Ault et al. v. Canada (Attorney General) et al., (2011) 274 O.A.C. 200 (CA)

JudgeO'Connor, A.C.J.O., MacPherson and Cronk, JJ.A.
CourtCourt of Appeal (Ontario)
Case DateFebruary 28, 2011
JurisdictionOntario
Citations(2011), 274 O.A.C. 200 (CA);2011 ONCA 147

Ault v. Can. (A.G.) (2011), 274 O.A.C. 200 (CA)

MLB headnote and full text

Temp. Cite: [2011] O.A.C. TBEd. FE.058

Margaret Ault, Robert Collier, Robert C. Temple, Rod Shepherd, Richard Findlay, David Luck, Lucie Nobert, Marie-France Dufour, and Bryan Armstrong (plaintiffs/respondents) v. Attorney General of Canada (defendant/appellant/respondent by way of cross appeal) and Sylvain Parent, Welton Parent Inc., Loba Limited and Raymond Jemus (third parties/respondents/appellants by way of cross-appeal)

(C49464)

David Luck (plaintiff/appellant/respondent by way of cross-appeal) v. Attorney General of Canada (defendant/respondent/appellant by way of cross-appeal)

(C49446; 2011 ONCA 147)

Indexed As: Ault et al. v. Canada (Attorney General) et al.

Ontario Court of Appeal

O'Connor, A.C.J.O., MacPherson and Cronk, JJ.A.

February 28, 2011.

Summary:

Prior to October 15, 2000, an option for transferring pension monies between the Public Service Superannuation Plan and private pension plans was by means of a reciprocal transfer agreement (RTA). Treasury Board Secretariat (TBS) negotiated the Loba RTA. The Canada Revenue Agency (CRA) shared its concerns about the Loba RTA to the TBS and to the Loba Parties (consulting actuaries). Federal public employees were not advised of the risks associated with the Loba RTA. The plaintiffs resigned from the federal public service to join Loba Ltd. The Loba Plan was revoked by the CRA. The plaintiffs sued the Attorney General of Canada (AGC). The plaintiff Luck advanced a claim for lost salary but made no pension loss claim. The AGC brought third party actions against the Loba Parties for negligent misrepresentation and breach of fiduciary duty.

The Ontario Divisional Court, in a decision reported at [2008] O.T.C. Uned. T47, concluded that the AGC was liable for negligent misrepresentation and that the Loba Parties were liable for negligent misrepresentation, as well as for breach of fiduciary duty after the plaintiffs joined the Loba Plan. The court determined that Luck's failure to lead evidence about his pension situation disentitled him to damages because he "chose to leave out a piece of the puzzle." Liability was apportioned at 80 per cent for the AGC and 20 per cent for the Loba Parties. The AGC appealed. Luck appealed the dismissal of his damages claim. The AGC cross-appealed in that proceeding.

The Ontario Court of Appeal allowed the AGC's appeal in part. The trial judge erred in her fiduciary analysis by holding that the Loba Parties owed no fiduciary duties to the plaintiffs before the plaintiffs joined the Loba Plan. That error, in turn, led the trial judge to inappropriately narrow her consideration of the extent and significance of the Loba Parties' breaches of their fiduciary duties for the purpose of apportionment of liability. In the result, the court assigned 60 per cent fault to the AGC and 40 percent to the Loba Parties. The court dismissed Luck's appeal and the AGC's cross-appeal in that proceeding.

Crown - Topic 1576

Torts by and against Crown - Negligence by Crown - Negligent advice or misrepresentation - [See Fraud and Misrepresentation - Topic 2508 ].

Crown - Topic 5261

Officials and employees - Pension benefits - General - [See Fraud and Misrepresentation - Topic 2508 ].

Damages - Topic 3630

Deceit and misrepresentation - Negligent misrepresentation - [See Torts - Topic 61 ].

Fraud and Misrepresentation - Topic 2508

Misrepresentation - Negligent misrepresentation - An option for transferring pension monies between the Public Service Superannuation Plan (PSSP) and private pension plans was by means of a reciprocal transfer agreement (RTA) - The trial judge concluded that "the explicit, implied and omitted representations of the federal Crown to the Plaintiffs regarding the availability of the Loba RTA as a legitimate option for them to consider were misleading" - On appeal, the Attorney General of Canada contended that the trial judge erred in reaching that conclusion because what the plaintiffs were told by the AGC's compensation advisors was accurate and, with respect to omissions, there was no obligation to provide the information - The Ontario Court of Appeal disagreed - "Whether or not a statement or implied statement is a misrepresentation is a finding of fact that depends on the trial judge's assessment of the evidence and inferences drawn from the evidence ... Such a finding should not be disturbed unless there is a palpable and overriding error in the trial judge's assessment of the evidence ... [T]he evidence marshalled by the trial judge to support her conclusion of misrepresentation was very strong indeed" - See paragraphs 37 to 42.

