Mandeville et al. v. Manufacturers Life Insurance Co., 2014 ONCA 417

JudgeGillese, Blair and Strathy, JJ.A.
CourtCourt of Appeal (Ontario)
Case DateMay 22, 2014
JurisdictionOntario
Citations2014 ONCA 417;(2014), 321 O.A.C. 83 (CA)

Mandeville v. Manufacturers Life (2014), 321 O.A.C. 83 (CA)

MLB headnote and full text

Temp. Cite: [2014] O.A.C. TBEd. MY.035

Richard Mandeville, Wismar Greaves, Marcus Jordan and Anthony Bowen (plaintiffs/appellants) v. The Manufacturers Life Insurance Company (defendant/respondent)

(C55953; 2014 ONCA 417)

Indexed As: Mandeville et al. v. Manufacturers Life Insurance Co.

Ontario Court of Appeal

Gillese, Blair and Strathy, JJ.A.

May 22, 2014.

Summary:

In 1999, the defendant Manulife demutualized (i.e., converted from a mutual insurance company to a stock company) and distributed $9 billion in value to its participating policyholders. Less than three years earlier, Manulife had transferred a group of participating policies in Barbados to another life insurance company. In a class action, the plaintiffs asserted that Manulife should have protected the interests of the Barbados policyholders at the time of the transfer so that they could have shared in the value of the company on demutualization.

The Ontario Superior Court, in a decision reported at [2012] O.T.C. Uned. 4316, dismissed the action. The court provisionally assessed damages. The plaintiffs appealed from the dismissal. Manulife cross-appealed from the assessment of damages.

The Ontario Court of Appeal dismissed the appeal and the cross-appeal.

Actions - Topic 1500

Cause of action - General principles - What constitutes a cause of action - [See first Damages - Topic 531 ].

Damages - Topic 531

Limits of compensatory damages - Remoteness - Torts - Recoverable damages - Purely economic loss - In 1999, the defendant Manulife demutualized (i.e., converted from a mutual insurance company to a stock company) and distributed $9 billion in value to its participating policyholders - Less than three years earlier, Manulife had transferred a group of participating policies in Barbados to another life insurance company - In a class action, the plaintiffs asserted that Manulife should have protected the interests of the Barbados policyholders at the time of the transfer so that they could have shared in the value of the company on demutualization - The action was dismissed - On the plaintiffs' appeal, the Ontario Court of Appeal discussed the nature of the claim, rejecting the plaintiffs' assertion that their claim was for loss of a proprietary right and not for pure economic loss - At its highest, what the policyholders had immediately before the transfer was the hope or mere expectancy that, if and when Manulife was permitted to demutualize and it did demutualize, their rights as participating policyholders would entitle them to receive demutualization benefits - A hope or mere expectancy was not a legally enforceable right or interest - See paragraphs 130 to 144.

Damages - Topic 531

Limits of compensatory damages - Remoteness - Torts - Recoverable damages - Purely economic loss - In 1999, the defendant Manulife demutualized (i.e., converted from a mutual insurance company to a stock company) and distributed $9 billion in value to its participating policyholders - Less than three years earlier, Manulife had transferred a group of participating policies in Barbados to another life insurance company - In a class action, the plaintiffs asserted that Manulife should have protected the interests of the Barbados policyholders at the time of the transfer so that they could have shared in the value of the company on demutualization - The action was dismissed - On the plaintiffs' appeal, the Ontario Court of Appeal discussed the nature of the claim, rejecting the plaintiffs' assertion that their claim was for loss of a proprietary right and not for pure economic loss - The plaintiffs claimed damages equivalent to the benefits they would have received on demutualization - The injury or damage consisted of harm to their economic interests, rather than physical harm or damage to their person or property - The claim was for pure economic loss - See paragraphs 145 to 158.

Damages - Topic 531

Limits of compensatory damages - Remoteness - Torts - Recoverable damages - Purely economic loss - [See Torts - Topic 79 ].

Torts - Topic 1

Negligence - General principles - [See Torts - Topic 79 ].

