CBV = THEIVES.. Student loan defaulted in 1999

@whid

Thank you for your well thought-out post regarding the Statute of Limitations on Federal student loans. I truly appreciate someone who has read my posts and has responded with an intelligeent reply and asking for further clarification of my comments. I also appreciate your reference to the article that appeared in the Ottawa Citizen noting the write-off of over $300 million of Federal student loans that are deemed uncollectible due to the current 6 year limitation period as detailed in both the Canada Student Loans Act as well as the Canada Student Financial Assistance Act.

The article in the Ottawa Citizen actually raises more questions than it answers. Here's why:

1. While the article refers to Federal student loans, it provides no information on which Federal student loans were written off. There are basically 3 types of Federal student loans starting on August 1, 1964 with "Guaranteed" student loans that were issued under the Canada Student Loans Act. Beginning on August 1, 1995 and ending on July 31, 2000, there were
"Risk-Shared" student loans issued under the Canada Student Financial Assistance Act. And while the financial institutions that issued these loans during this time period were ultimately responsible for their collection, student loans issued under this Act for which no payment had been made to the financial institution for 18 months following a student's end-of-study period were then returned back to the Federal government for collection. These loans were then known as "Put-Back" loans. And finally, all Federal student loans that were issued after July 31, 2000 were known as "Direct" student loans.

2. While Federal student loans are issued in all Provinces and Territories, the article was silent as to where these Federal student loans that were written off originated.

3. While the article made it "daylite" clear that the reason these Federal student loans were written off is because they survived the 6 year limitation period clearly stated in both the Canada Student Loans Act and the Canada Student Financial Assistance Act, this is precisely why when the new Ontario Limitations Act, 2002 was written, passed and proclaimed in force effective January 1, 2004 that it included Paragraph 16(1)(k) which provides NO LIMITATION PERIOD for Federal student loans issued under the Canada Student Loans Act and the Canada Student Financial Assistance Act. The lawyers responsible for drafting this Statute were pressured by the financial community in Ontario to include this provision in the new Limitations Act as they foresaw the mounting student debt and the resulting inability of many students to honour their committments resulting in defaulted student loans. Under the current Federal legislation of a 6 year limitation period to commence a legal proceeding, they wanted that limitation period extended to a NO LIMITATION PERIOD knowing that while some students after finishing their studies may not be gainfully employed and therefore not able to repay their loans, at some time in the future, they most likely will be employed full-time and earning an income commensurate with their ability to repay their student loans.

In my previous post, I clearly stated the following: "When the lawyers ( both government and those in private practice ) sat down and drafted this Act in 2002, they specifically wanted to include all student loans, both Provincial and Federal that had been issued by financial institutions in Ontario within the provisions of the new Ontario Limitations Act." You will note that I specifically referred to Ontario and not to other Provinces and Territories. The significance of that statement is that Federal student loans issued in other Provinces and Territtories are still subject to the 6 year limitation period provided for in the two Federal Acts. However, any Province or Territory can elect to opt out of any Federal limitation provision providing they provide for a separate limitation provision for the Federal Acts within their own Limitation Statute. This is precisely what Ontario has done.

In addition, I also clearly stated the following: "You should note that Direct Student Loans made after July 31, 2000 are not caught within these provisions." The significance of this statement is that all Federal student loans issued after July 31, 2000 are still subject to the 6 year limitation period regardless of which Province or Territory in which they were issued.

Any Federal Department or any Province can elect to opt out of the general limitation provisions found in Section 32 of the Crown Liability and Proceedings Act providing they make a separate limitation provision for it. Under both the Canada Student Loans Act and the Canada Student Financial Assistance Act, a separate limitation provision is clearly stated. It just happens to coincide with the limitation provision provided for by the Crown Liability and Proceedings Act.

32. Except as otherwise provided in this Act, or in any other Act of Parliament, the laws relating to prescriptions and the limitations of actions in force in a province between subject and subject apply to any proceedings by or against the Crown in respect of a cause of action arising otherwise than in a province shall be taken within six years after the cause of action arose.

In the matter heard in the Supreme Court of Canada on December 4, 2003, File No 28717 between the Appellant, Her Majesty the Queen and the Respondent, Joe Markevich, it was held that the Appellant's case was dismissed becauase it did not come within the provisions of Section 32 of the Crown Liability and Proceedings Act.

Here is a brief synopsis of the case. In 1985, Joe Markevich was issued assessments by Revenue Canada for a tax liability in excess of $230,000 to which he did not object. No attempts were made to collect on this tax liability until 1997 when the tax liability along with accrued interest had grown to an amount in excess of $770,000. Mr. Markevich made a Motion to the Federal Court to have this lawsuit "quashed" but the Motions Judge disagreed. Mr. Markevich then appealed to the Federal Court of Appeal to have the decision of the Motions Judge overturned. The Federal Court of Appeal overturned the decision of the Motions Judge and Her Majesty the Queen then appealed to the Supreme Court of Canada. The Supreme Court of Canada agreed with the Federal Court of Appeal and dismissed the appeal.

At the time of the appeal, Section 222 of the Income Tax Act ( Canada ) read as follows:

222. All taxes, interest, penalties, costs and other amounts payable under this Act to her Majesty and recoverable as such in the Federal Court or any other court of competent jurisdiction or in any other manner provided by this Act.

As can be clearly seen, the Income Tax Act ( Canada ) did not provide for a specific limitation period for the collection of taxes, interest, penalties and other amounts payable under this Act to her Majesty and relied entirely on the limitation period as provided in Section 32 of the Crown Liability and Proceedings Act, namely, six years.

After the Crown's appeal was dismissed, the Department of Finance immediately decided to change the wording of Section 222 of the Income Tax Act ( Canada ) and provide for a separate and different limitation period, thus overriding any limitation period as provided for in Section 32 of the Federal Crown Liability and Proceedings Act.

Here is how Section 222 of the Income Tax Act ( Canada ) currently reads:

222.(4) The limitation period for the collection of a tax debt of a taxpayer

(a) begins

(i) if a notice of assessment or a notice referred to in subsection 226(1) in resprct of the tax debt is sent to or is served on the taxpayer after March 3, 2004, on the day that is 90 days after the day on which the last one of these notices is sent or served, and

(ii) if subparagraph (i) does not apply and the tax debt was payable on March 4, 2004, or would have been payable on this date but for a limitation period that otherwise applied to the collection of the tax debt, on March 4, 2004, and

(b) ends, subject to subsection (8) on the day that is 10 years after the day on which it begins.

As you can see, the Department of Finance has elected to opt out of the limitation provisions of Section 32 of the Crown Liability and Proceedings Act and provide for a separate limitation period for the collection of taxes, interest, penalties and other amounts under the Income Tax Act ( Canada ).

And Section 32 also provides for any province to elect out of any Federal limitation provision and provide for their own limitation provision within their own Limitation Act. And that is precisely what the drafters of the new Ontario Limitation Act, 2002 did with the inclusion of Paragraph 16(1)(k).