CITATION: Smith v. Casco Inc., 2011 ONCA 306
DATE: 20110420
DOCKET: C52672
COURT OF APPEAL FOR ONTARIO
Goudge, Gillese and Juriansz JJ.A.
BETWEEN
Judith Smith
Plaintiff (Respondent)
and
Casco Inc.
Defendant (Appellant)
John D. Strung, for the appellant
Colin E. Wright, for the respondent
Heard: February 15, 2011
On appeal from the order of the Divisional Court (Pierce R.S.J., Matlow and Tramner JJ.), dated May 14, 2010, with majority reasons by Matlow J. and dissenting reasons by Pierce R.S.J.
Gillese J.A.:
OVERVIEW
[1] This appeal revolves around a single question: is the plaintiff bound by a spousal waiver that she signed in respect of her husband’s pension?
[2] Section 44 of the Pension Benefits Act, R.S.O. 1990, c. P.8 (“PBA”) requires every pension paid to a member with a spouse on the date of the first instalment of the pension to be a joint and survivor pension. However, s. 46(1) of the PBA permits those who are entitled to a joint and survivor pension to waive their entitlement by delivering a written waiver in the form approved by the Superintendent.[^1]
[3] The waiver that the plaintiff signed was not the Superintendent approved form.
[4] In my view, the executed spousal waiver deviates from the Superintendent approved form in matters affecting substance and the plaintiff is not bound by it.
BACKGROUND
[5] Jim Smith worked for Casco Inc. for approximately 39 years. At first, he was a labourer in which he did the “dirty jobs”. In the process, he was exposed to high levels of n-hexane and benzene, which apparently are carcinogens. Later, he rose to be a supervisor and production trouble shooter at the Cardinal plant, a position of significant responsibility. Although he had a modest education, his income in the last few years of employment was just under $100,000. At one point, Jim and his wife, Judith Smith, moved to a home just three blocks from the plant so that Mr. Smith could respond more readily to his many call-backs. He received congratulations from the company president and was described as a committed and valuable employee.
[6] Mr. Smith was a member of the Casco pension plan.
[7] In about February 2000, Mr. Smith told his wife that Casco was offering an exit incentive program that would give them a bonus of approximately $76,000 and a full pension if he were prepared to retire early, at the age of 58. After 39 years on the job, they were both excited at the prospect.
[8] Judith Smith was entirely dependent on her husband’s income. She and Jim were married in 1961, when they were both young. With only a Grade 9 education, she had no significant employment history outside of the home. She relied entirely on her husband in terms of financial matters.
[9] The pension was critical to the couple’s future. Apart from their house, which they did not intend to sell, their only other asset consisted of RRSPs totalling about $168,000 (including the early retirement bonus).
[10] Mr. Smith was presented with fourteen pension options from which to choose. By default, pursuant to Option 5 he would have received a monthly pension of $3,322.39 up to his 65th birthday. Thereafter, he would have received $2,758.22 per month for life. Had Mr. Smith selected this option, Judith Smith would have been entitled to a survivor’s pension of $1,654.93 per month for life, if he predeceased her.
[11] Instead, Mr. Smith chose Option 2, under which he was entitled to a pension of $3,590.39 per month until he turned 65, and then $3,026.23 per month for life, guaranteed for 60 months, that is until July 1, 2005. Pursuant to this option, his wife was entitled to no survivor benefits beyond July 1, 2005. He signed the necessary paperwork to select Option 2 and take early retirement.
[12] In order for Mr. Smith to select Option 2, Judith Smith was required to sign a form that had been prepared by Casco. Part of the title to the document was “Postretirement Spousal Survivor Benefit Waiver Form” (the “Casco Spousal Waiver”). The form is set out in full in Schedule A to these reasons.
