COURT OF APPEAL FOR ONTARIO

CITATION: Pouget v. Saint Elizabeth Health Care, 2012 ONCA 461

DATE: 20120629

DOCKET: C53714

Feldman, MacPherson and Sharpe JJ.A.

BETWEEN

Julie Pouget

Appellant

and

Saint Elizabeth Health Care and Judy Davidson

Respondents

Paul J. Pape, for the appellant

Christopher M. Andree, for the respondents

Heard: March 5, 2012

On appeal from the judgment of Justice Terrence L.J. Patterson of the Superior Court of Justice, dated April 13, 2011, with reasons reported at 2011 ONSC 1013.

Feldman J.A.:

Introduction

[1] The appellant, Julie Pouget, was fired from her job as a nurse by the respondent, Saint Elizabeth Health Care (“SEHC”) in March 2003. Days later, SEHC reported the termination to the Ontario College of Nurses (the “College”), as it was obliged to do under the Regulated Health Professions Act, 1991, S.O. 1991, c. 18 (the “Act”). Although a discipline proceeding was instituted by the College, ultimately no evidence was offered. In November 2008, more than five and a half years after the College received the complaint about Pouget, all of the charges against her were dismissed.

[2] In 2009, Pouget issued a statement of claim against SEHC and her former manager, the respondent Judy Davidson. The action was principally styled as one for wrongful dismissal but Pouget also pleaded several claims alleging bad faith, including: malicious prosecution; negligent investigation; breach of fiduciary duty; and intentional infliction of mental distress. This second category of claims arose directly from SEHC’s report to the College and the damages Pouget claims to have suffered in the resulting investigation and discipline proceedings.

[3] The respondents moved before pleading to strike all of Pouget’s claims except the claim for wrongful dismissal. They argued that none of the “bad faith” claims could be advanced because all the information needed to prove them was privileged and inadmissible under s. 36(3) of the Act. That section prohibits any “report, document or thing prepared for or statement given” in a discipline proceeding from being used in a civil proceeding. The motion judge agreed with the respondents and struck all of the claims except the claim for wrongful dismissal. He also dismissed the action in its entirety against the respondent Davidson.

Facts

[4] As this appeal arises from a pleadings motion, the facts are taken from the statement of claim and the motion judge’s reasons.

[5] Pouget became a registered nurse in 1997 and was hired by SEHC in 1998 to provide home-based nursing care. In January 2003, Pouget was selected to become a member of SEHC’s “Web of Wisdom” team for nurses with special expertise in wound care. This required additional training and travel on top of Pouget’s regular caseload.

[6] On February 18, 2003, a client called SEHC to report that Pouget missed a scheduled visit the previous day. When SEHC followed up, the client also reported that Pouget had smelled strongly of alcohol on a previous visit. Another client apparently reported a missed visit on February 19, 2003. On Friday, February 21, Pouget’s father called her manager, Davidson, to advise that Pouget had suffered an emotional breakdown and to ask for a meeting to discuss the situation. In the course of arranging for Pouget’s clients to be seen by other nurses, Davidson determined that an investigation was required involving contacting all of Pouget’s clients.

[7] Davidson met with Pouget and her father on Monday, February 24. Pouget confirmed that she was having mental health issues but denied any professional misconduct. She was put on paid then unpaid leave. Pouget was referred to a psychologist as part of SEHC’s employee assistance program and was scheduled to either return to work or provide a status report on March 14. In her statement of claim, Pouget maintains that she did not know she was required to provide a doctor’s note clearing her to resume working at this time, but that she obtained such a note on March 19 and promptly informed Davidson.

[8] On March 25, 2003, Pouget received a letter from Davidson advising her that she was terminated “due to frustration of contract”. Following the termination, Davidson continued her investigation.

[9] On April 9, 2003, Davidson submitted a report to the College pursuant to s. 85.5(1) of the Health Professions Procedural Code, Schedule 2 to the Act (the “Code”), which requires employers of regulated health professionals to inform the Registrar when an employee is terminated due to professional misconduct, incompetence or incapacity. That section further provides that notice of the dismissal to the Registrar must be in “a written report setting out the reasons” for termination.

