COURT FILE AND PARTIES

COURT FILE NO.: CV-12-55698

DATE: 2013/11/27

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Lise Germaine Stanton, Respondent Plaintiff

AND

Coughlin & Associates Limited and The Public Guardian and Trustee, Defendants

BEFORE: J. Mackinnon J

COUNSEL:
Paul L. Conlin, for the Plaintiff

Rodrigo Escayola, for the Moving Defendant, Coughlin & Associates Limited

Lisa Brost, for the Moving Defendant, The Public Guardian and Trustee

HEARD: October 24, 2013

ENDORSEMENT

[1] This is a motion by both defendants under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 21 for a determination of a question of law before trial and for an order to strike the Statement of Claim on the grounds that it discloses no reasonable cause of action.

[2] The plaintiff and Mr. Stanton were married in 1974 and separated on a final basis in 2000. They entered into a written Separation Agreement dated April 1, 2004. That Agreement provided that neither of them shall be entitled to share or receive benefits of any kind from any Pension Plan of the other, except that the survivor may receive survivor’s benefits if a deceased has not remarried, or has not designated another beneficiary. For those wishing to read them, portions of the actual Separation Agreement are attached as Appendix “A”.

[3] The plaintiff and Mr. Stanton were never divorced.

[4] Mr. Stanton was a member of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, and a member of the U.A. Local 71 Pension Plan. The defendant, Coughlin & Associates Limited (“Coughlin”) was the administrator of the Pension Plan.

[5] In December 2005, the Public Guardian and Trustee (“PGT”) was appointed as Mr. Stanton’s Guardian of property pursuant to the Substitute Decisions Act 1992, S.O. 1992 c. 30 (“SDA”). In April 2006, the PGT completed a Declaration of Marital Status and a Retirement Application on behalf of Mr. Stanton, who was approaching 65 years of age. On the form, the PGT indicated that the plaintiff was a former spouse of Mr. Stanton for the purposes of the Pension Plan and that their relationship had terminated effective April 1, 2004 due to legal separation. These were submitted to Coughlin later in the same month. As part of the Retirement Application, the PGT opted for a single life annuity with a ten year guarantee period, which terminates upon the death of the member.

[6] Although he and the plaintiff were separated, Mr. Stanton maintained her as beneficiary of his pre–retirement pension benefits right up to the time of his retirement in 2006. He had not designated any beneficiary of the post-retirement benefits under the Pension Plan.

[7] Mr. Stanton died in May 2011 without having remarried. The present value of the remaining guaranteed payments net of federal taxes was paid out to the Estate of Raymond Stanton by cheque issued by Coughlin. The plaintiff is entitled to those funds as the sole beneficiary under Mr. Stanton’s will. His will predated the separation and had not been changed at any time thereafter. However, the plaintiff is seeking a declaration that she is entitled to an order compelling the defendants to provide her a survivor’s pension for life.

Rule 21.01(1)

[8] The motions are brought under rule 21.01(1) which provides as follows:

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

(a) for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs; or

(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.

[9] The applicable test for striking a claim for disclosing no reasonable cause of action is that it must be “plain and obvious” that the claim cannot succeed. The test is met where: a) a plaintiff pleads allegations that do not give rise to a recognized cause of action; b) a plaintiff fails to plead a necessary element of a recognized cause of action; c) the allegations in the pleading are simply conjecture, assumptions or speculation unsupported by material facts, or where mere conclusions of law are asserted: see Hunter v. Bravener (2003), 57 W.C.B. (2d) 449, [2003] O.J. No. 1613 (Ont. C.A.).

The Statement of Claim

[10] In the Statement of Claim, the plaintiff seeks an order declaring that she is entitled to a survivor’s pension for life, and an order compelling the defendants to provide the survivor’s pension to her. She alleges that the PGT incorrectly identified her as a former spouse having regard to the legislative definition of “spouse”. In the result, the application erroneously indicated that joint and last survivor options were not applicable. She further alleges that since Mr. Stanton had not remarried or designated another beneficiary, the Separation Agreement permitted her to receive his survivor’s pension benefits. She states that by electing a single life annuity, the PGT made a pension beneficiary designation which it is not permitted to do. She claims that Coughlin knew or ought to have known that PGT could not change the designation of the pension beneficiary.

Positions of the Parties

[11] The defendants both rely on section 44(4) of the Pension Benefits Act, R.S.O. 1990, c. P. 8 (“PBA”) as meaning that a joint and survivor annuity was not available at the time the PGT elected the single life annuity. Coughlin also submits that, as plan administrator, it had no relationship with or duty to the plaintiff, or any choice but to accept the election made by the PGT. The PGT submits that its sole duty was to Mr. Stanton and there could be no benefit to him from a joint and survivor annuity even if the choice had been available. The PGT distinguishes between any identity of interest between Mr. Stanton and his Estate and the plaintiff in her personal capacity. The election of a single life annuity increased the payments to Mr. Stanton during his lifetime and resulted in a payment to his Estate of the present value of the remaining guaranteed payments. By comparison, a joint survivor annuity would have reduced the payments he would have received during his lifetime and would not have resulted in any proceeds for the Estate, rather in a direct payment to the plaintiff in her personal capacity as the surviving annuitant.