[13] On June 14, 2000, Jim brought the Casco Spousal Waiver home with him at lunchtime. He told Judith that she had to sign it so he could retire. She “glanced at it” and then signed it. She did not read the Casco Spousal Waiver carefully. Only the first substantive paragraph, which she understood assured her of a 60% survivor’s pension, “really jumped out” at her. The Casco Spousal Waiver referred to section 44 of the PBA, a matter about which Mrs. Smith knew nothing.
[14] Mr. Smith took the exit incentive program and retired from Casco on July 1, 2000, at age 58. At the time, he was in apparent good health. However, on November 5, 2003, he was unexpectedly diagnosed with cancer. He died less than a month later, on December 3, 2003.
[15] Mrs. Smith then learned that her husband had chosen a single life pension guaranteed for five years, a period that would expire in June 2005. After that date, Mrs. Smith’s only income has been from CPP, in the amount of $5,600 to $5,900 a year.
[16] She brought an action against Casco for negligent misrepresentation in respect of the information it had provided her and her husband about the pension options.
[17] By the time of trial, Mrs. Smith had sold her house, was living in rented accommodation, had exhausted virtually all of her savings, and had outstanding income tax and Visa bills.
[18] In advance of trial, the parties agreed on damages, in the event that Casco was found liable. Those damages amounted to Mrs. Smith being paid pension benefits as if her husband had chosen Option 5. Thus, they consisted of a lump sum to the date of trial and thereafter, payment of $1,654.93 per month for the balance of Judith Smith’s life, less any deduction for contributory negligence.
[19] At trial, much evidence was led about what Casco did and did not do when providing the Smiths with information about the various pension options and their consequences.
[20] The trial judge held that there had been negligent misrepresentation on the part of Casco and no contributory negligence on Mrs. Smith’s part. By judgment dated May 29, 2008, he ordered damages in the agreed on amounts.
[21] Casco appealed.
[22] On appeal, a majority of the Divisional Court upheld the trial decision on the basis that the Casco Spousal Waiver was invalid because it was “substantially different” from the Superintendent approved waiver. A copy of the Superintendent approved waiver can be found in Schedule B to these reasons.
[23] Pierce R.S.J., in dissent, would have allowed the appeal and dismissed the claim on the basis that any deviations in the Casco Spousal Waiver were irrelevant. In her view, Mrs. Smith was bound by the Casco Spousal Waiver because she had signed it. Alternatively, Pierce R.S.J. held that the court could relieve against deviations from the prescribed form and this was an appropriate case for such relief.
[24] With leave, Casco appeals to this court.
THE ISSUE
[25] As previously mentioned, this appeal revolves around a single issue: is Mrs. Smith bound by the Casco Spousal Waiver that she signed?
[26] After resolving this issue, I will respond to the following questions, which the appellant has asked this court to answer:
Was Mrs. Smith’s failure to read the Casco Spousal Waiver fatal to her claim?
Did the Casco Spousal Waiver depart in substance from the form prescribed by the Superintendent?
Does s. 46 of the PBA render the Casco Spousal Waiver invalid or does the court have the power pursuant to s. 28(d) of the Interpretation Act, s. 98 of the Courts of Justice Act, R.S.O. 1990, the common law, or the rules of Equity, to relieve against the requirement of s. 46 of the PBA?
If the court has such a power, should it have been exercised in the circumstances of this case?
If Mrs. Smith is not barred from recovery by reason of signing the Casco Spousal Waiver, should her recovery be reduced for her own contributory negligence in signing the form without reading it?
THE RELEVANT LEGISLATIVE PROVISIONS
[27] The relevant parts of ss. 44 and 46 of the PBA read as follows:
- (1) Every pension paid under a pension plan to a former member who has a spouse on the date that the payment of the first installment of the pension is due shall be a joint and survivor pension.
(3) The amount of the pension payable to the survivor of the former member and the spouse of the former member shall not be less than 60 per cent of the pension paid to the former member during the joint lives of the former member and his or her spouse.
- (1) 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.
