Executive Summary: Key Legal and Evidentiary Issues

• The case centered on whether the federal or provincial limitation period applied to the Crown's recovery of salary overpayments.

• The dispute arose under section 32 of the Crown Liability and Proceedings Act, which governs the applicable limitation periods.

• The Federal Public Sector Labour Relations and Employment Board sided with the respondent, applying Ontario’s two-year limitation period.

• The Attorney General argued the limitation period should be six years, claiming the cause of action arose “otherwise than in a province.”

• The Board failed to clearly identify the cause of action before applying the limitation framework, a critical legal misstep.

• The Federal Court of Appeal found the Board’s decision unreasonable and remitted the matter for redetermination.

Facts and outcome of the case

The dispute arose after the respondent, Véronique St-Onge, was overpaid by her employer, the National Research Council of Canada, during a period when she was on leave without pay. The employer attempted to recover this overpayment by deducting it from her salary. In response, St-Onge filed a grievance, arguing that the employer’s claim to recover the funds was time-barred under Ontario’s two-year limitation period.

Before the Federal Public Sector Labour Relations and Employment Board, both parties agreed that section 32 of the Crown Liability and Proceedings Act applied, but they disagreed on how. St-Onge asserted that the cause of action arose in Ontario and was thus subject to Ontario's two-year limitation period. The Attorney General of Canada countered that the cause of action arose “otherwise than in a province,” invoking the six-year federal limitation period instead.

The Board sided with St-Onge, agreeing that the two-year provincial limitation period applied and ordering the employer to stop salary deductions and repay previously withheld amounts. In doing so, it distinguished the facts from prior case law, including the Supreme Court’s decision in Markevich v. Canada and its own decision in Dansou, both of which supported a federal limitation period.

On judicial review, the Federal Court of Appeal criticized the Board for failing to clearly identify the applicable cause of action before applying the limitation period. The Court highlighted that determining where a cause of action arises requires identifying all its elements and their location. Since the Board skipped this foundational step, its analysis was deemed unreasonable.

As a result, the Court granted the Attorney General’s application for judicial review and sent the case back to the Board for a proper redetermination. Although the Attorney General succeeded, no costs were awarded because they had not been requested.