[12] The plaintiff submits that the election of a joint and survivor pension annuity was an available option, whereas Coughlin erroneously advised the PGT that there was no such option, such that the PGT failed to consider it to the detriment of Mr. Stanton and his Estate. Alternatively, she seeks leave to amend her Statement of Claim to plead that the joint and survivor option was in fact mandatory under the Pension Plan, that both defendants owed her a fiduciary duty as Estate beneficiary to know and communicate that fact in the case of Coughlin, and to know and select that annuity in the case of the PGT.

Analysis

[13] In my view, the Statement of Claim does not disclose a cause of action against either defendant and should be struck. The claim that the plaintiff was an eligible spouse under section 44 of the PBA cannot succeed. Sections 44(1) and 44(4) provide as follows:

44(1) Every pension paid under a Pension Plan to a retired member who has a spouse on the date that the payment of the first instalment of the pension is due shall be a joint and survivor pension.

44(4) Subsections (1) to (3.1) do not apply,

(a) in respect of a pension benefit if payment of the pension has commenced before the 1st day of January, 1988; or

(b) in respect of a retired member who is living separate and apart from his or her spouse on the date that payment of the first instalment of the pension is due.

[14] The Court of Appeal for Ontario has recently interpreted nearly identical provisions of section 48(1) and section 48(3) of the PBA. The comparable sections of section 48 of the PBA are attached as Appendix “B” for those who wish to read them. In Carrigan v. Quinn, 2012 ONCA 736, 112 O.R. (3d) 161, Juriansz J.A. stated at para. 25:

25 The canons of statutory interpretation require that the statutory provision being interpreted be considered in the context of the statute as a whole. Considering s. 48(1) in context, it is readily apparent that it does not apply in all circumstances. Section 48(3) defines a situation in which s. 48(1) does not apply. It states that "[s]ubsection (1) ... [does] not apply where the member or former member and his or her spouse are living separate and apart on the date of the death of the member or former member." In other words, when the member and his or her spouse are living separate and apart when the member dies, s. 48(1) does not apply, and therefore there is no statutory direction that the death benefit be paid to the member's spouse.

[15] He further stated at para. 40:

40 As I read it, the PBA does not presume that property division following marriage breakdown is completed until divorce. A member with a legally married spouse, but living apart from that spouse, may arrange his or her own affairs by designating a beneficiary to receive the pension under s. 48(6).

[16] The decision in Carrigan in this regard is consistent with previous Ontario authority addressing section 44. Robinson v. University of Guelph, 2010 ONSC 6150, 71 E.T.R. (3d) 99 is one example. Smiley v. Ontario (Pension Board) (1994), 116 D.L.R. (4th) 337, 1994 7505 (Ont. Ct. J. (Gen. Div.)) is another. To paraphrase Smiley, to have a statutory entitlement to a mandatory joint and survivor pension, the employee must have a spouse at the time of retirement, the spouses must not be separated on the date the first instalment of the pension is due and the spouse must survive the employee.

[17] The plaintiff and Mr. Stanton were living separate and apart at the relevant time and accordingly, section 44(1) was inapplicable and a joint and survivor pension was not mandated by the PBA. This left the PGT with the ability to choose the annuity it believed to be best for Mr. Stanton. The only duty the PGT owed was to him, and the PGT was authorized to do on Mr. Stanton’s behalf anything in respect of property that he could have done himself, if capable, except make a will. The SDA provides in sections 31(1) and 32(1):

31.(1) A guardian of property has power to do on the incapable person’s behalf anything in respect of property that the person could do if capable, except make a will.

32.(1) A guardian of property is a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.

[18] There is no foundation pleaded in fact or in law to support a conclusion that the PGT owed any private law duty of care to the plaintiff. Neither did the deceased, Mr. Stanton. Had he lived, he would have been free to select a single life annuity and, as his guardian of property, so was the PGT.

[19] The PGT did not change or make a beneficiary designation. Rather, it selected a single life annuity with a guaranteed term. Since there was no designated beneficiary, the present value of the remaining guaranteed payment was payable to Mr. Stanton’s Estate.

[20] The Statement of Claim alleges that the wording of Coughlin’s Declaration of Marital Status erroneously represented to the PGT that the plaintiff was a former spouse because of her legal separation from Mr. Stanton. The alleged error, as pleaded, is relied on by the plaintiff in support of her claim to be a spouse entitled to a joint and survivor pension by reason of section 44(1) of the PBA. For the same reasons already given, this ignores the impact of section 44(4). Accordingly, this allegation cannot disclose a cause of action.

