Other Canada Pension Plan (CPP)

Decision

[1] The appeal is allowed, in part.

[2] The Minister did not have the authority to stop the Appellant’s disability benefits retroactively to May 2007. As such, the Appellant, S. W., is not required to repay the benefits he received from May 2007 to and including December 2009.

[3] The earliest the Minister could stop the Appellant’s benefits was January 2010. The Minister has shown that, by that date, the Appellant’s disability was no longer severe.

Overview

[4] The Appellant is a 60-year-old man who injured his right shoulder in a motor vehicle accident (MVA) of December 1991. He had shoulder surgery in September 1992 and March 1994, but the surgeries, and other treatments, did not improve his condition.^{Footnote 1} He developed a frozen shoulder and chronic pain due to a significant rotator cuff tear.

[5] The Appellant applied for CPP disability benefits in November 1994.^{Footnote 2} In his application, he reported that he was unable to work because he could not use his right shoulder and because he had problems with his right ear, neck and lower back.^{Footnote 3}

[6] The Minister initially denied the application. However, the Minister later changed its decision and awarded the Appellant disability benefits retroactive to December 1993.^{Footnote 4}

[7] At the time of the MVA, the Appellant was self-employed as a janitor. When the Minister approved the Appellant’s application, the Minister was aware that the Appellant had a business called X. However, the Minister awarded the benefits anyway because the Appellant said he had sub-contracted out all of his work since his accident.^{Footnote 5}

[8] In 2009, the Minister began a review of the Appellant’s eligibility for the benefits. The review appears to have been triggered by a third party who reported the Appellant was working and earning money.^{Footnote 6}

[9] In 2012, the Minister’s investigator finished her report, and sent the Appellant’s file to one of the Minister’s medical adjudicators. Nothing more appears to have been done with the file until 2020.^{Footnote 7}

[10] In July 2020, one of the Minister’s adjudicators spoke with the Appellant on the phone and told him his file was being investigated and that his benefits would be suspended effective August 1, 2020.^{Footnote 8}

[11] In October 2020, the Minister sent the Appellant a letter informing him of the results of the investigation. The letter explained that the Appellant’s work activity since 2007 showed that the Appellant was no longer disabled. This meant the Appellant was not eligible for the benefits he received from May 2007^{Footnote 9} to July 2020, and so the Appellant would have to return those benefits to the government. The amount totalled $111,052.62.^{Footnote 10}

[12] The Appellant asked the Minister to reconsider. He explained that the income he received from his business (X) was not for any physical work he performed. Instead, he was a manager “of sorts”. He said he hired contract labour to do the physical work, and he only did paperwork.

[13] The Minister reconsidered and decided to maintain its decision to stop the Appellant’s benefits effective May 2007.^{Footnote 11}

[14] The Appellant appealed the Minister’s reconsideration decision to the Social Security Tribunal’s General Division. In his Notice of Appeal, he said that after his injury, he did not do the physical work for his janitorial business. Instead, he did the administrative work and hired workers to do the physical work. He also said that Service Canada should have only looked at his net earnings and not his gross earnings. He said that over the span of 12 years he averaged under $2,300 net income per year. The Appellant added that Service Canada was aware of his business in 2007 and allowed him to continue.^{Footnote 12}

What I must decide

[15] I have two main issues to decide.

[16] First, I must decide if the Minister had the authority to stop the Appellant’s disability benefits retroactively to May 1, 2007. If the Minister did not have the authority to stop benefits in May 2007, then I must decide if the Minister had the authority to stop benefits at a later date.

[17] Second, I must decide if the Minister has shown that the Appellant’s disability stopped being severe and, if so, at what date.^{Footnote 13}

[18] The CPP legislation says that a disability must be “severe” and “prolonged”.

[19] A disability is severe if it makes a person incapable regularly of pursuing any substantially gainful occupation.^{Footnote 14}

[20] A disability is prolonged if it is likely to be long continued and of indefinite duration, or is likely to result in death.^{Footnote 15}

The Minister has the authority to stop benefits, but that authority has limits

[21] The Minister can stop a person’s disability benefits if the Minister finds that the person is no longer disabled.^{Footnote 16} The Minister can also require a person to return any benefits they were not entitled to receive.^{Footnote 17}

[22] However, the Minister’s authority to stop a person’s benefits has limits. The Federal Court of Appeal has held that the Minister can stop a person’s benefits but only as far back as the “last standing decision” confirming eligibility. This means that once the Minister decides that a person continues to be disabled, the Minister must honour that decision. The Minister cannot later change that decision and find that the person’s disability benefits should stop at an earlier date.^{Footnote 18}

The Minister did not have the authority to stop the Appellant’s benefits before January 2010

