CITATION:
Ault v. Canada
          (Attorney General), 2011 ONCA 147

DATE: 20110228

DOCKET: C49464

COURT OF APPEAL FOR ONTARIO

OConnor A.C.J.O., MacPherson and Cronk JJ.A.

BETWEEN

Margaret Ault, Robert Collier, Robert C. Temple, Rod
          Shepherd, Richard Findlay, David Luck,
Lucie

Nobert
, Marie-France
Dufour
,
          Bryan Armstrong

Plaintiffs (Respondents)

and

Attorney General of Canada

Defendant (Appellant/Respondent by way of cross appeal)

and

Sylvain Parent,
Welton
Parent Inc.,
Loba
Limited
and Raymond
Jemus

Third Parties (Respondents/Appellants by way of cross-appeal)

DOCKET: C49446

AND BETWEEN

David Luck

Plaintiff (Appellant/Respondent by way of cross-appeal)

and

Attorney General of Canada

Defendant (Respondent/Appellant by way of cross-appeal)

William McDowell, Monique
Jilesen
,
          Elizabeth Richards and Emily Graham, for the Attorney General of Canada

Dougald
Brown, for the respondents
          in C49464 and for the appellant in C49446

Howard
Yegendorf
, Marcia Green and
          Stephanie Lewis for the third party respondents

Heard: January 25 and 26, 2011

On appeal from the judgment of Justice Catherine D. Aitken of
          the Superior Court of Justice, dated September 3, 2008, with reasons reported
          at (2008), 80 C.C.P.B. 1 and 2010 ONSC 1423.

By the Court:

OVERVIEW

[1]

Following a 39-day trial, the trial judge awarded
    damages for negligent misrepresentation to seven of the eight plaintiffs who
    had sued the federal government, excluding David Luck. The Attorney General of
    Canada (the AGC) and Mr. Luck both appeal from that decision.

BACKGROUND

[2]

The events giving rise to this litigation occurred more
    than a decade ago.

[3]

Prior to October 15, 2000, one option for transferring
    pension monies between the Public Service Superannuation Plan (the PSSP) and private
    pension plans was by means of a reciprocal transfer agreement (RTA). Treasury
    Board Secretariat (TBS), the administrative arm of the Treasury Board, was
    responsible for negotiating such pension portability agreements with approved
    employers with valid private pension plans. One advantage of transferring
    monies pursuant to a RTA was that, in some cases, the transfer value was higher
    than it might otherwise have been (two times contributions plus interest).

[4]

One of the 300 or so RTAs at the time was the
Loba
RTA. It was the brainchild of Sylvain Parent, an
    actuary and pension consultant. Mr. Parent was the principal actuary of
Welton
Parent Inc. (formerly known as
Welton
Beauchamp Parent Inc. (WBP)), an actuarial firm with a pension consulting
    focus. Leading up to the October 15, 2000 deadline for transferring monies
    pursuant to a RTA, Mr. Parent and WBP actively recruited federal public
    servants to join
Loba
Limited (
Loba
)
    on the basis that it would be financially advantageous from a pension
    perspective. They attracted significant interest in
Loba
and some 120 public servants, including the plaintiffs, joined the consulting
    company. Mr. Parent was the President of
Loba
and owned
    both it and WBP through a personal holding company.

[5]

The idea was that federal employees would resign from
    their employment with the public service, join
Loba
,
    and transfer their pension monies to the
Loba
pension
    plan (the
Loba
Plan). The employees would remain
    with
Loba
only as long as it took to have their
    pension monies transferred. Once that happened, they would quit
Loba
and transfer their monies out of the
Loba
Plan, which was structured to permit cash payouts.

[6]

While TBS had negotiated the
Loba
RTA, it had concerns about the legitimacy of the
Loba
pension scheme.  For instance, it was
    concerned about the payout of pension monies in cash and, further, that the
Loba
Plan might not meet all requirements for registration
    under the
Income Tax Act
, R.S.C. 1985,
    c. 1.

[7]

As a result of concerns about the
Loba
arrangements, TBS put a hold on transfers to the
Loba
Plan during the summer of 2000. The plaintiffs were not made aware of the hold.

[8]

While the hold was eventually lifted, TBS officials
    continued to have concerns about the validity of the
Loba
Plan, which they communicated to the Canada Revenue Agency (the CRA). The CRA
    shared its concerns about the
Loba
Plan and other
    similar plans.

[9]

In particular, the CRA set out its concerns in writing
    in a letter to TBS dated September 7, 2000 (the TBS Letter) and in a second
    similar letter to
Loba
and WBP dated September 15,
    2000 (the Parent Letter). The CRA intended that the TBS and Parent Letters be
    distributed to all those interested in RTAs so that they would be aware of the
    risks and could make an informed choice about their pension funds. The CRA
    asked TBS officials and Mr. Parent to distribute the letters setting out its
    concerns.

[10]

For various reasons, the TBS and Parent Letters were
    not broadly distributed as intended and requested by the CRA. The eight
    plaintiffs in this case did not receive copies of either letter and were not
    informed of most of the information contained in the letters.

[11]

In the meantime, various government communications
    advised employees that if they applied by the October 15th RTA deadline, their
    monies would be transferred to the private pension plans designated by them. There
    was no mention in any of these communications of any risks associated with the
    transfer of pension monies pursuant to a RTA and, in particular, the
Loba
RTA.

[12]

In this case,
some time
after
    they had quit the public service and commenced employment with
Loba
, the plaintiffs learned that transfers to the
Loba
Plan had been suspended, that the RCMP was investigating
Loba
and Mr. Parent, and that the CRA was investigating
    the
Loba
Plan.

[13]

In 2003, the CRA filed a Notice of Intent to Revoke the
Loba
Plan, and the Federal Court of Appeal upheld
    that decision: 2004 D.T.C. 6680 (F.C.A.). Mr. Parents subsequent attempt to
    have the
Loba
Plan re-registered was unsuccessful:
    2009 D.T.C. 5033 (F.C.A.).

[14]

As a result of the revocation, the plaintiffs pension
    monies were not transferred to the
Loba
Plan.

[15]

The plaintiffs (except for Mr. Luck who did not claim
    any pension losses) sued the AGC, claiming the difference between: (1) the
    benefits (salary, pension, severance pay, health coverage, life insurance
    coverage) they would have received between the date of resignation from the
    public service and the date they likely would have retired from the public
    service had they not joined
Loba
; and (2) the
    benefits (earnings, pension, etc.) they actually received over the same period.
    All earned less after leaving the public service than they would have earned had
    they remained in the public service until their retirement date.  They also lost certain benefits available to
    public servants.

[16]

The AGC in turn brought third party actions against
Loba
, Mr. Parent, and WBP (collectively, the
Loba
Parties) for negligent misrepresentation and breach
    of fiduciary duty.

TRIAL JUDGES REASONS

[17]

The trial judge concluded that the AGC was liable for
    negligent misrepresentation. The core of the trial judges findings against the
    AGC was:

1)

the AGC owed duties of care to the plaintiffs as
    employer and pension plan administrator;

2)

the AGC made explicit, implied and omitted
    representations regarding the availability of the
Loba
RTA as a legitimate pension portability option, which representations were
    misleading:

a)

there were  explicit representations relating to the existence, legality and
    accessibility of the
Loba
RTA;

b)

there was an implied representation that the government
    had satisfied itself that  approved employers
    with RTAs with the government, including
Loba
, were
    legitimate employers and that the government was unaware of any circumstances that
    raised serious doubts as to whether a transfer could be made under the
Loba
RTA; and

c)

there
was an omitted
    representation in the failure to advise the plaintiffs that there was a
    significant identifiable risk that the CRA would deregister the
Loba
Plan.

3)

the key negligence was the failure to distribute the TBS
    Letter from the CRA detailing the CRAs concerns about pension transfers from
    the government to entities like
Loba
, or a failure to
    distribute the information in the TBS Letter, to the plaintiffs;

4)

the plaintiffs reasonably relied on the AGCs
    representations; and

5)

the
explicit, implied and
    omitted representations caused the plaintiffs loss of government and pension
    income.

[18]

The trial judge held that the
Loba
Parties were also liable to the plaintiffs for negligent misrepresentation, as
    well as for breach of fiduciary duty. Her central findings in relation to the
Loba
Parties were:

1)

the
Loba
Parties owed duties
    of care to the plaintiffs;

2)

the
Loba
Parties did not owe fiduciary
    duties to the plaintiffs prior to their joining the
Loba
Plan, but did so thereafter;

3)

the
Loba
Parties made
    negligent misrepresentations to the plaintiffs;

4)

the key negligent misrepresentation was the failure to
    provide the plaintiffs with the TBS and Parent Letters or the information
    contained in the letters;

5)

the failure in 4) also amounted to a breach of
    fiduciary duties on the part of the
Loba
Parties;

6)

in
addition, the
Loba
Parties withheld information about the
Loba
Plan beginning in January 2001 in further breach of
    their fiduciary duties.

