COURT FILE NO.: 11-CV-439656CP

DATE: November 26, 2012

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CHARLOTTE PERRENOUD and RAJESH BEDI

Plaintiffs

– and –

eHEALTH ONTARIO and HER MAJESTY THE QUEEN in right of Ontario as represented by the MINISTER OF HEALTH AND LONG –TERM CARE

Defendants

Jacqueline L. King and John De Vellis for the Plaintiffs

Joseph D’Angelo and Christopher Thompson for the Defendants

Proposed action under the Class Proceedings Act, 1992

HEARD: November 14, 2012

PERELL, J.

REASONS FOR DECISION

A. INTRODUCTION

[1] The Plaintiffs Rajesh Bedi and Charlotte Perrenoud are employees of eHealth Ontario. They sue eHealth for breach of contract and they sue Her Majesty the Queen in right of Ontario (“Ontario”) for inducing breach of contract. The Plaintiffs sue on behalf of other employees of eHealth, and they move for certification of their action as a class action under the Class Proceedings Act, 1992, S.O. 1992, c. C.6. The action concerns Performance Awards for 2010/2011 and Merit Increases for 2011.

[2] The Plaintiffs also bring a motion to amend their Statement of Claim to add a claim that eHealth breached its employment contracts with its employees by failing to pay Performance Awards for 2011/2012.

[3] For the reasons and subject to the qualifications that follow, I grant the Plaintiffs’ motions.

B. FACTUAL BACKGROUND

[4] eHealth is a non-profit corporation without share capital, and it is an agent of Ontario within the meaning of the Crown Agency Act, RSO 1990, c. C.48. eHealth was established by Ont. Reg. 43/02 of the Development Corporations Act, R.S.O. 1990, c.10, to continue the corporation known as Smart Systems for Health Agency. eHealth’s goal is to connect the medical community to a secure network of electronic medical records. eHealth reports to the Legislature through the Minister of Health and Long Term Care.

[5] As set out in the regulations, the Minister of Health and Long-Term Care is responsible for eHealth. Under s. 8 of Ont. Reg. 43/03, the Minister is empowered to issue binding policy directions to the Board of Directors of eHealth.

[6] Rajesh Bedi or Toronto, Ontario and Charlotte Perrenoud of Oakville, Ontario are employees of eHealth. Mr. Bedi became an employee in 2004, and Ms. Perrenoud became an employee in 2006.

[7] When Mr. Bedi and Ms. Perrenoud accepted their respective offers of employment in addition to a base salary, their compensation package included: (1) participation in a pension plan; and (2) participation in a performance incentive plan.

[8] For present purposes, the relevant provisions of the Performance Incentive Policy, or “PIP” as it is referred to by eHealth employees, are set out below:

1. Purpose/ Objective

2. The Performance Incentive Plan is designed to reward employees for their contributions to the successful achievement of corporate goals and individual objectives and to share in the success of eHealth Ontario. The Performance Management ratings are used to calculate the incentive awards.

3. Scope

2.1 Eligibility

The Performance Incentive Plan covers all full time regular employees and those on employment contracts of one year plus one day who deemed eligible to particpate.

To participate in the Performance Incentive Plan employees must be actively employed and have a rating of "2" or higher when they are assessed according to the Performance Management process. …

3. Policy

3.1 Incentive Awards

Incentive awards range from 0 to 15% of an eligible employee's pro-rated base earnings as at. December 31 or the employee's start date with eHealth Ontario, whichever is later.

3.2 Timing of Payment

Incentive awards for the current plan year will be paid no later than May 31 of the following the plan year.

3.3 Option to Contribute to Defined Contribution Pension Plan (DCPP)

Employees may elect within a prescribed time period to direct a percentage of the incentive award to the eHealth Ontario DCPP at their pre-existing contribution rate. If employees choose this option, eHealth Ontario will make a matching contribution at the pre-existing matching rate in the pay period immediately before the payment of the incentive award. Employees are liable for all tax implications of contributions made to the DCPP.

3.8 Amendment and Termination of the Plan

The eHealth Ontario Board of Directors HR Sub-Committee of the Board, or CEO may terminate, suspend, or amend the Performance Incentive Plan, in whole or in part at any time and at their sole discretion, without any liability.

3.9 Interpretation

The VP of Human Resources shall have full power and authority to interpret and administer the Performance Incentive Plan; Disputes arising under the Performance Incentive Plan regarding its administration, interpretation or calculation of incentive awards or any other matter may be submitted in writing to the VP of Human Resources, who shall render a final and binding decision.

[9] In addition to the Performance Awards, eHealth employees may also receive a pay raise known as a Merit Increase, which is a percentage of their base salary as determined by eHealth management.

[10] Until the events giving rise to this action, both Mr. Bedi and Ms. Perrenoud received Performance Awards and Merit Increases for every year they have worked at eHealth.

[11] eHealth manages the performance of employees through the Performance Management Process. Managers generally meet with employees three times during the fiscal year to set employment objectives and individual development plans, measure progress and provide and receive feedback. The performance rating in the Performance Management Plan is a factor in assessing eligibility to participate in the Performance Incentive Plan Policy.

[12] To be eligible to receive a Performance Award, an employee must: (1) be a full time regular employee, or an employee on contract of one year plus one day; (2) have a rating of “2” or higher when assessed according to the Performance Management Process; (3) have started employment on or before December 31 of the plan year; and (4) subject to certain exceptions, be actively employed at the time the award is paid.

