Supreme Court

SUPREME COURT OF Nova Scotia

 

Citation: Sorensen v. Investors Group Financial Services Inc., 2014 NSSC 398

Date: 2014-11-07

Docket: Halifax,  No.  345162

Registry: Halifax

Between:

KATHLEEN SORENSEN, of Bedford, Nova Scotia

Plaintiff

v.

INVESTORS GROUP FINANCIAL SERVICES INC., an Extra-Provincial Corporation, and GREAT WEST LIFE ASSURANCE COMPANY, an Extra-Provincial Insurance

Defendants

 

Judge:	The Honourable Justice Pierre L. Muise, J
Heard:	March 25, 2014, in Halifax, Nova Scotia
Final Written Submissions:	Received May 14, 2014.
Counsel:	Barry Mason, for the Plaintiff Alan Parish and Naomi Metallic, for the Defendants

 

                                     

INTRODUCTION

[1]             The Plaintiff, Kathleen Sorensen, was a consultant and regional director for the Defendant, Investors Group Financial Services Inc.  Investors Group has a group insurance policy with the Defendant, Great West Life Assurance Company (“Great-West”). That policy provides long-term disability insurance coverage for Investors Group consultants and directors.

[2]             After initially enrolling for disability benefits, consultants and directors must re-enroll each year. At the time of enrollment and re-enrollment they select one of four available coverage options, outlined in an annual booklet provided to them by Investors Group. The yearly selection is made through an online program provided by Investors Group. That program displays the benefits and coverage resulting from the four options. After the selection is made, a confirmation statement is provided by Great-West and outlines the benefits and coverage for the particular option selected.

[3]             Coverage and premiums for the particular option selected are calculated by Great-West based on the insurable earnings amount for each director/consultant, which amount is provided to Great-West by Investors Group. The insurable earnings amount was, according to the group policy, supposed to be 70% of average annual earnings over three years. However, Investors Group mistakenly, over multiple years, provided 100% of average annual earnings as the insurable earnings. That resulted in erroneous coverage and premium amounts being provided to Ms. Sorensen and other directors/consultants.

[4]             As with others, Ms. Sorensen had been given those erroneous amounts, and the error had not been discovered, when she made her selection, paid premiums, went on long term disability and started receiving benefits.  When she made her selection she knew she was afflicted with Parkinson’s Disease. Her condition then deteriorated to the point where she was placed off work full time due to the resulting disability.

[5]             After the error was discovered, the overpaid portions of premiums were refunded, and benefits, at the erroneously elevated level, were continued for about six months before being reduced to the proper amount upon about four months’ written notice to Ms. Sorensen.

[6]             Ms. Sorensen commenced the within action claiming damages arising from: breach of contract by both defendants, including that Great-West is liable for Investors Group’s error because it was Great-West’ s agent; and/or, negligent misrepresentation by Investors Group. She also claims that both defendants are estopped from reducing her benefits below the amount it was represented she would receive.

[7]             The Defendant, Investors Group, brought this motion for summary judgment on the evidence.

ISSUES

[8]             This motion raises the following issues:

1.                 What test and principles apply to a motion for summary judgment on the evidence?

2.                 Should summary judgment be granted on the claims for breach of contract and liability for the error of an agent?

3.                 Should summary judgment be granted on the claim for negligent misrepresentation?

4.                 Should summary judgment be granted on the estoppel claim?

 

 

 

LAW AND ANALYSIS

 

ISSUE 1:    WHAT TEST AND PRINCIPLES APPLY TO A MOTION FOR SUMMARY JUDGMENT ON THE EVIDENCE?

[9]             CPR 13.04 provides:

13.04 (1) A judge who is satisfied that evidence, or the lack of evidence, shows that a statement of claim or defence fails to raise a genuine issue for trial must grant summary judgment.

(2) The judge may grant judgment for the plaintiff, dismiss the proceeding, allow a claim, dismiss a claim, or dismiss a defence.

(3) On a motion for summary judgment on evidence, the pleadings serve only to indicate the laws and facts in issue, and the question of a genuine issue for trial depends on the evidence presented.

(4) A party who wishes to contest the motion must provide evidence in favour of the party’s claim or defence by affidavit filed by the contesting party, affidavit filed by another party, cross-examination, or other means permitted by a judge.

(5) A judge hearing a motion for summary judgment on evidence may determine a question of law, if the only genuine issue for trial is a question of law.

[10]        In Coady v. Burton Canada Company, 2013 NSCA 95, Saunders J.A., at paragraphs 27 and 28, quoted and commented on the test for summary judgment enunciated by the Supreme Court of Canada in Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423, and in Canada (Attorney General) v. Lameman, 2008 SCC 14, as follows (except that I have omitted the case references):

27     In Guarantee the Supreme Court enunciated the test for summary judgment. But because the Court's clear statement of the test is not always reiterated with precision, the Court's words bear repeating. The Court said:

                        27 The appropriate test to be applied on a motion for summary judgment is satisfied when the applicant has shown that there is no genuine issue of material fact requiring trial, and therefore summary judgment is a proper question for consideration by the court.  … Once the moving party has made this showing, the respondent must then "establish his claim as being one with a real chance of success"  ….

