On May 23, 2014 the Federal Court of Canada decided the Federal Treasury Board Secretariat’s interpretation of the policy for compensating Canadian Forces members who lose money on the sale of a house due to a posting was unreasonable.

McInnes Cooper’s Dan Wallace represented Canadian Forces Major Marcus Brauer in the first Canadian court challenge of the Treasury Board’s interpretation of this policy. Major Brauer lost $88,000 when he was reposted and forced to sell his home in Bon Accord, Alberta (40 km north of Edmonton). The policy says the Secretariat will reimburse members who sell their home at a loss for 100% of the loss – if the Secretariat decides the “community” is in a “depressed market”.

For two years, Major Brauer pursued full reimbursement of his loss through the Canadian Forces and Treasury Board’s internal processes on the basis Bon Accord is a community in a “depressed” housing market. However, the Secretariat maintained that Major Brauer’s community was the entire Edmonton Metropolitan Area – not Bon Accord – which was not “depressed”, so he was not entitled to full reimbursement for his loss under the policy. Major Brauer’s only recourse was to ask the Federal Court to review the Board’s decision, find it unreasonable, and order it to reconsider it. The Federal Court did just that:

  • Reasonableness. For the first time, a Court decided that the Treasury Board’s decisions interpreting this policy must be reviewed on a standard of reasonableness (as opposed to correctness).
  • Unreasonable Interpretation. The Court decided the Treasury Board’s interpretation of the word “community” for the purpose of deciding whether the market was “depressed” would render the policy virtually meaningless – and was unreasonable.
  • Reconsideration. The Court did not have the power to apply the policy, so did what it could: ordered the Treasury Board Secretariat to reconsider Major Brauer’s request – but also that the “community” is Bon Accord.
  • Legal Costs. In a rare move, the Court also ordered the Federal Government to reimburse Major Bauer for 100% of his legal costs – a higher scale than that which courts normally order.

Click here to read a copy of the Federal Court’s May 23, 2014 decision.