[13] In May 2011, after the eHealth employees, including Mr. Bedi and Ms. Perrenoud, had been rated under the Performance Incentive Policy for the 2010/2011 fiscal year, they were notified of the amounts of their Performance Awards and of Merit Increases in a document entitled "2010/2011 Compensation Details".

[14] Mr. Bedi’s Compensation Details Statement granted him a Performance Award of 12% of his base salary, in the amount of $10,658.00, and a 3% Merit Increase in his base salary, in the amount of $2,798.00.

[15] Ms. Perrenoud’s Compensation Details Statement granted her a Performance Award of 7.5% of her base salary, in the amount of $7,246.00, and a 1.65% Merit Increase on her base salary, in the amount of $1,594.00.

[16] In the Compensation Details Statement, the Performance Award payout date was set for June 3, 2012.

[17] On May 18, 2011, the Toronto Star published an article entitled "Hundreds at eHealth Ontario get bonus, raise, despite call for wage freeze." The article criticized eHealth's decision to award Performance Awards and Merit Increases in the light of the Minister of Finance's call for a wage freeze. The Star article asserted that senior officials of the Ontario Government were furious with eHealth’s decision to pay Performance Awards and Merit Increases. The article stated:

The controversial electronic health records agency eHealth Ontario is giving hundreds of its employees 1.9% merit raises and bonuses averaging 7.8% despite a government edict to freeze wages, the Star has learned.

[18] In the Star article, Muriel Deschenes, eHealth's senior director of stakeholder relations and communications, was quoted as defending the Performance Awards as a standard means to managing and improving employee performance.

[19] Also on May 18, 2011, CTV.ca published an article from The Canadian Press entitled, “"Opposition wants Liberals to axe eHealth staff bonuses". The article stated that the Minister was disappointed to hear eHealth was giving out bonuses and called top brass from the agency on the carpet Wednesday to demand they take another look at the plan. The article quoted the Minister as stating: “I spoke to the chair and the CEO of eHealth Ontario this morning and I asked them to review the decision in the context of our legislation and get back to me as quickly as possible...I want them to review it in context of the spirit of the legislation and the letter of the legislation...we need to take another look through the lens of the taxpayer.”

[20] On May 20, 2011, Ms. Deschenes issued a press release from, Greg Reed, the CEO of eHealth stating:

Since assuming responsibility for eHealth Ontario, our management team has been guided by two principal goals: to create a culture of accountability and achievement at the agency and to help build the electronic health care system which is so essential to improving the quality of health care people receive across Ontario. While much work lies ahead, I believe we have made significant progress during the past year. In that respect, we offered agency employees a certain level of individual performance-linked incentive compensation.

However, when placed in the context of the hard work eHealth still has to do in overcoming past challenges, and in light of the pressing financial circumstances that all Ontarians face, it is clear that this decision needs to be revisited. Indeed, it threatens to obscure the genuine progress agency employees are making to help deliver a stronger, more responsive health care system.

Accordingly, I have advised the minister that we are reversing the previous decision immediately. Merit increases and performance­linked incentives will not be paid to employees of the agency this year"

[21] Also on May 20, 2011, the Toronto Star wrote a follow up article entitled "eHealth scraps raises and bonuses after Star story." The story quotes the press release and quotes the Minister of Health as stating: “I want to applaud eHealth Ontario for making this decision, in the best interest of Ontarians...they are leading by example and putting Ontario's taxpayers first. ....”

[22] In the result, neither Mr. Bedi nor Ms. Perrenoud received a Performance Award for the 2011/2011 fiscal year. They also did not receive Merit Increases.

[23] When the 2010/2011Performance Award and that year’s Merit Increases were not paid, Mr. Bedi and Ms. Perrenoud commenced this proposed class action.

[24] Meanwhile and subsequently in March 2012, Mr. Bedi and Ms. Perrenoud and the other eHealth employees were rated under the Performance Incentive Policy for the 2011/2012 fiscal year.

[25] The employees were advised of their individual ratings; however, unlike the practice in the past, eHealth did not provide a Compensation Details Statement setting out the details of any Performance Award or Merit Increase.

[26] In the result, eHealth did not pay out Performance Awards or Merit Increases for the 2011/2012 fiscal year. In a proposed amendment to their Statement of Claim, the Plaintiffs submit that eHealth breached its contract by its failure to make Performance Awards for the 2011/2012 fiscal year. There is no claim for Merit Increases for the 2011/2012 fiscal year.

[27] In their proposed class action, Mr. Bedi and Ms. Perrenoud allege that eHealth breached their employment contracts for the 2010/2011 and the 2011/2012 fiscal years and that the Minister is liable for inducing a breach of contract with respect to the 2010/2011 fiscal year.

[28] Including the proposed amendment to their Statement of Claim, the Plaintiffs advance four claims; namely:

(1) breach of contract for eHealth’s alleged failure to pay the Performance Awards for the fiscal year 2010/2011;

(2) breach of contract for eHealth’s alleged failure to pay the Performance Awards for 2011/2012;

(3) breach of contract for eHealth’s failure to pay the Merit Increase for 2010/2011; and

(4) the Minister’s inducing breach of contract for the 2010/2011 fiscal year.

[29] The Plaintiffs plead that eHealth breached its contract by refusing to pay Performance Awards that had already been awarded. With respect to the Merit Increases, the Plaintiffs submit that eHealth did not give reasonable notice of the retraction of the Merit Increases. Further, the Plaintiffs submit that eHealth breached its duty to action in good faith in regards to the employees contracts of employment. They also allege that the Minister owed the employees a duty of good faith.

[30] The Plaintiffs claim ancillary declaratory relief with respect to the allocation of Performance Allowances to the class members’ pension plans and punitive damages in the amount of $1 million.

