Reimbursement of Insurance Premium

The employee grieved the requirement to repay a mortgage default (CMHC) insurance premium and associated costs, as communicated to him in an e-mail of May 30, 2001. The grievor maintained that the requirement was unfair and unreasonable in the circumstances. The grievor requested that the requirement to repay the insurance premium and associated costs be withdrawn.

This premium was paid in relation to the house the grievor purchased in Location X. The Department's position for seeking reimbursement is:

• Reimbursement of Canada Mortgage and Housing Corporation (CMHC) fees is based on the equity of the former principal residence and how much this equity is transferred to the new residence;
• Since the residence had not been sold, the department could not determine the equity (section 3.8.7);
• The equity was not transferred fully to the new residence (section 3.8.8);
• The two-year relocation period, ending August 2000, passed (section 3.1.2);
• The grievor's residence was not listed with a licensed real estate broker since June of 1999 (section 3.4.1);
• The grievor's residence was a duplex. If he occupies one unit as principal residence, and sells the building on relocation, only those parts of the costs related to the home unit may be reimbursed. Had he been entitled to the CMHC reimbursement, he would have been entitled to half of the cost (section 3.4.1(f)).

The Bargaining Agent representative presented the following background information.

In the summer of 1998, the grievor resided at Location X. That summer he secured another position at Location Y. The Relocation Counsellor, in a note to file, remarked that the grievor consulted with her to discuss his relocation and sale of his house.

The grievor put his house for sale in September 1998. On the advice of his real estate agent, a price value was listed for his home. In January 1999, he lowered that price. He had not received any offers on the house and to complicate matters, during a windstorm, his neighbour's tree fell on his house, causing significant damage, which because of a dispute between insurance companies, was not repaired until January 1999. In January 2000, he again lowered his price, then again in June 2000. Despite these reductions, he did not succeed in selling his house.

In February 1999, the grievor who was renting a house at Location Y, enquired about buying a house in that location. The response he received was put in the context of the Temporary Dual Residence Assistance (TDRA), stating that the duplicate costs of making an unconditional offer on a house before having sold the former house may not be fully covered by TDRA.

The grievor found a residence at Location Y and inquired about receiving the Mortgage Default Insurance Premium (commonly known as the CHMC insurance). He was notified that he qualified for the premium.

The grievor then requested an extension of the TDRA and it was granted. The house was purchased, with a closing date of April 30, 1999. Because he only had a 5% down payment, a CMHC premium was paid on the purchase.

In January 2000, the grievor received an email reminding him that he would have to pay back the CMHC premium on the sale of his property if it was in excess of 25% of the purchase price. He was also informed that the Department would require a copy of the sale agreement to calculate the percentage of coverage and that the "two-year deadline" to dispose of the property at Location X was August 21, 2000. Failure to meet this stipulation of the Relocation Directive would mean the grievor would have to reimburse the department.

This came as a shock to the grievor. He had never been advised that he would have to repay the CMHC premium if he did not succeed in selling his house at Location X. He had indeed acquired the residence at Location Y within two (2) years of his relocation. He therefore met the conditions of the Directive. As he had not managed to sell his house at Location X, he had no equity to apply to the purchase. His only contribution was financial: a 5% down payment.

The Department is claiming reimbursement of $5032.85 (the CMHC premium with taxes).

The Bargaining Agent representative maintained that the grievor acted in good faith on the basis of the advice he was provided. He purchased a house with a 5% down payment because he was told that he qualified for the CMHC premium. He was to apply the equity from the sale of his house once it was sold, but he was never able to sell it. Because he relied, to his detriment, on the information provided, the employer should not proceed with the recovery of the CMHC premium.

The Departmental representative argued that the grievor is not entitled to claim for reimbursement of the mortgage default insurance premium and associated costs of the Relocation Directive and the Relocation Guide.

The grievor was provided with a copy of the Relocation Directive and advised that it was his responsibility to become familiar with and adhere to the entitlements and restrictions contained within this Directive. In addition, he was provided with information regarding the Guaranteed Home Sale Plan (GHSP) including criteria for participation, as specified in the Relocation Directive 2.11.2 under Temporary Dual Residence Assistance (TDRA), as well as any financial limitations if he was not participating in the GHSP.

At the time, the grievor indicated that he would like to participate in the GHSP; however, he acknowledged that he did not qualify and could therefore not participate.

The grievor bought a house at Location Y in March 1999 and was informed that his entitlement to the Canada Mortgage and Housing Corporation mortgage insurance premium reimbursement was conditional upon the selling of his property at Location X, as this was the only way the department could determine his equity. The grievor submitted a claim for and was reimbursed $5032.85 to cover the above referenced mortgage insurance premium in accordance with sections 3.8.7(a)(b)(c) of the Relocation Directive.

In January 2000, the grievor was reminded that the deadline to dispose of his property at Location X was August 31, 2000. During this time and given the real estate market in the area, the grievor chose not to renew his contract with the real estate broker and decided to rent the property at Location X.

The Departmental representative advised the Committee that as the grievor had not sold his home at Location X and the two-year limit had been surpassed, a letter was sent in May 2001, requesting reimbursement of the $5032.85, which had previously been paid to cover the CMHC mortgage insurance premium. The grievor had been provided with copies of the applicable Relocation Directive, had been advised of specific sections which pertained to his situation and had been reminded of the two-year time limit on two separate occasions.

The Departmental representative concluded that the grievor was fully aware of the conditions specified in the Relocation Directive and regardless of the difficulties he faced in relation to selling his property at Location X, the Relocation Directive provides for a time period which the Department respected. The grievor did not sell his property, therefore, he is not eligible for the reimbursement of the mortgage loan insurance premium and as such, he must repay the monies previously dispensed to cover this expense. The employer clearly applied the Relocation Directive in a fair and non-discriminatory manner.

The Executive Committee considered and agreed with the report of the Government Travel Committee which concluded that there was a shared responsibility on the part of both parties in this matter. Therefore, the Committee agreed that both the department and the employee share repayment equally (i.e., the employee should repay $2,516.42 and the department $2,516.43). The Executive Committee asked that the appropriate financial authority be found to facilitate this outcome.

The grievance was upheld in part.