A federal court judge has ruled Canadians must repay Employment Insurance overpayments even when the mistake is entirely the government’s, rejecting arguments that claimants should be excused in cases of administrative error.In a recent decision, Justice William Pentney of the Federal Court said there is no legal basis to let recipients keep benefits they were not entitled to receive, even in sympathetic circumstances.“This is a sympathetic case, but the law does not provide Service Canada with the discretion to write off overpayments based on sympathy,” Pentney wrote, adding that any decision to forgive such debts rests solely with the government.The case involved Alberta resident Maya Knauth, a former employee of Battle River Power Co-op in Camrose, who applied for Employment Insurance sickness benefits in 2024. While her claim was approved, Service Canada mistakenly issued 28 weeks of payments instead of the 26 weeks allowed, later demanding repayment of $1,366.Knauth argued she did nothing wrong — a point the court accepted.“Ms. Knauth says she did nothing wrong. She is right,” Pentney wrote, noting federal lawyers did not dispute her account. However, he said the central legal question was whether officials acted reasonably in refusing to waive repayment..Under Employment Insurance rules, overpayments may only be written off in limited circumstances, such as when the overpayment is under $20, the debtor is deceased or bankrupt, the debt is uncollectable, or repayment would cause undue hardship.Pentney acknowledged the outcome appeared unfair but said the law is clear.“She did nothing wrong in making her Employment Insurance claim and there was nothing she could have done to prevent the situation,” he wrote. “Despite all of that, she was overpaid.”The ruling is consistent with other federal decisions holding taxpayers and benefit recipients responsible for government mistakes.In a separate 2025 case, David Spiro of the Tax Court found a taxpayer liable after the Canada Revenue Agency processed an incorrect T4 slip that overstated income. The taxpayer missed a 90-day deadline to challenge the assessment.“Although the Canada Revenue Agency made a stupid mistake in reassessing, I have no discretion,” Spiro wrote in that case.
