November 17, 2006
41.4.8
Background
The employee grieved the department's refusal to reimburse the cost of the Mortgage Default Insurance (MDI) premium pursuant to paragraph 9.17 of the Relocation Directive.
Bargaining Agent Presentation
The Bargaining Agent representative stated that the grievor's relocation expenses were governed by the terms of the NJC Integrated Relocation Program Directive (IRPD). The grievor purchased a home at the new location and based on the price of the new home, was required to incur a mortgage that represented more than 75% of the purchase price which, by law, entails the payment of a Mortgage Default Insurance Premium (MDI). The premium paid amounted to $8,179.71 plus $654.38 tax for a total of $8,834.09 and was incorporated into the mortgage. The grievor's financial institution disbursed the funds in one lump sum payment to the Canada Mortgage and Housing Corporation (CMHC).
According to paragraph 9.17 of the IRPD, the grievor was eligible to be reimbursed $3,200.96 of the premium paid as this represented the limit of available funds under the personalized expense envelope. The grievor was denied reimbursement for the eligible portion of the MDI premium on the basis that it was not the intent of the directive to reimburse the premium if it had been incorporated into the mortgage.
The representative contended that the intent of the Directive had been met as the MDI premium had been paid to CMHC in one lump sum. The method of repayment to the bank of the value of the premium should not be a factor in determining whether the premium was reimbursed.
Departmental Presentation
The Departmental representative stated that the grievor received an interpretation from the Treasury Board Secretariat (TBS) and was advised by Royal Lepage (who administers the Relocation directive on behalf of the Employer), that adding the amount of the MDI to the grievor's mortgage was contrary to the "intent of the directive" and that he would not be entitled to reimbursement.
The representative mentioned that based on the recent interpretation of section 9.17 of the NJC IRP Directive received from the Treasury Board Secretariat (TBS), and the circumstances by which the grievor paid the MDI premium, the grievance was denied at the second level of the grievance process.
The representative requested that the Committee review and/or advise on the intent of the NJC IRP Directive in regards to the reimbursement of the MDI.
Executive Committee Decision
The Executive Committee considered and agreed with the report of the Relocation Committee which concluded that the grievor was not treated within the intent of section 9.17 of the NJC Integrated Relocation (IRP) Directive. The Mortgage Default Insurance (MDI) was levied in one payment and paid directly to the Canada Mortgage and Housing Corporation (CMHC).
The Committee agreed that the grievor be reimbursed the MDI to the extent of the remaining available funds in the Customized/Personalized Funds.
The grievance was upheld to the extent described.