CITATION: Smith v. Casco, 2010 ONSC 2584
DIVISIONAL COURT FILE NO.: DC-08-00001439-000
DATE: 20100514
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
PIERCE R.S.J., MATLOW, TRANMER JJ.
B E T W E E N:
JUDITH SMITH
Plaintiff
(Respondent)
John D. Strung
For the Defendant (Appellant)
- and -
CASCO INC.
Defendant
(Appellant)
Colin E. Wright
For the Plaintiff (Respondent)
HEARD: February 4, 2010 at Ottawa
PIERCE, R.S.J. (dissenting)
[1] Mr. Jim Smith was a long-term employee of Casco (“the company”) who decided to retire at age 58, effective July 1, 2000. He was then in good health. Mrs. Smith was primarily employed as a housewife. She had a grade nine education. Mr. Smith completed grade ten.
[2] The Smiths were devoted to each other. Mr. Smith made all the major financial decisions for the family. The appellant relied on him in all major financial matters. Mr. Smith was the primary breadwinner. Mrs. Smith testified that she trusted her husband completely and didn’t insist on discussing how their financial affairs would work after retirement. She stated that her husband told her “he would take care of her forever.”
[3] In preparation for retirement, Mr. Smith took several steps, beginning in November, 1998. First, he attended a financial planning seminar offered by the company. As well, he requested a letter from the pension plan actuary in 1998 setting out his pension entitlement and options. Then, in February, 1999, he met with a company representative to get more information about his pension options. He signed up for a pension information session in November, 1999. In March of 2000, Mr. Smith applied for and accepted the company’s exit incentive program. At that time, the company agreed to pay for the respondent and Mr. Smith to obtain private advice from a chartered accountant to assist with their retirement plans. The Smiths did not avail themselves of this opportunity.
[4] Mr. Smith chose a pension that was guaranteed on his life for five years. This entitled him to a pension of $3,590.39 per month until age 65 and $3,026.23 thereafter, guaranteed for 60 months. This option did not include a survivor pension for Mrs. Smith beyond the guaranteed period, July 1, 2005. Mr. Smith did not discuss his pension election with Mrs. Smith. The pension income paid the Smiths about half Mr. Smith’s pre-retirement income. The benefit paid was greater than that which would have been paid had a survivor pension been chosen.
[5] In order to give effect to Mr. Smith’s pension election, Mrs. Smith was required to sign a waiver of the spousal survivor pension, which she did on June 14, 2000. She did not speak to anyone at Casco about the waiver.
[6] The trial judge found that on June 14th, Mr. Smith brought the spousal survivor pension form home at lunch time and she signed it without reading it over carefully. Mrs. Smith testified that her husband told her it was required in order to finalize his retirement. She stated that she “quickly glanced at it because we were anxious to get for a swim [sic] and have lunch.” Mr. Smith had an hour for lunch and it usually took him ten minutes each way to walk to and from work.
[7] The document contained this caution:
Prior to completing this form, we understand that each party should consider obtaining independent legal advice concerning their individual rights and the effect of this waiver.
[8] Mrs. Smith did not do so. The trial judge found that “…unless it was a requirement to do so, she would probably not have wanted independent legal advice because of her trust in her husband.”
[9] Mr. Smith was diagnosed with cancer in November of 2003 and unfortunately died on December 3, 2003. His pension terminated in June 2005. The trial judge found that until Mr. Smith’s death, the Smiths were living beyond their means, using up their capital in order to support their lifestyle.
[10] The trial judge concluded that the company breached its duty of care to the respondent by failing to properly advise her of the implications of signing the survivor pension waiver. In doing so, he applied the reasoning in Deraps v. Labourers Pension Fund of Central and Eastern Canada 1999 3790 (ON CA), 179 D.L.R. (4th) 168 (Ont. C.A.).
[11] The trial judge also determined that the survivor pension waiver form tendered by the company was not as easy to understand as the form approved by the Superintendant of Financial Services. He found that even if the respondent had read the form, she would not have been able to understand it without independent legal advice. He awarded the respondent damages for negligent misrepresentation of $17,949.97 plus a monthly pension during her lifetime of $1,654.93 and fixed costs at $65,000.