Fraud and Misrepresentation - Topic 2535

Misrepresentation - Elements - Reliance - [See Torts - Topic 61 ].

Practice - Topic 8825.3

Appeals - General principles - Duty of appellate court regarding apportionment of fault by trial judge or jury - [See first Torts - Topic 64 ].

Professional Occupations - Topic 1701

Actuaries - Duty to client - Fiduciary duty - An option for transferring pension monies between the Public Service Superannuation Plan and private pension plans was by means of a reciprocal transfer agreement (RTA) - One of the RTAs was the Loba RTA, the brainchild of Parent, the principal actuary of an actuarial firm ("WBP") - Parent and WBP actively recruited federal public servants to join Loba Ltd. - The plaintiffs resigned from the federal public service to join Loba Ltd. - The Loba pension plan was revoked by the Canada Revenue Agency - The federal Crown brought third party actions against Loba Ltd., Parent and WBP (the Loba Parties) for breach of fiduciary duty - The Ontario Court of Appeal held that the trial judge's fiduciary analysis minimized Parent's and WBP's professional obligations under the Canadian Institute of Actuaries Rules of Professional Conduct - In so doing, the trial judge erred - Parent and WBP were not mere passive conduits of financial information in their consultations with the plaintiffs before the plaintiffs resigned from the public service - Nor did the absence of a specific grant of discretionary agency authority or power to the Loba Parties dispose of the question of whether the Loba Parties' relationship with the plaintiffs was fiduciary from the outset - See paragraphs 79 to 85.

Professional Occupations - Topic 1701

Actuaries - Duty to client - Fiduciary duty - The Ontario Court of Appeal stated that "[w]e appreciate that the standards of professional conduct set by a self-regulating body, like the CIA [Canadian Institute of Actuaries], are not dispositive of whether the professional obligations owed under those standards are fiduciary in nature. However, they 'are of guiding importance in determining the nature of the duties flowing from a particular professional relationship' ... As with lawyers and accountants, the standards of responsibility set by the self-regulating body of the actuarial profession are intended to protect the public interest and safeguard the independence of the profession and its credibility with the public ... Viewed in this manner, the CIA standards of conduct for actuaries engage obligations of loyalty, honesty and fair dealing" - See paragraph 86.

Professional Occupations - Topic 1701

Actuaries - Duty to client - Fiduciary duty - Parent was the principal actuary of an actuarial firm ("WBP") - The plaintiffs sought advice from Parent and WBP in their capacities as consulting actuaries before the plaintiffs resigned from the federal public service, joined Loba Inc., and transferred their pension monies to the Loba Plan - The Canada Revenue Agency revoked the Loba Plan - The defendant, the Attorney General of Canada (AGC) brought third party actions against Parent, WBP and Loba Inc. (Loba Parties) - The AGC argued that there was an implied undertaking by the Loba Parties that they would act in the plaintiffs' best interests, thereby triggering fiduciary duties - The Ontario Court of Appeal agreed - Parent's knowledge of the circumstances under which the Loba Parties' advice was sought, coupled with Parent's and WBP's inherent duties of loyalty as professional actuaries and the fact that highly personal and confidential information was communicated to the Loba Parties by the plaintiffs, created, at least, an implied undertaking that the Loba Parties would act in the plaintiffs' best interests - The relationship between the plaintiffs and the Loba Parties prior to the plaintiffs joining the Loba Plan fell within the rubric of the fiduciary obligation - In the end result, the court concluded that there was a serious and obvious breach by the Loba Parties of their fiduciary duties by their failure to disclose information to the plaintiffs that was material to the plaintiffs' decisions - See paragraphs 87 to 93.

Torts - Topic 54

Negligence - Causation - Test for (incl. "but for" test and "material contribution" test) - The Ontario Court of Appeal stated that "[t]he basic test for determining causation in cases of negligence is the 'but for' test. The plaintiff bears the burden of showing that 'but for' the negligent act or omission of the defendant the injury or harm would not have occurred. The 'but for' test recognizes that compensation for negligent conduct should only be made where there is a substantial connection between the injury and the defendant's conduct ... In assessing the issue of 'substantial connection', courts consider whether the damages claimed were a reasonably foreseeable result of the defendant's negligence. In cases where there is not a substantial connection between the damages and the negligence, the damages are said to be too remote for recovery" - See paragraphs 44 and 45.

