DATE: 20050526

DOCKET: C39979 and C40108

COURT OF APPEAL FOR ONTARIO

CRONK, GILLESE and ARMSTRONG JJ.A.

B E T W E E N :

MARTIN GRINSELL and ARLENE GRINSELL, Executors of the Estate of CAROLE PERLETT

W. Danial Newton and Alex W. Demeo, for the appellants

Appellants (Plaintiffs)

• and -

RIVERSIDE HEALTH CARE FACILITIES INC. AND THE MUTUAL LIFE ASSURANCE COMPANY OF CANADA

Stephen J. Wojciechowski, for the respondent, Riverside Health Care Facilities Inc.

Elizabeth McIntyre and Greg Sitch, for the intervenor, The Ontario Nurses Association

Respondents (Defendants)

Heard: May 16, 2005

On appeal from the judgment of Justice H.M. Pierce of the Superior Court of Justice dated April 9, 2003 and the order of Justice Pierce dated May 8, 2003.

CRONK J.A.:

I. Background

[1] Carole Perlett, a registered nurse, was employed by Riverside Health Care Facilities Inc. (“Riverside”) from March 16, 1981 until she was killed on March 22, 1996. After her death, the appellants, the executors of her estate, claimed life insurance benefits on her behalf from the respondents under a group life insurance policy issued by The Mutual Life Assurance Company of Canada (“Mutual Life”) and administered by Riverside (the “Policy”).

[2] The group life insurance plan provided for two types of benefits under the Policy: basic life insurance benefits in stipulated amounts and enhanced benefits equal to double the annual earnings of the insured.

[3] Ms. Perlett became eligible to participate in the group life insurance plan on June 16, 1981, three months after she commenced employment with Riverside. She signed an enrolment card under the plan in July 1981, electing at that time only basic life insurance coverage under the Policy.

[4] Upon receipt of the appellants’ claim for benefits, Mutual Life paid the estate the sum of $10,165 on account of the basic life insurance benefit under the Policy, inclusive of an accidental death and dismemberment payment, rather than enhanced benefits equal to double Ms. Perlett’s annual earnings at the time of her death.

(1) Collective Agreement

[5] While employed at Riverside, Ms. Perlett was a member of the Ontario Nurses’ Association (the “ONA”), a bargaining unit of nurses at Riverside. Throughout the years, Ms. Perlett’s work at Riverside was governed by various versions of a collective agreement negotiated between the ONA and the Ontario Hospital Association on behalf of Riverside.

[6] The collective agreement identified those disputes that could be subject to grievance arbitration under the agreement. Article 7.01 of the agreement defined a grievance, “as a difference arising between the parties relating to the interpretation, application, administration or alleged violation of the Agreement including any questions as to whether a matter is arbitrable”.

[7] Riverside’s only obligations under the collective agreement in relation to the group life insurance plan were to pay a stipulated percentage of the premium on the Policy when due and to provide hospital employees with an information booklet concerning the Policy. Neither the Policy or its terms formed part of the collective agreement; nor did the collective agreement set out the terms upon which the group life insurance plan was to be administered.

[8] Following Mutual Life’s denial of the payment of enhanced benefits under the Policy, the appellants and the ONA commenced a grievance against Riverside under the arbitration provisions of the collective agreement. Initially, Riverside took the position through its counsel that the appellants’ claim was not arbitrable under the collective agreement.

(2) Tort Action

[9] The appellants then sued Riverside and Mutual Life. As against Riverside, they alleged that Riverside was negligent in administering the group life insurance plan with the result that Ms. Perlett’s estate was wrongfully denied the enhanced benefits to which she was entitled under the Policy. The appellants’ settled their claims against Mutual Life shortly before trial, whereupon their action against it was discontinued and the trial proceeded only as against Riverside.

[10] Riverside defended the tort action on various grounds, including on the basis that it did not owe a duty of care to Ms. Perlett, that it was not negligent, and that its only duty to Ms. Perlett in relation to the group life insurance plan arose under the collective agreement, with which it had complied.

[11] In its statement of defence, Riverside also pleaded that no action could be maintained at law on behalf of Ms. Perlett because her rights were set out in the collective agreement and a grievance under that agreement had been initiated on the issues raised in the appellants’ statement of claim. In essence, and contrary to its earlier position that the appellants’ claims were not arbitrable, Riverside asserted that the appellants’ claims were governed by and subject to the collective agreement.

[12] However, prior to trial, Riverside agreed not to raise any jurisdictional argument in defence to the action and to deal with the appellants’ claims on the merits. On that basis, the grievance initiated by the appellants was settled.

