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5. Welfare Security Requirements

(a) General

Welfare may insist on any of a variety of legal commitments by the recipients as 'security' for the payment of benefits in the event that retroactive assets or income ultimately becomes available. The term 'security' is used here in the same manner in which a bank might use it when referring to collateral for a loan.

Lien requirements against real estate owned by members of the benefit unit were abolished in December 2004. Procedures for discharging liens are covered below.

(b) Discharging Liens

. History

Until repealed by a regulation that came into force on 15 December 2004, welfare could in some circumstances require that the claimant or a member of the benefit unit consent to the placement of a lien against their real estate (land or buildings) as a condition of eligibility. This could have been required even if the property was an exempt asset, such as the principal residence of the benefit unit [Act s.12; now repealed]. The effect of the lien was to bar the sale of the real estate until any overpayments had been paid off.

This section is included primarily for its historical value, and in case there are any remaining undischarged liens registered on title.

. Discharging Liens

If the welfare administrator obtained the lien, and if they further registered it 'on title' (ie. in the land titles or land registry office against the property) then recipients are now entitled to receive a lien "discharge" document on request [Reg s.66].

The lien removal is achieved by registering a further document entitled a "discharge" on title. Welfare may register the discharge themselves on title, although legally they can leave it to the claimant to do the registration. Recipients should discuss this issue with welfare to be clear on who is going to do it.

The effect of registering the discharge on title is to cancel the lien. However, any monies paid under a lien prior to 15 December 2004 are not refundable.

(c) "Agreements to Reimburse" and "Assignments and Directions"

. Overview

These are two separate legal instruments, but are usually combined by welfare in a single document, called the "Agreement to Reimburse and Assignment".

They apply when a benefit unit has potential future income which could apply retroactively to it as income, and thus retroactively eliminate or reduce the assistance paid.

Applicants applying on behalf of minors in temporary care (see Ch. 2 "Claimants") may also be required to commit to "Agreements to Reimburse" and "Assignments and Directions" [Reg s.57(8)].

. "Agreement to Reimburse"

The first, an "Agreement to Reimburse", is really a contract between welfare and the recipient/s to payback benefits. It has the legal force of a contract - that is, an entitlement to sue in the courts and the right to impose an overpayment [Act s.19(2)] - but not the strength of a true security such as a lien (discussed above) or mortgage, which is secured as a legal interest against real estate.

As a recipient (and their spouse) is under a legal duty to pay-back any legitimate overpayments assessments in any event, an "Agreement to Reimburse" (by itself) provides little additional security except where the administrator runs into some technical flaw in enforcing their usual "overpayment" procedures. In that case it could form the basis of a civil lawsuit against the recipient.

. "Assignment and Direction"

An "Assignment and Direction" is a stronger form of security than an "Agreement to Reimburse". It is essentially a legal instruction (and permission) for a third party - who owes or may owe money to a member of the benefit unit - to pay that money directly to the welfare administrator. The practical advantage of such a right for the administrator is plain.

The typical situation in which an "Assignment and Direction" is used is where the recipient has a legal claim such as a motor vehicle accident lawsuit against someone. Here welfare would require an 'assignment' of future proceeds from a judgment or settlement and typically send the document to both the recipient's litigation lawyer and maybe also the defendant's lawyer. The lawyers would then be obliged to forward monies in accordance with the Assignment and Direction.

By law, such Assigments and Directions are irrevocable by the recipient [Reg s.15(3)].

. London (City) v. Medina Isovic (Ont Superior Court, 2009)

This case raises a number of issues that to date have yet to be addressed robustly by the courts, although in my opinion the results and reasoning are flawed. The proceeding was an application to the court (not a lawsuit) brought by the municipal welfare administrator to determine the amount of money from a personal injury tort settlement that the recipient had to repay to the administrator for the period that she was on welfare. The actual funds in dispute were held in trust by a legal clinic pending the ruling. The injury occured while the recipient was in receipt of welfare, which at the time she supplemented with employment earnings which were deducted at a 50% rate from her income assistance in accordance with the STEP earnings income exemption rules (see Ch.6, s.3).

The principal amount of the settlement was roughly $21,000 for "wage loss" (nothing apparently for pain and suffering). The recipient argued that the damage award, being in the nature of income replacement, should only be charged against her at half this amount, as would have been the case under the STEP rules if the income had been earned contemporaneously with her receipt of assistance.

The court, in siding with the City, relied in part on the text of the Agreement to Reimburse that the recipient was required to sign as a condition of eligibility, in particular the following provisions:

1. The recipient agrees to reimburse the City of London for all monies paid or to be paid by the City of London to the recipient/beneficiary out of monies which are due and owing or may become due and owing to the recipient or any beneficiary when those monies become payable.

