Ruffolo v. Sun Life Assurance Company of Canada,

• Jurisdiction: Ontario
• Judge: Moldaver, Simmons and Blair, JJ.A.
• Neutral Citation: 2009 ONCA 274
• Citation: 2009 ONCA 274,(2009), 247 O.A.C. 209 (CA),95 OR (3d) 709,73 CCLI (4th) 185,[2009] OJ No 1322 (QL),177 ACWS (3d) 538,247 OAC 209,68 CPC (6th) 322,[2009] O.J. No 1322 (QL),95 O.R. (3d) 709,(2009), 247 OAC 209 (CA),247 O.A.C. 209
• Date: 27 October 2008
• Court: Court of Appeal (Ontario)

Ruffolo v. Sun Life (2009), 247 O.A.C. 209 (CA)

MLB headnote and full text

Temp. Cite: [2009] O.A.C. TBEd. AP.016

John Ruffolo and Nicole Lepage (plaintiffs/appellants) v. Sun Life Assurance Company of Canada (defendant/respondent)

(C48470; C48088; 2009 ONCA 274)

Indexed As: Ruffolo et al. v. Sun Life Assurance Co. of Canada

Ontario Court of Appeal

Moldaver, Simmons and Blair, JJ.A.

April 2, 2009.

Summary:

The plaintiffs commenced a proposed class action, asserting that the defendant long term disability insurer wrongly deducted or set off the Canada Pension Plan Child Benefit from the disability benefits paid under their policies. The insurer counterclaimed against one of the two plaintiffs respecting an alleged overpayment of benefits. The proceedings were never certified as class proceedings and the parties agreed that the plaintiffs' actions would be heard and finally determined as individual actions.

The Ontario Superior Court, in a decision reported at [2007] O.T.C. Uned. 085, dismissed the plaintiffs' claims and allowed the counterclaim. The court awarded the defendant $215,000 in costs on a partial indemnity basis, all inclusive of counsel fee, disbursements and GST. The plaintiffs appealed the dismissal of their claims and the award of costs. The insurer cross-appealed the costs decision.

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

Government Programs - Topic 1246

Canada Pension Plan - Assessments and contributions - Deductions - The plaintiffs asserted that the defendant long term disability insurer wrongly deducted or set off the Canada Pension Plan (CPP) Child Benefit from the disability benefits paid under their policies - The Ontario Court of Appeal affirmed the dismissal of the action - The clear terms of the policies permitted offsetting of the benefits - The offsetting of benefits did not violate the CPP - There was no public policy reason for not interpreting the parties' private contractual arrangements in this manner - Further, the court rejected an assertion that the offsetting was tantamount to an assignment and was therefore void under s. 65 of the CPP - The CPP benefits, including the CPP Child Benefit, remained unchanged in nature or quantum - What was diminished by the offsets was the amount paid in private long term disability benefits - There was nothing contrary to public policy in permitting an insurer and an insured to control and limit the amount of private long term disability benefits payable under private coverage - See paragraphs 14 to 19.

Practice - Topic 206.9

Persons who can sue and be sued - Individuals and corporations - Status or standing - Proposed class action - A proposed class action was never certified as a class action and the parties agreed that the plaintiffs' actions would be heard and finally determined as individual actions - The trial judge dismissed the plaintiffs' claims, allowed the defendant's counterclaim, and awarded the defendant costs on a partial indemnity basis - The plaintiffs appealed, asserting that the trial judge erred in making a costs award given the regime codified by s. 31(1) of the Class Proceedings Act - The defendant asserted that s. 31(1) did not apply - The Ontario Court of Appeal rejected the defendant's assertion - A class proceeding was not an individual action until certification was granted - Rather, it was a special type of action under the Act that might be certified into a class proceeding or, with leave, converted into regular individual proceedings - The action was never converted into individual proceedings - Accordingly, in spite of the parties' agreement, the proceedings were ultimately governed by the Class Proceedings Act, including s. 31(1) - See paragraphs 22 to 24.

Practice - Topic 210.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Costs - [See Practice - Topic 206.9 ].

Practice - Topic 210.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Costs - The Ontario Court of Appeal held that the court's general discretion to determine costs under s. 131(1) of the Courts of Justice Act (and its companion, Civil Procedure Rule 57.01) continued to apply to the determination of costs in class proceedings despite the costs provisions under s. 31(1) of the Class Proceedings Act - However, in such proceedings, the court would look to see whether any of the s. 31(1) factors (ie., a test case, a novel point of law or a matter of public interest) applied and, if so, would give them significance in the course of exercising its discretion in determining costs - What that "significance" would be depended on the circumstances of the case - The decision of how much weight to accord the factors was discretionary - The proper approach was that it be seen, as observed in Caputo et al. v. Imperial Tobacco Ltd. et al. (Ont. S.C.), "through the lens of the goals of the Act in the factual context of the case." - The well established trio of goals underpinning the Act were access to justice, behaviour modification and judicial economy - See paragraphs 25 to 33.