[19]

Having concluded that both the AGC and the
Loba
Parties were liable to the plaintiffs, the trial judge
apportioned  liability
as between them at 80 per cent for the AGC and 20 per cent for the
Loba
Parties.

[20]

In the result, the AGC was ordered to pay damages to
    the plaintiffs as follows:

Margaret Ault

$124,961.00

Robert Collier

$355,860.00

Robert C. Temple

$235,663.00

Rod Shepherd

$615,947.00

Richard Findlay

$586,205.00

Lucie

Nobert

$468,022.00

Bryan Armstrong

$446,143.00

[21]

The trial judge also ordered that the
Loba
Parties were jointly and severally liable to the AGC
    for contribution and indemnity in respect of the AGCs damages in the following
    amounts:

Margaret Ault

$24,992.20

Robert Collier

$71,172.00

Robert C. Temple

$47,132.60

Rod Shepherd

$123,189.40

Richard Findlay

$117,241.00

Lucie

Nobert

$93,604.40

Bryan Armstrong

$89,228.60

[22]

The eighth plaintiff in the action was David Luck.  As noted, he advanced a claim for lost salary
    but made no pension loss claim.  He did
    not lead evidence about the capitalized value of his pension benefits.  The trial judge observed (correctly, as it
    turns out) that it was possible that the capitalized value of the actual
    pension he received would be greater than the capitalized value of the pension
    he would have received had he remained in the public service until his
    anticipated retirement date.  In these
    circumstances, the trial judge determined that, although Mr. Luck had suffered
    a proven loss of $108,525 relating to his loss of salary and severance pay
    (which the trial judge would have reduced by 10 per cent for contributory
    negligence), his failure to lead evidence about his pension situation
    disentitled him to damages because he chose to leave out a piece of the
    puzzle.  In her view, it was necessary
    to look at the net impact of the financial ramifications of Mr. Lucks
    resignation. Thus, as a material evidential gap existed, Mr. Lucks damages
    claim failed.

[23]

The trial judge awarded costs to the plaintiffs
    totalling $708,399 and, by analogy to the damages
apportionment,
she ordered that the
Loba
Parties were jointly and
    severally liable to the AGC for contribution and indemnity in the amount of
    $139,675 in respect of these costs.

[24]

The trial judge ordered that Mr.  Luck pay costs of $20,000 to the AGC.

[25]

In the third party actions, the trial judge ordered
    that the
Loba
Parties pay the AGC costs of $100,000.

ISSUES ON APPEAL

[26]

The AGC  raises five
    issues on the main appeal:

1)

Did the trial judge err in finding that the AGC owed
    the plaintiffs a duty of care?

2)

Did the trial judge err in finding that the AGC had breached
    the duty by making an untrue, inaccurate or misleading representation that was
    reasonably relied on by the plaintiffs?

3)

Did the trial judge err in finding that the AGC had caused
    the plaintiffs losses?

4)

Did the trial judge err in her apportionment of
    liability as between the AGC and the
Loba
Parties?

5)

Did the trial judge err in failing to award the AGC its
    total partial indemnity costs against the
Loba
Parties in the third party actions?

[27]

The
Loba
Parties cross-appealed
    the costs ruling of the trial judge in the third party actions. They sought to
    set aside the $100,000 costs award made against them and to replace it with an
    order that the AGC pay them substantial indemnity costs of $592,861. The
Loba
Parties abandoned their cross-appeal at the appeal
    hearing.

[28]

Mr.  Luck appeals
    the trial judges dismissal of his damages claim on the basis that the trial
    judge erred by linking his inferred pension gain to his proven salary loss.
    The AGC cross-appeals, asking among other things that any damages awarded
    reflect Mr. Lucks contributory negligence.

[29]

At the appeal hearing, the court did not call on the plaintiffs
    to respond to issues 1, 2 and 3.

THE AGCS APPEAL

(1)

Duty
    of care

[30]

The
    existence of a duty of care is the first of five requirements set out in
Queen v.
Cognos
Inc.
, [1993] 1 S.C.R. 87, at
para
. 33, for
    establishing negligent misrepresentation.

[31]

The
    trial judge concluded that the Treasury Board, as employer and as pension plan
    administrator, owed a duty of care to the plaintiffs. The AGC submits that the
    trial judge erred in reaching this conclusion for two reasons: first, she
    failed to respect the distinct and separate statutory responsibilities of the
    Treasury Board, as employer and plan administrator, and the CRA, as the
    regulator of pension plans under the
Income
    Tax Act
; and second, she erroneously determined that the duty being alleged
    in this case fell within a recognized category or an analogous one. We do not
    accept these submissions.

[32]

On
    the first point, the trial judge was very careful in the way she described the
    locus within the federal government for the potential duty of care in this case
     it was the Treasury Board, as employer and plan administrator, the
    Superannuation Directorate, which was responsible for the actual administration
    of the PSSP, and compensation advisors within the employing departments, who
    were responsible for advising employees regarding superannuation matters. She
    said (at
para
. 611):

Public
    servants such as
Charko
,
Gravelle
and Macpherson working at the Pensions Division [of TBS],
Soucoup
and Swan working at the Superannuation Directorate [of Public Works and
    Government Services Canada] and the compensation advisors working in the
    employing departments and agencies, ought reasonably to have foreseen that
    public servants, such as the Plaintiffs, considering exercising their right as
    members of the PSSP to take advantage of
[a]
RTA would rely on their representations
    regarding the existence, legality and accessibility of that RTA.  I also find that reliance on those
    representations by public servants in the Plaintiffs position, in the
    particular circumstances of these cases, was reasonable.  I conclude that
Charko
,
Gravelle
, Macpherson,
Soucoup
,
    Swan, the compensation advisors in the departments and agencies, and those to
    whom all of these individuals reported, had an obligation to be mindful of the
    Plaintiffs interests in going about their responsibilities as the Plaintiffs
    employer and as administrator of the Plaintiffs pension plan.

[33]

It
    is true that other branches of the government, including the CRA, and other government-related
    entities, such as the RCMP, were involved in various ways in assessing,
    investigating and regulating the RTA program. However, the plaintiffs claim
    about money they alleged they had unfairly lost  was against their employer
    and their pension plan administrator. As explained by the trial judge (at
para
. 627):

What
    is being suggested [by the plaintiffs] is that, where the Pensions Division,
    that is charged with overseeing the RTAs entered into by the Treasury Board for
    the benefit of PSSP members, has specific knowledge of a significant risk
    associated with a category of such RTAs, the Treasury Board owes a duty of care
    to public servants whom it knows to be considering an RTA to advise them of the
    existence of that risk.

[34]

On
    the second point, the AGC submits that there is no established duty in law on
    an employer to provide information about the viability of a prospective new
    employers (
Lobas
) pension plan.

[35]

This
    misses the point that the entire RTA program was created by the federal government
    and that the federal government had created an internal apparatus, anchored in
    TBS and fleshed out with pension divisions and compensation
advisors,
    that
was deeply involved in administering the program. Any step taken by
    an employee towards transferring his or her pension monies pursuant to a RTA
    with a new employer had an immediate impact on the employees status as a
    federal public servant (gone), salary (gone), and pension (transferred).
    Accordingly, it was the plaintiffs longstanding and current status as
    employees in the federal public service  not their potential new employment
    with a different employer  that grounds the duty of care.

[36]

The
    government was not only the employer of the plaintiffs. It was also the
    administrator of the PSSP of which all the plaintiffs were members as federal
    government employees.   As this court
    said in
Hembruff
v. Ontario Municipal Employees Retirement
    Board
(2005), 78 O.R. (3d) 561, at
paras
. 66 and
    67, leave to appeal refused, [2006] S.C.C.A. No. 3, there is a special
    relationship between the administrator of a pension plan and the members of the
    plan and, as a result, the administrator has an obligation to be mindful of
    plan members interests when administering the plan. In these circumstances,
    framing a duty of care in terms of providing information to employees and plan
    members about a known significant risk associated with a category of such
    RTAs fits comfortably within the description of the duty of care in the
    pension case law. There is nothing novel about the duty of care found by the
    trial judge in this case.

(2)

Misrepresentation
    and reliance

[37]

The
    trial judge concluded that the explicit, implied and omitted representations
    of the federal Crown to the Plaintiffs regarding the availability of the
Loba
RTA as a legitimate option for them to consider were
    misleading. The AGC contends that the trial judge erred in reaching this
    conclusion because what the employees were told by various representatives of
    the government including, especially, their compensation advisors, was accurate
    and, with respect to omissions, there was no obligation to provide the
    information.