2. The parties agree that the reimbursement referred to in section 1 herein is to be made out of monies which would be included as income under the relevant regulation.

3. The parties agree that the reimbursement amount shall not exceed the amount of assistance received from 25/10/94 to the date this claim is settled or until such time as assistance is terminated, out of any compensation that may be coming to me from Cornerstone Engineering and Armand Morrow [her solicitor].

4. The recipient agrees to execute an Assignment in respect of the monies out of which reimbursement is to be paid on the request of the City of London.

The court continued it's reasoning, citing from the Assignment and Direction form which the recipient was similarly required to execute and provide to the administrator (once again under threat of disentitlement):

[11] Under the separate document entitled Assignment and Direction, Ms. Isovic assigned to the City of London "all right, title, and interest in all monies due and owing to me not to exceed the amount of assistance received from 25/10/94 to the date this claim is settled or until such time as assistance is terminated, out of any payments that may be coming to me from Cornerstone Engineering and hereby direct my solicitor Armand Morrow to forward all monies due less Armand Morrow’s account and the amount payable to OHIP in the amount of assistance received" to the Social Services Department of the City of London.

It then summarized the terms of the Agreement to Reimburse in these terms:

[12] For what did Ms. Isovic agree to reimburse the City under the Agreement to Reimburse? The answer is reimbursement:

1. for all monies paid by the City of London to the recipient out of monies due and owing to the recipient when they became due and payable;

2. out of monies that would be included as income under the relevant regulation;

3. provided it shall not exceed the amount of assistance received from 25/10/94 to the date her claim was settled;

4. out of any compensation that may be coming to her from Cornerstone Engineering and her solicitor.

Characterizing the receipt of income in the settlement as 'notional' earnings, the court held in favour of the City and ordered all income assistance over the relevant period paid back to the City, without any application the 50% STEP earning income deduction - despite the facts that she was working at the date of the injury, and that the injury was the sole cause of her cessation of earnings.

In reaching this conclusion, the court relied expressly on Reg s.15(1), the primary authorizing provision governing Agreements to Reimburse and on the very broad s.48(1) definition of income (which of course described what funds the exemptions would then be applied to in order to determine the material issue of chargeability, or deductibility) [Reg 48(1)] (both of these are quoted here):

15(1)
If money is due and owing or may become due and owing to a member of a benefit unit that, if received, would be or would have been included as income for the purpose of calculating the income assistance available for the benefit unit, the administrator may require, as a condition of eligibility for basic financial assistance, that the member of the benefit unit or the person authorized to act for that member agree in writing to reimburse all or any part of the assistance paid when the money becomes payable.

...

48(1) Subject to sections 49 to 54, income shall be determined for a month by adding the total amount of all payments of any nature paid to or on behalf of or for the benefit of every member of the benefit unit during the period determined by the Director.

The court acknowledged the 50% STEP exemption for wage earnings set out in Reg 49(1)1 but distinguished wage earnings within a true employment relationship (on the one hand) from compensation for loss of earnings (on the other hand). On this basis it held that the STEP exemption did not apply. It stated it's view that the non-application of these exemptions was in fact consistent with the purpose of the STEP exemptions, and that such a purposive interpretation overrode the principle [expressed in Rizzo v Rizzo Shoes (SCC, 1998)] that any ambiguity in social benefits legislation should be resolved in favour of the benefits-claimant (on the basis that it found no ambiguity in the legislation). I find this ruling problematic from a number of perspectives, which I elaborate on in turn next.

First, from a straightforward purposive statutory interpretation perspective, the intention of the STEP program is to provide an incentive for the recipient to find and maintain productive employment, but here it becomes inoperative due to the unfortunate (and entirely fortuituous) injury suffered by the recipient. As such the incentive effect is nullified in that unpredictable and immaterial circumstance. Incentives are all - and only, about encouraging 'target' behaviour, and their removal for reasons beyond the control of the recipient is inconsistent with their purpose. The only foreseeable response to such arbitrary (and prone to be perceived as capricious) forfeiture of the incentive will be cynicism and resentment - hardly consistent with the maintenance of any incentive.

The second issue is whether this treatment of the funds is consistent within the general framework of other law that such transactions must exist within. On this point the court seems to have accepted the City's submission that loss of actual wages is distinct from compensation for lost wages, and also the related submission that - therefore - the award in this case would not be (income) taxed due to it's status as 'capital income', rather than wage income. The one case (of three cited by the court in support of this tax point) that I have been able to locate online, Jacques v Passey (Alta CA, 1999), does make a distinction between loss of actual wages versus 'loss of earnings capacity', as that distinction was required on the facts of that case. However damages for 'loss of earning capacity' are plainly distinct from damages for lost earnings, as was the case here. Loss of earning capacity is a much more notional, speculative form of damage (contingent on one's employment prospects rather than one's actual contractual engagements), while damages for lost wages (as was compensated for here) are quite easily ascertainable by simple extrapolation from earnings received at the date of the accident.