[21] In oral argument, the plaintiff requested leave to amend the Statement of Claim to plead that under the terms of the Pension Plan at the applicable time, the definition of spouse was such that the requirement was mandatory to provide a joint and survivor annuity where the member and his or her spouse were living separate and apart on the member’s date of retirement. The portions of the Pension Plan before the court were inadequate to ascertain whether this was or was not a mandatory requirement when Mr. Stanton retired. Nor was the issue whether the Pension Plan administrator might owe a duty of care to members’ spouses adequately developed in the materials before the court. The Separation Agreement between the plaintiff and Mr. Stanton did not waive a survivor’s ability to receive survivor’s benefits if a deceased had not remarried or designated another beneficiary. If the Pension Plan did require a joint and survivor pension for separated but still legally married spouses when the first installment of Mr. Stanton’s pension was due, then there may be a cause of action against Coughlin in negligent misrepresentation arising from the wording of its Declaration of Marital Status, assuming it owed a duty of care to the spouses of its members.

[22] Coughlin submitted that leave to deliver an amended Statement of Claim should not be given because a pleading that the terms of the Pension Plan mandated a joint and survivor annuity constituted a new cause of action, and was prescribed. This may be, but I am not prepared to determine any of these issues on this motion, having regard to the very limited material before me related to them.

[23] For these reasons, the Statement of Claim is struck as disclosing no cause of action. Leave is given to deliver a fresh Statement of Claim within 20 days to assert a cause of action against Coughlin only, on the basis that the terms of the Pension Plan mandated a joint and survivor annuity in the facts of this case, but subject to the ability of Coughlin to plead a limitation defense.

Costs

[24] It seems to me that both defendants are entitled to costs of the motion payable by the plaintiff on a partial recovery basis, and that the PGT is also entitled to its costs of the action from the plaintiff. If the parties are unable to reach an agreement on the issue of costs, then I may be spoken to.

J. Mackinnon J

Date: November 27, 2013

Appendix “A”

Seperation Agreement

8. Pensions. Neither the Husband nor the Wife shall be entitled to share or to receive any benefits of any kind from pension of the other, including but not limited to any employment Pension Plans, deferred profit sharing plans, registered retirement savings plans and registered home ownership plans except that the survivor may receive survivor’s benefits if a deceased has not remarried, or has not designated another beneficiary.

11.1 Property. Except as provided in this agreement, the Husband and Wife agree that:

a) All their property has been divided to their mutual satisfaction;

b) Each releases all rights to and interest in property owned by the other which he or she has or may acquire under the laws of any jurisdiction, under presently existing legislation or future legislation and in particular the Family Law Act, including all rights to and interest in:

i. ownership in property;

ii. possession in property;

iii. compensation for contribution of any kind, whether direct or indirect, made to property;

iv. division of property;

v. an equalization payment pursuant to the Family Law Act; and

vi. any resulting, constructive or other type of trust;

c) the Husband and Wife release all rights, possessory or otherwise, which he or she has or may acquire under Part II of the Family Law Act.

11.3 Estate. Except as provided in this agreement, and subject to any gifts or designations of insurance or pensions from one of the parties to the other validly made (by will or otherwise) after the date of this agreement, the Husband and Wife each release all rights which he or she has or may acquire under the laws of any jurisdiction in or against the estate of the other and in particular:

a) under the Succession Law Reform Act, or any other statute.

i. to share in the estate of the other upon the other dying intestate, or

ii. to an allowance or payment as a dependant from the estate of the other;

b) under the Trustee Act, R.S.O. 1990 or any other statute to act as an executor or administrator of the will or the estate of the other;

c) under the Family Law Act, or any other statute to his or her entitlement thereunder on the death of the other and, in particular, from any claims under Parts I and II; and

d) to apply to set aside the other’s will.

Appendix “B”

Pension Benefits Act (“PBA”)

48. (1) If a member who is entitled under the Pension Plan to a deferred pension described in section 37 dies before payment of the first instalment is due, or if a former member or retired member dies before payment of the first instalment of his or her deferred pension or pension is due, the person who is his or her spouse on the date of death is entitled,

(a) to receive a lump sum payment equal to the commuted value of the deferred pension;

(b) to require the administrator to pay an amount equal to the commuted value of the deferred pension into a registered retirement savings arrangement; or

(c) to receive an immediate or deferred pension, the commuted value of which is at least equal to the commuted value of the deferred pension.

(3) Subsections (1) and (2) do not apply where the member, former member or retired member and his or her spouse are living separate and apart on the date of death.

(6) A member, former member or retired member described in subsection (1) may designate a beneficiary and the beneficiary is entitled to be paid an amount equal to the commuted value of the deferred pension mentioned in subsection (1) or (2),

(a) if the member, former member or retired member does not have a spouse on the date of death; or

(b) if the member, former member or retired member is living separate and apart from his or her spouse on the date of death.

(7) The personal representative of a member, former member or retired member described in subsection (1) is entitled to receive payment of the commuted value mentioned in subsection (1) or (2) as the property of the member, former member or retired member if he or she has not designated a beneficiary under subsection (6) and,

(a) does not have a spouse on the date of death; or

(b) is living separate and apart from his or her spouse on the date of death.