[23] The difficulty in this case is that when the Minister finished its investigation in 2012 it did not issue the Appellant a written decision confirming his continued eligibility for benefits. Instead, the file appears to have sat idle for several years. In fact, it appears that nothing was done with the Appellant’s file until about 2020. The Minister has acknowledged this.^{Footnote 19}

[24] In 2020, the Minister sent the Appellant documents implying that he continued to be eligible for the benefits until 2010. I am referring to the Reassessment Kit. This kit includes a cover letter of January 17, 2020 informing the Appellant that his file is under review. The letter tells the Appellant to fill out the enclosed Disability Reassessment Questionnaire, and to make sure to answer all the questions about his condition from January 2010 to the present. The letter also tells the Appellant to have his doctor fill out the Reassessment Medical Report about the Appellant’s disability from January 2010 to the present.^{Footnote 20} Finally, the Questionnaire itself clearly states that the period under review is from 2010 to present.^{Footnote 21}

[25] All of this, in my mind, amounts to a decision confirming the Appellant’s continued eligibility for the benefits until January 2010. As a result, the Minister did not have the authority to change the Appellant’s eligibility for benefits for the period before January 2010. The Appellant is, therefore, not required to return the benefits he received from May 2007 to December 31, 2009.

[26] I turn now to the second issue in this appeal – that is, if the Minister has shown that the Appellant’s disability stopped being severe.

The Appellant’s work activity since January 2010

The Rexall Drugstore Contracts

[27] In January 2010, the Appellant’s business held contracts to clean three Rexall drugstores. The Appellant had held these contracts for many years. The stores were in Chatham, Wallaceburg, and Sarnia.

[28] The Appellant testified that he did not do any of the physical work. He had 2 or 3 workers do the cleaning. The workers cleaned each store once a week. They did not clean more than one store in the same day. They would first clean the Sarnia store and then the next day they would clean the Wallaceburg store and then the day after that they would clean the Chatham store.

[29] The contracts with Rexall ended on June 30, 2010. I have a letter from the company confirming this.^{Footnote 22} The Appellant told me the contracts ended because Rexall wanted his company to take over the entire district and the Appellant did not feel capable of that much work.

The Shoppers Drug Mart Contracts

[30] In May 2011, the Appellant signed contracts to clean two Shoppers Drug Mart stores in Chatham. One store was on X Street and the other store was on X Avenue.

[31] The Appellant testified that he hired three workers to clean the stores. The workers cleaned the stores on Mondays and Thursdays. All three workers cleaned together. It took the workers about 1-2 hours to clean each store, depending on what season it was.   

[32] The Appellant said he lost the contracts with Shoppers because new managers wanted their own people to do the cleaning. He lost the X contract in 2019 and then he lost the X contract in June or July 2021.

Contract to clean a doctor’s office

[33] The Appellant testified that in March or April 2021, he began a contract to clean Dr. Tran’s office. This contract is ongoing.

[34] The Appellant has one worker who is responsible for all the cleaning. The cleaning is done three times one week (Monday, Wednesday and Friday), and two times the next week (Tuesday and Thursday).

Work capacity is not only about a person’s ability to do physical work

[35] The Appellant submits that his benefits should be reinstated because he did not do the physical work in the business. He acknowledged he did some physical work in the first year after he received disability benefits, but he said that since that time (one year after his benefits began) he has not done any of the physical work. Even then, he says the only work he ever did was just to help take out some garbage from the stores so that his workers could finish the job sooner.

[36] I explained to the Appellant that a person’s capacity to work is not linked solely to the ability to do physical work. A person’s ability to do non-physical work, such as supervisory work and office work, can in some cases mean a person is no longer disabled.

The Minister has shown that the Appellant’s disability was not severe in January 2010

[37] As I explained earlier, I am only focusing on the period in and after January 2010. In my view, the Minister has shown that the Appellant’s disability was not severe in January 2010. Here are the reasons why.

The Appellant was likely doing some physical work

[38] Although the Appellant says he was not doing any of the physical work in the business, I do not believe this to be true.

[39] First, there are indications in the medical evidence of the Appellant doing physical work. For example, in March 2010, Dr. Tran reported that the Appellant does janitorial work and “does do some physical work”.^{Footnote 23} In 2018, Dr. Kukkadi wrote that the Appellant’s hip problems were interfering with his physical activity and that the Appellant is “currently” not working because of his “current” problem.^{Footnote 24}

[40] Second, the Appellant acknowledged in 2011 that he did some physical work. For example, on June 22, 2011, the Appellant told one of the Minister’s investigators that when he had the contracts for Rexall, he drove his workers to the work locations and his workers did about 90% of the work. The Appellant helped with things like dust-mopping the shelves and floor and showing the workers how to use the machinery.^{Footnote 25}

[41] Third, the Appellant has provided inconsistent information about his activities. For example, in June 2010, the Appellant told one of the Minister’s investigators that he was not doing the physical work in the Rexall stores. He was only driving the workers to the stores and then supervising them while they worked. When the investigator asked why the Appellant was driving his workers to the stores, the Appellant said it was because some of his employees did not drive.^{Footnote 26} This is different from what the Appellant told me at the hearing. The Appellant said there was a time when he drove his workers to the stores, but after 2007 he only went to the work sites once a month. He lent his workers his truck and trailer to get to and from the job sites.