Without further criticizing that interpretation of income tax law [not having reviewed the other two cited cases which are not available online through Canlii: Cirella v. Canada (Fed Ct, 1997) and London (City) v Gibbins (Ont District Court, 1989), and not professing to be any sort of tax law expert] it is relevant to note that damages for lost wages are treated as retroactive wage payments for all collateral benefit schemes that I am aware of: wrongful dismissal claims, private disability insurance, employment insurance, WSIB, human rights awards and so on. The reasoning applied here would thus doubly penalize any recipient who was also in receipt of such other wage replacement income by reason of the same injury by requiring them to both disgorge the full amount of lost wage damages to the collateral benefit provider, and again to welfare itself. And that's assuming that the income tax treatment is as it was advanced by the City.

Thirdly we have the court's flawed interpretation of Reg 15(1) [quoted above]. Reliance on s.15(1) for the conclusion that these settlement funds can be counted as welfare "income", without application of the STEP earnings deductions, relies on erroneous reasoning. The operative phrasing of s.15(1), which defines what funds may be subject of the Agreement, captures money that "may become due and owing to a member of a benefit unit that, if received, would be or would have been included as income for the purpose of calculating the income assistance available for the benefit unit" [author's emphasis]. The reference here to the calculation of income assistance refers expressly to the operation of the normal income treatment calculation rules, of which the STEP exemptions are a key part. So for the court to focus on the broad, pre-exemption definition of income in Reg 48(1), as it did, misses the limited scope of the authority that Reg 15(1) grants to the administrator to extract reimbursement Agreements from recipients.

The fourth issue is that, to the extent that the court relied in it's reasoning on the wording of the Agreement to Reimburse (from which it quoted extensively) it conflates the legislative authority granted to the administrator to require such an agreement (on the one hand) with the terms included in these administrator-drafted forms (the administrator who is an interested party in such proceedings). As well, it must be kept in mind that the recipient's execution of these forms is required of them under threat of disentitlement. Welfare, by both practical and legal reality, is the last line of defence between recipients and the street.

Both the SBT and the courts must be careful to read such administrator-drafted documents down strictly in light of their legal authority. To do otherwise is to allow the administrator to illegally extort additional terms from a recipient at threat of disentitlement.

And of course this is precisely what happened here. The court, relying on the wording of the Agreement to Reimburse, fully missed the fact that the document exceeded the statutory entitlement of the administrator in that it lacked the essential reference to the calculation of income assistance that Reg s.15(1) itself embodies: ie. "income for the purpose of calculating the income assistance".

Anyone arguing that such an Agreement is purely contractual in nature, and should be interpreted as such, has no realistic perception of the plight and immediate hand-to-mouth circumstances of welfare recipients. Moreover if they are to continue with such an argument, they are obliged to also take into account the standard contractual legal principles of contra proferentum (that ambiguity in a contract will be read against the party that imposed the terms in dispute) and relief from unconscionable bargains (duress, unequal bargain power - do I really need to go on?).

This was simply a bad judicial decision.

(d) Subrogation

. Overview

In it's usual non-welfare form, "subrogation" is the right of an insurer to enforce the tort claims held by an "insured" (ie. the policy-holder) against anyone who has caused harm that the insurer has had to compensate the "insured" for. Basically, an insurer is 'given' the insured's right to sue, though normally such lawsuits are advanced in the name of the insured.

Welfare adopts the same principle, giving an administrator a "subrogated" right to pursue a claim against a wrong-doer when a benefit unit member suffers a loss as a result of someone's act or omission (legally, a tort) and this results in assistance being paid [Act s.70].

. Amount of Subrogation

The amount of the subrogated claim by the adminstrator is limited to the amount of monies spent in past (and anticipated to be spent in the future) under any provincial social assistance program (eg. Ontario Works and ODSP and their predecessors).

. Where Recipient Sues

If such a tort claim is made by the member of the benefit unit, they must notify the administrator of this promptly.

In practice, while the administrator has the right to commence and conduct such a lawsuit themselves, they typically just insist that the recipient pursue it through their lawyer (usually a personal injury lawyer acting on a contingency fee arrangment), as an aspect of their 'duty to realize all available resources' (see s.7 below). Any lawyer engaged by the recipient will likely be sent an "Assignment" (see above) signed by the recipient at the insistence of the administrator, to hold any recovered monies in trust for the purpose of refunding the administrator the applicable welfare assistance paid to the recipient.