[38]

We
    do not accept this submission. Whether or not a statement or implied statement
    is a misrepresentation is a finding of fact that depends on the trial judges
    assessment of the evidence and inferences drawn from the evidence: see
Kerr v.
Danier
Leather Inc.
(2005), 77 O.R. (3d) 321 (C.A.), at
para
.
    139,
affd
[2007] 3 S.C.R. 331. Such a finding should
    not be disturbed unless there is a palpable and overriding error in the trial
    judges assessment of the evidence: see
NBD
    Bank, Canada v. Dofasco Inc.
(1999), 46 O.R. (3d) 514 (C.A.), at
para
. 85, leave to appeal refused, [2000] S.C.C.A. 96.

[39]

In
    our view, the evidence
marshalled
by the trial judge to support her conclusion of misrepresentation was
    very strong indeed. Although there were many facets to this evidence, we would
    mention just one by way of illustration, namely, the disconnect between what
    senior TBS
administrators  knew
in the months running up to the October 15, 2000 cutoff date
    for RTAs about the significant risks associated with  transfers to the
Loba
Plan  and the ignorance of the lower level
    compensation advisors  the people who actually met with and assisted the
    employees  about those risks. As explained by the trial judge (at
para
. 668):

In cross-examination,
Charko
acknowledged that he expected that the information provided to the Plaintiffs
    by compensation advisors would be complete.  All of the compensation advisors who dealt with the Plaintiffs were
    operating on the incorrect premise that the
Loba
RTA
    was a routine arrangement and transfer payments would occur in the normal
    course under the
Loba
RTA.  Since they were unaware that the Treasury
    Board had previously put the
Loba
transfers on hold
    and that the Treasury Board was in possession of information that could result
    in its again putting the transfers on hold or suspending them indefinitely, the
    compensation advisors were not in a position to advise the Plaintiffs of the
    existence of these risks.  In essence,
    they were not in a position to provide the Plaintiffs with the relevant
    information they needed in order to make an informed decision relating to their
    pension options.  Had the compensation
    advisors been aware of the existence of Treasury Board concerns and of the
    earlier hold on transfers, at the very least, they could have advised the
    Plaintiffs to make further inquiries of the Treasury Board before submitting
    their resignations from the public service.  That was not done.

[40]

There
    is nothing in this reasoning or in the rest of the trial judges analysis on
    the misrepresentation issue that could fairly attract the label palpable and
    overriding error.

[41]

The
    same analysis and conclusion is apposite with respect to the AGCs assertion
    that the plaintiffs did not reasonably rely on the information that they
    received from the AGCs compensation advisors. Again, the standard of review of
    this issue is palpable and overriding error. Again, the trial judge dealt
    comprehensively with the evidence, including, importantly, providing an
    individual assessment of the evidence relating to reliance for each employee.
    She expressed her conclusion in this fashion (at
para
.
    868):

The
    substance of the evidence of each Plaintiff was that he or she had relied on
    the written and/or oral communications from government representatives in
    concluding that a transfer of pension entitlements from the PSSP to the
Loba
pension plan pursuant to the
Loba
RTA was a routine matter, assuming the Plaintiff resigned from the public
    service, became employed with
Loba
and submitted an
    Appendix B before October 15, 2000.  I
    interpret the Plaintiffs evidence as being that they relied on the written
    and/or oral communications from government representatives in concluding that
    the government was not aware of circumstances that created a significant risk
    that the
Loba
pension plan would be de-registered and
    transfers under the
Loba
RTA would never occur.  I also accept the evidence of all of them that,
    had they been made aware that a significant risk existed that a transfer of
    their pension entitlement into the
Loba
pension plan
    might not occur, this would have impacted their decision to leave the public
    service to join
Loba
.

[42]

Again,
    our conclusion is that there is nothing in the trial judges analysis on the
    reliance issue that could fairly attract the label palpable and overriding
    error. The employees clearly relied on the advice of professional people in
    the government whom they trusted and, as found by the trial judge, their
    reliance was entirely reasonable.

(3)

Causation

[43]

The AGC argues that the trial judge erred in finding that
    the AGCs negligent misrepresentations caused the damages she awarded.  We disagree.

[44]

The basic test for determining causation in cases of
    negligence is the but for test.  The
    plaintiff bears the burden of showing that but for the negligent act or
    omission of the defendant the injury or harm would not have occurred.

[45]

The but for
    test recognizes that compensation for negligent conduct should only be made
    where there is a substantial connection between the injury and the defendants
    conduct:
Resurfice
Corp. v.
Hanke
, [2007] 1 S.C.R. 333, at
para
. 23.  In
    assessing the issue of substantial connection, courts consider whether the
    damages claimed were a reasonably foreseeable result of the defendants
    negligence.  In cases where there is not
    a substantial connection between the damages and the negligence, the damages
    are said to be too remote for recovery.

[46]

The trial judge found as a fact that had the AGC
    advised the plaintiffs prior to their resignations from the public service of
    the significant risks that were identified by the CRA as being associated with
Loba
-type
arrangements,
the plaintiffs
    would not have resigned from the public service to join
Loba
.  The trial judge went on to conclude that it
    was the act of leaving the public service to join
Loba
that resulted in the damages because the plaintiffs  employment with
Loba
did not provide them with the same salary and other benefits as those to which
    they would have been entitled had they continued in the public service.

[47]

Each of the plaintiffs testified to the facts as found
    by the trial judge.  We see no basis to
    interfere with these findings.  Thus, it
    can be said that but for the AGCs negligent misrepresentations, the plaintiffs
    would not have incurred the damages awarded.

[48]

The AGC argues, however, that the damages awarded by
    the trial judge for the loss of salaries and benefits are not substantially
    connected to the AGCs negligent misrepresentations and are, therefore, not
    compensable.  The AGC makes three
    arguments in this regard.

[49]

First, the AGC argues that the damages were not
    reasonably foreseeable to the AGC.  The AGC
    had no way of knowing whether the plaintiffs would earn more or less at their
Loba
jobs. That being the case, the AGC could not have
    reasonably foreseen the damages claimed.

[50]

The trial judge addressed this issue squarely.  She pointed out that a senior TBS official, Ann
Gravelle
, realized that if public servants resigned
    to join
Loba
and transfers were indefinitely
    suspended under the
Loba
RTA, the public servants
    risked incurring precisely the type of losses that they claimed in this
    case.
Gravelle
,
    who was one of the principal TBS
actors  on
this file, foresaw exactly the
    situation that ensued and led to the plaintiffs damages.  In our view, the losses that give rise to the
    damage awards were reasonably foreseeable to the AGC.

[51]

Second, the AGC argues that it did not induce the plaintiffs
    to leave their public service employment and that the lack of any inducement
    weighs against a finding of causation.  While evidence of an inducement may be strong evidence to support a
    finding of causation, it is not essential.  In a case of negligent misrepresentation, a plaintiff need prove only
    that he or she relied on the misrepresentation in taking the course of action
    that led to the damage.

[52]

In this case, the trial judge found reliance and had
    ample evidence to support her finding.

[53]

Finally, the AGC argues that the
Loba
Parties misrepresentations met the but for test and that had it not been for
    those misrepresentations, the plaintiffs would not have left the public
    service.  The fact that Mr. Parent, the
    principal of
Loba
,  also
made misrepresentations to the plaintiffs
    does not negate the AGCs liability.  The
    trial judge found that the plaintiffs relied on the AGCs misrepresentations
    and that those misrepresentations were a cause of the loss.  It is not the law that a particular
    defendants negligent misrepresentation must be the sole cause of the
    plaintiffs loss.  There can be more than
    one substantial cause.  It is sufficient
    that the plaintiff relied on the defendants statements to his or her detriment:
NBD Bank,
at
para
.
    78.  Indeed, when there is more than one
tortious
cause, the court may apportion liability among
tortfeasors
.

(4)

Apportionment of liability

[54]

The
    AGC argues that the trial judge failed to properly assess the apportionment of
    liability. It contends that the
Loba
Parties
    negligence was the largest cause, by far, of the plaintiffs damages and that
    the trial judges 80:20
apportionment
in
favour
of the
Loba
Parties should
    be reversed, so that the
Loba
Parties are held 80 per
    cent liable and the AGCs proportionate fault is reduced to 20 per cent.

[55]

In
    support of this argument, the AGC attacks the trial judges apportionment on
    several bases. Among other matters, it submits that the trial judge erred by
    concluding that the
Loba
Parties owed no fiduciary
    duties to the plaintiffs before the date on which the plaintiffs became members
    of the
Loba
Plan. It also maintains that when
    assigning degrees of fault to the AGC and the
Loba
Parties, the trial judge failed to consider the
Loba
Parties fiduciary duties and their breaches of those duties. Finally, the AGC
    contends that the trial judges apportionment of liability does not properly
    reflect her own description of the nature and extent of the
Loba
Parties blameworthy acts with respect to the plaintiffs. These errors, the AGC
    says, led to the failure to assign to the
Loba
Parties a degree of responsibility that accurately reflects their blameworthy
    conduct.

