pending appeal, pursuant to Rule 341A(4) [Fed-
eral Court Rules, C.R.C., c. 663 (as enacted by
SOR/79-57, s. 8)].
PRATTE J.A.: I agree.
HUGESSEN J.A.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.