[28] Section 28(d) of the Interpretation Act, R.S.O. 1990, c. I.11, read as follows:
- In every Act, unless the contrary intention appears,
(d) where a form is prescribed, deviations therefrom not affecting the substance … do not vitiate it;
[29] The Interpretation Act was repealed by s. 134 of the Access to Justice Act, 2006, S.O. 2006, c. 21. The Access to Justice Act also enacted the Legislation Act, 2006, S.O. 2006, c. 21, Sch. F, which replaced the Interpretation Act. The Legislation Act, 2006, came into force on July 25, 2007.
[30] Section 84 of the Legislation Act, 2006, is the successor provision to s. 28(d) of the Interpretation Act. It differs significantly from s. 28(d). It reads as follows:
- Deviations from a form whose use is required under an Act do not invalidate the form if,
(a) they do not affect the substance and are unlikely to mislead; and
(b) the form is organized in the same or substantially the same way as the form whose use is required.
[31] However, as s. 28(d) of the Interpretation Act was in force at the time that Mrs. Smith signed the Casco Waiver Form and there is nothing in the Legislation Act, 2006, to suggest that it is intended to apply retroactively, it is s. 28(d) of the Interpretation Act that Casco relies on in this appeal.
ANALYSIS
[32] A pension can play a vital role in the quality of a spouse’s life, as this case amply demonstrates.
[33] Its importance is underscored by s. 44 of the PBA:
44.(1) Every pension paid under a pension plan to a former member who has a spouse on the date that the payment of the first installment of the pension is due shall be a joint and survivor pension. [emphasis added]
[34] The mandatory nature of the language in s. 44(1) demonstrates that the legislature intended that pensions for plan members with spouses at the time they begin receiving their pensions are to be “joint and survivor”.
[35] However, s. 46(1) enables those with a right to a joint and survivor pension benefit to waive that entitlement.
- (1) 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. [emphasis added]
[36] On a plain reading of s. 46(1), waiver can be effected by one of two means: a Superintendent approved waiver or a domestic contract. As has been mentioned, only the first of the two is in play in this appeal.
[37] Whether s. 46(1) was intended to prescribe the only methods by which waiver can be achieved was not squarely raised in these proceedings and need not be decided. For the purposes of this appeal, I will assume without deciding that waiver can be effected using a form other than the Superintendent approved form. Thus, the question becomes, was the Casco Spousal Waiver effective?
[38] Casco relies on s. 28(d) of the Interpretation Act.[^2] For ease of reference, the relevant part of s. 28(d) is set out again now:
- In every Act, unless the contrary intention appears,
(d) where a form is prescribed, deviations therefrom not affecting the substance … do not vitiate it;
[39] Accordingly, the Casco Spousal Waiver must be compared to the Superintendent approved waiver to determine whether there are deviations affecting the substance of the form.
[40] In my view, a comparison of the two waiver forms (which can be found in Schedules A and B to these reasons) leads to the clear conclusion that the deviations in the Casco Spousal Waiver affect the substance of the form. The most significant deviation is this. The Superintendent approved waiver makes it clear that entitlement to a joint and survivor pension arises from s. 44 of the PBA and that as a result of signing the waiver, entitlement to the joint and survivor pension is waived. This message is delivered in two ways. First, the signatories must insert the name of the pension plan into the sentence that says that the right to a joint and survivor pension flows from s. 44 of the PBA. Second, there is a stand-alone statement in bold type, which warns that by signing the document, entitlement pursuant to s. 44 of the PBA is waived.