. Case Law

In S v K 55 OR (2d) 111 (Ont District Ct, 1986) a court application for support brought by a recipient at the compulsion of the FBA Director was challenged as being "champertous". "Champerty" and "maintenance" are old statutory law principles barring unwarranted or financially-motivated interference in or encouragement of litigation. The court dismissed this argument citing (amongst other things) that as the right of 'subrogation' was also statutorily-based that it trumped the champerty statute, that the champerty statute did not bind the Crown, and that the government had no financial interest in the case as it would have reduced the recipient's allowance anyway if she did not proceed with the application.

(e) Limits to Security Requirements

Of course, any "Agreements to Reimburse", "Assignments and Directions", overpayments and civil claims can only cover what welfare is entitled to have repaid. Income and assets that would be exempt from assessment as deductible income or exempt assets are still exempt for purposes of determining any retroactive amounts owing under such arrangements.

(f) Family Support Workers

Welfare may employ "family support workers" who have authority to explore, negotiate and enter into support arrangements with those under a court order or agreement duty to support claimants or members of their benefit unit. They may also assist a claimant with such court proceedings and agreements, commence related court proceedings themselves, and investigate into, inquire into and gather, disclose and use personal information as needed to perform their duties [Reg s.65.1].

Case Note: Elliott v Dalbergs (Ont Family Court, 2010)

The case of Elliott v. Dalbergs (Ont Family Ct, 2010) involved a requirement made on a recipient (under threat of disentitlement) by a welfare administrator and through family support worker, pursuant to the recipient's duty to realize all available resources [Reg 13(1)], that the welfare recipient apply to court for a child support order.

The case was dismissed on DNA evidence that the respondent was not the father. The issue then arose as to whether the municipality, having compelled the application in it's capacity as the welfare administrator, should be liable for the respondent's costs.

While holding the applicant-recipient to be liable for costs, the court also ordered a costs hearing to determine if the welfare administrator should bear costs jointly with her. On that issue, the court cited the following related cases for the test for ordering costs against a non-party to the litigation:

[49] It has been held that costs may be awarded against a delivery agent under the Act where the agent: “(1) has instigated and supported the applicant in making the application; (2) has wrongly set this court in motion; (3) has known, or ought to have known, that the [application] was fruitless . . .; (4) has been unsuccessful [in the application]; (5) was effectively identified with the applicant’s application; (6) has effectively controlled the situation and the court process”: see Y.(A.)
v. K.(L.) (1987), 7 R.F.L. (3d) 91 (Ont. Prov. Ct. (Fam. Div.)), at paras. 11-18.

[50] The fact that the delivery agent merely assists the applicant with her unsuccessful application, in accordance with the governing legislation, will not, by itself, render the agent liable to the successful party for costs: see Bristowe v. Keats 2006 CarswellOnt 422, 2006 ONCJ 14 (CanLII), 2006 ONCJ 14, [2006] W.D.F.L.

[51] Where the delivery agent “assumed a controlling role” in the unsuccessful application, such conduct may attract an award of costs: see Edwards v. McIntosh 1986 CarswellOnt 1557, [1986] W.D.F.L 1066 (Ont. Prov. Ct. (Fam. Div.)), at para. 11.

The court also stated:

It hardly seems fair that the Region expects to enjoy all of the benefits of this litigation without shouldering any of the liabilities, particularly when one considers the manifest injustice to the respondent.

6. Trust Funds

(a) Overview

Trust funds can be "testamentary" (ie. created in a will) or "inter vivos" (created while the persons creating the trust still lives). Technically, trust funds are "owned" by their trustees, for the benefit of the "beneficiaries".

A common, but not necessary, accompanying provision in any trust fund arrangement is to pay out the interest at intervals, but only allow pay-out of portions of the principal in special circumstances determined by the trustee. If any monies are actually paid-out (as opposed to being re-invested) to a claimant from a trust fund they will be assessed at that time as to their income impact (see Ch.6 "Income Rules") (normally trust income will be deducted dollar-for-dollar).

The administrator's main concerns with such trust funds are the extent to which the principal of the trust fund can be counted as a chargeable asset, ie. counting towards disentitlement on asset grounds. Recall that the key issue in defining a chargeable asset is whether it is "available" for the support of the benefit unit.

(b) Henson Trusts

It is this issue of "availability" that was the essence of the leading court case on social assistance and trust funds: Ontario (COMSOC) v Henson (reviewed below). When considering the asset impact of trusts on a benefit unit, the first thing that must be done is to determine the type of trust involved: is it a "Henson trust" or a non-Henson trust?