[42] Fourth, the Appellant has shown a tendency to hold back information that might not support his case. I will give two examples.

[43] Here is the first example. On May 20, 2010, the Appellant filled out a Disability Reassessment Questionnaire that had been sent to him by the Minister. In that Questionnaire, the Appellant reported that he had not engaged in any work activity (employment / self-employment) during the period under review.^{Footnote 27} (The Questionnaire explains that the period under review is from December 1, 1993).^{Footnote 28}

[44] The Appellant’s response is clearly not true. The evidence shows that at the time the Appellant completed the Questionnaire he was in fact operating his janitorial business and had been maintaining three cleaning contracts with Rexall for several years.

[45] Here is the second example. In May 2011, the Appellant signed contracts to clean two Shoppers Drug Mart stores.^{Footnote 29} That same month, the Appellant got commercial general liability insurance coverage for his business.^{Footnote 30} However, in June 2011 (the month after the contracts were signed), the Appellant told one of the Minister’s investigators that he did not have any cleaning contracts and that he had not worked since June 2010, when his business closed.^{Footnote 31} It was not until the next day when the investigator went to the Appellant’s home to return a document that the Appellant acknowledged that he signed two cleaning contracts for Shoppers Drug Mart in May 2011. When the investigator asked the Appellant why he had told her the previous day that he did not have any work contracts, the Appellant said he had misunderstood what the investigator had asked.^{Footnote 32}

[46] I do not believe the Appellant misunderstood what the investigator asked. The issue was simple – i.e. was the Appellant still working? The Appellant said he was not.  If the Appellant was uncertain about the question, then he could have asked the investigator for clarification.

[47] As a whole, the Appellant’s evidence is not reliable enough for me to get a true understanding of how much physical work he did in his business.

The Appellant’s gross earnings were above the substantially gainful threshold

[48] The Minister submits that the Appellant’s income was substantially gainful.

[49] The Appellant submits that his income has not been substantially gainful. He says that the Minister only considered his gross earnings. He believes the Minister should have considered his net earnings.

[50] In 2014, the CPP was amended to include a definition of “substantially gainful”. The CPP Regulations say that “substantially gainful” means a salary or wages equal to or greater than the maximum annual amount a person could receive as a disability pension.^{Footnote 33}

[51] Before 2014, the term “substantially gainful” was not defined in the legislation. However, this does not mean that the definition is not relevant when assessing a person’s income in years before 2014. The Tribunal’s appeal division has held that, even when the definition of “substantially gainful” does not strictly apply, the definition can provide some reasonable, common-sense guidance as to what should be considered “substantially gainful” when assessing a person’s earnings in a case involving a cessation of benefits.^{Footnote 34} This is a case involving a cessation (stopping) of benefits.

[52] The table below shows the Appellant’s earnings from 2010 to 2018, and it shows what the corresponding substantially gainful threshold is.

[53] The chart above shows that the Appellant’s gross earnings have consistently been above the substantially gainful threshold since 2010. I should also point out that the Appellant’s earnings in 2010 and 2011 do not represent full years of work.

[54] In 2010, the Appellant only worked until June. If the Appellant had continued his three contracts with Rexall past June, his income in 2010 would likely have been close to what he earned in 2008 and 2009, being $43,275 and $36,131 respectively.^{Footnote 38}

[55] In 2011, the Appellant did not start working until the end of May, when he entered into the contracts with Shoppers Drug Mart.

[56] I accept that the Appellant’s gross earnings are not determinative of whether he regained a capacity to work. However, I do not agree with the Appellant that I should only be looking at his net earnings.

[57] Net earnings (or losses) can be misleading. When reporting income for income tax purposes, businesses have a natural tendency to overstate expenses and understate profits.^{Footnote 39} Also, low net incomes or net losses do not prove a person is disabled.

[58] I have looked to see if there is an obvious connection between the Appellant’s years of low earnings and his disability. I do not see one. The Appellant did not change from three contracts (with Rexall) to two contracts (with Shoppers) for reasons related to his disability. Instead, he changed contracts because Rexall wanted him to do an entire district and the Appellant says he was not capable of doing that. Aside from the change in contracts from Rexall to Shoppers, the work stayed the same. The fluctuations in net income levels seem largely due to the different types of expenses the Appellant was claiming.

The Appellant’s business was likely profitable

[59] The Appellant told me that his business was not profitable and that he was lucky if he made $400 a month.