[31] After considering certain objections raised by the Defendants to the class definition, in their Reply Factum, Mr. Bedi and Ms. Perenoud propose the following class definition:

All past and current full time employees for whom eHealth:

(a) completed a Compensation Details Statement in respect of the 2010/2011 fiscal year; and/or

(b) completed an evaluation and awarded a performance rating of 2”or higher or the equivalent rating of “Developing”or higher for the 2011/2012 fiscal year.

[32] As set out in their factum, Mr. Bedi and Ms. Perenoud propose the following common issues:

(1) Are the proposed Class Members entitled to the Performance Awards and/or Merit Increases already granted pursuant to the Performance Incentive Policy as set out in the Compensation Details Statements for the 2010/2011 fiscal year?

(2) Are the proposed Class Members entitled to elect to transfer a portion of their Performance Award into a DCPP and have that portion matched by eHealth?

(3) Are the proposed Class Members who were evaluated by eHealth on the basis of their performance and received a performance rating of "2" or higher or the equivalent rating of "Developing" or higher on their Performance Management Plan appraisal for the 2011/2012 fiscal year entitled to a Performance Award?

(4) Did the Minister induce eHealth to breach its express and implied contractual commitments to the proposed Class Members?

(5) Did the Defendants act in bad faith?

(6) Is this a case for punitive damages, and if so, in what amount?

[33] The Defendants oppose the amendment to the Statement of Claim, and they oppose the certification of the action as a class action. The Defendants’ attack the Plaintiffs’ Statement of Claim and submit that for various reasons, it is plain and obvious that the Plaintiff’s various claims are legally untenable.

[34] The Defendants submit that eHealth had no obligation to pay Performance Awards because the Performance Incentive Policy permitted eHealth to “suspend” the plan “without any liability.”

[35] The Defendants submit that the payment of Merit Increases is entirely discretionary and that as a matter of contract law, a promise to pay a salary increase is not enforceable in the absence of consideration from the employee of which there was none in the case of the eHealth employees.

[36] The Defendants deny that the Minister has any duties of good faith to the eHealth employees, and they submit that she is not liable for the tort of inducing breach of contract primarily because there was no breach of contract and also because the constituent elements of the tort have not been pleaded.

C. CERTIFICATION

1. Introduction and Methodology

[37] The Defendants’ foremost attack against this proposed class action is that the Plaintiffs have not shown a reasonable cause of action in their original Statement of Claim. The Defendants’ also submit that the Plaintiffs’ motion to amend the Statement of Claim to add a claim for the 2011/2012 Performance Awards, should be refused because the proposed added cause of action is untenable, again for the reason that the proposed amendment does not show a reasonable cause of action. Thus, the Defendants’ foremost attack is that the Plaintiffs’ action does not satisfy the cause of action criterion of the test for certification as a class action.

[38] As I will explain below, it is my opinion that only the claim against Ontario for inducing breach of contract or for a breach of a duty of good faith is legally untenable. I will not be certifying this claim for a class action. This claim against Ontario is, practically speaking, redundant in any event.

[39] Because the only basis for refusing the amendment to the Statement of Claim would be the absence of a tenable cause of action argument and because I shall be rejecting that argument, I do not propose to discuss the law about when the court should grant leave to amend a pleading. I grant the Plaintiffs’ motion to amend.

[40] It follows that I shall use the amended Statement of Claim to determine whether this action should be certified as a class action. I will address the cause of action issues as part of the certification motion.

[41] By way of explaining my overall methodology, first, I will briefly describe the test for certification.

[42] Second, I will describe the Cause of Action Criterion and the Plain and Obvious Test for a Cause of Action.

[43] Third, under the Heading “Analysis of the Proposed Causes of Action against eHealth and Ontario,” I will discuss the four claims being made against the Defendants; namely: (a) The Breach of Contract Claim for the 2010/2011 Performance Award; (b) The Breach of Contract Claim for the 2011/2012 Performance Award; (c) The Breach of Contract Claim for Merit Increases; and (d) The Inducing Breach of Contract Claim.

[44] Fourth, I will address, the Identifiable Class Criterion.

[45] Fifth, I will address the Common Issues Criterion.

[46] Sixth, I will address the Preferable Procedure Criterion.

[47] Seventh, I will address the Representative Plaintiff and Litigation Plan Criterion.

2. The Test for Certification

[48] Pursuant to s. 5(1) of the Class Proceedings Act, 1992, the court shall certify a proceeding as a class proceeding if: (a) the pleadings disclose a cause of action; (b) there is an identifiable class; (c) the claims of the class members raise common issues of fact or law; (d) a class proceeding would be the preferable procedure; and (e) there is a representative plaintiff who would adequately represent the interests of the class without conflict of interest and who has produced a workable litigation plan.

[49] For an action to be certified as a class proceeding, there must be a cause of action, shared by an identifiable class from which common issues arise that can be resolved in a fair, efficient, and manageable way that will advance the proceeding and achieve access to justice, judicial economy, and the modification of behaviour of wrongdoers: Sauer v. Canada (Attorney General), 2008 CanLII 43774 (ON SC), [2008] O.J. No. 3419 (S.C.J.) at para. 14, leave to appeal to Div. Ct. refused, 2009 CanLII 2924 (ON SCDC), [2009] O.J. No. 402 (Div. Ct.).

[50] On a certification motion, the question is not whether the plaintiff's claims are likely to succeed on the merits but whether the claims can appropriately be prosecuted as a class proceeding: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at para. 16.