Practice - Topic 210.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Costs - Unsuccessful plaintiffs in a proposed class action asserted that the trial judge erred in awarding costs to the defendant given the costs regime codified by s. 31(1) of the Class Proceedings Act - The Ontario Court of Appeal rejected the assertion - The general rule that costs follow the event applied in Ontario class proceedings - Even if the presence of one or more of the s. 31(1) criteria (ie., a test case, a novel point of law or a matter of public interest) was found to exist, a court need not refrain from awarding costs to a successful defendant - Whether a "no costs" order, or some adjustment to the costs as claimed, was appropriate to reflect the s. 31(1) factors depended on the circumstances of each case - Here the judge identified and considered s. 31(1) factors and attempted to make an award that would not discourage class proceedings and get in the way of the access to justice policies of the Act - The judge also considered the defendant's interests, thought that the plaintiff's vulnerability was somewhat overstated and concluded that it was not appropriate to make a no costs order - There was no error in principle in his decision - See paragraphs 34 to 41.

Practice - Topic 210.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Costs - Section 31(1) of the Ontario Class Proceedings Act provided that "In exercising its discretion with respect to costs under subsection 131(1) of the Courts of Justice Act, the court may consider whether the class proceeding was a test case, raised a novel point of law or involved a matter of public interest." - The Ontario Court of Appeal rejected an assertion that the presence of a s. 31(1) factor should, absent special circumstances, outweigh competing costs considerations and relieve an unsuccessful class plaintiff from an adverse costs award - To accept that principle would be inconsistent with the structure of the Act and unfair to class action defendants - See paragraph 37.

Practice - Topic 210.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Costs - The plaintiffs commenced a proposed class action, asserting that the defendant long term disability insurer wrongly deducted or set off the Canada Pension Plan Child Benefit from the disability benefits paid under their policies - After a five day trial, the trial judge dismissed the action and allowed the insurer's counterclaim against one of the plaintiffs - In addressing the issue of costs, the judge identified the presence of the factors listed in s. 31(1) of the Class Proceedings Act (technically a test case, novel points of law and a matter of public interest) - The judge declined to make a "no costs" order, but held that it was appropriate to substantially reduce the insurer claim for costs of $538,334.83 - The insurer was entitled to costs on a partial indemnity basis given its success, the principle of indemnity and its appropriate carriage and conduct of its own defence - The judge awarded $215,000 stating that the amount was justified by the amount in issue, the importance of the issues, the complexity of the proceedings, concerns about access to justice and the principle that the costs of litigation should be reasonable and have regard to the losing party's reasonable expectations - The Ontario Court of Appeal concluded that the trial judge's conclusions on costs reflected no error in principle - See paragraphs 42 to 44.

Practice - Topic 7020.1

Costs - Party and party costs - Entitlement to - Successful party - Quantum - [See fifth Practice - Topic 210.3 ].

Practice - Topic 7037

Costs - Party and party costs - Entitlement to - Factors or circumstances reducing entitlement - [See fifth Practice - Topic 210.3 ].

Practice - Topic 7053.1

Costs - Party and party costs - Entitlement to party and party costs - Class or representative actions - [See fifth Practice - Topic 210.3 ].

Cases Noticed:

Gariepy et al. v. Shell Oil Co. et al., [2002] O.T.C. 656; 23 C.P.C.(5th) 393 (Sup. Ct.), refd to. [para. 25].

Caputo et al. v. Imperial Tobacco Ltd. et al., [2005] O.T.C. 160; 74 O.R.(3d) 728 (Sup. Ct.), consd. [para. 25].

Pearson v. Inco Ltd. et al. (2006), 208 O.A.C. 284; 79 O.R.(3d) 427 (C.A.), folld. [para. 25].

McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (2009), 233 O.A.C. 245; 298 D.L.R.(4th) 86 (C.A.), refd to. [para. 32].

Garland v. Consumers Gas Co. (1995), 22 O.R.(3d) 767 (Gen. Div.), refd to. [para. 36].

2038724 Ontario Ltd. et al. v. Quizno's Canada Restaurant Corp. et al., [2008] O.T.C. Uned. 366; 2008 CanLII 27822 (Sup. Ct.), refd to. [para. 37].

Statutes Noticed:

Class Proceedings Act, S.O. 1992, c. 6, sect. 31(1) [para. 20].

Courts of Justice Act, R.S.O. 1990, c. C-43, sect. 131 [para. 29].

Rules of Civil Procedure (Ont.), rule 57.01 [para. 29].

Counsel:

Kirk M. Baert and Celeste Poltak, for the appellants;

Patricia Jackson, John Terry and Jana Stettner, for the respondent;

Scott C. Hutchison and Aaron Dantowitz, for the Law Foundation of Ontario.

This appeal and cross-appeal were heard on October 27, 2008, by Moldaver, Simmons and Blair, JJ.A., of the Ontario Court of Appeal. Blair, J.A., released the following judgment for the court on April 2, 2009.