THE MIRA NURSING HOME Claimant - v. -, 2016 NSSM 35

Claim No: SCCH-449747 IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Cite as: Mira Nursing Home v. King-MacCullum, 2016 NSSM 35 BETWEEN: THE MIRA NURSING HOME Claimant - and - DANA KING-MacCALLUM Defendant REASONS FOR DECISION BEFORE Eric K. Slone, Adjudicator Hearing held at Halifax, Nova Scotia on May 17, 2016 Decision rendered on May 25, 2016 APPEARANCES For the Claimant William Russell, counsel For the Defendant self-represented

BY THE COURT : Introduction 1 The Defendant is a former LPN who worked for the Defendant nursing home from May 2010 to March 2013. During that time she was in a union position and was represented by Unifor. During some of that time, she (along with all other employees) were working under an expired Collective Agreement while a new one was being negotiated. 2 Some time after she left the Claimant ’ s employ, the Defendant learned that the new Collective Agreement had been signed and that all employees were entitled to retroactive raises. She initiated a request for her retroactive pay.

To her evident surprise, she was told that, in fact, she owed the Employer money because they had been inadvertently paying her too much for approximately the last two years of her employment. 3 She was initially told by an administrator that the amount she owed was $1,058.60.

She was sent a handwritten document that calculated the overpayment at $2,655.03, which - after deducting the retroactive pay of $1,596.43 - resulted in her owing $1,058.60. 4 The Defendant refused to pay because, in her view, the mistake was made by the Claimant, and not by her, and she felt that it was not fair to make her pay back money she had received in good faith. 5 By the time the matter reached court, the amount owing had almost doubled to $2,033.31.

A more senior employee, Douglas Wyle, did a much more thorough calculation and produced a spreadsheet that shows all of the salary that the Defendant had received during her employment. What his analysis showed was that sometime in about August 2011, her hourly rate was increased from $21.910 to $23.531, without any apparent reason. It remained at that artificially high rate throughout her employment. In March 2012, her rate would have gone up slightly from the $21.91 to $22.41, which meant that the rate of overpayment slowed but did not vanish. 6 Mr.

Wyle figured out also what the correct rate should have been, including the retroactive pay raises, and came up with the net owing of $2,033.31. This appears to be a gross figure. If the Defendant is ordered to pay this back, there will be issues of income tax and other deductions from income that would have to be dealt with. 7 However, the there are several threshold questions: a. Does this court have jurisdiction to entertain the claim? b. Factually speaking, was there an overpayment? c. If so, is the Claimant entitled to recoup this overpayment?

Jurisdiction 8 The question of jurisdiction arises because the parties were in a unionized relationship, and there is a great deal of case law at the highest level stating that disputes arising under a collective agreement must be determined by an arbitrator. It appears, however, that there is still a sliver of jurisdiction left to the courts to deal with matters that have nothing to do with the collective agreement and cannot be said to “ arise from it. ” Assuming the Claimant is correct, all that happened was a clerical error and money was paid to the Defendant in a mistaken belief that she was entitled to it.

Had the Defendant still been an employee, I believe the Claimant ’ s recourse would have been through the grievance process. But given that they are no longer in such a relationship, the availability of arbitration is highly

dubious. 9 I am satisfied that sending this matter back to be dealt with by an arbitrator is neither correct, nor practical. In that scenario, theClaimant would have to launch a management grievance against the union, who (in turn) would be obliged to answer to it. What then? The Defendant is no longer an employee of the Claimant and no longer a member of Unifor. The Union has no ability to recoveranything from the Defendant. I see no pathway for the Claimant to recover its money using that procedure, which satisfies me that thejurisdiction of the court is not ousted in this very unusual situation.

It is axiomatic that every right must have a remedy, and this claimseems to be the only remedy available. Was there an overpayment? 10 This question is not without its complexity. The calculations were done once by the administrator, with a very different resultthan that arrived at by Mr. Wyle. Nevertheless, I am satisfied that Mr. Wyle did his calculations carefully and that he is correct.

Thefact that the correct amount is almost twice what the Defendant was initially told is, is confusing to the Defendant and ought to beembarrassing to the Claimant, but the numbers do add up. 11 The Defendant did not make any effort at the hearing to question the numbers, so the weight of the evidence favours theClaimant. Is the Defendant obliged to repay what she was overpaid? 12 There are two legal theories that assist the Claimant. One is “money paid under honest mistake of fact” while the other is“unjust enrichment.” 13 The Defendant’s position is that she should not suffer from someone else’s error.

There is some moral force to that. I believeher when she says that she never questioned her pay, and assumed that the Claimant knew what it was doing. She says she did not lookthat carefully at her pay stubs, which is plausible. Assuming she noticed the raise, she would not have been inclined to look a gift horsein the mouth. 14 Although the Defendant did not specifically say this, I expect that she budgeted according to what she was being paid andprobably did not save up for the eventual refund she would be obliged to make.

Having to dig into other funds, or go into debt to repaythis money, may indeed amount to a hardship. There was no specific evidence to that effect, but even if there was the law has not showna great deal of sympathy for such factors. 15 The concept of recovering money paid under a mistake of fact has probably existed in some form for centuries. Even so, it hasbeen commented upon by courts as issues arise that test its parameters. Some twenty years ago, in Wolfson v.