The distinction between the two is whether the claimant has any ability to influence the timing, amount or manner of the release of the money to themselves or any member of the benefit unit for support purposes. The key concept underlying this is whether the trust monies are "available" or "liquid" to the benefit unit for support.

A "Henson trust" is one that gives 'unfettered' or 'absolute' discretion to the trustee as to how to distribute the monies of the trust to the beneficiary of the trust. As such, monies in a Henson Trust are beyond the control of (ie. 'unavailable' to) the beneficiary and are not chargeable assets (or income when first established) for purposes of the asset and income maximums.

In Ontario (COMSOC) v Henson [1987] OJ #1121 (Div Ct); (appeal to CA dismissed), the court held a testamentary trust to be unavailable to the mentally handicapped FBA recipient (and thus not a 'chargeable' asset) where the will directed the trustees:

To pay so much of the income therefrom, or the whole of the income therefrom, together with so much of the capital thereof to or for the benefit of my daughter AUDREY JOAN HENSON as my Trustees shall in the exercise of their absolute and unfettered discretion consider advisable from time to time.

The will further expressed the testator's desire that the trustees maximize the beneficary's entitlement in light of other sources of support (collateral benefits) - effectively urging them to manage the trust in such a fashion as to continue the receipt of social assistance:

Without in any way binding the discretion of my Trustees, it is my wish that in exercising their discretion in accordance with the provisions of this paragraph, my Trustees take account of and in so far as they may consider it advisable take such steps as will maximize the benefits which my said daughter would receive from other sources if payments from the income and capital of the residue of my estate were not paid to her for her own benefit, or if such payments were limited to an amount or time. In order to maximize such benefits, I specifically authorize my Trustees to make payments varying in amounts and at such time, or times, as my Trustees in the exercise of their absolute discretion may consider in the best interests of my said daughter.

In closing, the court held the funds to be unavailable - even by way of compulsion (the normal manner would be a court application against the trustees) - at the hands of the recipient:

In our view, the provision of the will, set out above, gives the trustees absolute and unfettered discretion; the respondent could not compel the trustees to make payments to her if there were not funds available to her under the Family Benefits Act, sufficient to meet her needs. Therefore, in our view, Miss Henson does not have a beneficial interest, as that term is used in the definition of liquid assets.

The Henson case - being endorsed by the Court of Appeal - is strong authority for a 'recipient-generous' interpretation of testamentary trusts. However it demonstrates two further themes that recur in the following cases: the important of the construction of the specific testamentary document being considered, and (frankly) the demeanour of the specific court in which the issue is in front of.

(c) Case Law

These are two sample cases of further court treatment of this issue. There are more, several of which are referred to in Ozad.

. Ozad

In Ozad v Ontario (COMSOC) [1998] OJ #6498 (Div Ct) the court found a testamentary trust to be effectively "available" where the trust deed placed a positive burden on the trustees to support the developmentally-disabled beneficiary/recipient. The court reasoned that this enabled the recipient to take the trustees to court to compel pay-out from the trust. The key phrasing in the will was:

... in my Trustees' absolute discretion, to use such part of the income and/or principal of the fund, during the lifetime of my said son, as my Trustees deem adequate for his support, maintenance and education.

The case places a heavy burden on unsophisticated (and in this case mentally-handicapped) recipients to realize available resources, and seems to be at odds with the principle established in the Henson case - where "absolute discretion" rendered the funds unavailable. However there were further related - and ambiguous provisions in the will - and the court did engage in an extensive review of related case law, including Henson. I suggest that Ozad is essential reading - along with Henson for anyone drafting a "Henson" trust. Ozad lies at the unsympathetic end of the continuum, opposite from Henson.

. Guy

In Guy v Northumberland County [2001] OJ #2166 (Div Ct) the OW recipient and her brother were joint trustees over two trust funds for the recipient's children. While the recipient never declared the trust funds, the court held that - on examination of the construction of the will - that it was the testator's intention that the funds accumulate until the children were 24, subject only to encroachment for "the benefit" of the beneficiary at the absolute discretion of the trustees. The court considered and distinguished Ozad, reaching the conclusion that the beneficiaries would not be able to force encroachment on the principal by the trustees through the courts.

(d) Caution

Whether a trust is a Henson Trust or otherwise, or the extent to which monies in a trust are available to the benefit unit, is always a matter of a careful review of the Trust deed by someone who knows what they are doing, such as a lawyer or experienced trust counsellour.

When considering creating a trust for someone who is or might become a recipient, careful and informed planning is similarly required.

In such situations special attention should be paid to the extent to which any current recipients are consulted about the form of the trust. Current recipients are under a 'duty to realize all available financial resources' (see s.7, below) and as such their efforts to "shield" potential trust assets from availability may be viewed as illegal from both eligibility - and prosecution - perspectives.