Torts - Topic 10

Negligence - Standard of care - General - [See Torts - Topic 83 ].

Torts - Topic 60

Negligence - Causation - Foreseeability - In 1999, the defendant Manulife demutualized (i.e., converted from a mutual insurance company to a stock company) and distributed $9 billion in value to its participating policyholders - Less than three years earlier, Manulife had transferred a group of participating policies in Barbados to another life insurance company - In a class action, the plaintiffs asserted that Manulife should have protected the interests of the Barbados policyholders at the time of the transfer so that they could have shared in the value of the company on demutualization - The action was dismissed - The sole issue on the plaintiffs' appeal was whether the trial judge had erred in refusing to recognize that Manulife owed the policyholders a duty of care at the time of the transfer - In dismissing the appeal, the Ontario Court of Appeal agreed with the trial judge that it was reasonably foreseeable that the Barbados policyholders would suffer harm as a result of Manulife's transfer of their policy to another company prior to demutualization - See paragraphs 174 to 178.

Torts - Topic 77

Negligence - Duty of care - Relationship required to raise duty of care - In 1999, the defendant Manulife demutualized (i.e., converted from a mutual insurance company to a stock company) and distributed $9 billion in value to its participating policyholders - Less than three years earlier, Manulife had transferred a group of participating policies in Barbados to another life insurance company - In a class action, the plaintiffs asserted that Manulife should have protected the interests of the Barbados policyholders at the time of the transfer so that they could have shared in the value of the company on demutualization - The action was dismissed - The sole issue on the plaintiffs' appeal was whether the trial judge had erred in refusing to recognize that Manulife owed the policyholders a duty of care at the time of the transfer - In dismissing the appeal, the Ontario Court of Appeal discussed the application of the Anns (1978 H.L.) test in the context of a claim for pure economic loss - See paragraphs 159 to 173.

Torts - Topic 77

Negligence - Duty of care - Relationship required to raise duty of care - In 1999, the defendant Manulife demutualized (i.e., converted from a mutual insurance company to a stock company) and distributed $9 billion in value to its participating policyholders - Less than three years earlier, Manulife had transferred a group of participating policies in Barbados to another life insurance company - In a class action, the plaintiffs asserted that Manulife should have protected the interests of the Barbados policyholders at the time of the transfer so that they could have shared in the value of the company on demutualization - The action was dismissed - The sole issue on the plaintiffs' appeal was whether the trial judge had erred in refusing to recognize that Manulife owed the policyholders a duty of care at the time of the transfer - In dismissing the appeal, the Ontario Court of Appeal held that the relationship between the Barbados policyholders and Manulife was not sufficiently proximate that a prima facie duty of care arose - At the time of the transfer, the Barbados policyholders had no legally recognized right, claim or interest to share in the value of Manulife on a future demutualization - Further, the transfer, as structured, was lawful under the relevant statutes and had been approved in both jurisdictions - Given the "tenuous and inchoate nature" of the Barbados policyholders' interest and the legislation that empowered Manulife to transfer the policies, the proximity requirement was not met - See paragraphs 179 to 193.

Torts - Topic 79

Negligence - Duty of care - Factors limiting or reducing scope of duty of care (incl. situations where no prima facie duty of care established) - In 1999, the defendant Manulife demutualized (i.e., converted from a mutual insurance company to a stock company) and distributed $9 billion in value to its participating policyholders - Less than three years earlier, Manulife had transferred a group of participating policies in Barbados to another life insurance company - In a class action, the plaintiffs asserted that Manulife should have protected the interests of the Barbados policyholders at the time of the transfer so that they could have shared in the value of the company on demutualization - The action was dismissed - The sole issue on the plaintiffs' appeal was whether the trial judge had erred in refusing to recognize that Manulife owed the policyholders a duty of care at the time of the transfer - The Ontario Court of Appeal dismissed the appeal - Having found no prima facie duty of care at the first stage of the Anns (1978 H.L.) test, the court observed that it was unnecessary to consider whether there were residual policy considerations that would negate the imposition of a new duty of care - However, two such policy considerations warranted mention - These were, first, the policy reasons for the common law's traditional reluctance to permit recovery for pure economic loss and, second, the fact that negligence law generally sought to remedy the destruction of value, rather than grievances about the way in which value was distributed - The plaintiffs' claim was about the distribution of value, not the destruction of value - See paragraphs 194 to 201.