[51] The test for certification is to be applied in a purposive and generous manner, to give effect to the important goals of class actions – providing access to justice for litigants; promoting the efficient use of judicial resources; and sanctioning wrongdoers to encourage behaviour modification: Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534 at paras. 26-29; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at paras. 15 and 16.

[52] The purpose of a certification motion is to determine how the litigation is to proceed and not to address the merits of the plaintiff's claim; there is to be no preliminary review of the merits of the claim: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at paras. 28-29.

3. The Cause of Action Criterion and the Plain and Obvious Test for a Cause of Action

[53] The first criterion for certification is whether the plaintiff’s pleading discloses a cause of action. As already noted above, the Defendants’ major argument is that the Plaintiffs fail to satisfy this criterion and that for various reasons each of the Plaintiffs’ four causes of action is fatally flawed.

[54] The “plain and obvious” test for disclosing a cause of action from Hunt v. Carey Canada, 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959 is used to determine whether a proposed class proceeding discloses a cause of action for the purposes of s. 5 (1)(a) of the Class Proceedings Act, 1992: Anderson v. Wilson (1999), 1999 CanLII 3753 (ON CA), 44 O.R. (3rd) 673 (C.A.) at p. 679, leave to appeal to S.C.C. ref’d, [1999] S.C.C.A. No. 476; 176560 Ontario Ltd. v. Great Atlantic & Pacific Co. of Canada Ltd. (2002), 2002 CanLII 6199 (ON SC), 62 O.R. (3d) 535 (S.C.J.) at para. 19, leave to appeal granted, 2003 CanLII 36393 (ON SCDC), 64 O.R. (3d) 42 (S.C.J.), aff’d (2004), 2004 CanLII 16620 (ON SCDC), 70 O.R. (3d) 182 (Div. Ct.).

[55] The plain and obvious test derived from what historically was known as a demurrer pleading and what in Ontario was rule 126 of the former Rules of Practice and what is now rule 21.01 (1)(b) of the Rules of Civil Procedure, which states:

21.01 (1) A party may move before a judge, …

(b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence,

and the judge may make an order or grant judgment accordingly.

[56] Where a defendant submits that the plaintiff’s pleading does not disclose a reasonable cause or action, to succeed in having the action dismissed, the defendant must show that it is plain, obvious, and beyond doubt that the plaintiff cannot succeed in the claim: Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 1998 CanLII 4831 (ON CA), 164 D.L.R. (4th) 257 (Ont. C.A.). Matters of law that are not fully settled should not be disposed of on a motion to strike: Dawson v. Rexcraft Storage & Warehouse Inc., supra, and the court's power to strike a claim is exercised only in the clearest cases: Temelini v. Ontario Provincial Police (Commissioner) (1990), 1990 CanLII 7000 (ON CA), 73 O.R. (2d) 664 (C.A.).

[57] In assessing the cause of action or the defence, no evidence is admissible and the court accepts the pleaded allegations of fact as proven, unless they are patently ridiculous or incapable of proof; A-G. Canada v. Inuit Tapirisat of Canada, 1980 CanLII 21 (SCC), [1980] 2 S.C.R. 735; Canada v. Operation Dismantle Inc., 1985 CanLII 74 (SCC), [1985] 1 S.C.R. 441; Nash v. Ontario (1995), 1995 CanLII 2934 (ON CA), 27 O.R. (3d) 1 (C.A.); Folland v. Ontario (2003), 2003 CanLII 52139 (ON CA), 64 O.R. (3d) 89 (C.A.); Canadian Pacific International Freight Services Ltd. v. Starber International Inc. (1992), 1992 CanLII 15412 (ON SC), 44 C.P.R. (3d) 17 (Ont. Gen. Div.) at para. 9.

[58] The law must be allowed to evolve, and the novelty of a claim will not militate against a plaintiff: Johnson v. Adamson (1981), 1981 CanLII 1667 (ON CA), 34 O.R. (2d) 236 (C.A.), leave to appeal to the S.C.C. refused (1982), 35 O.R. (2d) 64n. However, a novel claim must have some elements of a cause of action recognized in law and be a reasonably logical and arguable extension of established law: Silver v. Imax Corp., 2009 CanLII 72334 (ON SC), [2009] O.J. No. 5585 (S.C.J.) at para. 20; Silver v. DDJ Canadian High Yield Fund, 2006 CanLII 21058 (ON SC), [2006] O.J. No. 2503 (S.C.J.).

[59] Generally speaking, the case law imposes a very low standard for the demonstration of a cause of action, which is to say that, conversely, it is very difficult for a defendant to show that it is plain, obvious, and beyond doubt that the plaintiff cannot succeed with the claim.

[60] That said, the case at bar is in the main a breach of contract claim, and courts do from time to time under Rule 21 or under s. 5 (1)(a) of the Class Proceedings Act, 1992 dismiss breach of contract actions where as a matter of interpretation, the court is satisfied that the defendant’s conduct did not breach the terms of the contract. See: Arora v Whirlpool Canada LP, 2012 ONSC 4642; Stitt v Ontario, [2001] O.J. No. 1337 (S.C.J.); Lincoln Canada Services LP v First Gulf Design Build Inc., 2007 CanLII 45712 (ON SC), [2007] OJ No 4167 (S.J.C.).