[12] The parties to this appeal disagree whether the Casco spousal waiver was substantially the same as the waiver approved by the Financial Services Commission of Ontario. A good deal of the argument on appeal focused on this issue. My colleagues have concluded that the waiver signed by the respondent did not conform to the requirements of s. 46 (1) of the Pension Benefits Act, R.S.O. 1990 c. P.8. and therefore the appellant is negligent as determined by the trial judge. With respect, I cannot agree.
[13] In my view, the failure of the respondent to carefully read the waiver before signing it is fatal to her claim.
[14] The Supreme Court of Canada dealt with this issue in Marvco Color Research Ltd. v. Harris 1982 63 (SCC), [1982] 2 S.C.R. 774. In that case, the appellant sued for foreclosure on a second mortgage which the respondents signed without reading, on the strength of the representation of a third party that the document related to minor adjustments on a mortgage for which they were already liable. The respondents pleaded non est factum. The court found that the appellant accepted the mortgage as valid and adjusted its affairs, releasing another party from a chattel mortgage held by the appellant in reliance on the impugned mortgage.
[15] The Supreme Court characterized the respondents’ actions in failing to determine the nature of the document they were signing as “careless.” The court concluded,
Much confusion and uncertainty would result in the field of contract and elsewhere if a man were permitted to try to disown his signature simply by asserting that he did not understand that which he had signed.
[16] A consideration of whether the respondent would have understood the document had she read it is, in my view, hypothetical and irrelevant. The fact is, she did not read it.
[17] The facts of this case are distinguishable from the Deraps case in several respects. In Deraps, the plaintiff read the waiver of a survivor pension but did not understand it. She signed the waiver nonetheless and was predeceased by her husband. At the time she signed the waiver, she knew her husband was critically ill and unlikely to survive the year. She also knew that the pension would be her only source of income.
[18] Here, the respondent only glanced at the waiver and did not read it. Her husband was then in good health.
[19] In Deraps, the trial judge held that the form was confusing and the oral explanation of the form was confusing or misleading. In this case, the company made no representation as to the content of the waiver. The respondent instead relied on her husband and signed it to finalize his retirement. Mr. Smith had other investments in addition to the pension, unlike the Deraps.
[20] The company drew to the respondent’s attention that she should obtain independent legal advice before signing but the court found that she would not likely have done so unless it was a requirement of receiving the pension. Instead, she relied on the direction of her husband in the matter of the pension, as she had done with respect to financial decisions during her married life. The company had no means of compelling her to obtain legal advice; it could not have refused to pay the pension until she did so.
[21] In this case, the pension administrator was entitled to rely on the election made by Mr. Smith for a pension benefit at a higher rate than would have been paid had a survivor pension been elected. The pension fund paid Mr. Smith a greater benefit in reliance on his election and Mrs. Smith’s waiver, to the detriment of other pension members. In this respect, this case mirrors Marvco where the Supreme Court adopted this dissenting observation of Cartwright J. in Prudential Trust C. Ltd. et al. v. Cugnet [citation omitted]:
…generally speaking, a person who executes a document without taking the trouble to read it is liable on it and cannot plead that he mistook its contents, at all events, as against a person who acting in good faith in the ordinary course of business has changed his position in reliance on such document.
[22] Even if I am not correct in this conclusion, I am of the view that the trial judge erred in finding the respondent relied on the representation of the company in proving her claim for negligent misrepresentation. How could she rely on the company’s representations when she did not attend its retirement seminars, did not accept its offer of accounting advice, declined to read the company’s waiver, and would not likely have obtained independent legal advice when advised to do so by the company? The trial judge found, and I agree, that the respondent relied on her husband in this instance.
[23] Apart from proving reliance as an element of negligent misrepresentation, there is a substantial issue of contributory negligence by the respondent which the trial judge does not acknowledge. She failed to read the waiver and failed to obtain independent legal advice with respect to the waiver, even when advised to do so.
[24] I have now had the advantage of reading the majority decision in this appeal. Even if I am in error that the respondent’s failure to read the waiver is fatal to her claim, I am not persuaded that s. 46 (1) of the Pension Benefits Act R.S.O. 1990 c. P. 8 is dispositive of the appeal.