[56]

The
    test for appellate interference with a trial judges apportionment of liability
    is an exacting one: The apportionment of liability is primarily a matter
    within the province of the trial judge. Appellate courts should not interfere
    with the trial judges apportionment unless there is demonstrable error in the
    trial judges appreciation of the facts or applicable legal principles
    (citations omitted):
Ingles v.
Tutkaluk
Construction Ltd
., [2000] 1 S.C.R. 298, at
para
. 57. See also
Martin
    v.
Listowel
Memorial Hospital
(2000), 51 O.R.
    (3d) 384 (C.A.), at
para
. 20. A similar deferential
    standard applies to a trial judges conclusion that a fiduciary duty did not
    exist on the specific facts of a given case. Absent an error of law or a
    palpable and overriding error of fact, such a finding must be upheld on appeal:
Galambos
v. Perez
, [2009] 3 S.C.R. 247, at
para
. 49.

[57]

In
    this case, we are satisfied that these high thresholds for interference with
    the trial judges apportionment and her fiduciary finding have been met. In our
    view, the trial judge erred by concluding that the
Loba
Parties owed fiduciary duties to the plaintiffs only after the plaintiffs
    became members of the
Loba
Plan. She further erred by
    failing to properly account in her apportionment analysis for the fiduciary
    duties owed and breached by the
Loba
Parties.
    Finally, the trial judge erred by apportioning liability in a way that is
    fundamentally inconsistent with her own description of the blameworthy conduct
    of the parties. These errors displace the deference that ordinarily would be
    accorded to the trial judges apportionment. They resulted in a material
    understatement of the
Loba
Parties degree of fault.
    Accordingly, the trial judges apportionment of liability cannot stand.

(
a
)       Trial
    Judges consideration of the

Loba
Parties
    fiduciary duties

[58]

The
    trial judge held that, in their roles as the administrator and third party
    administrator of the
Loba
Plan, the
Loba
Parties owed fiduciary duties to the plaintiffs from
    the date when the plaintiffs became members of the
Loba
Plan. The latest date on which any of the plaintiffs joined the
Loba
Plan was October 14, 2000, the day prior to the cutoff
    date for transfers of pension funds under the
Loba
RTA. The trial judge rejected the AGCs contention that the
Loba
Parties owed fiduciary duties to the plaintiffs before the plaintiffs joined
    the
Loba
Plan.

[59]

The
    trial judge also held that Mr. Parent and WBP, as consulting actuaries, owed
    additional duties to the plaintiffs based on the professional and ethical
    standards for actuaries prescribed in the
Rules
    of Professional Conduct
promulgated by the Canadian Institute of Actuaries
    (the CIA), the regulator of actuaries in Ontario. The trial judge concluded
    that these additional obligations gave rise to ordinary tort law, rather than
    fiduciary, duties of care to the plaintiffs.

[60]

The
    trial judge did not refer explicitly to the
Loba
Parties fiduciary duties in her apportionment analysis. However, contrary to
    the AGCs submission, we think that she did so implicitly when she said in her
    apportionment reasons (at
para
. 1313):

I have
    found that the most significant negligent misrepresentation made by Parent,
Loba
and WBP was their failure to advise the Plaintiffs
    about the contents of [the TBS and Parent Letters]. As the
Loba
pension plan administrator or third party administrator, and as an actuary, Parent
    had a professional duty to disclose this information. Parent let his own
    wishful thinking and certainty about the legitimacy of the
Loba
arrangements get in the way of his obligation to make full disclosure to the
Loba
pension plan members. He put the financial interests
    of himself,
Loba
and WBP ahead of those of the
    Plaintiffs  in not disclosing this information.

[61]

The
    trial judge had earlier found that the
Loba
Parties
    deliberate non-disclosure of the TBS and Parent Letters or the information
    contained in them was a breach of their fiduciary duties. Thus, while the trial
    judge did not use the label fiduciary duty in her apportionment analysis, it
    is implicit in the above-quoted passage from her reasons that she took account
    of those fiduciary duties that she concluded were owed by the
Loba
Parties to the plaintiffs.

[62]

However,
    for the purpose of her assessment of the
Loba
Parties proportionate degree of responsibility, the trial judges
    consideration of the
Loba
Parties breaches of
    fiduciary duty was confined to their conduct from the date that the plaintiffs
    joined the
Loba
Plan.

[63]

This
    is confirmed by the trial judges comments, set out above. In those comments,
    the trial judge referred both to the
Loba
Parties
    role as the administrator or third party administrator of the
Loba
Plan, and to Mr. Parents role as an actuary.  On the trial judges findings, the former
    role gave rise to fiduciary duties after the plaintiffs became members of the
Loba
Plan, while Mr. Parents role as an actuary in
    relation to the plaintiffs was not fiduciary in nature. Further, the
    non-disclosure emphasized by the trial judge was described by her as the
    obligation to make full disclosure to the
Loba
pension plan members.

(b)       Errors in the trial judges fiduciary
    analysis

[64]

In
    our view, the trial judge erred in her fiduciary analysis by holding that the
Loba
Parties owed no fiduciary duties to the plaintiffs
    before the plaintiffs joined the
Loba
Plan. This
    error, in turn, led the trial judge to inappropriately narrow her consideration
    of the extent and significance of the
Loba
Parties
    breaches of their fiduciary duties for the purpose of apportionment of
    liability. We say this for the following reasons.

[65]

First,
    the trial judges finding regarding the date on which the
Loba
Parties fiduciary duties first commenced conflicts with her own factual
    findings concerning the nature of the relationship between the parties and the
    circumstances surrounding that relationship prior to the plaintiffs joining the
Loba
Plan. The trial judge found that:

(1)

Mr.
    Parent held himself out to the plaintiffs as being an actuary and pension
    expert;

(2)

during
    his interactions with the plaintiffs, Mr. Parent acted in a variety of
    different capacities, including as a consulting actuary with expertise in
    pension matters, when he advised [the plaintiffs] about their entitlement
    under the PSSP, their potential entitlement under the
Loba
[Plan], and the options available to the Plaintiffs to realize that value after
    it arrived in the
Loba
[Plan];

(3)

Mr.
    Parent was also functioning as principal of WBP, the consulting actuary to the
    Plaintiffs;

(4)

Mr.
    Parent knew that the plaintiffs looked to him and to WBP for information about
    their pension entitlements
because
he
    was an actuary (emphasis in original);

(5)

Mr.
    Parent realized that the plaintiffs would place trust in the information he
    provided in great measure because he was a professional actuary subject to
    professional obligations;

(6)

the
    plaintiffs provided personal and confidential information to Mr. Parent and WBP
    during their pre-October 15, 2000 consultations with them, including
    information about their family situations, their incomes, their positions and
    their goals for the future, which none of the plaintiffs would have shared
    with Mr. Parent unless they believed that [he] was under a duty to use that
    information for their benefit. In addition, when Mr. Parent
was explaining employment opportunities at
Loba
 to each plaintiff (
i.e.
in his consultations with the plaintiffs prior to their
    resignations from the public service), Mr. Parent knew each plaintiffs age,
    years of service with the public service, position, income level and retirement
    plans (emphasis added);

(7)

Mr.
    Parent knew that each plaintiff considered their pension funds with the PSSP as
    one of his or her most significant assets and that each plaintiff would be
    relying heavily on what he told them about
Loba
, the
Loba
[Plan] and the
Loba
RTA
in deciding whether to leave the public
    service and join
Loba
 (emphasis added);

(8)

Mr.
    Parent was also aware that the plaintiffs were being asked to make a very
    significant decision about their future in a short time frame and that they
    had minimal opportunity to gather information relevant to that decision and
    very little opportunity to consult any other professionals concerning the
Loba
option;

(9)

the
    subject matter being dealt with by Mr. Parent in his role as a consulting
    actuary was very complex;

(10)

Mr.
    Parent realized the limits of the plaintiffs   knowledge
    regarding pensions. The plaintiffs did not           have
    the skills to verify the numbers or the options      outlined by Mr. Parent;

(11)

as
    far as the plaintiffs and Mr. Parent were aware, no one had as much expertise
    about the
Loba
Plan as Mr. Parent did;

(12)

given
    their limited pension knowledge and the complexity of the subject matter and
    its inaccessibility to the average person, the plaintiffs were vulnerable;

(13)

Mr.
    Parent realized that the plaintiffs
were
    looking to him for relevant information to inform their decision whether or not
    to leave the public service and join
Loba

    (emphasis added); and

(14)

had
the plaintiffs been made aware that a
    significant risk existed that a transfer of their pension entitlement into the
Loba
pension plan might not occur, this would have
    impacted their decision to leave the public service to join
Loba
.
    In particular, had the plaintiffs been told of the information in the TBS and
    Parent Letters, the plaintiffs would not have decided to leave the public
    service to join
Loba
and, therefore, would not have
    suffered any damages.

