Lacroix v.
Canada Mortgage and Housing Corp.
Practice — Pleadings — Amendment of pleadings — Prejudice or presumed prejudice, what constitutes — Adding new cause of action — Statement of claim — Leave to amend — With conditions.
Motion by the plaintiffs, represented by Lacroix, for leave to amend their statement of claim in this class action by adding three additional plaintiffs. The defendants objected to certain of the proposed amendments on the grounds that they constituted new causes of action and involved new plaintiffs. The defendants argued that the amendments were prejudicial to them, as they had spent considerable time and money in preparing for the original claims. The defendants further claimed that the court did not have jurisdiction to deal with the new claims, because they raised an issue solely within the jurisdiction of the CMHC Superintendent.
HELD: Motion allowed. There was no significant prejudice to the defendants in allowing the proposed amendments. There were new causes of action, but the former ones remained, so the defendants' preparations to date would not be wasted. As to the jurisdictional issue, the legislation was not clear that this was a question solely in the Superintendent's purview. However, the claim was required to plead sufficient facts to support the claims of the three additional plaintiffs. In this case, only generalities had been provided. With this condition, the motion was allowed.
Statutes, Regulations and Rules Cited:
Counsel:
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W.J. Sammon and James B. Barnes, for the plaintiffs. Lawrence E. Ritchie, for the respondents. |
¶ 1 CHARBONNEAU J. (endorsement):— The test that the court must apply to decide whether to grant leave to the plaintiffs to amend their statement of claim is contained in Rules 26.01 and 21.01(b). The court is directed to grant the amendment unless prejudice would result that could not be compensated for by costs or an adjournment and provided that the proposed pleading is tenable at law in the sense that it discloses a reasonable cause of action.
¶ 2 In applying the above test, the case law provides the following guidelines:
| a) | A pleading will be struck only if it is plain and obvious that it discloses no cause of action. |
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| b) | The facts pleaded must be taken to be true. |
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| c) | The pleading should be read generously to accommodate drafting deficiencies. |
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| d) | Matters of law not fully settled must be permitted to continue to trial. |
¶ 3 The defendants only object to certain of the proposed amendments namely those contained in paragraphs 1(a), 1(a).1, 15.1, 15.5, 15.9 to 15.11 inclusive, and 28.
SIGNIFICANT PREJUDICE
¶ 4 First of all, the defendants raise a general objection on the basis of substantial prejudice. It is submitted that the action is an entirely new action with a broader class, new plaintiffs, and new causes of action. The defendants submit they have spent significant time and resources defending this class proceeding and now the plaintiffs propose to start a new process at the very beginning. This is materially unfair to the defendants and that prejudice cannot be cured by costs. In the alternative, if the amendment as allowed, the defendants should be granted their costs thrown away payable forthwith.
¶ 5 It is an exceedingly rare scenario that will justify refusing an amendment on the grounds of prejudice. Indeed the case law is full of decisions where substantial amendments were granted in the very middle of trial. In this case, the decision of the Divisional Court in Mosanto Canada Inc. v. Superintendent of Financial Institutions, [2001] O.J. No. 963, (released on March 19, 2001) was issued after the process was well underway, and at that time the plaintiffs immediately alerted the defendants and the court to the fact they would seek an amendment. At the suggestion of the defendants, the court directed the plaintiffs to withhold their motion to amend until such time as other motions were resolved.
¶ 6 Furthermore, although the matter is somewhat over two years old, the proceeding is at a very early stage. I, therefore, conclude that the defendants are not significantly prejudiced. Although new allegations will be asserted, the action as formerly constituted will continue and, therefore, the defendants' efforts will not have been for nothing.
AMENDMENTS UNTENABLE AT LAW
Jurisdiction:
¶ 7 The defendants submit that each and every new claim asserted by the plaintiffs will necessitate answering the question: Did a partial termination of the CMHC plan occur? That is a question which, it is submitted, falls squarely within the exclusive jurisdiction of the Superintendent. At the very least, given the expertise of the Superintendent in this very specialized field and the applicable statutory and regulatory scheme, the court should decline to exercise such jurisdiction in deference to the Tribunal.
¶ 8 Mr. Ritchie, in his very able argument, relies on a number of cases, which have interpreted similar provincial statutory schemes, mostly the Ontario one. The court was not referred to any case specifically dealing with the Federal scheme. The jurisprudence relied on by the defendants point to three factors which should guide the courts when deciding whether to defer to the Superintendent or other Tribunal set up under the Act:
| (i) | the nature of the legislation; |
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| (ii) | the role and expertise of the Tribunal; and, |
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| (iii) | the nature of the question in issue. |
¶ 9 The plaintiffs quite correctly point out that there are a number of differences between the Ontario and Federal Act. The following are some of the provisions only found in the Federal Act:
| 1. | There is no intervening specialized Commission between the Superintendent and the judicial review process before the courts. |
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| 2. | Any interested party may bring a court action for a remedy when an administrator contravenes the conflict of interest provisions of the statute [s. 8(11)]. |
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| 3. | The Superintendent may apply to the court to obtain an order against anyone contravening or failing to abide with the Act or any direction issued by the Superintendent [s. 33.1(1)]. |
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| 4. | The Superintendent may bring a court action to enforce any cause of action that a member or former member or any person entitled to a benefit or refund from the plan could bring. [(s. 33.2(1)]. |
¶ 10 Obviously, the Federal Statutory framework leaves a lot of room for standard court actions, and the Ontario Superior Court of Justice is not in any way excluded from hearing the actions contemplated by the Act.