4. Analysis of the Proposed Causes of Action against eHealth and Ontario

(a) The Breach of Contract Claim for the 2010/2011 Performance Award

[61] The Plaintiffs plead that eHealth is liable in breach of contract for non-payment of Performance Awards in 2010/2011. However, eHealth submits that there is no reasonable cause of action for breach of contract because the unambiguous terms of the contract, the Performance Incentive Policy, expressly permit the conduct alleged to be a breach. More particularly, the Defendants argue that by virtue of the announcement of non-payment of incentive awards, the Performance Incentive Policy was suspended and, pursuant to the express language of s. 3.8 of the Policy, eHealth may “suspend” the Performance Incentive Plan “without any liability.”

[62] The Defendants’ argument is essentially that eHealth lawfully suspended the Performance Incentive Policy for 2010/2011 and for 2011/12. In support of this argument, the Defendants presented me a case about the interpretation of a termination provision in a commercial contract and a case about a Federal Government wage freeze directive. See: ArcelorMittal Dofasco Inc. v. US Steel Canada Inc., [2008] O.J. No. 4412 at paras 69-79 (S.C.J.); Granger v Canada (Treasury Board), [2000] F.C.J. No 836 (C.A.) at para 13. However, this case law was not helpful. Neither case interprets the meaning of the word “suspend.”

[63] For fiscal year 2010/2011, the Plaintiffs’ counterargument is multifaceted. They submit that the Performance Award was not an ex gratia payment by the employer and rather had become part of the employee's salary and, therefore, it could not be changed without reasonable notice to the employee, which did not occur in the case at bar. The Plaintiffs submit that the evidence in the action will demonstrate that, based on the context of the employment relationship, including the offer of employment and the past practices, the Performance Award was an integral part of their wage structure that could not be terminated without reasonable advance notice. They submit that if the Performance Award was discretionary, then eHealth was obliged to exercise its discretion in good faith. They submit that eHealth’s contractual right to suspend Performance Awards does not encompass reneging on an expressed commitment to pay the Performance Award. They submit that as a factual matter what happened in the case at bar for the 2010/2011 year and for the 2011/2012 year were breaches of contract not the performance of it. They submit that to “suspend” does not include a retroactive revocation of salary that was earned.

[64] As I view it, the Defendants’ argument is essentially a focused argument about the interpretation of the Performance Incentive Plan and the Plaintiffs’ counterargument is a multifaceted argument interpreting the whole employment relationship between the parties.

[65] Putting aside for a moment, the Plaintiffs’ complex counterargument, in my opinion, it is not plain and obvious that the Defendants’ interpretative argument about the meaning of s. 3.8 of the Performance Incentive Plan is correct, and in my opinion it is not plain and obvious that what eHealth did was to “suspend” the Plan.

[66] For the meaning of suspend, I will simply refer to the Concise Oxford English Dictionary (11th ed.), which defines “suspend” as follows: “Suspend v. 1. Halt temporarily. 2 debar temporarily from a post, duties, etc. as a punishment 3. Defer or delay (an action, event, or judgment) …”

[67] A trial court may ultimately decide that what occurred in 2011 when the employees were rated and advised that their Performance Awards would be paid in June and then advised later in May 2011 in a press release that they would not be paid was a suspension of the Performance Incentive Plan, but at this juncture this is not plain and obvious. Put somewhat differently, the Plaintiffs have an arguable case that what occurred in 2012 was not a suspension of the Performance Incentive Plan.

[68] To be clear, I am not saying that more evidence is required to decide the interpretative point as it has been framed by the Defendants. Rather, what I am saying is that assuming the facts set out in the Statement of Claim are true, it is not plain and obvious that the interpretative point as it has been narrowly framed by the Defendants favours the Defendants.

[69] It is also not plain and obvious that a court would reject the Plaintiffs’ counterarguments that define the interpretative problem more broadly than how it has been framed by the Defendants.

[70] I, therefore, conclude that the Plaintiffs have shown a reasonable cause of action for breach of contract for the 2010/2011 Performance Awards.

(b) The Breach of Contract Claim for the 2011/2012 Performance Award

[71] The Plaintiffs plead that eHealth is liable in breach of contract for non-payment of Performance Awards in 2011/2012.

[72] The Defendants argue, once again, that there is no reasonable cause of action. Again, the Defendants’ argue that the Performance Award was lawfully suspended. They add that the Plaintiffs’ claim for 2011/2012 Performance Awards is more tenuous than the claim for the fiscal year 2010-2011.

[73] On the assumption that eHealth’s conduct with respect to the 2011/12 Performance awards can be isolated from what happened the prior year, I would agree that the Plaintiffs’ cause of action for Performance Awards for 2011/2012 is weaker than the claim for 2010/2011, when eHealth announced a date for payment of the awards.

[74] However, once again, in my opinion, it is not plain and obvious that the Plaintiffs’ claim will fail, and, once again, it is not plain and obvious that a court should approach the interpretative problem as narrowly as the Defendants would have it framed.

[75] I, therefore, include that the Plaintiffs have shown a reasonable cause of action for breach of contract for the 2011/2012 Performance Awards.

(c) The Breach of Contract Claim for Merit Increases

[76] The Plaintiffs claim damages for breach of contract for eHealth’s alleged failure to provide the Plaintiffs with reasonable notice of the retraction of Merit Increases.

[77] In paragraphs 33-38, the Defendants argue that the Plaintiffs have not pleaded a reasonable cause of action because the Plaintiffs do not plead - nor could they plead - that they provided any consideration for the Merit Increase such as to create a legally binding contract for the Merit Increase.

[78] Rather than paraphrase the Defendants’ argument, I will set it out in full:

33. In Yarlett v. Re/Max Realtron Realty Inc., [1989] O.J. No. 1379 (H.C.J.), the Ontario High Court of Justice on a Rule 21 motion dismissed a claim in breach of contract for a failure of consideration. The court held that an undertaking by a vendor of a house was unenforceable due to lack of consideration for the undertaking.