[66]

The
    trial judge was entitled to make these findings on the evidence before her and
    they are not challenged on appeal. These findings concern the nature of the
    relationship between the parties and the circumstances surrounding that
    relationship prior to the date on which the plaintiffs joined the
Loba
Plan. They reflect elements of trust, reliance,
    confidence and vulnerability in the relationship and dealings between the parties
    during the plaintiffs pre-October 15, 2000 consultations with the
Loba
Parties. As we will elaborate, these relational
    features underlie the notion of a fiduciary duty. See
Lac Minerals Ltd. v. International Corona Resources Ltd.
, [1989] 2
    S.C.R. 574.  In our view, these findings
    compel the conclusion that the
Loba
Parties
    fiduciary duties arose before the plaintiffs joined the
Loba
Plan.

[67]

We
    also note that, at the relevant times, Mr. Parent owned both
Loba
and WBP through his personal holding company. He
    served as
Lobas
President and the representative of
    the
Loba
Parties in their dealings with the
    plaintiffs before they joined the
Loba
Plan. The
    trial judge found that Mr. Parent was the directing mind of
Lobas
and WBPs operations and their agent during his consultations with the
    plaintiffs. It was Mr. Parent who met or spoke to all the plaintiffs to
    explain what their relationship would be with
Loba
and what benefits they could receive under the
Loba
RTA and
Loba
pension plan. It was also Mr. Parent
    who answered the Plaintiffs questions about the
Loba
arrangements  both before and after they joined
Loba
.

[68]

On
    these facts, the trial judge concluded that, like Mr. Parent personally,
Loba
owed duties of care to the plaintiffs. We agree.
    Moreover, in the circumstances that obtained here,
Loba
is fixed with the consequences of Mr. Parents and WBPs breaches of their
    fiduciary duties.

[69]

There
    is a second difficulty with the trial judges fiduciary analysis. Although the
    trial judge relied on many of the findings described above to support her
    conclusion that the
Loba
Parties owed duties of care
    to the plaintiffs prior to the date on which they joined the
Loba
Plan  duties that she found attracted a high
    standard of care  she held that these duties were not impressed with fiduciary
    obligations. This conclusion is at odds with the applicable jurisprudence
    regarding the distinctions between the fiduciary obligation and the ordinary
    tort law duty of care. While these duties may sometimes overlap, they remain
    conceptually and functionally unique: see
Norberg
v.
Wynrib
,
[1992] 2 S.C.R. 226, at p.
    272.

[70]

In
Hodgkinson
v. Simms
, [1994] 3 S.C.R. 377, at p.
    404, the Supreme Court endorsed the following description of the fiduciary
    principle, set out in
Lloyds Bank Ltd. v.
    Bundy
, [1975] Q.B. 326 (C.A.), at p. 341:

Such
    cases tend to arise where someone relies on the guidance or advice of another,
    where the other is aware of that reliance and where the person upon whom
    reliance is placed obtains, or may well obtain, a benefit from the transaction
    or has some other interest in it being concluded.  In addition, there must, of course, be shown
    to exist a vital element  referred to as confidentiality.

[71]

The
    Supreme Court also indicated at p. 405:

[T]he
    fiduciary duty may properly be understood as but one of a species of a more
    generalized duty by which the law seeks to protect vulnerable people in
    transactions with others  the concept of vulnerability  is an important
indicium
of [the existence of a fiduciary relationship].

[72]

In
    this context,
Hodgkinson
holds at p. 405:

[W]
hile
both negligent misrepresentation and breach of
    fiduciary duty arise in reliance-based relationships,
the presence of loyalty, trust and confidence distinguishes the
    fiduciary relationship from a relationship that simply gives rise to
tortious
liability. Thus, while a fiduciary obligation
    carries with it a duty of skill and competence, the special elements of trust,
    loyalty and confidentiality that obtain in a fiduciary relationship give rise
    to a corresponding duty of loyalty.
[Emphasis added.]

[73]

Ultimately,
    the trial judge appears to have rejected the notion that the
Loba
Parties owed fiduciary duties to the plaintiffs before
    they joined the
Loba
Plan on the basis of three main factors
    (at
para
. 958):

(1)

Mr.
    Parent had minimal interaction with each of the     plaintiffs in his role as consulting actuary;

(2)

the
plaintiffs sought information from Mr. Parent          based on an actuarial analysis. They
    did not seek or         obtain advice or
    recommendations in a broader          sense;
    and

(3)

the
plaintiffs were aware that due to Mr. Parents          obligations to WBP and
Loba
, he had other interests            and divided loyalties.

[74]

In
    our opinion, the trial judges emphasis on these factors was misplaced. We note
    first, the duration and frequency of Mr. Parents contacts with the plaintiffs
    before they joined the
Loba
Plan, while part of the
    context of their dealings, is not determinative of the existence of fiduciary
    obligations. Fiduciary law focuses on relationships. It is the nature of the
    relationship at issue as well as the surrounding circumstances that give rise
    to fiduciary duties. See
Galambos
,

at
para
. 70;
Lac Minerals
, at p. 648.

[75]

Further,
    and significantly, although the trial judge framed the scope of Mr. Parents
    consulting services narrowly in the above-mentioned part of her reasons, this
    is inconsistent with her other findings that cast the services provided to the
    plaintiffs prior to their resignations from the public service in considerably
    broader language. For example, the trial judge elsewhere held that Mr. Parent
    (and therefore also WBP and
Loba
) advised the
    plaintiffs before they quit the public service and joined
Loba
about: (1) their entitlements under the PSSP; (2) their potential entitlements
    under the
Loba
Plan; (3) the available options to
    realize value after their funds arrived in the
Loba
Plan; and (4) their employment opportunities at
Loba
.

[76]

The
    trial judge also held that the plaintiffs trusted and relied on the information
    and advice provided by the
Loba
Parties, including in
    respect of their decisions whether to leave the public service and join
Loba
. These findings implicate the plaintiffs dependency
    on the
Loba
Parties and their vulnerability from the
    outset of the parties consultations.

[77]

Finally,
    the fact that the plaintiffs knew that Mr. Parent was not acting as a
    completely independent actuary does not answer the question whether the
Loba
Parties were fiduciaries. Mr. Parent failed to fully
    disclose the nature of the
Loba
Parties conflicting
    interests in the
Loba
pension plan arrangements,
    including his own divided loyalties, to the plaintiffs. Further, as the trial
    judge herself observed, a duty of loyalty is inherent to any professional
    relationship, including that of an actuary and his or her client.

[78]

When
    the trial judges findings about the relationship between the parties prior to
    the date on which the plaintiffs joined the
Loba
Plan
    are viewed as a whole, they strongly militate in
favour
of the conclusion that the
Loba
Parties fiduciary
    duties arose before that date. The relationship of trust and confidence between
    the parties began when the plaintiffs approached Mr. Parent and disclosed
    highly personal and confidential information to him in reliance, to his
    knowledge, on his qualifications and expertise as an actuary and pension expert
    who was providing professional actuarial and pension-related services about a
    complex subject matter that was beyond the plaintiffs own experience and
    evaluative skills.

[79]

Finally,
    the trial judges fiduciary analysis is also problematic in that it undermines
    and minimizes Mr. Parents and WBPs obligations as actuaries whose
    professional conduct is regulated by the standards set by the CIA, their
    self-regulating body.

[80]

As
    we have said, the trial judge found that Mr. Parent owed the plaintiffs a duty
    of care in accordance with the CIA
Rules
    of Professional Conduct
that
bind
actuaries in
    Ontario. She also held that WBP, as the actuarial firm for whom Mr. Parent
    worked, owed the same duty of care to the plaintiffs.

[81]

The
    evidence at trial established that the applicable CIA
Rules
oblige actuaries, among other things, to refrain from any
    professional conduct involving misrepresentation and to make full and timely
    disclosure to a client of the sources of all direct or indirect compensation
    that the member or the members firm has received or may receive in relation
    to a professional services assignment.

[82]

The
    trial judge considered Mr. Parents and WBPs obligations to the plaintiffs
    under the CIA
Rules
in the context of
    determining whether they owed an ordinary duty of care to the plaintiffs. Later
    in her reasons, she also acknowledged that their
obligations
    under the CIA
Rules
was
a
    factor supporting the conclusion that they were in a fiduciary relationship
    with the plaintiffs when providing them with a financial analysis relating to
    their pension entitlement under the PSSP and the possibilities under the
Loba
RTA.