Torts - Topic 54

Negligence - Causation - Test for (incl. "but for" test and "material contribution" test) - The plaintiffs resigned from the federal public service, joined Loba Inc., and transferred their pension monies to the Loba Plan - The Canada Revenue Agency revoked the Loba Plan - The trial judge awarded damages for negligent misrepresentation to seven of the eight plaintiffs who had sued the federal government - The Attorney General of Canada (AGC) argued that the trial judge erred in finding that the AGC's negligent misrepresentations caused the damages awarded - The Ontario Court of Appeal disagreed - The trial judge found as a fact that had the AGC advised the plaintiffs prior to their resignations from the public service of the significant risks that were identified by the Canada Revenue Agency as being associated with Loba-type arrangements to have their pension monies transferred, the plaintiffs would not have resigned from the public service to join Loba - The trial judge concluded that it was the act of leaving the public service to join Loba that resulted in the damages because the plaintiffs' employment with Loba did not provide them with the same salary and other benefits as those to which they would have been entitled had they continued in the public service - Each of the plaintiffs testified to the facts as found by the trial judge - There was no basis to interfere with those findings - "But for" the AGC's negligent misrepresentations, the plaintiffs would not have incurred the damages awarded - See paragraphs 46 to 48.

Torts - Topic 61

Negligence - Causation - Causal connection - The plaintiffs left their public service employment to join Loba Ltd. on the basis that it would be financially advantageous from a pension perspective - They transferred their pension monies to the Loba Plan - The Treasury Board Secretariat (TBS) had negotiated the Loba reciprocal transfer agreement (RTA) - The Canada Revenue Agency revoked the Loba Plan - The Attorney General of Canada (AGC) argued that the damages awarded by the trial judge for the loss of the plaintiffs' salaries and benefits were not substantially connected to the AGC's negligent misrepresentations and were, therefore, not compensable - The Ontario Court of Appeal disagreed - First, the losses were reasonably foreseeable to the AGC - The trial judge pointed out that a senior TBS official realized that if public servants resigned to join Loba and transfers were indefinitely suspended under the Loba RTA, the public servants risked incurring precisely the type of losses claimed - Second, evidence of an inducement was not essential - "In a case of negligent misrepresentation, a plaintiff need prove only that he or she relied on the misrepresentation in taking the course of action that led to the damage" - The trial judge had ample evidence to support the finding of reliance - Finally, the fact that Loba's principal also made misrepresentations to the plaintiffs did not negate the AGC's liability - "It is not the law that a particular defendant's negligent misrepresentation must be the sole cause of the plaintiff's loss ... It is sufficient that the plaintiff relied on the defendant's statements to his or her detriment" - See paragraphs 48 to 53.

Torts - Topic 64

Negligence - Causation - Apportionment - The Ontario Court of Appeal stated that "[t]he test for appellate interference with a trial judge's apportionment of liability is an exacting one: 'The apportionment of liability is primarily a matter within the province of the trial judge. Appellate courts should not interfere with the trial judge's apportionment unless there is demonstrable error in the trial judge's appreciation of the facts or applicable legal principles' ... A similar deferential standard applies to a trial judge's conclusion that a fiduciary duty did not exist on the specific facts of a given case. Absent an error of law or a palpable and overriding error of fact, such a finding must be upheld on appeal" - In this case, the court was satisfied that those high thresholds for interference with the trial judge's apportionment and her fiduciary finding had been met - See paragraph 56.

Torts - Topic 64

Negligence - Causation - Apportionment - The plaintiffs left their public service employment to join Loba Ltd. on the basis that it would be financially advantageous from a pension perspective - They transferred their pension monies to the Loba Plan - The Treasury Board Secretariat had negotiated the Loba reciprocal transfer agreement - The Canada Revenue Agency revoked the Loba Plan - The trial judge apportioned liability at 80 per cent for the AGC and 20 per cent for the Loba Parties (consulting actuaries) - The Ontario Court of Appeal assigned 60 per cent fault to the AGC and 40 per cent to the Loba Parties - The trial judge erred: by concluding that the Loba Parties owed fiduciary duties to the plaintiffs only after the plaintiffs became members of the Loba Plan; by failing to properly account in her apportionment analysis for the fiduciary duties owed and breached by the Loba Parties; and by apportioning liability in a way that was fundamentally inconsistent with her own description of the blameworthy conduct of the parties - Those errors resulted in a material understatement of the Loba Parties' degree of fault - See paragraphs 57, 107.