[13] At trial, the court’s jurisdiction to determine the dispute between the parties was not put in issue by the parties. Riverside did not raise any jurisdictional issue at trial; nor did it ask the trial judge to make a determination of the rights between the parties based upon the assertion that the appellants’ claims fell to be determined exclusively under the collective agreement. To the contrary, during the course of the trial, Riverside’s counsel informed the trial judge that the parties had agreed not to argue the issue of jurisdiction and that he was not relying upon the jurisdictional issue to defeat the appellants’ claims.

[14] In the result, neither party raised or made submissions at trial on the justiciability in a court of law of the appellants’ claims against Riverside.

[15] The trial judge was also informed of the fact that a grievance had been initiated. However, when Riverside sought to lead evidence at trial concerning the grievance, the trial judge ruled that such evidence was irrelevant and, therefore, inadmissible.

[16] By judgment dated April 9, 2003, Pierce J. of the Superior Court of Justice held that Riverside owed its employees a duty of care to advise them concerning group insurance and to competently administer its group benefits plans; that, in the case of Ms. Perlett, Riverside breached this duty in several respects; and that, if properly informed of the availability of the enhanced insurance benefits under the Policy, Ms. Perlett would have applied for and received enhanced group life insurance coverage worth twice her annual earnings. The trial judge stated, “Had Carole Perlett not been a member of a collective bargaining unit, I would have had no difficulty in concluding negligence by the employer is made out.”

[17] The trial judge then went on to hold that Riverside’s negligence in administering the group life insurance plan was a matter “within the normal scope of employer-[employee] relations, and [was] governed by the collective agreement”. On this basis, and in reliance on the Supreme Court of Canada’s decision in Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, the trial judge dismissed the appellants’ action.

(3) ‘Reconsideration’ Motion

[18] Promptly after the release of the trial judge’s reasons for the dismissal of the tort action and prior to her judgment in the action being taken out, the appellants brought a motion before the trial judge asking her to reconsider and reverse her judgment on the basis of new evidence relating to pre-trial events concerning the jurisdictional issue, including the grievance. In so doing, the appellants essentially sought to reopen the trial to adduce such new evidence. They did not assert that the new evidence was ‘fresh’ evidence, in the sense that it was discovered only after trial.

[19] The trial judge dismissed the appellants’ motion, stating, in part:

Would the evidence the plaintiffs seek to adduce make any difference to the trial judgment? No. The plaintiffs seek, essentially, to have the court accept jurisdiction where none exists. Consent cannot import jurisdiction. ...This court is bound by the precedent established by the Supreme Court of Canada in Weber v. Ontario Hydro.

[20] The appellants now appeal to this court from the dismissals of their tort action and their ‘reconsideration’ motion. By order of this court dated September 9, 2004, the ONA was granted leave to intervene as a party in both appeals.

II. Discussion

(1) Appeal from Dismissal of Tort Action

[21] In my view, the appellants’ appeal from the trial judge’s dismissal of the tort action on jurisdictional grounds must be allowed. I reach this conclusion for the following reasons.

[22] First, in reaching her determination that Riverside’s negligence in administering the group life insurance plan was governed by the collective agreement, the trial judge failed to consider the specific provisions of the agreement that set out Riverside’s limited obligations concerning the plan and to relate those provisions of the agreement to the matters in dispute between the parties.

[23] As stated by the Supreme Court of Canada in Weber, supra, at paras. 51 and 52:

[T]he task of the judge or arbitrator determining the appropriate forum for the proceedings centres on whether the dispute or difference between the parties arises out of the collective agreement. Two elements must be considered: the dispute and the ambit of the collective agreement.

In considering the dispute, the decision-maker must attempt to define its “essential character”, to use the phrase of La Forest J.A. in Energy and Chemical Workers Union, Local 691 v. Irving Oil Ltd. (1983), 148 D.L.R. (3d) 398, 47 N.B.R. (2d) 205 (C.A.). The fact that the parties are employer and employee may not be determinative. Similarly, the place of the conduct giving rise to the dispute may not be conclusive; matters arising from the collective agreement may occur off the workplace and conversely, not everything that happens on the workplace may arise from the collective agreement: Energy & Chemical Workers Union, supra, per La Forest J.A. …In the majority of cases, the nature of the dispute will be clear; either it had to do with the collective agreement or it did not. Some cases, however, may be less than obvious. The question in each case is whether the dispute, in its essential character, arises from the interpretation, application, administration or violation of the collective agreement [emphasis added].

[24] Thus, the trial judge was obliged to determine the essential character of the dispute before her and whether it fell within the ambit of the collective agreement having regard to the specific provisions of the agreement that related to the group life insurance plan. Her failure to do so constitutes reversible error.

