Barrister and Solicitor
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6. 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 ODSP income support, or - more commonly - the reduction of income support in accordance with the available income or resource (see Ch.11 "Director Decisions") (ie. the unrealized resource will be "deemed" to be in-pay and deductions made accordingly) [Reg s.11].
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 - 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 ODSP of the potential asset or income source nonetheless.
(b) Some Specific Situations of the Duty to Realize
. Immigration Sponsorships
The ODSP regulation specifically mentions immigration sponsorship undertakings as a resource which a claimant should pursue [Reg s.11(2)(a)]. In practice though this is usually pursued by the province or federal government.
Case Note: . Education-Related Funding
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:
 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. .....
Government-guaranteed student loans are resources to which a dependent adult in the benefit unit may be entitled (and must therefore pursue) "if the member is in full-time attendance at a post-secondary institution" [Reg 11(2)(b)].
Note that this provision, by failing to cover all members of the benefit unit [as the parallel welfare (Ontario Works) provision does] - plainly exonerates other members (such as the recipient and spouse) of the benefit unit from the duty to realize available student loans. However for any such persons pursuing this eligibility, typically (at the discretion of the Director) any education-related funding is an exempt asset [see s.3(f) "Asset Rules: Asset Exemptions: Student Funding", above].
For the treatment of such funding as income see Ch.7, s.10 "Income Rules: Student and Education-Related Income".
. Spousal and Child Support
Perhaps the most common available resource or income is spousal support or child support from an absent 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).
ODSP 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.
. 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 11(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 ODSP 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 to such a degree that the basic needs budgetary requirements amount for the children of a benefit unit were reduced in proportion to the amount of OCB payable, so that if the OCB is
NOT received, ODSP will not make it up (but see the "Transition Child Benefit" below).
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.7, s.6].
. Testamentary Gifts and Trusts
Note from the discussion of trusts (see s.5: "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 by the testator into a protected trust, done in order to achieve or preserve ODSP eligibility, may be a prosecutable offence (although - ironically - the Director may be quite happy to allow this to happen; review their current policy carefully). These situations must be handled with great care.
(c) Some Exemptions from the Duty to Realize
Grounds which may justify a hardship release include [PBA s.67(5), General Reg s.87(1)]:
- Early Retirement Pensions
Opting for EARLY retirement CPP (or QPP) pensions is NOT considered available income or resources which trigger the duty to realize herein [Reg s.11(2)(c)]. However IF they are taken voluntarily they are chargeable, both as income and assets.
Old Age Security now has an early optional form called the "Allowance". ODSP law has not yet categorized this as exempt from the duty to realize assets - like early optional CPP - though this may be an oversight. Technically though it appears that these "Allowances" are resources which should be pursued in satisfaction of this duty. If this issue arises seek legal assistance promptly.
- 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.
- pending eviction
- medical expenses
- renovation work on residence necessary due to illness or disability
- first and last month's rent required
- next year's income is expected to be 2/3 or less of maximum pensionable earnings.
7. Improvident Dispositions of Assets
ODSP is concerned that assets are not spent or otherwise disposed of 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 under the ODSP asset maximums. As such ODSP is on the watch for such "improvident" dispositions of assets, which it defines as situations where [Reg s.22]:
Where this occurs, ODSP will normally refuse, cancel or reduce income support to achieve the situation that would have been the case if the transactions had not occured - although in some cases ODSP has discretion as to whether to impose these sanctions [see (d) "Timelines", below].
- 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 income support.
Such "improvident" transactions typically take two forms: simple improvident money spend-downs, and improvident transfers of property.
(b) Improvident Money Spend-down
When a person has been on ODSP for a while and then receives a lump sum of some form (commonly a retroactive motor vehicle accident lawsuit settlement, which could be in the tens of thousands of dollars), it is tempting for them to want to keep the current income stream and as well to keep or spend the lump sum. To do otherwise is seen (accurately) by the recipient as simply giving the lump sum to the province. However ODSP eligibility can only be legally maintained when the lump sum is spent down in a reasonable and responsible manner - ie. one that minimizes ODSP's responsibility to care for the benefit unit.
In such cases ODSP will carefully scrutinize any quick spend-downs as to what they were spent on, receipts, etc. If ODSP feels that the spend-down was "improvident" it will disentitle for the period that the person would have been able to support themselves (free from ODSP) IF they had "providently" spent the money. When determining the duration of any disentitlement, ODSP Directors will not necessarily equate "provident" financial management with 'survival' at the ODSP rate, but neither will they be overly generous to someone who they think is trying the scam the system.
That said, ODSP is typically generous in tolerating even quick spend-downs for such things as:
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 such intended expenditures to the ODSP 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.10, s.3(f): "Applications and Procedures: Welfare Trustees"].
- debt repayments;
- home purchases (if realistically planned);
- any disability-related items;
- Director-approved education programs.
(c) Improvident Property Transfers
As mentioned above, "assets" as defined in ODSP 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 relative 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 ODSP of that duty at least for a time.
It is surprising how often improvident disposition schemes occur - and are caught. Social assistance recipients are not well practiced at fraud - perhaps that is one reason why they remain poor.
ODSP has the automatic right to investigate and examine transactions for improvident disposition (by any member of the benefit unit) made up to a year prior to the application date [Reg s.22(1)], "or anytime thereafter" (ie. back one year from any point during eligibility) [Reg s.22(2)]. If it finds such transactions within that time period it "shall" (ie. must) impose a cancellation or deduction as described above [Reg 22(1)] (until 27 March 2009 this provision read "may" and allowed the Director discretion as to whether to impose the sanction).
Further, where they have "reason to believe" that such an assignment or transfer occurred more than a year ago but within three years ago, then they can investigate those transactions as well. This 'extension' applies to both an applicant (counting from the time of their original application), and a recipient at any time (counting three years back from when the Director has such "reason to believe"). In the case of improvident dispositions found within this extended time period, the Director "may" assess a cancellation or deduction (ie. they have discretion as to whether to do so or not) [Reg 22(3)].
It is this ability to examine transactions well-prior to the application date that gives rise to potential overpayment and possibly even prosecution liability in respect of Henson trust planning [see s.5: "Trust Funds", above]. That said, cultural acceptance of such trust planning amongst the middle class may militate against harsh consequences - despite the actual violation of the improvident disposition rules that they may embody.
On violation of this duty, the Director may either [Reg s.22(1)]:
As can be seen from the wording, the latter provision gives the Director a lot of discretion in how they deal with these situations. For a further discussion of "non-compliance" implications and procedures, see Ch.11: "Director
- cancel eligibility, or
- "reduce the amount of the amount of income support to compensate for the inadequate consideration or the value of the assets assigned or transferred".
(f) Practical Issues
When the Director 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.6: "Information Eligibility"). If 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.14 "Fraud and Prosecutions"). At this point claimant is best advised to seek the assistance of a lawyer experienced in social assistance and/or criminal law - preferrably both.