34. Courts have found that promises to pay salary increases are unenforceable because there was no consideration to make the promise contractually binding. In Simpson v Ontario, [1997] O.J. No. 3082 (Gen. Div.) at para 24, aff’d [1997] O.J. No. 3082 (CA), the Ontario Court General Division rejected the employees’ class action claim for a salary increase in part on the basis that there was no fresh consideration for the promise to pay the salary increase.

35. Similarly, in Brock v Matthews Group Ltd, [1988] O.J. No. 370 (H.C.J.), aff’d [1991] O.J. No 83 (C.A.), the Ontario High Court of Justice found that the employer’s promise of a salary increase to an employee was an unenforceable gratuitous promise because the employee did not give any consideration for it.

36. In Bennett v British Columbia, [2012] B.C.J. No. 497 at paras. 24-26, 32-33, 37 (C.A.), the British Columbia Court of Appeal similarly found that promises of premium free medical and health insurance to employees following retirement were not contractually binding because employees did not provide fresh consideration for the promise.

37. In the converse situation, where detrimental changes are purportedly made to an employee’s contract of employment, such as a new termination clause, courts have been strict in requiring consideration for the detrimental change. Employers have not been permitted to rely on the employee’s continued employment as consideration to the employee for the detrimental change: Francis v Canadian Imperial Bank of Commerce, 1994 CanLII 1578 (ON CA), [1994] O.J. No. 2657 (C.A.); Hobbs v TDI Canada Ltd (2004), 2004 CanLII 44783 (ON CA), 37 C.C.E.L. (3d) 163 (C.A.); Braiden v La-Z-Boy Canada Ltd, 2008 ONCA 464, [2008] O.J. No. 2314 at paras. 56, 60 (C.A.) Similarly, where purported favourable changes are made to an employee’s contract of employment, such as a merit increase, an employee cannot rely on his continued employment as consideration to the employer for the favourable change. In both cases, there is no fresh consideration.

38. In short, the claim for a merit increase does not contain the necessary elements for the formation of a contract, and thus, there is not a reasonable cause of action for breach of contract.

[79] There ultimately may be merit in the Defendants’ arguments but their success may depend on persuading a court that the Plaintiff’s claim depends on new consideration for the Merit Awards. In their factum, the Plaintiffs counter with an elaborate argument that may succeed in persuading a court that the Defendants conceptualization of the case is the correct one.

[80] As noted above, the case law establishes that it is difficult for a defendant to show that it is plain and obvious that the plaintiff’s claim is untenable. In the case at bar, the Defendants have not convinced me that the Plaintiffs do not have an arguable case for the 2011 Merit Increases that were announced in the Compensation Details Statements.

(d) The Inducing Breach of Contract Claim

[81] The Defendants make two arguments to challenge the Plaintiffs’ cause of action against Ontario for inducing breach of contract. First, they submit that since there is no tenable breach of contract action, there cannot be an action for inducting breach of contract. Second, they submit that the Plaintiffs have not pleaded three of the required elements of the tort of inducing breach of contract.

[82] Because I have concluded that there is an arguable breach of contract claim, the Defendants’ first argument fails.

[83] Turning to the second argument, the elements of a claim of inducing breach of contract are: (1) the plaintiff is a party to a valid and enforceable contract; (2) the defendant is aware of the contract and its terms; (3) the defendant intends to procure a breach of the contract; (4) the defendant persuades or induces a contracting party to breach the contract with the plaintiff; and, (5) the plaintiff suffers damages as consequence of the breach of the contract. See: Alleslev-Krofchak v. Valcom, 2010 ONCA 557; Correia v. Canac Kitchens (2008), 2008 ONCA 506, 91 O.R. (3d) 353 (C.A.); Drouillard v. Cogeco Cable Inc., (2007), 2007 ONCA 322, 86 O.R. (3d) 431 (C.A.).

[84] The Defendants submit that the pleaded facts do not satisfy the second, third, and fourth elements of the tort. They submit that the Statement of Claim is deficient because it does not plead that: (a) the Minister knew that eHealth would not pay the Performance Awards and the Merit Increases; (b) the Minister knew that the non-payment would breach the employees’ contracts of employment; (c) that the Minister specifically intended eHealth to breach the contracts of employment; and (d) the Minster’s actions “caused” a breach of contract.

[85] In short, the Defendants submit that there was nothing illegal about a principal telling its agent that she is disappointed with its decision and asking them to rethink it and that the Plaintiffs have not pleaded a viable cause of action against Ontario for inducing breach of contract.

[86] I agree with the Defendants’ argument. Therefore, I conclude that the Plaintiffs have not shown a reasonable cause of action for inducing breach of contract. I see no purpose in granting leave to amend because, practically speaking, the inducing breach of contract claim is redundant. Ontario would be liable for its agent, eHealth, if it breached the employment contracts.

[87] I conclude that the Plaintiffs have satisfied the first criterion for certification for three of the four pleaded causes of action.

[88] I can now turn to the other criterion for certification.

5. The Identifiable Class Criterion

[89] In defining class membership, there must be a rational relationship between the class, the causes of action, and the common issues, and the class must not be unnecessarily broad or over-inclusive: Pearson v. Inco Ltd. (2006), 2006 CanLII 913 (ON CA), 78 O.R. (3d) 641 (C.A.) at para. 57, rev'g 2004 CanLII 34446 (ON SCDC), [2004] O.J. No. 317 (Div. Ct.), which had aff'd [2002] O.J. No. 2764 (S.C.J.).