[25] Section 46 (1) provides for waiver of the joint and survivor pension in two ways: by tendering a form approved by the Superintendent or by filing a domestic contract. The section states:
The persons entitled to a joint and survivor pension benefit may waive the entitlement to receive payment of pension benefits in the form of a joint and survivor pension by delivering to the administrator of the pension plan or, in the case of a deferred life annuity, to the insurance company a written waiver in the form approved by the Superintendent or a certified copy of a domestic contract, as defined in Part IV of the Family Law Act, containing the waiver.
The content of the form or of the domestic contract is not prescribed in the Act.
[26] When the waiver was signed, the Interpretation Act, R.S.O. 1990, c. I.11 was in effect. Section 28 of that Act dealt with deviation from prescribed forms. It stated:
In every Act, unless the contrary intention appears,
(d) where a form is prescribed, deviations therefrom not affecting the substance or calculated to mislead do not vitiate it.
[27] This curative provision was applied by the court in Hristovski v. Krpan 1996 CarswellOnt 2765 (Ont. Ct., Gen. Div), aff’d 1996 10231 (ON CA), 93 O.A.C. 237 in circumstances where notice of a mortgage sale was alleged to be null and void. The court held at para. 33 that the deviation in the form used was an inadvertent minor variance and dismissed the objection to it. The court relied on the finding in Comrie Lumber Co.& Tomlinson Construction Services Ltd. (1977), 1977 1348 (ON SC), 15 O.R. (2d) 613 (H.C.) that “a notice should not be held inoperative simply by reason of minor irregularities as long as it meets the purpose for which it is required.”
[28] Mr. Justice Panet came to the same conclusion about the failure to use a prescribed form for the appointment of a mediator in Hudson v. State Farm Mutual Automobile Insurance Co. [1999] O.J. No. 136 (Ont. Ct. Gen. Div.). At para. 12 he observed,
I conclude that it would be a strained interpretation and an inappropriate application of the Code to require, in all circumstances, an absolute adherence to the requirements of the Code.
[29] I agree with the appellant’s submission that the deviations from the prescribed form are not causative of the respondent’s loss as she did not read the form before signing. Therefore the harm sought to be avoided by use of a prescribed form was not at issue in this case.
[30] In my view, this is not a case to require strict conformity to the prescribed form. The substance of the form did not affect the nature of the waiver; nor was the form calculated to mislead. The pension plan had nothing to gain by plan members choosing one option instead of another. In fact, the respondent was not misled by the content of the form. The evidence establishes that she signed it because her husband asked her to do so. The form of the waiver was irrelevant because she did not read it. A different form would not have altered her decision to sign it.
[31] For the above reasons, I would allow the appeal and dismiss the respondent’s claim with costs here and below to be determined by this panel.
Pierce R.S.J.
MATLOW, J. (TRANMER, J. concurring)
[26] Judgment is to issue dismissing this appeal. The judgment in appeal is upheld but, with respect, for reasons which are significantly different from those of the trial judge. Counsel may make written submissions with respect to the costs of this appeal by exchanging copies and delivering them to the office of this court at Ottawa within one month.
[27] The motion made on behalf of the appellant for leave to appeal the disposition of costs made by the trial judge is also dismissed. I am not persuaded that there is anything about that disposition which brings it within the scope of those unusual cases in which leave should be granted.
[28] The pertinent facts of this case are accurately set out above in the dissenting reasons for judgment of Pierce, R.S.J.
[29] Following the completion of the arguments on this appeal and after judgment was reserved, this panel invited both counsel to make further written submissions “regarding the application, if any, of section 46 (1) of the Pension Benefits Act, R.S.O., 1990.c. P.8 (“the Act”) to the form of waiver that was used in the case at bar. That issue was not specifically argued at trial and is understandably not addressed in the trial judge’s reasons. Both counsel responded with helpful submissions that included references to sections 46 (1) and (2) of the Act and other statutory provisions as well. Neither counsel objecting to the consideration of this issue on this appeal as no prejudice could be shown. In the preparation of these reasons, I have carefully considered the submissions that were made initially and those that were most recently in response to the invitation of this panel.