[25] Second, the trial judge dismissed the appellants’ action solely on the basis that Riverside’s alleged negligence was a matter governed by the collective agreement. It was thus her view that the adjudication of the appellants’ claims was an arbitrable matter to be determined under the grievance arbitration provisions of the collective agreement.

[26] But the arbitrability of the appellants’ claims was not in issue at trial. It was not raised or asserted by either party and it was not the subject of any submissions by the parties. These facts distinguish the case at bar from those cases where the justiciability in a court of law of a plaintiff’s claim is squarely before the court.

[27] Third, the essential character of the dispute between the parties in this case concerned the propriety of Riverside’s administration of the group life insurance plan and its duties to Ms. Perlett as a participating member of that plan. The collective agreement is silent on these issues. The agreement provides only for Riverside’s obligations to pay the premiums on the Policy when due and to furnish its employees with an information booklet concerning the Policy.

[28] There is no dispute here as to whether Riverside paid premiums on the Policy when due, as required under the collective agreement. Moreover, where a collective agreement provides only that an employer will be responsible for the payment of premiums associated with an insurance policy, a claim against the employer for the provision of benefits is not arbitrable: see Canadian Broadcasting Corp. v. Burkett (1997), 155 D.L.R. (4th) 159 (Ont. C.A.) at 167-68. In any event, the appellants’ claims against Riverside were not premised on an alleged duty by Riverside to pay benefits under the Policy.

[29] Accordingly, the facts that give the dispute between the parties its essential character and the specific language of this collective agreement indicate that the parties did not intend this dispute to be governed by the collective agreement. The essential character of the matters at issue does not engage the rights and obligations of the parties found expressly or by inference in the collective agreement: see London Life Insurance Co. v. Dubreuil Brothers Employees Association (2000), 49 O.R. (3d) 766 (C.A.).

[30] In all these circumstances, I conclude that the trial judge’s dismissal of the action on jurisdictional grounds cannot stand. However, that does not end the matter.

[31] The trial judge made clear findings that Riverside owed Ms. Perlett a duty of care and that Riverside breached that duty in several respects. Riverside has not appealed those findings and the tort action failed solely on the basis of the trial judge’s conclusion that the proper forum for resolution of the appellant’s claims was before an arbitrator under the arbitration process envisaged by the collective agreement. In addition, there is no dispute between the parties on the issue of damages. With one qualification, which I address next, the parties are agreed that the quantum of the appellants’ loss is $206,840, that is, the value of the enhanced benefits payable in relation to Ms. Perlett under the Policy, net of the basic life insurance benefit already received by the appellants.

[32] Given these factors, I conclude that effect should be given to the trial judge’s determination of the appellants’ negligence claims against Riverside.

[33] The respondent argues, however, that the amount payable to the appellants should be further reduced by the sum of $50,000, paid by Mutual Life to the appellants as a term of the settlement leading to the discontinuance of the tort action as against Mutual Life.

[34] I do not accept this submission. On the record before this court, the nature of and the basis for this payment are unclear and I am unable to conclude that it was received by the appellants as a partial payment of the enhanced benefits claimed under the Policy.

[35] I also do not agree with the respondent’s submission that the appellants’ claim against Riverside is foreclosed by the settlement reached with Mutual Life. As appears from their statement of claim, the appellants’ claims against Riverside were not restricted to claims against it in its capacity as an agent of the insurer. Nor did the trial judge find that the duty of care owed by Riverside to Ms. Perlett was premised on an agency relationship between Riverside and the insurer.

(2) Appeal from Dismissal of ‘Reconsideration’ Motion

[36] I have already determined that I would allow the appeal from the dismissal of the tort action, on the basis that I have described. Accordingly, it is unnecessary to consider the matters raised on the appellants’ appeal from the dismissal of their ‘reconsideration’ motion.

III. Disposition

[37] Accordingly, for the reasons given, I would allow the appeal and set aside the dismissal of the tort action, and grant judgment against Riverside in favour of the appellants in the sum of $206,840, together with pre-judgment interest from October 18, 1996 (the date of the payment to the appellants of the basic group life insurance benefit) and post-judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C-43. I would dismiss, as moot, the appellants’ appeal from the dismissal of their ‘reconsideration’ motion.

[38] The appellants are entitled to their costs of this proceeding on a partial indemnity scale, fixed in the total amount of $25,000, inclusive of disbursements and Goods and Services Tax. The appellants are also entitled to their costs of the trial, to be assessed if the parties are unable to agree on quantum.

RELEASED:

“MAY 26 2005” “E.A. Cronk J.A.”

“EAC” “I agree E.E. Gillese J.A.”

“I agree Robert P. Armstrong”