[90] The definition of an identifiable class serves three purposes: (1) it identifies the persons who have a potential claim against the defendant; (2) it defines the parameters of the lawsuit so as to identify those persons bound by the result of the action; and (3) it describes who is entitled to notice: Bywater v. Toronto Transit Commission, [1998] O.J. No. 4913 (Gen. Div.).

[91] The Defendants argue that the proposed class definition is over-inclusive because: (a) with respect to the claimants for a Performance Award, the definition ignores the prerequisite that the employee be actively employed at the time the award is paid; and (b) with respect to the claimants for an Merit Increase, the definition ignores the prerequisites that the claimant must have started employment on or before December 31 of the plan year and, subject to certain exceptions, be actively employed at the time the award is paid.

[92] In my opinion, the Defendants’ objections are purely technical. In my opinion, once the technical objections are addressed by amending the definition accordingly, the class definition satisfies the requirements of s. 5 (1)(b) of the Class Proceedings Act, 1992.

6. The Common Issues Criterion.

[93] For an issue to be a common issue, it must be a substantial ingredient of each Class member's claim and its resolution must be necessary to the resolution of each Class member's claim: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at para. 18.

[94] The fundamental aspect of a common issue is that the resolution of the common issue will avoid duplication of fact-finding or legal analysis: Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534 at para. 39; McCracken v. Canadian National Railway Co. 2012 ONCA 445 at para. 183.

[95] With regard to the common issues, "success for one member must mean success for all. All members of the class must benefit from the successful prosecution of the action, although not necessarily to the same extent." That is, the answer to a question raised by a common issue for the plaintiff must be capable of extrapolation, in the same manner, to each member of the class: Shopping Centres Inc. v. Dutton, supra at para. 40; Ernewein v. General Motors of Canada Ltd., 2005 BCCA 540 at para. 32; Merck Frosst Canada Ltd. v. Wuttunee, 2009 SKCA 43 at paras. 145-46 and 160; McCracken v. Canadian National Railway Co., supra, at para. 183.

[96] Common issues should not be framed in overly broad terms. It does not serve the ends of either fairness or efficiency to certify an action on the basis of issues that are common only when stated in the most general terms because inevitably such an action would break down into inefficient individual proceedings: Rumley v. British Columbia, 2001 SCC 69, [2001] 3 S.C.R. 184 at para. 29; McCracken v. Canadian National Railway Co. 2012 ONCA 445 at para. 183.

[97] An issue is not a common issue if its resolution is dependent upon individual findings of fact that would have to be made for each class member: Fehringer v. Sun Media Corp., [2003] O.J. No. 3918 (Div. Ct.) at paras. 3, 6. Common issues cannot be dependent upon findings which will have to be made at individual trials, nor can they be based on assumptions that circumvent the necessity for individual inquiries: Nadolny v. Peel (Region), [2009] O.J. No. 4006 (S.C.J.) at paras. 50-52; Collette v. Great Pacific Management Co., 2003 BCSC 332, [2003] B.C.J. No. 529 (B.C.S.C.) at para. 51, var'd on other grounds (2004) 2004 BCCA 110, 42 B.L.R. (3d) 161 (B.C.C.A.); McKenna v. Gammon Gold Inc., 2010 ONSC 1591, [2010] O.J. No. 1057 (S.C.J.) at para. 126, leave to appeal granted 2010 ONSC 4068, [2010] O.J. No. 3183 (Div. Ct.), var’d 2011 ONSC 3882 (Div. Ct.).

[98] An issue can satisfy the common issues requirement even if it makes up a very limited aspect of the liability question and even though many individual issues remain to be decided after its resolution. In determining the commonality of a question, the focus is on the commonality of the question, and it is an error to focus on those aspects of the claim that would require individual determination. The comparative extent of individual issues is not a consideration in the commonality inquiry although it is a factor in the preferability assessment. See Cloud v. Canada (Attorney General) (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401 (C.A.) at paras. 51 to 65, leave to appeal to S.C.C. ref'd, [2005] S.C.C.A. No. 50.

[99] The common issue criterion presents a low bar: Carom v. Bre-X Minerals Ltd. (2000), 2000 CanLII 16886 (ON CA), 51 O.R. (3d) 236 (C.A.) at para. 42; Cloud v. Canada (Attorney General) (2004), O.R. (3d) 401 (C.A.) at para. 52; 203874 Ontario Ltd. v. Quiznos Canada Restaurant Corp., 2009 CanLII 23374 (ON SCDC), [2009] O.J. No. 1874 (Div. Ct.), aff’d 2010 ONCA 466, [2010] O.J. No. 2683 (C.A.), leave to appeal to S.C.C. ref’d [2010] S.C.C.A. No. 348. An issue can be a common issue even if it makes up a very limited aspect of the liability question and even though many individual issues remain to be decided after its resolution: Cloud v. Canada (Attorney General) supra, at para. 53.

[100] The Defendants object to the common issues as they have been phrased largely on technical grounds. They submit that the language of some of the questions is objectionable because the question presupposes or assumes liability or some aspect of liability or the language presumes that the Defendants’ legal position cannot be defended. The Defendants submit that the problems with the class definition being overbroad carry over into the common issues and entail that there is no basis in fact for some of the common issues. They submit that some of the common issues are objectionable because they lump the Defendants together and fail to differentiate that the claim against Ontario is not grounded in breach of contract. The Defendants submit that the question about punitive damages is not a common issue because the court cannot make a rational assessment about the appropriateness of punitive damages until after individual assessments of class members claims have been completed.