28     That statement was affirmed by the Supreme Court of Canada in Canada (Attorney General) v. Lameman, … where the Court per curiam reiterated the test for summary judgment:

[11] For this reason, the bar on a motion for summary judgment is high. The defendant who seeks summary dismissal bears the evidentiary burden of showing that there is "no genuine issue of material fact requiring trial": … . The defendant must prove this; it cannot rely on mere allegations or the pleadings:  … . If the defendant does prove this, the plaintiff must either refute or counter the defendant's evidence, or risk summary dismissal:  … . Each side must "put its best foot forward" with respect to the existence or non-existence of material issues to be tried:  … . The chambers judge may make inferences of fact based on the undisputed facts before the court, as long as the inferences are strongly supported by the facts: … .

[11]        At paragraph 87, Saunders J.A. provided an excellent “quick summary of the law as it presently stands in Nova Scotia concerning summary judgment litigation” which reads:

1.         Summary judgment engages a two-stage analysis.

2.         The first stage is only concerned with the facts. The judge decides whether the moving party has satisfied its evidentiary burden of proving that there are no material facts in dispute. If there are, the moving party fails, and the motion for summary judgment is dismissed.

3.         If the moving party satisfies the first stage of the inquiry, then the responding party has the evidentiary burden of proving that its claim (or defence) has a real chance of success. This second stage of the inquiry engages a somewhat limited assessment of the merits of the each party's respective positions.

 4         The judge's assessment is based on all of the evidence whatever the source. There is no proprietary interest or ownership in "evidence". 

5.         If the responding party satisfies its burden by proving that its claim (or defence) has a real chance of success, the motion for summary judgment is dismissed. If, however, the responding party fails to meet its evidentiary burden and cannot manage to prove that its claim (or defence) has a real chance of success, the judge must grant summary judgment.

6.         Proof at either stage one or stage two of the inquiry requires evidence. The parties cannot rely on mere allegations or the pleadings. Each side must "put its best foot forward" by offering evidence with respect to the existence or non-existence of material facts in dispute, or whether the claim (or defence) has a real chance of success.

7.         If the responding party reasonably requires disclosure, production or discovery, or the opportunity to present expert or other evidence in order to "put his best foot forward", then the motions judge should adjourn the motion for summary judgment, either without day, or to a fixed day, or with conditions or a schedule of events to be completed, as the judge considers appropriate, to achieve that end.

8.         In the context of motions for summary judgment the words "genuine", "material", and "real chance of success" take on their plain, ordinary meanings. A "material" fact is a fact that is essential to the claim or defence. A "genuine issue" is an issue that arises from or is relevant to the allegations associated with the cause of action, or the defences pleaded. A "real chance of success" is a prospect that is reasonable in the sense that it is an arguable and realistic position that finds support in the record, and not something that is based on hunch, hope or speculation.

9.         In Nova Scotia, CPR 13.04, as presently worded, does not create or retain any kind of residual inherent jurisdiction which might enable a judge to refuse to grant summary judgment on the basis that the motion is premature or that some other juridical reason ought to defeat its being granted. The Justices of the Nova Scotia Supreme Court have seen fit to relinquish such an inherent jurisdiction by adopting the Rule as written. If those Justices were to conclude that they ought to re-acquire such a broad discretion, their Rule should be rewritten to provide for it explicitly.

10.       Summary judgment applications are not the appropriate forum to resolve disputed questions of fact, or mixed law and fact, or the appropriate inferences to be drawn from disputed facts.

11.       Neither is a summary judgment application the appropriate forum to weigh the evidence or evaluate credibility.

12.       Where, however, there are no material facts in dispute, and the only question to be decided is a matter of law, then neither complexity, novelty, nor disagreement surrounding the interpretation and application of the law will exclude a case from summary judgment.

[12]        More recently, the Supreme Court of Canada has once again pronounced itself on summary judgment proceedings. In Hryniak v. Mauldin, 2014 SCC 7, at paragraphs 2, 3 and 5, Karakatsanis J., for a unanimous Court stated:

2     Increasingly, there is recognition that a culture shift is required in order to create an environment promoting timely and affordable access to the civil justice system. This shift entails simplifying pre-trial procedures and moving the emphasis away from the conventional trial in favour of proportional procedures tailored to the needs of the particular case.  … .

3     Summary judgment motions provide one such opportunity. … .

….