[10] After meeting with College investigators, Davidson prepared a multi-count complaint against Pouget involving approximately 15 clients and alleging missed visits, billing irregularities, improper befriending of clients, alcohol dependency and improper financial dealings with clients. The College eventually withdrew some of the charges in June 2006 and the rest on the eve of the hearing in November 2008. Four months later, Pouget brought her claim against SEHC and Davidson.

The Motion to Strike

[11] SEHC and Davidson moved to strike all of Pouget’s claims except the one for wrongful dismissal. The motion judge granted the motion and dismissed the claim against Davidson in its entirety. He also dismissed Pouget’s motion to add certain parties (all SEHC employees) because the applicable limitation period had expired.

[12] The motion judge based his analysis and conclusion on s. 36(3) of the Act, which provides:

No record of a proceeding under this Act, a health profession Act or the Drug and Pharmacies Regulation Act, no report, document or thing prepared for or statement given at such a proceeding and no order or decision made in such a proceeding is admissible in a civil proceeding other than a proceeding under this Act, a health profession Act or the Drug and Pharmacies Regulation Act or a proceeding relating to an order under section 11.1 or 11.2 of the Ontario Drug Benefit Act.

[13] The motion judge reasoned that because this provision prevented Pouget from proving any allegations involving the report to the College and the resulting fallout, those allegations must be struck out at the pleading stage. This encompassed all her bad faith claims against SEHC.

[14] He also accepted the respondents’ position that the Code, which is a schedule under the Act, provides a complete code to Pouget’s claims except for wrongful dismissal. In particular, he noted that SEHC was mandated under s. 85.5(1) of the Code to report Pouget’s termination, and s. 85.6 of the Code provides immunity for reports made in good faith: “No action or other proceeding shall be instituted against a person for filing a report in good faith under section 85.1, 85.2 or 85.5.” The motion judge observed that under s. 26(4) of the Code, a panel can choose not to proceed with a complaint if it is found to be frivolous, vexatious or made in bad faith or otherwise an abuse of process. Section 53 of the Code authorizes the panel to order the College to pay all or part of a member’s legal costs if it is of the opinion that the commencement of proceedings was unwarranted.

[15] The motion judge explained, at paras. 41-42:

The allegation before the court is that SEHC did an incomplete investigation in preparing the report to the [College] and that they withheld information that was contained in their business records that would have exonerated Pouget.

This begs the question as to who has the responsibility for investigating any allegations. It appears to me that the provisions of the legislation clearly provide the investigatory role and the decision to proceed or not with the disciplinary procedures to be entirely in the hands of the [College].

[16] The motion judge concluded that only the wrongful dismissal action was properly before the court.

[17] Notably, he further held, at para. 44, that “all business records, save and except as they pertain to the wrongful dismissal action, are not evidence that may be admitted pursuant to s. 36(3) of the Code.”

The Appeal

[18] Pouget appeals, seeking leave to amend her pleadings and asking this court to reinstate the action against Davidson. In oral argument, counsel advised that Pouget wished to abandon her appeal seeking to add parties as defendants.

[19] On appeal, the parties agree on a few basic premises. First, Pouget should be allowed to proceed with her wrongful dismissal claim. Second, SEHC’s written report to the College, submitted on April 9, 2003 pursuant to s. 85.5(1) of the Code, is inadmissible and cannot form part of Pouget’s claim. Third, s. 85.6 of the Code immunizes a person from being sued for filing a report “in good faith” under s. 85.5. Counsel did not agree on how to reconcile this provision with the documentary immunity from production accorded under s. 36(3).

[20] The main point of contention between the parties boils down to whether or not Pouget can rely on documents, principally business records, that were created before SEHC made its report to the College, but that were subsequently referred to in the report or provided as part of the complaint.