Torts - Topic 83

Negligence - Duty of care - Whether defendant took reasonable care - In 1999, the defendant Manulife demutualized (i.e., converted from a mutual insurance company to a stock company) and distributed $9 billion in value to its participating policyholders - Less than three years earlier, Manulife had transferred a group of participating policies in Barbados to another life insurance company - In a class action, the plaintiffs asserted that Manulife should have protected the interests of the Barbados policyholders at the time of the transfer so that they could have shared in the value of the company on demutualization - The action was dismissed - The sole issue on the plaintiffs' appeal was whether the trial judge had erred in refusing to recognize that Manulife owed the policyholders a duty of care at the time of the transfer - The Ontario Court of Appeal dismissed the appeal on the basis that the relationship between the Barbados policyholders and Manulife was not sufficiently proximate that a prima facie duty of care arose - However, the court addressed the trial judge's conclusion that, if Manulife had owed the Barbados policyholders a duty of care, he would have found that Manulife had breached the standard of care - The trial judge found that the standard of care required Manulife to structure the transfer in a way that preserved the Barbados policyholders' voting rights so that they could have shared in the demutualization benefits - This was holding Manulife to an unreasonable measure - See paragraphs 202 to 221.

Cases Noticed:

Mandeville et al. v. Manufacturers Life Insurance Co. (2002), 40 C.P.C.(5th) 182 (Sup. Ct.), refd to. [para. 96].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), appld. [para. 114].

Cooper v. Hobart - see Cooper v. Registrar of Mortgage Brokers (B.C.) et al.

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268; 2001 SCC 79, refd to. [para. 114].

Midleton's Will Trusts, Re, [1969] 1 Ch. 600, refd to. [para. 140].

Kidd et al. v. Canada Life Assurance Co. et al., [2010] O.T.C. Uned. 1097; 54 E.T.R.(3d) 225; 2010 ONSC 1097, refd to. [para. 140].

Martel Building Ltd. v. Canada, [2000] 2 S.C.R. 860; 262 N.R. 285; 2000 SCC 60, refd to. [para. 146].

D'Amato et al. v. Badger et al., [1996] 2 S.C.R. 1071; 199 N.R. 341; 79 B.C.A.C. 110; 129 W.A.C. 110, refd to. [para. 146].

Design Services Ltd. et al. v. Canada, [2008] 1 S.C.R. 737; 374 N.R. 77; 2008 SCC 22, refd to. [para. 146].

Canadian National Railway Co. et al. v. Norsk Pacific Steamship Co. and Tug Jervis Crown et al., [1992] 1 S.C.R. 1021; 137 N.R. 241, refd to. [para. 150].

Sauer v. Canada (Attorney General) et al. (2007), 225 O.A.C. 143; 2007 ONCA 454, refd to. [para. 190].

Ryan v. Victoria (City) et al., [1999] 1 S.C.R. 201; 234 N.R. 201; 117 B.C.A.C. 103; 191 W.A.C. 103, refd to. [para. 206].

Mustapha v. Culligan of Canada Ltd., [2008] 2 S.C.R. 114; 375 N.R. 81; 238 O.A.C. 130; 2008 SCC 27, refd to. [para. 209].

Authors and Works Noticed:

Canada, Department of Finance, 1997 Review of Financial Sector Legislation: Proposals for Changes (1996), generally [para. 21].

Counsel:

Paul J. Pape, Shantona Chaudhury, Linda Rothstein and David B. Williams, for the appellants;

Sheila Block, David Outerbridge, Crawford Smith and James Gotowiec, for the respondent.

This appeal and cross-appeal were heard on December 2, 3 and 5, 2013, by Gillese, Blair and Strathy, JJ.A., of the Ontario Court of Appeal. On May 22, 2014, Gillese, J.A., delivered the following judgment for the court.

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