Note that the Ontario Works Act makes it a prosecutable offence to "obtain or receive" and to "aid or abet" another to "obtain or receive" assistance to which they are not entitled [Act s.79]. Related prosecutions may also be available under Criminal fraud and conspiracy provisions.

(e) Trust Funds and ODSP

Note that for ODSP recipients, any trust (even a non-Henson one) is subject to a $100,000 asset exemption [or rather, the combination of any inheritance trust (ie. either a testamentary or inter vivos trust) and/or a life insurance-created trust, and the cash surrender value of any life insurance policies cannot exceed $100,000].

This $100,000 ODSP exemption would apply to welfare claimants temporarily as long as they have a pending, first-time ODSP application that has not yet been finally disposed of (see s.3 "Asset Limits Where Pending First-time ODSP Application", above) [ODSP Reg s.28(1) para.19,20 (3)].

Of course, a properly-constructed Henson trust would be completely asset-exempt under either OW or ODSP rules.


7. Duty to Realize Available Financial Resources

(a) Duty to Realize Available Resources

A recipient and members of the benefit unit must make "reasonable efforts to obtain compensation or realize a financial resource or income that the person may be entitled to or eligible for". Failure to do so may result in refusal or cancellation of welfare benefits, or - more commonly - the reduction of assistance by the amount of the available income or resource (see Ch.9 "Administrator Decisions") (ie. the unrealized resource will be "deemed" to be in-pay and deductions or eligibility decisions made accordingly) [Reg s.13].

The "resources" to which this duty applies include both available assets and income (see Ch.6: "Income Rules"). Some examples would be: debts owed to the claimant or a member of the benefit unit, potential litigation awards and auto insurance benefits, other public pension schemes such as WSIB benefits and EI, student loans - and others.

Generally, unless the resource is specifically excluded from this duty (as below), it should be pursued with the means available to the claimant. Inability to pursue resources due to lack of means (eg. can't pay legal costs, etc) may be a reasonable excuse from this duty (though I haven't seen it litigated yet), however the recipient has a duty to advise welfare of the potential asset or income source regardless of their ability to independently pursue the funds.

(b) Some Specific Situations of the Duty to Realize

. Immigration Sponsorships

The welfare regulation specifically mentions immigration sponsorship undertakings as a resource which a claimant should pursue [Reg s.13(2)(a)]. In practice though this is done by the province or federal government itself.

Case Note:
Where a sponsored immigrant makes use of social assistance, the assistance provider has a statutory entitlement, which is contractual in nature, to recover the amount of assistance provided as a debt: Mavi v Canada (SCC, 2011). This right may be enforced by filing a ministerial certificate in federal court, or any provincial court of competent jurisdiction. The decision to pursue debt recovery is subject to a duty of procedural fairness, as follows:

[5] In the exercise of this discretion, which Parliament has made clear is narrow in scope, the Crown is bound by a duty of procedural fairness. The content of this duty is fairly minimal. The Crown is obliged prior to filing a certificate of debt with the Federal Court (i) to notify a sponsor at his or her last known address of its claim; (ii) to afford the sponsor an opportunity within limited time to explain in writing his or her relevant personal and financial circumstances that are said to militate against immediate collection; (iii) to consider any relevant circumstances brought to its attention keeping in mind that the undertakings were the essential conditions precedent to allowing the sponsored immigrant to enter Canada in the first place; and (iv) to notify the sponsor of the government’s decision. This is a purely administrative process. It is a matter of debt collection. There is no obligation on the government decision maker to give reasons. .....

. Student Loans

Government-guaranteed student loans are resources to which a recipient may be entitled "if the member is in full-time attendance at a post-secondary institution" [Reg 13(2)(b)].

On this topic note some instances in which student loan eligibility may render a person categorically ineligible from receiving assistance (see Ch.2 "Claimants: Post-secondary Students"). For income treatment of student loans see Ch.6 "Income Rules: Student and Education-Related Income".

. Canada Child Tax Benefit (CCTB) and Ontario Child Benefit (OCB)

With changes brought about by the introduction of the Ontario Child Benefit (OCB) in July 2008, both of these government supports [CCTB and OCB] became specifically included within the duty to realize available resources [Reg 13(2)(b.1)]. Essentially, at that time the CCTB and OCB - which are generally available even to families not on social assistance - became integrated into the welfare system such that they are (with some minor CCTB exceptions) effectively presumed to be in pay to the recipient. With the OCB this presumption was implemented in welfare law by reducing the basic needs budgetary requirements amount for the children of a benefit unit in accordance with the amount of OCB payable, so that if the OCB is not received, welfare will not make it up.