[21] Counsel for Pouget submits that any documents generated before Pouget’s dismissal on March 25, 2003 – including activity logs and billing records she says will exonerate her of any wrongdoing – are not covered by s. 36(3) because they existed independently of any report to the College and were clearly not “prepared for” that purpose. He acknowledges that documents created between Pouget’s termination on March 25 and SEHC’s report to the College on April 10 would be inadmissible if they were created for the purpose of the report. He submits that the characterization of these documents is a question of fact that should be left to the trial judge. As noted above, counsel for Pouget accepts that the report itself and any information gathered in the resulting investigation are inadmissible under s. 36(3).

[22] Counsel for SEHC submits that any document referred to in the report or appended to the report, as well as any information that touches on the substance of the report, is privileged under s. 36(3). This includes information generated before the report was contemplated if SEHC ultimately relied on that information in its report. In oral argument, counsel for SEHC took the position that documents created prior to dismissal would be admissible in a regular wrongful dismissal claim, but that those same documents would be inadmissible if the termination was accompanied by a report to the College.

Analysis

(a) The Case Law

[23] The interpretation and application of s. 36(3) has been discussed in three recent decisions of this court: M.F. v. Sutherland (2000), 2000 CanLII 5761 (ON CA), 188 D.L.R. (4th) 296; Task Specific Rehabilitation Inc. v. Steinecke (2004), 2004 CanLII 4853 (ON CA), 244 D.L.R. (4th) 414; and Ontario v. Lipsitz, 2011 ONCA 466, 281 O.A.C. 67. Immunity provisions similar to s. 85.6 of the Code were discussed in these cases and in the Supreme Court of Canada’s decision in Finney v. Barreau du Quebec, 2004 SCC 36, [2004] S.C.R. 17. I will consider each in turn.

[24] In Sutherland, Laskin J.A. writing for the majority explained, at para. 36, that “the purpose of s. 36(3) is to prevent not just patients but all participants in College proceedings from using documents generated for those proceedings in civil proceedings, in short to keep the two proceedings separate.” He held, at para. 40, that where a pleading pleads facts that cannot be proved at trial because it relies on documents that are inadmissible under s. 36(3), the pleading must be struck out under rule 25.11. He also held that s. 38 of the Act, which immunizes College administrators from liability for acts done “in good faith” does not connote a “bad faith” exception to the application of s. 36(3). In other words, s. 36(3) contains no exception for investigations done fraudulently or in bad faith.

[25] However, Laskin J.A. went on to observe, at para. 45, that since s. 36(3) refers only to a “report, document or thing”, it does not prevent a party from pleading and proving the fact that a complaint was made in the first place.

[26] In Task, an occupational therapy clinic sued a prosecutor from the College of Occupational Therapists of Ontario after the prosecutor successfully negotiated a plea deal with one of the clinic’s former employees. As part of that deal, the employee sent letters to all her former clients containing information that reflected poorly on the clinic. The clinic alleged it lost more than 50% of its business as a result.

[27] In bringing its action against the prosecutor, the clinic tried to reprise the argument made in Sutherland, namely, that s. 36(3) of the Act contains an implied exception where the prosecution by the College was done in bad faith. The plaintiff in Task argued that the majority in Sutherland had not appreciated that because s. 38 of the Act allows administrators of the Act to be held accountable for actions taken in bad faith, s. 36(3) must be interpreted to allow such an action to be proved using the documents prepared for the proceedings. The court in Task rejected that argument, holding that the issue had been clearly raised and decided in Sutherland.

[28] The court also referred to the Supreme Court’s decision in Finney, which was released after the oral argument in Task. Finney involved an immunity provision in a Quebec statute for those involved in the discipline process for Quebec lawyers, which like s. 38 of the Act, grants immunity to regulatory investigators and prosecutors for “acts done in good faith”. The case discussed the scope of the concept of bad faith in the context of the section. As the case did not involve issues of proof or a section comparable to s. 36(3), the Court of Appeal in Task did not find Finney of assistance.

[29] However, for the purpose of this case and the interpretation of s. 85.6 of the Code, Finney makes it clear that the good faith limitation on immunity is to be given effect by the courts. It follows, therefore, that where a claim asserts bad faith, as long as it can be proved without running afoul of s. 36(3), such a claim is not to be struck out at the pleading stage.