¶ 11 When one compares s. 33.1 of the Federal Act to the equivalent s. 87 of the Ontario Act, a significant difference is highlighted. In Ontario, once the Superintendent is satisfied that an administrator is contravening the Act, he/she issues an order directing the administrator to comply within a certain time. There is no need to first obtain a court order. If no appeal is filed, the order becomes the final order on the question and may be enforced. If an appeal is launched, a specialized tribunal, the Commission, which may substitute its own opinion for that of the Superintendent, hears the matter. Subsequently, an appeal lies, but on the record, to the Divisional Court. This is very different from the Federal scheme where the Superintendent must first institute an ordinary court action. The court is, therefore, specifically granted the right to apply its own discretion in assessing the facts and the law to the issues brought forward by the Superintendent.
¶ 12 My review of the Federal Act leads me to conclude that it is far from clear and obvious that the decision as to whether there was a partial termination must, or even ought to, be left to the Superintendent. The defendants have failed to convince me that either the role or expertise of the tribunal, or the nature of the question in issue are such that it is clear and obvious the plaintiffs' action should not proceed before this court. The plaintiffs should not be prevented from proceeding with their action on this basis at this stage of the proceeding.
DUTY TO DIVIDE THE SURPLUS
¶ 13 The defendants object to paragraph 15.4 on the basis that the plaintiffs appear to be alleging that a duty to divide the surplus exists in the absence of some crystallization event. I agree that no such duty exists in view of the decision of the Supreme Court of Canada in Schmidt v. Air Products (1994), 115 D.L.R. (4th) 631 (S.C.C.).
¶ 14 Mr. Sammon, for the plaintiffs, points out that the paragraph is not intended to say that, but rather simply states that whether the Work Force Adjustment Program and the surplus review are held to be a partial termination or some other crystallization event, there was a duty to divide when they took place.
¶ 15 I agree with the defendants that paragraph 15.4 will have to be amended to clearly set out the true intent of the plaintiffs as communicated to the court by Mr. Sammon and the application of the Schmidt rational.
BREACH OF STATUTE AS A CAUSE OF ACTION
¶ 16 The defendant is quite right that there is no automatic cause of action based on the tort of statutory breach. In order to import civil liability for breach, the statutory provision must expressly provide for it: Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205.
¶ 17 The plaintiffs counter that the breach of statutory duty, which is the foundation of their cause of action, is a breach of the duty imposed by s. 8(10)(b) which states:
If there is a material conflict of interest between the role of an employer who is an administrator (...) and (his) role in any other capacity, the administrator shall act in the best interests of the members of the pension plan. |
¶ 18 The plaintiffs submit that s. 8(11) which permits an application by "any (...) interested person, for any order on such terms as the court considers appropriate" is sufficiently clear wording to conclude that the legislator intended to confer on an aggrieved party a cause of action in civil damages.
¶ 19 The matter is certainly not without ambiguity. However, given the test of "clear and obvious" to be met before a claim is struck at this stage, the ambiguity should be resolved in favour of the plaintiffs. Moreover, there will be very little prejudice to the defendants to let the trial judge decide this issue. Section 8(11) permits the plaintiffs to bring an action. The only issue is what remedy could the plaintiffs seek and obtain. They could likely seek a declaration that the defendants did not act in the best interest of the plaintiffs. A parallel action of this nature would fly in the face of judicial economy and risk conflicting decisions.
¶ 20 Although in a very different context, it is noteworthy that Sharpe J. (as he then was) in Re Phillips v. Dis-Management (1995), 24 O.R. (3d) 435 held that the words "make such further and other order as the judge considers appropriate" in s. 94(1) of the Landlord and Tenant Act conferred on the court jurisdiction to award damages.
¶ 21 For all of the above reasons, I am not prepared at this stage to strike out the plaintiffs' claim for damages based on breach of statutory duty.
THE NEW CLASS DEFINITION
¶ 22 This is not properly a question to be addressed on this motion. The court will decide, on the motion to amend the certification order, the exact definition of the new class or indeed whether it will be modified at all. All of those questions are left opened until such time as the second part of this motion is heard. The fact that the plaintiffs propose a class definition in their statement of claim is not conclusive of anything in that respect. The usual burden will rest with the plaintiffs.
PARTICULARS OF THE CLAIM OF THE PLAINTIFFS
¶ 23 The statement of claim must plead sufficient material facts to show that each individual plaintiff has a cause of action against the defendants. In other words, if the action were to proceed as individual actions, the claim must allege all the material facts in support of each plaintiff's cause of action.
¶ 24 Here the plaintiffs have only provided generalities. Leave to amend the claim, by adding the three additional plaintiffs, is not granted unless the plaintiffs properly plead the material facts necessary to establish that each of the five representative plaintiffs has a cause of action against one or all of the defendants. That portion of the plaintiffs' motion is, therefore, dismissed without prejudice to the plaintiffs to further amend their claim to plead the required facts within the next twenty (20) days.
¶ 25 Otherwise, the plaintiffs' motion is allowed. Counsel may make written submissions on costs within twenty (20) days, if so advised.
CHARBONNEAU J.
QL UPDATE: 20030530
cp/s/qw/qlgkw/qlkjg