The main practical effect of this for recipients is that they must ensure that both of these benefits are applied for and current at all times, mainly by keeping their income tax filings current and otherwise applying as required. However, where this is not done, the recipient may be temporarily eligible for transition assistance under the "Transition Child Benefit" (TCB) program [see Ch.6, s.6(e)].

The CCTB and OCB are discussed at more length in Ch.6, s.6.

. Spousal and Child Support

Perhaps the most common available resource or income is spousal support or child support from an absent or sepaarted spouse and parent.

Where a mother refused to co-operate with the Director of FBA in providing information regarding the putative father of her child, the Divisional Court upheld the Director and SARB in refusing to grant her FBA benefits: Re Clifton and COMSOC 53 OR (2d) 33 (Div Ct), both as an aspect of the Director's duty to investigate and verify (much stronger under that legislation) and under the claimant's duty to realize available resources.

In Campbell v Ontario (COMSOC) 71 DLR (4th) 765 (Ont Div Ct) a mother refused to pursue child support from the father of her child. The court upheld the FBA Director's determination that this violated her duty to realize all available resources but sent the matter back to the Board for a proper evidentiary determination of the amount of 'available' support income which was to be deemed as income to the mother (and thus deducted from her cheque).

Welfare law has created a special class of worker: the "family support worker" to assist applicants, recipients and dependents to pursue financial support that may be available to them. In the case of Elliott v. Dalbergs (Ont Family Ct, 2010) the court held that an administrator who compelled the recipient to advance an unsuccessful claim for child support may, in some circumstances, be jointly liable for the legal costs of the proceeding. This case is discussed in greater detail in s.5 above.

. Minors in Temporary Care

Applicants on behalf of children taken into temporary care may also be required to make "reasonable efforts to pursue support from any person with a legal obligation to support the child" [Reg s.57(7)].

. Testamentary Gifts and Trusts

Note from the discussion of trusts (see "Trust Funds", above) that participation by a claimant in the conversion (before the will is drafted, or after it is executed) of potential testamentary gifts (eg. will bequests) into protected Henson trusts may violate this provision - though I am not aware of this proposition ever being legally tested.

As well, the intentional conversion by a recipient of a once-intended gift from the testator into a protected trust, done in order to achieve or preserve welfare eligibility, may be an offence (although - ironically - the administrator may be quite happy to allow this to happen; review their current policy carefully).

(c) Some Exemptions from the Duty to Realize

. Early Retirement Pensions

Opting for early retirement CPP (or QPP) pensions (between ages 60 and 65) is not considered income or resources which trigger the duty to realize herein [Reg 13(2)], but if they are taken early voluntarily then they are chargeable, both as income and assets.

Note:
Old Age Security now has an early (between ages 60 and 65) optional form called the "Allowance". Welfare law has not yet categorized this as exempt from the duty to realize assets, though this may be an oversight and welfare may exempt this 'Allowance' from the 'duty to realize'. Technically however it appears that these "Allowances" are resources which should be pursued in satisfaction of this duty. If this issue arises seek legal assistance promptly.

. ODSP Income Support

Members of the benefit unit are not required to apply for ODSP income support as an aspect of their duty to realize available resources.

. Hardship Payouts under Pension Benefits Act

Some employers offer private pension plan benefits to their employees. Such plans are usually governed under the Ontario Pension Benefits Act (PBA) (except for instance when the employment is federally-regulated such as in air or rail transportation, RCMP, etc).

The PBA provides, with exceptions for short accumulation - and for expectation of death within two years - that the funds in such a plan are 'locked-in', and cannot normally be accessed by the employee until their retirement.

Until recent (year 2000) legal changes to the PBA, a locked-in pension was usually inaccessible by the recipient and thus exempt as both income and asset. However the changes now allow for discretionary ('hardship') releases of the locked-in monies where an application is made to and accepted by the Superintendent of Financial Services, which governs pension matters in Ontario. The applicant must however convince the Superintendent that they meet one or more of the pre-conditions to such a release, which usually involve financial hardship.

Grounds which may justify a hardship release include:

• pending eviction
  
• medical expenses
  
• renovation work on residence necessary due to illness or disability
  
• first and last month's rent
  
• life expectancy of less than two years
  
• income of less than $25,000 per year.

The Pension Benefits Act provides that:

s.66(6)
The entitlement of a person, in his or her discretion, to withdraw money from a locked-in retirement account as defined in the regulations shall not be considered when determining, for the purposes of any other Act, the income or assets available to a person.