[60] I think the Appellant’s business was more profitable than he admits. Why else would the Appellant operate his business for such a long period of time? I know the Appellant says he kept his business just to make sure his workers had jobs, but I do not know how much of this is true. The Appellant has given inconsistent evidence about the number of workers he had working for him, and some of the evidence suggests he only had one worker at times.^{Footnote 40}

[61] Even when I subtract the wages the Appellant paid his workers, the Appellant’s earnings were usually above the substantially gainful threshold, until 2017. As I said earlier, the Appellant’s earnings in 2010 and 2011 do not represent full years of work. Here is a summary of what the Appellant earned after paying his workers.

[62] I know that the Appellant would have had other expenses besides just the labour costs. However, as I noted earlier, expenses can be inflated for income tax purposes, making it difficult for me to assess the real monetary value of the Appellant’s work.

The Appellant’s medical conditions did not go away in 2010

[63] I know that the Appellant’s medical conditions did not suddenly go away in January 2010. I also acknowledge that the Appellant’s difficulties with his right hand, arm and shoulder may have worsened between the date his benefits began and the date I am required to focus on (2010). In April 2010, for instance, the Appellant’s family physician (Dr. Leigh) reported that the Appellant has very limited use of his right arm and has reduced grip strength in his right hand. Dr. Leigh explained that there has not been any improvement in the Appellant’s condition, and he said the disability has worsened.^{Footnote 42}

[64] The does not mean, however, that the Appellant’s disability remained severe. What appears to have happened is that the Appellant found a way to work within his limitations.

[65] I know the Appellant has other medical conditions. However, some of these conditions worsened significantly years after 2010. For example, the Appellant had bilateral hip replacements, but not until 2018 and 2019.^{Footnote 43} Moreover, investigations into his left hip appear not to have started until about 2016.^{Footnote 44} He also had a right knee replacement, but not until 2019.

[66] The medical evidence does not show that the Appellant’s other medical conditions rendered him incapable regularly of pursuing a substantially gainful occupation in 2010.

[67] A sleep study of April 2007 showed sleep disordered breathing, but it was described as mild.^{Footnote 45}

[68] In August 2006 and November 2007, the Appellant’s cardiologist (Dr. Tran) reported that the Appellant’s exercise stress test was positive. However, Dr. Tran also said the Appellant did not have any symptoms, though he noted shortness of breath.^{Footnote 46}

[69] The shortness of breath (related to COPD) is something that seems to have flared from time to time^{Footnote 47}, but I did not see evidence showing how it may have been affecting the Appellant’s functionality in and around 2010. Moreover, as recent as 2018, Dr. Tran said the Appellant’s lung symptoms were under good control and he again said the Appellant did not have any cardiac symptoms.^{Footnote 48}

[70] The Appellant had difficulties with left knee pain that started in or around 2008. However, by March 2009 the Appellant was reporting that the pain had improved significantly.^{Footnote 49} I did not see evidence of significant worsening before 2010.

[71] I have been unable to get a clear understanding of the Appellant’s limitations because, as I said earlier, the Appellant’s evidence was not reliable and I believe he was doing physical work in 2010. On top of this, the Appellant was able to manage his own business for many years, and this required organization, supervision, record keeping and inventory management skills.

[72] All of this shows me that the Appellant was likely capable regularly of pursuing a substantially gainful occupation as of January 2010.

The Appellant has shown he was employable in the real world in 2010

[73] When I am deciding if a disability is severe, I must consider factors such as an appellant’s age, level of education, language abilities, and past work and life experience. These factors help me decide if the Appellant could work in the real world.^{Footnote 50}

[74] In January 2010, the Appellant was only 48 years of age and he thus had many more years ahead of him before the standard age of retirement. He was also skilled at operating his own business, and had maintained that business for many years.^{Footnote 51} As for his education, I have inconsistent evidence about the highest grade the Appellant completed in school. He has reported various levels, ranging from grade 5 to grade 11.^{Footnote 52} Because of the inconsistencies, I cannot rely on what the Appellant has reported. However, a Transferrable Skills Analysis report says the Appellant completed grade 10^{Footnote 53}, and so I am prepared to accept that as his level of education. Although the Appellant did not complete high school, he has been capable regularly of pursuing a substantially gainful occupation. As such, I cannot find that his low level of education has prevented him regularly from pursuing work within his limitations.

It is not necessary for me to assess the prolonged part of the disability

[75] As I have found that the Appellant’s disability was no longer severe as of January 2010, it is not necessary for me to assess whether it was prolonged.

Conclusion

[76] The Appellant is not required to return the disability benefits he received from May 2007 to and including December 2009. However, as of January 2010, the Appellant’s disability was not severe and so he was not entitled to the benefits he received since that date.

[77] The appeal is allowed, in part.