[83]

The
    trial judge went on to conclude, however, that this factor was overborne by
    other considerations, including: (1) since the plaintiffs did not have any
    pre-existing relationship with Mr. Parent, there was no expectation that he
    would feel loyalty toward them,
aside
    from the loyalty inherent in any professional relationship
 (emphasis
    added); (2) the plaintiffs did not obtain advice from Mr. Parent about what
    they should do and Mr. Parent made it clear that he was simply providing the
    plaintiffs with a financial analysis for their use; and (3) none of the
    plaintiffs gave Mr.  Parent discretion to
    act on his or her behalf. In this fashion, the trial judge discounted the
    import of Mr. Parents and WBPs professional obligations under the CIA
Rules.
In so doing, the trial judge
    erred.

[84]

We
    have already discussed the trial judges conflicting findings about the scope
    of the professional services provided by the
Loba
Parties. To
repeat,
based on her factual findings as a
    whole, we are unable to accept that Mr. Parent and WBP played the limited role
    set out in paragraphs 75 and 85, above. On the totality of the trial judges
    findings, they were not mere passive conduits of financial information in their
    consultations with the plaintiffs before the plaintiffs resigned from the
    public service.

[85]

Nor
    does the absence of a specific grant of discretionary agency authority or power
    to the
Loba
Parties in respect of the plaintiffs and
    their interests dispose of the question of whether the
Loba
Parties relationship with the plaintiffs was fiduciary from the outset. As
    indicated by the Supreme Court in
Galambos
, at
paras
. 83-84, while
    [
i
]t is fundamental to the existence of any
    fiduciary obligation that the fiduciary has a discretionary power to affect the
    other partys legal or practical interests, that power may be quite broadly
    defined. It may arise, for instance, in particular situations such as the
    professional advisory relationship addressed in
Hodgkinson
, by the beneficiary
    entrusting the fiduciary with information or seeking advice in circumstances
    that confer a source of power: see,
e.g.
,
Lac Minerals
and
Hodgkinson
. This case involves a
    professional advisory relationship in which, under conditions of trust,
    reliance and vulnerability, personal and confidential information was
    communicated by the plaintiffs for the purpose of obtaining actuarial and
    pension-related advice on a complex subject matter.

[86]

We
    appreciate that the standards of professional conduct set by a self-regulating
    body, like the CIA, are not dispositive of whether the professional obligations
    owed under those standards are fiduciary in nature. However, they are of
    guiding importance in determining the nature of the duties flowing from a
    particular professional relationship:
Hodgkinson
, at p. 425. As with lawyers and accountants, the
    standards of responsibility set by the self-regulating body of the actuarial
    profession are intended to protect the public interest and safeguard the
    independence of the profession and its credibility with the public: see
Hodgkinson
, at p.
    425, in the context of the accounting profession. Viewed in this manner, the
    CIA standards of conduct for actuaries engage obligations of loyalty, honesty
    and fair dealing.

[87]

In
    this case, the plaintiffs sought advice from Mr. Parent and WBP in their capacities
    as consulting actuaries before the plaintiffs resigned from the public service.
    The AGC argues that in light of Mr. Parents and WBPs positions as consulting
    actuaries, their professional obligations under the CIA
Rules
, and the specific circumstances surrounding the relationship
    between the plaintiffs and the
Loba
Parties as found
    by the trial judge, there was an implied undertaking by the
Loba
Parties that they would act in the plaintiffs best interests, thereby
    triggering fiduciary duties: see
Galambos
, at
paras
. 76-77 and 79.

[88]

We
    agree. Mr. Parents knowledge of the circumstances under which the
Loba
Parties advice was sought, coupled with Mr. Parents
    and WBPs inherent duties of loyalty as professional actuaries and the fact
    that highly personal and confidential information was communicated to the
Loba
Parties by the plaintiffs, created, at least, an
    implied undertaking that the
Loba
Parties would act
    in the plaintiffs best interests. The trial judges findings that the
    relationship between the parties was imbued with elements of trust, reliance
    and confidence and that the plaintiffs were vulnerable, reinforce the
    conclusion that the
Loba
Parties were fiduciaries
    from the outset. These considerations are entitled to great weight in
    determining whether fiduciary obligations were in play prior to the plaintiffs
    joining the
Loba
Plan.

[89]

All
    these factors are powerful markers of a fiduciary relationship. In all the
    circumstances, we conclude that, on the trial judges own findings, the
    relationship between the plaintiffs and the
Loba
Parties prior to the plaintiffs joining the
Loba
Plan
    fell within the rubric of the fiduciary obligation.

(c)       Breaches of fiduciary duties

[90]

It
    remains to consider whether the
Loba
Parties breached
    the fiduciary duties that they owed to the plaintiffs prior to the plaintiffs
    joining the
Loba
Plan. Accepting the trial judges
    findings, this clearly occurred. The trial judge found that the
Loba
Parties breached their duty of care to the plaintiffs
    when they failed to share the CRAs concerns about the
Loba
pension arrangements with the plaintiffs as soon as they became aware of them.
    Knowledge of those concerns was brought home to the
Loba
Parties on their receipt of the TBS and Parent Letters in September 2000.

[91]

The
    trial judge further found that Mr. Parent consciously decided not to share this
    information with the plaintiffs in order to protect his pension portability
business
. In other words, he deliberately put his own
    personal and financial interests ahead of those of the plaintiffs in order to
    profit financially. This conduct is antithetical to the duties of a fiduciary.

[92]

Mr.
    Parents non-disclosure did not end there. The trial judge also held that he
    failed to tell the plaintiffs of the
Loba
Parties
    personal financial interests in the
Loba
pension
    arrangements, including in particular, Mr. Parents intent to ultimately arrange
    for the balance of the surplus in the
Loba
Plan to be
    paid out for the benefit of persons other than the plaintiffs. In addition, the
Loba
Parties were to be paid substantial fees from
    the
Loba
Plan itself. Not surprisingly, Mr. Parent
    was unable to say that these intended fees would constitute a prudent use of
    the trust funds comprising the
Loba
Plan.

[93]

Thus,
    the
Loba
Parties failed to disclose information to
    the plaintiffs that was material to the plaintiffs decisions whether to resign
    from the public service and transfer their pension monies to the
Loba
Plan, at the precise time when the information would
    have been most relevant and valuable to the plaintiffs. This was a serious and
    obvious breach by the
Loba
Parties of their fiduciary
    duties to the plaintiffs.

(d)       Conclusion regarding fiduciary duties

[94]

In
    apportioning liability between the AGC and the
Loba
Parties, the trial judge was mindful of certain of the
Loba
Parties blameworthy conduct prior to the date on which the plaintiffs resigned
    from the public service and joined the
Loba
Plan.
    However, the trial judge evaluated the significance of that conduct for
    apportionment purposes on the basis that the
Loba
Parties offending conduct constituted breaches of their ordinary tort law,
    rather than fiduciary, duties owed to the plaintiffs.

[95]

But
    the distinction in the nature of the
Loba
Parties
    duties is significant. It is not merely a question of appropriate nomenclature.
    In contrast to the wrongs involved in the breaches of their tort law duties, the
    wrongs occasioned by the
Loba
Parties breaches of
    their fiduciary duties involved damage to the relationships of trust and
    confidence established with the plaintiffs.

[96]

It
    was therefore essential that the trial judge factor the full and fair
    consequences of the
Loba
Parties breaches of their
    fiduciary duties into her apportionment analysis: see
Norberg
, at p. 274,
per

LHeureux-Dubé
and
McLachlin
JJ., (in dissent but not on this
    point). This did not occur. Instead, by
failing
to do
    so, the trial judge undertook an unduly narrow assessment of the
Loba
Parties culpability.

(e)       Nature and extent of the parties blameworthy
    acts

[97]

The
    AGC contends that the trial judges 80:20 apportionment of liability does not
    properly reflect her own description of the nature and extent of the
Loba
Parties blameworthy acts with respect to the
    plaintiffs.

[98]

We
    agree. In her reasons on the apportionment issue, the trial judge carefully set
    out the culpable acts and omissions of both the AGC and the
Loba
Parties. In our view, there is a real parity, both quantitatively and
    qualitatively, in her two lists of factors. It is true that, with respect to
    some factors, the trial judge finds certain ameliorating circumstances that
    soften the
Loba
Parties culpability. However, read
    as a whole, the trial judges reasons on apportionment support a very modest
    differentiation in the apportionment of liability in
favour
of the
Loba
Parties. In this context, her ultimate
    apportionment at 80:20
favouring
the
Loba
Parties comes as a jarring conclusion at the end of
    reasons documenting similar misconduct by the AGC and the
Loba
Parties, both in number and in nature.

[99]

Quantitatively,
    by our count the trial judge found that there were 12 factors that pointed to
    the blameworthiness of the AGC:

·

The
    AGC put into place the RTA option for departing public servants.