While this wording is adequate to exempt such "available" funds from coming under the "duty to realize available assets" (thus allowing a recipient to 'leave them be' without eligibility consequences), their treatment as chargeable income and assets when the funds are accessed is less clear legally because at that point the funds are not just 'available', they are in fact 'in hand'. To my knowledge the legal issue of the impact of PBA s.66(6) on income and asset chargeability has yet to be resolved.

That said, OW Policy Directive 4.7 offers some limited income and asset exemption leniency, in some circumstances, for 'hardship release' funds actually withdrawn (see the section "Locked-In Money Accessed Under the Pension Benefits Act"):

OW Policy Directive 4.7


8. Improvident Dispositions of Assets

(a) Overview

Welfare is concerned that assets are not "spent" irresponsibly, and that the value of property on a sale or "assignment" (any form of transfer) is not purposely undervalued, in order to bring persons within the welfare asset caps. As such welfare is on the watch for "improvident" dispositions of assets, which it defines as situations where [Reg s.32]:

• the consideration for the assignment or transfer was inadequate; or (not 'and')
  
  
• a purpose of the assignment or transfer was to reduce the value of assets in order to qualify for assistance;

Where this occurs, welfare shall refuse, cancel or reduce benefits to achieve the situation that would have been the case if the transactions had not occured. That is, it will 'deem' the assets to still be held, and charge them against the recipient as normal asset rules would dictate.

Such transactions typically take two forms: simple improvident money spend-downs, and improvident transfers.

(b) Improvident Money Spend-down

When a person has been on welfare for a while and then receives a lump sum of some form (say a retroactive motor vehicle accident lawsuit settlement, which could be into the tens of thousands of dollars), it is tempting for them to want to keep the current income stream and as well keep or spend the lump sum. However welfare eligibility can only be legally maintained when the lump sum is spent down in a reasonable and responsible manner - ie. one that is not spend-thrift or wasteful.

In such cases welfare will carefully scrutinize any quick spend-downs as to what they were spent on, receipts, etc. If welfare feels that the spend-down was 'improvident' it will tend to disentitle for the period that the person would have been able to support themselves if they had 'providently' spent the money. When determining the duration of any disentitlement, welfare administrators will not necessarily equate "provident" financial management with survival at the welfare rate, but neither will they be overly generous to someone who they think is trying the scam the system.

That said, welfare is typically generous in tolerating even quick spend-downs for such things as:

• debt repayments;
  
• furniture;
  
• home purchases (if realistically planned);
  
• any disability-related items;
  
• administrator-approved education programs.

I have seen many cases where persons suddenly "enriched" spend money down quickly with poor judgment or manic expectations, or are victimized by those around them by theft or into participation in their suspect schemes. The safest route in terms of preserving eligibility is to present intended expenditures to the welfare worker before they are executed. As well, persons anticipating large sums of money who are in vulnerable situations should consider engaging the aid of a "trustee" well before the money becomes available (see Ch.8 "Procedures and Appeals").

(c) Property Transfers

As mentioned above, "assets" as defined in welfare law include not only cash and money but also most other forms of property including homes, cars, appliances, etc. The classic case of "improvident disposition" of such property would be "selling" a yacht to a brother for a dollar.

Welfare expects such transactions to be engaged in at market value and the proceeds therefrom to be applied for the support of the benefit unit, relieving them of that duty at least for a time.

It is surprising how often improvident disposition schemes occur - and get caught. Welfare recipients are not well practiced at fraud - perhaps that is one reason why they remain poor.

(d) Timelines

Welfare has the automatic right to investigate and examine transactions by any member of the benefit unit made up to a year prior to the application date for inadequate consideration [Reg s.32(3)] "or any time thereafter" (ie. anytime, back a year).

Further, where they have "reason to believe" that such an assignment or transfer occurred more than a year ago, then they can investigate and examine back three years from the application.

(e) Non-Compliance

On violation of this duty, the administrator shall either [Reg s.32(1)]:

• cancel eligibility, or
  
  
• "reduce the amount of the amount of assistance to compensate for the inadequate consideration or the value of the assets assigned or transferred".

For a further discussion of "non-compliance" implications and procedures, see Ch.9 "Administrator Decisions".

(f) Practical Issues

When the administrator learns of the possibility of such a transaction they are likely to issue a request for extensive information and documentation from the recipient (see Ch.5 "Information Eligibility"). If the recipient tries to comply and they are not satisfied with the response then they are likely to disentitle for "failure to provide information", leaving the recipient to fight it out on appeal.

In a situation where there has been fraud or concealment of financial circumstances there can be further complex and serious criminal issues regarding investigation, self-incrimination and the duty to provide information (see Ch.10 "Fraud"). At this point claimant is best advised to seek the assistance of a lawyer experienced in welfare and/or criminal law.