[30] In my view, this appeal should be determined solely on the basis of a careful comparison of the form of waiver used in this case and the form of waiver that had been approved by the Superintendent of Financial Services appointed pursuant to the Financial Services Commission of Ontario Act, 1997, S.O. 1997, c. 28.
[31] The starting point of this analysis is section 44 (1) of the Act which requires that the subject pension be “a joint and survivor pension”. It reads as follows:
Every pension paid under a pension plan to a former member who has a spouse on the date that the payment of the first instalment of the pension is due shall be a joint and survivor pension.
[32] However, in spite of this mandatory provision, section 46 (1) of the Act creates an exemption to allow persons entitled to a pension benefit to waive this mandatory provision by delivering, in the context of this case, “a written waiver in the form approved by the Superintendent” It reads as follows:
The persons entitled to a joint and survivor pension plan may waive the entitlement to receive payment of pension benefits in the form of a joint and survivor pension by delivering to the administrator of the pension plan or, in the case of a deferred life annuity, to the insurance company a written waiver in the form approved by the Superintendent or a certified copy of a domestic contract, as defined in Part IV of the Family Law Act, containing the waiver.
[33] There can be little doubt that the Legislature mandated the use of the approved form to ensure that the exception to the normal benefit prescribed by section 44 (1) of the Act could be obtained only if the prescribed preconditions were strictly satisfied.
[34] Nevertheless, as the trial judge found, the waiver form signed by the respondent was not in the approved form. At paragraph 26 of his reasons, he stated as follows;
Rather than just providing basis calculations, the implications of the 14 options offered could have been made much more clearly for the late James Smith and in fact were not communicated at all to the plaintiff, except through the wording of the waiver of joint and survivor pension. The actual form signed by the plaintiff is at Tab 78 of Exhibit #3B. The wording is slightly different than Form 3 approved by the Superintendent of Financial Institutions, pursuant to the Pension Benefits Act. That Form 3 provides the following wording that is not in the document signed by the plaintiff.
“We understand that Section 44 of the Pension Benefits Act provides that the pension paid to the member or former member from the (name or pension plan) must be paid as joint and survivor pension if we are spouses or same sex partners on the date that the payment of the first installment of the pension is due.”
[35] The trial judge continued at paragraph 27 of his reasons as follows;
The form signed by the plaintiff makes no reference to Section 44 of the Act until two paragraphs later, when the waiver is directed toward the benefits under that section.
[36] He then concluded as follows at paragraph 28 as follows;
I find that the approved Form 3 is somewhat easier to understand and more clearly ties the waiver to what Section 44 of the Pension Benefits Act provides. There is no such explanation in the form signed by the plaintiff herein.
[37] In their respective factums, counsel for the appellant and counsel for the respondent made detailed submissions with respect to the extent of the differences between the waiver form that was used and the form that had been approved by the Superintendent. Copies of the comparison charts included in those submissions are appended as Appendices “A” and “B” respectively to these reasons.
[38] I conclude that not only was the waiver used not in the form approved by the Superintendent but that it was substantially different. This conclusion is amply supported by the trial judge’ reasons and, as well, the comparisons set out in the factums filed and my own examination of the forms.
[39] It is my view that, in the context of this case, the use of a waiver form that differs substantially from the approved form is, without more, fatal to the success of the appellant’s appeal. The implied mandatory statutory requirement that the waiver form, to be valid, had to be in the approved form is set out in clear and unambiguous language and allows for no exception.
[40] Accordingly, it does not matter to the outcome of this appeal whether or not the respondent did or not read the waiver form before she signed it. The proper outcome of this case, on my analysis, has nothing to do with negligent misrepresentation. Nor would it be helpful to speculate whether the respondent might have read the waiver form had it been in the approved form. My characterization of what I consider to be the central issue in this appeal recognizes the importance of the exception created by section 46 (1) and the requirement for those who choose to rely on the exemption to comply strictly with the statute.
[41] As a result, despite the failure of the judgment in appeal to recognize and give effect to the deficiency of the waiver form used, the judgment was correct and meets the requisite standard of correctness.