[41] By contrast, the Casco Spousal Waiver can be read as if the right to a joint and spousal pension arises both from the Casco pension plan and under s. 44 of the PBA and that by signing the waiver, the signatory waives only entitlement flowing from s. 44. The first substantive paragraph in the Casco Spousal Waiver states that the signatories understand that the surviving spouse is entitled to a pension of 60% of the member’s pension from the pension plan. It is important to note that this paragraph makes no mention of s. 44 of the PBA. The statement that by signing the waiver, the surviving spouse will not be entitled to a joint and survivor pension provided by s. 44 of the PBA is located two paragraphs below. This statement is immediately followed by the paragraph in which the signatory waives the right to receive a “survivor’s pension under Section 44 of the Act”. Given the first substantive paragraph, which says that the right to a 60% joint and spousal pension arises from the pension plan, and the statement that by signing the waiver one gives up one’s entitlement flowing from s. 44 of the PBA, the Casco Spousal Waiver can be read as if the right to a joint and survivor pension flowing from the pension plan remains, even after the waiver has been signed.
[42] Because the purpose of the waiver is to give up all entitlement to a joint and survivor pension, this is a deviation of substance from the Superintendent approved waiver. The deviation impairs the substance of the waiver in the sense that the waiver does not meet the purpose for which it was required – to advise that by signing the form, a person waives all of his or her entitlement to a joint and survivor pension.
[43] In addition to this critical difference between the two waiver forms, four other differences between the two forms are worthy of note.
The title of the forms – The Superintendent approved waiver is completely unambiguous. In bold, capitalized letters it states “WAIVER OF JOINT AND SURVIVOR PENSION”. It is clear what the document is all about. The title of the Casco Waiver Form, on the other hand, does not make clear its purpose or nature. The title is “Pension Plan for Salaried Employees of Canada Starch Operating Company Inc.”, followed by “(Ontario Registration Number: Pending)”, followed by “Postretirement Spousal Survivor Benefit Waiver Form”.
The consequences of signing the waiver – The Superintendent approved waiver states in bold type that by signing the waiver, the person is losing entitlement to any joint and survivor pension provided by s. 44 of the PBA. The same statement is made in the Casco Spousal Waiver but it is not in bold type. Further, given the substantive ambiguity in the Casco Spousal Waiver described above, it is not clear from reading the sentence that the consequence of signing is that all entitlement to a joint and survivor pension is waived.
Independent legal advice – On the Superintendent approved waiver, the caution that before signing each person should consider obtaining independent legal advice is in bold type and immediately below the signature lines. Both the placement of the caution and the fact that it is in bold type draw attention to it. In the Casco Spousal Waiver, however, the caution is in regular type and forms part of the body of the document. Consequently, the caution has no prominence.
Delivery of the form – There is a note at the bottom of the Superintendent approved form, in bold type, stating that the waiver is not effective unless delivered to a certain person and within a certain period of time. This statement corresponds to the statutory requirement in s. 46(1) of the PBA. There is no equivalent statement on the Casco Spousal Waiver.
[44] As there are substantive differences between the Casco Spousal Waiver and the prescribed form, in my view, the Casco Spousal Waiver is invalid.
[45] Casco argued that the doctrine of non est factum applies, with the result that Mrs. Smith is bound. In my view, that doctrine does not apply when the legislature has provided a prescribed form. Casco chose to use its own form at its peril.
[46] Casco raised a “floodgate” alarm. This is a legitimate concern. There may be situations in which people have signed waivers that differ from the Superintendent approved waiver and are fully aware of the consequences of their actions. However, as Casco points out in the third question that it posed for the court, there are other methods by which the court may relieve against the strict requirements of s. 46. Those other arguments are not in play in this appeal. To the extent that Casco raises estoppel, it does so for the first time on appeal. A new defence is not to be raised at this stage of the proceedings, if for no other reason than the prejudice it would cause to Mrs. Smith given that all of the evidence is in.
[47] Having concluded that the Casco Spousal Waiver deviates in substance from the prescribed form, it is unnecessary to deal with the respondent’s alternative argument, namely, that the appeal should be dismissed by reason of Casco’s negligent misrepresentation.
[48] Based on the foregoing analysis, I would answer the questions posed by Casco as follows.
- Was Mrs. Smith’s failure to read the Casco Spousal Waiver fatal to her case?
ANSWER: No. The question is irrelevant in the circumstances of this case because the Casco Spousal Waiver is invalid.