[30] The third and most recent case of this court to discuss the scope and effect of s. 36(3) of the Act is Lipsitz. In that case, Lipsitz sued both Crown employees and employees of the College of Physicians and Surgeons for their role in inspecting and assessing his sleep disorder clinics under s. 75(a) of the Code. In response, the College argued that s. 36(3) made the claim regarding its investigation of Lipsitz unprovable at trial. The motion judge agreed and struck out that portion of Lipsitz’s claim.

[31] In dismissing Lipsitz’s appeal on this point, this court again referred to the Sutherland decision for two propositions. First, a plea of facts that cannot be proved at trial should be struck out under rule 25.11 of the Rules of Civil Procedure. Second, although the documents referred to in s. 36(3) are inadmissible in a civil proceeding, the fact of a complaint or of the commencement of an investigative proceeding may be proved at trial.

[32] The Lipsitz case also briefly considered another immunity provision with a good faith exception, in that case, s. 38(1) of the Independent Health Facilities Act, R.S.O. 1990, c. I. 3. That section grants immunity to administrators under that statute for acts or omissions “in the performance or exercise in good faith of any duty, function, power or authority” under the Act. The court in Lipsitz acknowledged, at para. 61, that the immunity provided by this section is limited: “Thus, acts or omissions are only protected under s. 38(1) if the person or entity acted in good faith.”

(b) Application of the case law to this case

[33] Applying these principles to this case, Pouget is not precluded from asserting claims against SEHC based on bad faith, which has been pleaded, as long as those claims can be proved without using any document referred to in s. 36(3). The fact of a complaint and of an investigation can be proved at trial.

[34] The case law reviewed above, including Sutherland, does not support the respondents’ position that documents created in the normal course of business automatically become inadmissible under s. 36(3) if those documents are later referenced in, or appended to, a report to the College. Such an interpretation of s. 36(3) is not supported by the clear language of the provision, which speaks of a report, document or thing prepared for or a statement given at a proceeding. It would also yield the absurd result that while Pouget has a claim for wrongful dismissal, she would have no meaningful way to prove that claim if documents such as her appointment schedule and billing records for February 2003 became immune from production because they later formed part of the “narrative” of SEHC’s report to the College.

[35] The exclusion from evidence of the complaint will clearly pose a practical problem for Pouget’s bad faith claim. She will have to prove bad faith without being able to refer to the contents of the complaint itself except to the extent that the substance of the complaint can be inferred from the background documents. That, however, is a practical problem of proof and not a legal barrier that would justify dismissing the action at the pleading stage.

Remedy

[36] In my view, the appropriate remedy on this appeal, as requested by the appellant’s counsel, is for the appellant to be granted leave to amend her claim in accordance with these reasons. Since she abandoned the portion of her appeal dealing with the addition of parties, I would dismiss that portion of the appeal.

[37] The motion judge granted summary judgment dismissing the action against Davidson on the ground that “her involvement in preparing the report and related involvement with the [College] is inadmissible” (para. 55). As I have explained, the motion judge erred in ruling that documents predating SEHC’s report to the College are protected under s. 36(3). These documents may relate not only to the wrongful dismissal claim, but also to the bad faith claims against Davidson. I would allow the appeal on this issue and reinstate the action against Davidson.

Conclusion

[38] I would allow the appeal to the extent that the appellant is granted leave to amend her claim in compliance with the principles set out in these reasons. I would also allow her claim against Davidson to be reinstated, again in compliance with the principles I have set out above. I would dismiss the portion of the appeal seeking the addition of parties. As the appellant achieved partial success on the appeal, I would award partial costs of the appeal to the appellant fixed at $15,000 inclusive of disbursements and H.S.T.

Signed: “K. Feldman J.A.”

“I agree J. C. MacPherson J.A.”

“I agree Robert J. Sharpe J.A.”

RELEASED: “KF” JUNE 29, 2012