[101] I agree with most but not all of the Defendants’ objections to the common issues - as they have been phrased.

[102] I do not agree that in the circumstances of this case, the question about punitive damages is inappropriate or that an answer about punitive damages depends upon the outcome of individual issues trials.

[103] None of the Defendants’ objections are fatal or irremediable, and in my opinion, with modest amendments to the language of the questions and deleting the reference to Ontario, the questions satisfy the common issues criterion of the test for certification.

[104] I, therefore, certify the following amended set of common issues about whether eHealth breached its its contractual obligations by not paying the Performance Award and Merit Increases in 2010/2011 and in not paying the Performance Award in 2011/12:

(1) Are Class Members entitled to the Performance Awards and/or Merit Increases set out in the Compensation Details Statements for the 2010/2011 fiscal year?

(2) If the answer to question (1) is yes, are the Class Members entitled to elect to transfer a portion of their Performance Award into a DCPP and have that portion matched by eHealth?

(3) Are the proposed Class Members entitled to a Performance Award for the 2011/2012 fiscal year?

(4) Did eHealth act in bad faith?

(5) Is this a case for punitive damages, and if so, in what amount?

[105] Had I concluded that there was a cause of action against Ontario, I would also have concluded that there was a common issue about the alleged misconduct of Ontario.

7. The Preferable Procedure Criterion.

[106] The fourth criterion for certification is the preferable procedure criterion.

[107] Preferability captures the ideas of: (a) whether a class proceeding would be an appropriate method of advancing the claims of the class members; and (b) whether a class proceeding would be better than other methods such as joinder, test cases, consolidation, and any other means of resolving the dispute: Markson v. MBNA Canada Bank (2007), 2007 ONCA 334, 85 O.R. (3d) 321 (C.A.) at para. 69, leave to appeal to S.C.C. ref'd, [2007] S.C.C.A. No. 346; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158.

[108] For a class proceeding to be the preferable procedure for the resolution of the claims of a given class, it must represent a fair, efficient, and manageable procedure that is preferable to any alternative method of resolving the claims: Cloud v. Canada (Attorney General) (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401 (C.A.) at paras. 73-75, leave to appeal to S.C.C. ref'd, [2005] S.C.C.A. No. 50.

[109] Whether a class proceeding is the preferable procedure is judged by reference to the purposes of access to justice, behaviour modification, and judicial economy and by taking into account the importance of the common issues to the claims as a whole, including the individual issues: Markson v. MBNA Canada Bank (2007), 2007 ONCA 334, 85 O.R. (3d) 321 (C.A.) at para. 69, leave to appeal to S.C.C. ref'd, [2007] S.C.C.A. No. 346; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158.

[110] In considering the preferable procedure criterion, the court should consider: (a) the nature of the proposed common issue(s); (b) the individual issues which would remain after determination of the common issue(s); (c) the factors listed in the Act; (d) the complexity and manageability of the proposed action as a whole; (e) alternative procedures for dealing with the claims asserted; (f) the extent to which certification furthers the objectives underlying the Act; and (g) the rights of the plaintiff(s) and defendant(s): Chadha v. Bayer Inc. (2001), 2001 CanLII 28369 (ON SCDC), 54 O.R. (3d) 520 (Div. Ct.) at para. 16, aff'd (2003), 2003 CanLII 35843 (ON CA), 63 O.R. (3d) 22 (C.A.), leave to appeal to S.C.C. ref'd, [2003] S.C.C.A. No. 106.

[111] The Defendants’ very weak argument about preferable procedure was that because the Plaintiffs had not demonstrated a workable Litigation Plan to move the action forward (an argument with which I do not agree), it cannot be determined at this time whether a class proceeding is the preferable procedure.

[112] I disagree.

[113] Regardless of any deficiencies in the Litigation Plan, the Plaintiffs’ proposed class action satisfies the preferable procedure criterion.

8. The Representative Plaintiff and Litigation Plan Criterion.

[114] The only argument that the Defendants make about the fifth criterion for certification is that they submit that the Plaintiffs’ Litigation Plan is unworkable.

[115] Specifically, the Defendants object to the Litigation Plan’s proposal for an aggregate assessment of the class members’ claims.

[116] I agree that individual assessments would be required and the Litigation Plan should be amended accordingly.

[117] The Defendants summit that the timelines in the litigation are unworkable. This submission may be true, but if there are problems, they can be resolved at a case conference. A Litigation Plan is always a work in progress.

[118] The Defendants object to proposed notice plan. Once again, there may be merit in the objection, but once again, the details of the notice plan can be sorted out at a case conference, if the parties cannot agree.

[119] I conclude that the Plaintiffs’ satisfy the fifth criterion for certification as a class action.

D. CONCLUSION

[120] For the above reasons and with the above qualifications, I allow the Plaintiffs’ motion to amend the Statement of Claim, and I certify this action as a class action under the Class Proceedings Act, 1992.

[121] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Plaintiffs’ submissions within 20 days from the release of these Reasons for Decision followed by the Defendants’ submissions within a further 20 days.

Perell, J.

Released: November 26, 2012.

COURT FILE NO.: 11-CV-439656CP-

DATE: November 26, 2012

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CHARLOTTE PERRENOUD and RAJESH BEDI

Plaintiffs

‑ and ‑

eHEALTH ONTARIO and HER MAJESTY THE QUEEN in right of Ontario as represented by the MINISTER OF HEALTH AND LONG –TERM CARE

Defendants

REASONS FOR DECISION

Perell, J.

Released: November 26, 2012