·

The
    AGC advertised the availability of the RTA option to the Compensation Community
    in the run-up to the October 15, 2000 deadline.

·

The
    AGC issued no warnings to the Compensation Community regarding factors that
    could limit a public servants access to a RTA or regarding potential risks
    associated with relying on a RTA.

·

At
    all times, the AGC identified
Loba
as an approved
    employer even though, as of May 2000, it had serious concerns about the
    validity of the
Loba
RTA.

·

By
    early October 2000, the AGC knew that the RCMP was collecting undercover
    evidence for the purpose of laying criminal charges.

·

By
    August 30, 2000, the AGC understood that
Loba
was
    receiving a 10 per cent commission for processing a transfer under the
Loba
RTA, which called into question its validity.

·

The
    AGCs culpability was augmented by its status as the plaintiffs long-term
    employer.

·

The
    AGCs culpability was augmented by its status as the plaintiffs long-term
    pension administrator.

·

The
    various actors within the AGC colluded by keeping highly relevant information
    from the plaintiffs.

·

The
    various actors within the AGC colluded by keeping highly relevant information
    from the
Loba
Parties.

·

After
    November 16, 2000, the AGC consciously withheld relevant information from the
    plaintiffs that might have assisted them in mitigating their losses.

·

When
    the plaintiffs finally asked to revoke their applications for a transfer to the
Loba
RTA, the AGC tried to impose a totally
    unreasonable Release and Indemnification Agreement.

[100]

Turning to the
Loba
Parties, by our count the trial judge found that there were 13 factors that
    pointed to the blameworthiness of the
Loba
Parties:

·

The
Loba
Parties conceptualized the
Loba
RTA.

·

The
Loba
Parties aggressively advertised and marketed the
Loba
RTA.

·

The
Loba
Parties received a 10 per cent commission for
    processing a transfer under the
Loba
RTA, which
    called into question its validity.

·

The
Loba
Parties knew that the AGC did not approve of the
    way the RTAs were being used by consulting companies.

·

The
Loba
Parties knew that the AGC had cancelled similar
    RTAs due to policy concerns on the part of the AGC.

·

The
Loba
Parties knew that the AGC was highly skeptical
    about its arrangement and was keeping a close eye on them.

·

The
Loba
Parties did not adequately convey to the
    plaintiffs the fragility of the
Loba
employer/employee relationship, which was a critical pre-condition of
    transferring funds into the
Loba
RTA.

·

The
Loba
Parties did not adequately explain to the
    plaintiffs the chain of events that resulted in a hold being placed on
    transfers under the
Loba
RTA in the summer of 2000.

·

The
Loba
Parties did not inform the plaintiffs that the
    letter they would receive from the AGC in the summer of 2000 was an
    extraordinary measure on its part
in  monitoring
RTAs.

·

The
Loba
Parties culpability was augmented by its status
    as a pension plan administrator.

·

The
Loba
Parties culpability was augmented by Mr. Parents
    status as an actuary, with a professional duty to disclose relevant
    information.

·

The
Loba
Parties culpability was augmented by Mr. Parent
    putting his personal financial interests and the
Loba
Parties financial interests ahead of those of the plaintiffs.

·

After
    October 15, 2000, the
Loba
Parties did not advise the
    plaintiffs about the hold the AGC had placed on transfers under the
Loba
RTA.

[101]

These lists from the trial judges
    description of the blameworthy acts of the AGC and the
Loba
Parties lead to an obvious conclusion  there is an almost exact quantitative
    parity in those acts.

[102]

Qualitatively, it strikes us that
    there is also a genuine parity in the trial judges description of the
    misconduct of both parties. Put simply, she was highly critical of both the AGC
    and the
Loba
Parties. For example, the trial judge
    castigated the AGC for engaging in an intentional deception that was
    particularly egregious. However, she also criticized Mr. Parent who put the
    financial interests of himself,
Loba
and WBP ahead of
    those of the plaintiffs. We do not see a qualitative difference in these
    descriptions of the parties blameworthy acts.

[103]

There is, however, one difference in
    the trial judges treatment of the AGC and the
Loba
Parties in the apportionment of liability section of her reasons. In the case
    of the
Loba
Parties, the trial judge went on to
    address several considerations that she regarded as ameliorating their degree
    of culpability, ultimately concluding that their blameworthiness was lessened
    because they had a reduced appreciation of the risks associated with the
Loba
pension arrangements. In our view, these factors
    justified the reduction of the
Loba
Parties degree
    of fault below 50 per cent. However, in light of the quantitative and
    qualitative parity in her description of the blameworthy acts of both parties
    set out above, the ameliorating factors
favouring
the
Loba
Parties are far removed from supporting a
    reduction of their liability to only 20 per cent.

(f)        Adjusted apportionment of liability

[104]

The trial judges errors that we
    have described led to a flawed assessment of the
Loba
Parties blameworthy conduct and, in turn, to an inappropriate reduction in
    their degree of fault. This necessitates adjustment of the trial judges
    apportionment.

[105]

In particular, recalibration of the
    trial judges apportionment is required to properly reflect her own assessment
    of the nature and extent of the
Loba
Parties
    culpability. On this ground alone, the trial judges 80:20
apportionment
must be revisited.

[106]

In addition, the apportionment of
    liability must take full account of the
Loba
Parties
    serious and ongoing breaches of their fiduciary duties. We recognize that these
    breaches do not entitle the plaintiffs to greater damages
per se
than those to which they would be entitled for the
Loba
Parties breaches of their ordinary tort duties.
    However, equity will intervene to supplement common law causes of action where,
    as here, a defendants wrongful conduct evinces breach of trust and the
    promotion of the defendants own or others interests at the expense of those
    of the plaintiff: see
K.L.B.

v. British Columbia
, [2003] 2 S.C.R.
    403, at
paras
. 48-49.

[107]

In all the circumstances, we
    conclude that a fair and reasonable adjustment to the trial judges
    apportionment of liability results in the assignment of 60 per cent fault to
    the AGC and 40 per cent fault to the
Loba
Parties. We
    trust that the parties are positioned to adjust the damages payable to the
    plaintiffs, and the
Loba
Parties liability to the
    AGC for contribution and indemnity and for part of the plaintiffs costs, in
    light of this adjusted apportionment of fault.

(5)

AGCs costs appeal

[108]

The AGC argues that the trial judge
    erred in failing to award the AGC its total partial indemnity costs against the
Loba
Parties in the third party actions. This
    argument may be dealt with summarily.

[109]

The determination of costs is a
    matter of judicial discretion. The circumstances in which an appellate court
    can interfere with a trial judges exercise of that discretion are strictly
    limited: absent an error in principle or unless the costs award is plainly
    wrong, appellate intervention is precluded: see
Hamilton v. Open Window Bakery Ltd.
, [2004] 1 S.C.R. 303, at
para
. 27;
Martin
,
    at
para
. 84.

[110]

The trial judge concluded that it
    was inappropriate to follow the normal rule that costs follow the event in
    the third party actions. In the result, she held that the
Loba
Parties should be liable for $100,000 of the AGCs $250,722 partial indemnity
    costs in those actions. We see no basis for interfering with this costs
    disposition.

[111]

The AGCs relevant pleadings contain
    allegations that impugn the integrity and honesty of Mr. Parent and assertions
    of wrongdoing analogous to fraud against the
Loba
Parties. Given the AGCs pleadings, it was open to the trial judge to consider
    the issue of unproven fraud allegations in her costs assessment. On her
    findings, those allegations were not established at trial. Serious allegations
    of this kind, if unproven, attract serious costs consequences: see
Hamilton
, at
para
.
    26. On this ground alone, the trial judge was justified in departing from the
    normal costs follow the event rule in the third party actions.

[112]

Nor do we see any error in principle
    in the trial judges consideration of factors bearing on the role of the AGC in
    the conduct of the litigation. This, too, was a proper consideration in the
    determination of costs.

[113]

Finally, we are not persuaded that
    the trial judges discretionary costs award in the third party actions is
    plainly wrong.

[114]

Accordingly, the AGCs costs
    challenge in the third party actions fails.

DAVID LUCKS APPEAL

[115]

The trial judge determined that Mr.
    Luck left his employment with the public service in reliance on the negligent
    misrepresentations of the AGC.  It is
    accepted that he suffered a loss in salary and benefits.  As already noted, the trial judge dismissed
    Mr. Lucks claim for damages because he had not led evidence about the possible
    increase in the value of his pension entitlement arising from his resignation
    from the public service at a date prior to the date on which he would have
    resigned or retired had the AGC not made the negligent misrepresentations.

[116]

The trial judge noted that Mr. Luck
    had the onus of proving his damages.  She
    also pointed out that in some situations receipt of a lesser pension for a
    longer period will yield a greater present value than receipt of a higher
    pension that starts at a later point in time. She concluded that Mr. Luck may
    have realized a pension gain from his early resignation and that his failure to
    lead evidence about his pension situation meant that she could not conclude
    that he had suffered any net loss as a result of his resignation.

