Executive Summary: Key Legal and Evidentiary Issues

• Erin Gray sought judicial review of the CRA's decision denying her eligibility for the Canada Emergency Response Benefit (CERB) after receiving payments from March 15, 2020, to September 26, 2020.

• CRA determined ineligibility on the basis that Gray earned more than $1,000 in employment income during the relevant periods and had not stopped working or had her work hours reduced due to the pandemic.

• The self-represented Applicant used an artificial intelligence application to assist with drafting her court submissions, resulting in two non-existent case citations being placed before the Court.

• Statutory provisions under the Canada Emergency Response Benefit Act and related regulations do not permit the CRA to consider equitable, contextual, or compelling personal circumstances in eligibility determinations.

• No procedural deficiencies were found, as the Applicant's file was reviewed twice with opportunities to submit new evidence at each stage.

• Despite the Respondent's request for costs, the Court exercised its discretion and declined to award any costs given the Applicant's good faith pursuit of judicial review.

Background and facts of the case
Erin Gray applied for and received the Canada Emergency Response Benefit (CERB) for seven periods spanning from March 15, 2020, to September 26, 2020. In April 2022, the Canada Revenue Agency (CRA) followed up with Gray to confirm that she had, in fact, been eligible to receive the CERB. In response, she submitted supporting documents including her application for three of the seven CERB periods for which she received payments, bank statements for the period from July 5 to September 26, 2020, pay stubs, her employment termination letter from February 4, 2021, and her 2020 T4. On July 13, 2023, the CRA informed Gray that she had not been eligible for any of the CERB payments she had received because she had earned more than $1,000 in employment income during the relevant periods and she had not stopped working or had her work hours reduced due to the pandemic.

The second review and its outcome
Gray requested a second review of her CERB eligibility in August 2023, advancing several arguments: that she was laid off from her job in February 2021 because of the impact of the pandemic on her employer, that her earnings were significantly reduced during the pandemic, that caregiving responsibilities for her disabled child limited her ability to work, that renovations on her building limited her ability to work, and that the government's communications about the CERB had been inconsistent, ambiguous, and confusing. A CRA officer conducted the second review, speaking with Gray by phone on May 22, 2024, and explaining that the original reviewer had determined her ineligible because she earned more than $1,000 during all the relevant periods and did not stop working in those periods as a result of the pandemic. As requested by the reviewing officer, Gray submitted her 2020 record of employment (ROE) because she had previously attested that she earned at least $5,000 in the CERB comparator periods, but this had not been validated. The CRA completed the second review on May 24, 2024, and confirmed that Gray had not been eligible for the CERB because of her employment income. The reviewing officer's notes indicated that Gray's ROE confirmed she had met the $5,000 income threshold for the comparator periods.

The use of artificial intelligence in court submissions
A notable preliminary issue arose from the fact that Gray, who was not represented by counsel, used an artificial intelligence application to assist with drafting her memorandum. Her memorandum referenced five cases, two of which simply do not exist. The Court noted that disclosing the use of AI in materials provided to the Court is required by the Federal Court Practice Direction entitled The Use of Artificial Intelligence in Court Proceedings, dated May 7, 2024. The Practice Direction exists to protect the integrity of judicial proceedings, safeguard public confidence in the justice system, and uphold the rule of law. The Court observed that while Gray may have believed her reliance on AI was innocuous, it was not, as it resulted in her placing hallucinated jurisprudence before the Court.

The Court's analysis of reasonableness
The parties agreed that the standard of review on the substance of the CRA's decision is reasonableness. The Court addressed each of the Applicant's three arguments in turn. First, regarding Gray's contention that the decision failed to demonstrate how the CRA applied the $5,000 income threshold to her commission-based earnings, the Court found there was some confusion on the Applicant's part, perhaps because she was asked to provide an ROE to verify her income for the qualifying periods. The CRA, however, had clearly communicated at each review that she was ineligible because she had earned more than $1,000 in each period that she received the CERB, not because she did not meet the $5,000 income threshold. Second, the Court noted that the eligibility criteria are determinative and that the statute does not permit the CRA to consider equitable, contextual, or compelling facts—like a job loss that took place after the period when Gray received the CERB or her caregiving responsibilities—unless those factors affect the concrete calculations that determine CERB eligibility. The record was clear that, even if Gray's income was diminished, she earned more than $1,000 in each CERB period, and so she was not eligible. Third, the Court expressed sympathy for Gray's argument regarding ambiguous guidelines, acknowledging that given the circumstances of the pandemic and the complex CERB eligibility criteria, it is no surprise that many individuals may have, in good faith, misunderstood their eligibility. The Court noted there was no allegation of dishonesty or misrepresentation, just a question of whether Gray qualified given the specific and mandatory eligibility requirements. Regardless of Gray's subjective knowledge at the time, the $1,000 threshold was an eligibility requirement under the law at the time she applied for the CERB, and it continued to apply throughout her receipt of CERB benefits. The Court concluded that neither the CERB Act nor its regulations grant the CRA flexibility in determining whether a taxpayer was eligible, and the legislation does not have relief provisions related to compelling personal circumstances.

Procedural fairness
The Court also found that the CRA's process for determining Gray's eligibility for the CERB was procedurally fair. There were no procedural deficiencies: Gray's file was reviewed twice, she was given an opportunity to submit new evidence on each review, her evidence was duly considered by the reviewing officers, and she received reasons for each decision.

Ruling and outcome
The Honourable Mr. Justice A. Grant of the Federal Court dismissed the application for judicial review, finding the CRA's decision was not only reasonable but was the only outcome available under the governing legislation. Although the Attorney General of Canada, the successful party, sought costs citing Federal Court Rule 400(3)(a), the Court declined to make any order as to costs, recognizing that an individual Canadian taxpayer had availed herself in good faith of her right to seek judicial review of a decision by a government body. No specific monetary amount was ordered in favour of either party.