[42] If, however, a form of waiver substantially in accordance with the approved form had been used in this case, I would agree with the reasons given by Pierce, R.S. J. set out in paragraphs 1-23 above and the disposition of this appeal that she proposes.
Matlow, J.
Tranmer, J.
RELEASED:
Appendix “A”
Excerpt from Factum of the Appellant
FSCO FORM 3
CASCO FORM
We understand that section 44 of the Pension Benefits Act provides that the pension paid to the member or former member from the [name of pension] must be paid as a joint and survivor pension if we are spouses or same-sex spouses on the date that the payment of the first installment of the premium is due. We also understand that the amount of the pension payable to the surviving spouse or same-sex partner must not be less than 60% of the pension paid to the member or former member while both are alive.
We understand that in the event of a member’s death after the date the member’s pension benefits under the Plan are due to commence, the spouse or same-sex partner will be entitled to a survivor’s pension from the Plan. The pension equals 60% of the member’s pension and will be payable for the spouse’s or same-sex partner’s remaining lifetime.
We understand that we may waive our right to the joint and survivor pension provided by section 44 of the Pension Benefits Act by signing this waiver.
We understand that we may waive the right of the surviving spouse or same-sex partner to receive the 60% survivor’s pension. In this case, the member will be entitled to elect an alternate form of pension benefit form the Plan which does not provide any survivor’s benefit to the spouse or same-sex partner.
We understand that by signing this waiver, the surviving spouse or same-sex partner will not be entitled to any joint and survivor pension provided by section 44 of the Pension Benefits Act.
We understand that by signing this waiver, the surviving spouse or same-sex partner will not be entitled to any joint and survivor pension provided by section 44 of the Pension Benefits Act.
We hereby waive our right to a joint and survivor pension provided by section 44 of the Pension Benefits Act by signing this waiver in the presence of witnesses.
We hereby waive the right of JUDY SMITH to receive a survivor’s pension under Section 44 of the Act.
Prior to completing this form, each party should consider obtaining independent legal advice concerning their individual rights and the effect of this waiver.
Prior to completing this form, we understand that each party should consider obtaining independent legal advice concerning their individual rights and the effect of this waiver.
Appendix “B”
Excerpt from Factum of the Respondent
[1] FSCO FORM 3
[2] CASCO FORM
[3] We understand that section 44 of the Pension Benefits Act provides that the pension paid to the member or former member from the [name of pension plan] must be paid as a joint and survivor pension if we are spouses or same-sex spouses on the date that the payment of the first installment of the pension is due. We also understand that the amount of the pension payable to the surviving spouse or same-sex partner must not be less than 60% of the pension paid to the member or former member while we are both alive.
[4] We understand that in the event of a member’s death after the date the member’s pension benefits under the Plan are due to commence, the spouse or same-sex partner will be entitled to a survivor’s pension from the Plan. The pension equals 60% of the member’s pension and will be payable for the spouse’s or same-sex partner’s remaining lifetime.
[5] We understand that we may waive our right to the joint and survivor pension provided by section 44 of the Pension Benefits Act by signing this waiver.
[6] We understand that we may waive the right of the spouse or same-sex partner to receive the 60% survivor’s pension. In this case, the member will be entitled to elect an alternate form of pension benefit from the Plan which does not provide any survivor’s pension to the spouse or same-sex partner.
[7] We understand that by signing this waiver, the surviving spouse or same-sex partner will not be entitled to any joint and survivor pension provided by section 44 of the Pension Benefits Act.
[8] We understand that by signing this waiver, the surviving spouse or same-sex partner will not be entitled to any joint and survivor pension by section 44 of the Pension Benefits Act.
CITATION: Smith v. Casco, 2010 ONSC 2584
DIVISIONAL COURT FILE NO.: DC-08-00001439-000
DATE: 20100514
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MATLOW, TRANMER and PIERCE JJ.
B E T W E E N :
JUDITH SMITH
Plaintiff
(Respondent)
- and –
CASCO INC.
Defendant
(Appellant)
REASONS FOR JUDGMENT
MATLOW and TRANMER JJ. (concurring)
PIERCE R.S.J. (dissenting)
Released: May 14, 2010