[117]

Mr. Luck argues that the trial judge
    erred in concluding that the amount of any pension gain should be deducted from
    his salary loss.  He argues, in
    circumstances such as those in this case, a court should make an award for a
    salary loss without examining whether the conduct triggered by the negligent
    misrepresentations resulted in a gain in the value of a pension.  We do not accept this argument.

[118]

Damages in cases of negligent
    misrepresentation are based on the restitution principle.  A successful plaintiff in a negligent
    misrepresentation case is entitled to be put in the position he or she would
    have been had the misrepresentation not been made:
Rainbow
    Industrial

Caterers Ltd. v. Canadian
    National Railway Co
., [1991] 1 S.C.R. 3.  As Professor Fridman notes in his text
The Law of Torts in Canada
, [a]n award
    of compensatory damages is based on the actual loss incurred by the plaintiff
    as closely as that can be calculated: 3d ed. (Toronto: Carswell, 2010), at p.
    476.

[119]

The effect of Mr. Lucks argument is
    that the court in awarding damages should take into account only the negative
    impact of the negligent misrepresentation, but not any benefit or gain flowing
    from it.  In our view, that approach does
    not make sense on the facts of this case.

[120]

Mr. Lucks reliance on the AGCs negligent
    misrepresentations was based on an anticipated gain in the value of his
    pension.  His decision to resign from the
    public service, which led to his salary and benefit losses, was inextricably
    linked to his expectation that he would receive a gain in the value of his
    pension and the belief that the gain would more than offset any loss.  Mr. Lucks expectation of a pension gain was
    no doubt based in large part on an expectation that his pension funds would be
    transferred to the
Loba
Plan under the
Loba
RTA.  That did
    not happen.  However, even though the
    transaction was not completed as anticipated, there was a possibility that Mr.
    Luck would realize an increase in the capitalized value of his pension.

[121]

In these circumstances, we see no
    reason why an award of damages in Mr. Lucks
favour
should not take into account any pension gain he realized as a result of his
    early resignation.  Indeed, Mr. Luck
    accepts that had he realized the full amount of the anticipated pension gain,
    as would have been the case if the funds had been transferred under the
Loba
RTA, he would have had no claim for loss of salary and
    other benefits.

[122]

In
Gauthier v. Canada
(2000), 185 D.L.R. (4
th
) 660, the New
    Brunswick Court of Appeal took a similar approach to the one we adopt in this
    case.  Mr. Gauthiers claim was based on
    a negligent misrepresentation that led to an early resignation and a loss of
    salary.  As a result of his premature resignation,
    Mr. Gauthier received a gain in his pension benefits.  The New Brunswick Court of Appeal held that
    the defendant was entitled to a credit for the amount of the pension gain in
    computing Mr. Gauthiers pecuniary loss.  In calculating the loss, the court took into account the negative
    financial repercussions as well as the positive effects in his financial
    situation: p. 672.

[123]

Mr. Luck argues that this court
    should take guidance from the jurisprudence in wrongful dismissal cases.  He says that the wrongful dismissal cases
    hold that when assessing damages, courts should not deduct a pension gain from
    the salary that would have been paid during the notice period.  The AGC disagrees that the wrongful dismissal
    cases, at least at the appellate level, have gone that far.

[124]

We do not find it necessary to
    resolve the disagreement with respect to the wrongful dismissal jurisprudence.  Whatever the situation is in wrongful
    dismissal cases, we are satisfied that on the facts of this case, the salary
    loss claim is so factually connected to an anticipated pension gain, that it
    was entirely appropriate for the judge to decline to award damages without
    evidence relating to the potential pension gain.  Thus, we would dismiss the appeal. In light
    of this conclusion, it is unnecessary to deal with the AGCs cross appeal.

DISPOSITION

[125]

The AGCs appeal is therefore
    allowed, in part, to accord with these reasons. Mr. Lucks appeal is dismissed,
    as is the AGCs cross-appeal in that proceeding. In light of our disposition of
    these appeals, the AGC shall deliver its brief written submissions concerning
    costs in respect of the main appeal and Mr. Lucks appeal to the Registrar of
    this court within 14 days from the date hereof. The respondents in the main
    appeal and the appellant in Mr. Lucks appeal shall deliver their brief written
    responding costs submissions within 14 days thereafter.

RELEASED:  FEB 28 2011 (D.R.O.)

Dennis OConnor A.C.J.O.

J.C. MacPherson J.A.

E. A. Cronk J.A.


CITATION:
Blumas
v. The
          Institute of Chartered Accountants of Ontario, 2011 ONCA 94

DATE: 20110203

DOCKET: C51638

COURT OF APPEAL FOR ONTARIO

Blair,
          Rouleau and Epstein JJ.A.

BETWEEN

Ronald
Blumas

Plaintiff/Appellant

and

The
          Institute of Chartered Accountants of Ontario,

Desmond Alexander Gibb and Grant
          Fraser Dickson

Defendants/Respondents

Ronald
Blumas
, in person

Robert Peck, for the respondents

Heard & released orally:
January 31,
          2011

On appeal from the judgment of Justice John A.
Desotti
of the Superior Court of Justice dated October
          14, 2009.

ENDORSEMENT

[1]

The appellant appeals from the dismissal of his action
    for abuse of statutory authority and defamation.  The appellants principal submission is that
    the e-mail in issue was not protected by qualified privilege because it was
    made maliciously, in the sense that it was dishonest or reckless.  The trial judge found that the statement was
    inaccurate and the appellant argues that the use of such inaccurate hyperbole
    has no place in a regulatory process like the one at issue and amounts to
    dishonesty or recklessness.  In the
    appellants view, Mr. Dicksons e-mail served no legitimate purpose in carrying
    out his duties as the Director of Practice Inspection or Mr. Wilsons duties as
    Chief Executive Officer.  The defamatory
    statements were outside the scope of the Institute of Chartered Accountants of
    Ontarios (ICAO) duties as a regulatory authority and the trial judge ought therefore
    to have found that they were not protected by qualified privilege because they
    were made with malice

[2]

We disagree.  We see
    no basis to interfere with the trial judges finding that Mr. Dicksons e-mail
    was sent on an occasion of qualified privilege and that the privilege was not
    lost in the circumstances.

[3]

The ICAOs officials were acting in the public
    interest, within the context of a confidential regulatory process.   It is important in such circumstances that
    the officials involved be free to speak candidly.  As found by the trial judge, the narrowly-focussed
    comment was neither malicious nor used to cause the appellant
    embarrassment.  Malice was not a motive,
    let alone the dominant motive.  There was
    an ample basis for this finding on the record in this case.  The information communicated was reasonably within
    the scope of the regulatory process in the circumstances at the point when the
    information was given.

[4]

In view of this conclusion, it is not necessary to deal
    with the issue of damages.  Given the
    outcome, we see no basis to interfere with the costs award made at trial.

[5]

For these reasons, the appeal is dismissed.  Costs of the appeal to the respondents fixed
    in the amount of $20,000, inclusive of disbursements and all applicable taxes.

R.A. Blair J.A.

Paul Rouleau J.A.

G.J. Epstein J.A.


CITATION: CIBC Mortgages Inc. v. Spencer, 2011 ONCA 141

DATE: 20110223

DOCKET: C52639

COURT OF APPEAL FOR ONTARIO

Weiler, Gillese and Blair JJ.A.

BETWEEN

CIBC Mortgages Inc.

Plaintiff (Respondent)

and

Winnifred Spencer and Maria Jaramillo

Defendants (Appellants)

Maria Jaramillo and Winnifred Spencer, appearing in person

Ron J. Aisenberg, for the respondent

Heard: January 12, 2011

On appeal from the judgment of
          Justice S.S. Seppi of the Superior Court of Justice, dated August 19, 2010.

APPEAL BOOK ENDORSEMENT

[1]

While the discovery of asbestos resulted in a substantial increase in
    the appellants costs, that problem does not mean that the bank is obliged to
    further extend time to the appellants to pay the mortgage.  Since the mortgage
    went into default about a year and a half of payments have been missed.

[2]

The appellants were granted an adjournment at first instance to pursue
    their plan of refinancing the mortgage.  That did not happen.  The appellants
    have no defence to the action.  Judgment was properly granted at first
    instance.  The appellants have the right to redeem the mortgage at any time
    until the property is sold.  In the circumstances, there is no impediment to
    them removing the asbestos, refinancing the property, and then redeeming the
    mortgage.

[3]

Accordingly the appeal is dismissed.  Costs are payable to the
    respondent and are fixed in the amount of $2,500, inclusive of disbursements
    and applicable taxes.