Torts - Topic 9151

Duty of care - Particular relationships - Claims against public officials, authorities or boards - General - An option for transferring pension monies between the Public Service Superannuation Plan (PSSP) and private pension plans was by means of a reciprocal transfer agreement (RTA) - The trial judge concluded that the Treasury Board, as employer and as pension plan administrator, owed a duty of care to the plaintiffs in terms of providing information to employees and PSSP members about a known "significant risk associated with a category of such RTAs" - The Ontario Court of Appeal stated that framing a duty of care in those terms "fits comfortably within the description of the duty of care in the pension case law" - The trial judge was very careful in the way she described the locus within the federal government for the potential duty of care - It was the plaintiffs' longstanding and current status as employees in the federal public service, not their potential new employment with a different employer, that grounded the duty of care - The government was not only the employer of the plaintiffs - It was also the administrator of the PSSP of which all the plaintiffs were members as federal government employees - See paragraphs 30 to 36.

Cases Noticed:

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 30].

Hembruff et al. v. Municipal Employees Retirement Board (Ont.) (2005), 203 O.A.C. 234; 78 O.R.(3d) 561 (C.A.), leave to appeal refused (2006), 354 N.R. 399; 233 O.A.C. 396 (S.C.C.), appld. [para. 36].

Kerr et al. v. Danier Leather Inc. et al. (2005), 205 O.A.C. 313; 77 O.R.(3d) 321 (C.A.), affd. [2007] 3 S.C.R. 331; 368 N.R. 204; 231 O.A.C. 348, refd to. [para. 38].

NBD Bank Canada v. Dofasco Inc. et al. (1999), 127 O.A.C. 338; 46 O.R.(3d) 514 (C.A.), leave to appeal refused (2000), 254 N.R. 400; 135 O.A.C. 195 (S.C.C.), refd to. [para. 38].

Hanke v. Resurfice Corp. et al., [2007] 1 S.C.R. 333; 357 N.R. 175; 404 A.R. 333; 394 W.A.C. 333, refd to. [para. 45].

Ingles v. Tutkaluk Construction Ltd. et al., [2000] 1 S.C.R. 298; 251 N.R. 63; 130 O.A.C. 201; 2000 SCC 12, refd to. [para. 56].

Martin v. Listowel Memorial Hospital et al. (2000), 138 O.A.C. 77; 51 O.R.(3d) 384 (C.A.), refd to. [para. 56].

Perez v. Galambos et al., [2009] 3 S.C.R. 247; 394 N.R. 209; 276 B.C.A.C. 272; 468 W.A.C. 272, refd to. [para. 56].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57, refd to. [para. 66].

Norberg v. Wynrib, [1992] 2 S.C.R. 226; 138 N.R. 81; 9 B.C.A.C. 1; 19 W.A.C. 1, refd to. [para. 69].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1, refd to. [para. 70].

Lloyds Bank Ltd. v. Bundy, [1975] Q.B. 326 (C.A.), refd to. [para. 70].

K.L.B. et al. v. British Columbia et al., [2003] 2 S.C.R. 403; 309 N.R. 306; 187 B.C.A.C. 42; 307 W.A.C. 42, refd to. [para. 106].

Hamilton v. Open Window Bakery Ltd. et al., [2004] 1 S.C.R. 303; 316 N.R. 265; 184 O.A.C. 209; 2004 SCC 9, refd to. [para. 109].

Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al., [1991] 3 S.C.R. 3; 126 N.R. 354; 3 B.C.A.C. 1; 7 W.A.C. 1, refd to. [para. 118].

Gauthier v. Canada (Attorney General) (2000), 225 N.B.R.(2d) 211; 578 A.P.R. 211; 185 D.L.R.(4th) 660 (C.A.), consd. [para. 122].

Authors and Works Noticed:

Fridman, Gerald Henry Louis, The Law of Torts in Canada (3rd Ed. 2010), p. 476 [para. 118].

Counsel:

William McDowell, Monique Jilesen, Elizabeth Richards and Emily Graham, for the Attorney General of Canada;

Dougald Brown, for the respondents in C49464 and for the appellant in C49446;

Howard Yegendorf, Marcia Green and Stephanie Lewis for the third party respondents.

This appeal was heard on January 25 and 26, 2011, before O'Connor, A.C.J.O., MacPherson and Cronk, JJ.A., of the Ontario Court of Appeal, who delivered the following reasons for judgment and judgment, released on February 28, 2011.

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    • Canada
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