Executive Summary: Key Legal and Evidentiary Issues

• The proper application of the $1,000 income threshold for CERB eligibility, specifically whether it should be based on net or gross income.

• Assessment of whether the applicant stopped working or had hours reduced for reasons related to the COVID-19 pandemic.

• Adequacy of the CRA officer’s reasoning and consideration of the applicant’s main submissions.

• Impact of the Respondent’s written settlement offer and the consequences of its rejection on the award of costs.

• Consideration of the applicant’s financial hardship in the quantification of costs.

• Determination of which party should receive an award of costs and the appropriate amount.

Facts of the case

Michelle Sarah Matta applied for judicial review of a decision by a benefits validation officer of the Canada Revenue Agency (CRA), dated May 8, 2024, which found her ineligible for certain Canada Emergency Response Benefit (CERB) payments related to four benefit periods she had previously received. The officer determined that for each of the four benefit periods, Matta either earned more than $1,000 of employment or self-employment income or did not stop working or have her hours reduced for reasons related to the COVID-19 pandemic.

Procedural history and policy terms at issue

On January 30, 2025, the Court released its decision on the merits, allowing Matta’s application for judicial review, setting aside the CRA decision, and remitting the matter for re-determination (Matta v Canada (Attorney General), 2025 FC 195). The Court found the CRA officer’s decision unreasonable for the first two benefit periods because the officer failed to address Matta’s submission that the $1,000 income threshold should be applied to her net income rather than her gross income. The Respondent acknowledged this reviewable error, but the parties disagreed on the appropriate relief. The Court adopted the Respondent’s position, quashing the decision and returning the matter for redetermination by another CRA officer, allowing Matta to provide further evidence and submissions. For the last two benefit periods, the Court found the officer’s decision reasonable but, consistent with the Respondent’s position, quashed the decision in its entirety so that eligibility for all periods would be re-determined.

Settlement offer and costs submissions

Both parties claimed costs. The Respondent argued for costs based on a written settlement offer made on September 24, 2024, which proposed that Matta discontinue the application and that the Respondent set aside the decision and refer the matter back for reconsideration by different CRA officers, with each party bearing their own costs. The offer was not accepted by Matta and expired at the commencement of the hearing. The Respondent calculated costs at $3,420 based on Column III of Tariff B of the Federal Courts Rules but declined to seek enhanced costs due to Matta’s self-represented status and the Respondent’s agreement that the application should be allowed. Matta sought costs of $11,000, citing lack of disclosure, compensation for time and hardship, and conduct related to the officer’s decision and CRA communications. She also referenced financial hardship, including having to sell her primary home.

Court’s analysis and outcome

The Court found that the Respondent was entitled to an award of costs. Although Matta’s application for judicial review was allowed, the Court determined that, after the filing of the Application Record and the extension of the settlement offer, the Respondent prevailed on the issues outstanding at the hearing. The Court emphasized that costs awards serve to promote settlement, and that a party who rejects a reasonable settlement offer and obtains no more favorable result should face a costs award. The Court considered Matta’s financial hardship in quantifying the award.

Ruling and overall outcome

The Federal Court ordered Michelle Sarah Matta to pay the Attorney General of Canada costs of this application in the all-inclusive lump-sum amount of $1,000. No damages were awarded.