- Did the Casco Spousal Waiver depart in substance from the form prescribed by the Superintendent?
ANSWER: Yes.
- Does s. 46 of the PBA render the form invalid or does the court have the power pursuant to s. 28(d) of the Interpretation Act, s. 98 of the Courts of Justice Act, R.S.O. 1990, the common law, or the rules of Equity, to relieve against the requirement of s. 46 of the PBA?
ANSWER: For the purposes of this appeal, it has been assumed that the court has the power to relieve against the s. 46 requirement.
- If the court has such a right, should it have been exercised in the circumstances of this case?
ANSWER: No, for the reasons given.
- If Mrs. Smith is not barred from recovery by reason of signing the Casco Spousal Waiver, should her recovery be reduced for her own contributory negligence in signing the form without reading it?
ANSWER: Having found the Casco Spousal Waiver to be invalid, the question of contributory negligence does not arise in this case.
DISPOSITION
[49] Accordingly, I would dismiss the appeal with costs in the agreed amount of $20,000, inclusive of disbursements and applicable taxes.
RELEASED: APR 20 2010 (“E.E.G.”)
“E. E. Gillese J.A.”
“I agree. S. T. Goudge J.A.”
“I agree. R. G. Juriansz J.A.”
Pension Plan for Salaried Employees of Canada Starch Operating Company Inc.
(Ontario Registration Number: Pending)
Postretirement Spousal Survivor Benefit Waiver Form
I, ______________________________________________________, a member of the above Plan
(member’s name)
And____________________________________________________, certify that we are spouses or same-
(spouse’s or same-sex partner’s name)
sex partners within the meaning of the Ontario Pension Benefits Act (the “Act”).
We understand that in the event of the 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 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.
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 the right of______________________________________________________________
(spouse’s or same-sex partner’s name)
to receive a survivor’s pension under Section 44 of the Act.
We understand that we my revoke this waiver at any time prior to the member’s pension benefits under the Plan are due to commence.
Prior to completing this form, we understand that each party should considering obtaining independent legal advice concerning their individual rights and the effect of this waiver.
Dated this day of________, 20.
Signature of Member Signature of Witness
Signature of Spouse or Same-sex partner Signature of Witness
C8038\Spousal-Waiver.doc\ag\20 03/2000
Financial Services
Commission
Of Ontario
WAIVER OF JOINT AND SURVIVOR PENSION
Form 3 – Approved by the Superintendent of Financial Services pursuant to
the Pension Benefits Act, R.S.O. 1990, c. P.8, as amended
Name of member or former member
We,
Name of spouse or same-sex partner of member or former member
and
(referred to below as the “member or former member”)
(referred to below as the “spouse or same-sex partner”)
certify that we are spouses or same-sex partners within the meaning of the Pension Benefits Act.
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 partners on the date that the payment of the first instalment of the pension is due. We also understand that the amount of 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.
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 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 a witness.
We understand that we may cancel this waiver at any time before the date of the commencement of payment of the member’s or former member’s pension.
Day, Month, Year
Dated this
day of
Signature of witness
Signature of member or former member
Name and Address of Witness (Printed)
Signature of Witness
Signature of spouse or same-sex partner of member or former member
Name and Address of Witness (printed)
Prior to completing this form, each party should consider obtaining independent legal advice concerning their individual rights and the effect of this waiver.
NOTE: This waiver is not effective unless it is delivered to the administrator of the pension plan or the insurance company, where appropriate within the twelve months preceding the commencement of payment of the pension benefit as required by subsection 46(2) of the Pension Benefits Act.
Form 3 – 2000/03/03
[^1]: S. 46(1) also provides that waiver can be by means of a certified copy of a domestic contract. As this aspect of s. 46(1) is not relevant to this appeal, it will not be referred to again in these reasons.
[^2]: As explained above, s. 28(d) is no longer operative. However, it was at the time that Mrs. Smith signed the Casco Spousal Waiver.