Corkum, (NS SC), Associate Chief Justice Palmeter of the Nova Scotia Supreme Court set out the law on mistake of fact: Money honestly paid under a mistake of fact can be recovered, even though the person paying it did not avail himself of the means ofknowledge which he possessed - see: Kelly v. Solari (1841), 9 M & W. 54, 152 E.R. 24; followed in Ste. Rose v. Royal Bank, (MB KB), [1928] 1 W.W. R. 663 (Man. K.B.). In the St. Rose case Dysart, J. set forth the criteria necessary to be met beforemoney can be recovered by virtue of mistake of fact at pp. 712-13: "First that the mistake is honest.

There must be on the part of the person paying the money the genuine bona-fide belief that certain factsexist which really do not exist. It is not what he ought to believe or what he ought to have learned. His laches or negligence will not ofthemselves affect his belief. Knowledge will not be imputed to him; however ample may be the means of knowledge which he has onhand, or however readily accessible those means may be, they do not constitute knowledge; and knowledge will not be imputed to him orinferred against him, unless he wilfully abstains from enquiry . . .

The second condition is that the mistake must be as between the person paying and the person receiving the money. In other words, thereceiver must in some way be a party to the mistake, either as inducing it, or as responsible for it, or connected with it. . . The third condition is that the facts, as they are believed to be impose an obligation to make the payment; The fourth condition to recovery is that the receiver of the money has no legal or equitable or moral right to retain the money as againstthe payer. This proposition is not the exact converse of the third condition.

The money may be owing to the receiver from a third personwho has induced the payment, but the existence of such a debt is not enough to defeat recovery . . ." 16 I believe that the Claimant here can fit these criteria. a. The Claimant honestly (even if carelessly) believed it owed the Defendant the money it was paying over the years; b. The Defendant was a “party” to the mistake, in the sense that she pocketed the money; c. The payments were made pursuant to a believed legal obligation, namely the payment of salary; d. The Defendant has no legal or equitable or moral right to retain the money.

Although it may seem unfair, the money was neverhers to keep and this does not, in my view, amount to a sufficient right to defeat the Claimant’s right to recovery. 17 On this basis alone the plaintiff should recover; however, there is a second reason for recovery and this is that the defendant hasbeen unjustly enriched. 18 The criteria for unjust enrichment has been set out by Dickson, J. (as he then was) in Pettkus v. Becker, (SCC),[1980] 2 S.C.R. 834: " 'Unjust enrichment' has played a role in Anglo-American legal writing for centuries. Lord Mansfield, in the case of Moses v.

Macferian(1760), 2 Burr. 1005 at p. 1012, 97 E.R. 676, put the matter in these words: ' . . . the gist of this kind of action is that the defendant, uponthe circumstances of the case, is obliged by the ties of natural justice and equity to refund the money'. " and further, at pp. 273-74: ". . . there are three requirements to be satisfied before an unjust enrichment can be said to exist: an enrichment, a correspondingdeprivation and absence of any juristic reason for the enrichment.

This approach, it seems to me, is supported by general principles ofequity that have been fashioned by the Courts for centuries . . ." 19 Under this test, the Defendant also cannot overcome the Claimant’s right to recovery. She has clearly been enriched, in the sensethat she received more money than she was due. The Claimant has been deprived of this money. Lastly, there is no “juristic” reasonwhy the Defendant should be entitled to keep the money. 20 The meaning of “juristic reason” was discussed in Garland v. Consumers Glass Co., 2004 SCC 25 , where Iacobucci J.stated:

44 .....the proper approach to the juristic reason analysis is in two parts. First, the plaintiff must show that no juristic reason from an established category exists to deny recovery. By closing the list of categories that the plaintiff must canvass in order to show an absence of juristic reason, Smith's objection to the Canadian formulation of the test that it required proof of a negative is answered.

The established categories that can constitute juristic reasons include a contract ( Pettkus , supra), a disposition of law ( Pettkus , supra), a donative intent ( Peter , supra), and other valid common law, equitable or statutory obligations ( Peter , supra).

If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis. 21 The Court went on to allow for the possibility that there are other categories of juristic reason that a Defendant might raise, but it has the burden of showing that such a reason should be sufficient. 22 I conclude that the Claimant succeeds on the ground of unjust enrichment, as well as on mistake of fact. 23 The Claimant seeks costs of issuing the claim ($99.70) plus $313.63 for service of the claim on the Defendant.

This latter amount involved investigative expenses which appear to have been used to locate the Defendant, although there was nothing before me to establish that the Defendant was avoiding detection. 24 In my discretion, I decline to award any costs to the Claimant. Although costs usually “ follow the event ” the Claimant was responsible for the unfortunate error, and compounded the problem by providing two different sets of calculations to the Defendant. 25 I also have a concern that ordering repayment of the gross amount is only part of the solution.

During all of the time the Defendant was being overpaid, she was subject to deductions for income tax, CPP, EI and whatever other benefits were covered by the collective agreement and were tied to salary. The Claimant is going to have to recalculate her T-4 for at least 2011, 2012 and 2013, allowing the Defendant to re-file her income tax for those years, which logically should generate refunds which will, to some small extent, mitigate the loss to her. There may also have to be other adjustments, for example to her pension, which only the Claimant can initiate.

The Union may have to be involved, in some small way. In any event, it is the Claimant ’ s obligation to see that all of these things are done. 26 As I have said, repayment of the gross amount owing is just a first step, but it is a necessary first step. My order will reflect the fact that the payment of $2,033.31 is to be made, and that the Claimant continues to have the obligation to sort out all of the resulting implications. Eric K. Slone, Adjudicator