5     To that end, I conclude that summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims.

 

At paragraphs 49 and 50, Karakatsanis J. further stated:

 

49     There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

50     These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.

 

[13]        Based on these references to the summary judgment judge making findings of fact, Investors Group submitted that this Court can resolve factual disputes on this motion for summary judgement. However, in my view, the comments in Hryniak v. Mauldin in relation to fact-finding on summary judgment motions were made in the context of an interpretation of the civil procedure rules in Ontario, which, unlike the Nova Scotia Civil Procedure Rules, contain express fact-finding powers. Karakatsanis J. outlined the applicable Ontario Rule and commented on it, at paragraphs 42 and 43, as follows:

    42    Rule 20.04 now reads in part:

            20.04 ...

                        (2) [General] The court shall grant summary judgment if,

                                    (a)        the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

                                    (b)        the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

 

(2.1) [Powers] In determining under clause (2) (a) whether there is   a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

                        1.         Weighing the evidence.

                        2.         Evaluating the credibility of a deponent.

                        3.         Drawing any reasonable inference from the evidence.

43     The Ontario amendments changed the test for summary judgment from asking whether the case presents "a genuine issue for trial" to asking whether there is a "genuine issue requiring a trial". The new rule, with its enhanced fact-finding powers, demonstrates that a trial is not the default procedure. (2.2) [Oral Evidence (Mini-Trial)] A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.

[14]        The applicable Nova Scotia Rule contains no such fact-finding powers. Therefore, in my view, the comments of Karakatsanis J. specifically regarding fact-finding in summary judgment proceedings are inapplicable in Nova Scotia, even though her comments regarding interpretation of summary judgment provisions generally are applicable. I agree with the following comments of Forgeron J. on this issue, in Armoyan v. Armoyan, 2014 NSSC 174, at paragraphs 19 and 20:

19     The Nova Scotia Court of Appeal has not yet commented on the impact, if any, of the summary judgment decisions of the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, and its companion case, Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8. That these pronouncements possess both a specific and general value, is noted by Karakatsanis, J.A., in para. 35 of Hryniak v. Mauldin, supra., which states as follows:

 

35 Rule 20 is Ontario's summary judgment procedure, under which a party may move for summary judgment to grant or dismiss all or part of a claim. While, Ontario's Rule 20 in some ways goes further than other rules throughout the country, the values and principles underlying its interpretation are of general application.

 

20     Rule 13 does not contain the expansive powers that are found in Ontario's summary judgment Rule. The Ontario rule grants evidentiary powers that have little or no parallel to Rule 13. Weighing evidence, drawing inferences, and making credibility findings, all of which are presumptively available on summary judgment in Ontario, are foreclosed or limited under Rule 13. The summary judgment test in Nova Scotia, therefore, continues to be based upon the two part test and analytical framework outlined in Coady v. Burton Canada Co., 2013 NSCA 95, but subject to the proportionality principles reviewed in Hryniak. Summary judgment rules are to be "interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims": para. 5 of Hryniak v. Mauldin, supra.

 

[15]        Our Court of Appeal, in Fougere v. Blunden Construction Ltd., 2014 NSCA 52, confirmed this was the correct approach in Nova Scotia. In that regard, Saunders J.A., for a unanimous Court, at paragraphs 6, 7 and 12, stated:

6     In our respectful view, the recent decision of the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, has little bearing upon the circumstances, analysis, reasoning or result in this case. There, Justice Karakatsanis, writing for a unanimous Court, considered the application of a new Rule in Ontario (their Rule 20) which now empowers judges in that province to weigh the evidence, draw reasonable inferences from the evidence, and settle matters of credibility when deciding whether to grant summary judgment. Those powers are foreign to the well-established procedures and settled law which operate in Nova Scotia.

7     We recognize of course the guidance provided by Justice Karakatsanis in her reasons concerning the importance of interpreting summary judgment rules "broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims." She spoke of the values and principles that underlie our civil justice system and raised a clarion call for a shift in culture to provide alternative adjudicative measures to the conventional trial model; and invoke procedures which will provide access to justice that is simplified, proportionate, less expensive, just and fair. …

….

12     … [T]his Court has repeatedly made it clear that the rules for summary judgment in Nova Scotia do not provide a forum in which to resolve conflicts surrounding material facts or credibility… .

 

[16]        Therefore, in Nova Scotia, the summary judgment test and framework are still as outlined in Coady v. Burton, applied with a broad interpretation of Rule 13 so as to promote fair access to justice, including the proportionality principles underlying it. That does not extend to weighing evidence and assessing credibility. However, as noted at paragraph 28 of Coady v. Burton, quoting with approval paragraph 11 of Canada v. Lameman, it does include making inferences of fact strongly supported by the undisputed facts before the court.

 

ISSUE 2:    SHOULD SUMMARY JUDGMENT BE GRANTED ON THE CLAIMS FOR BREACH OF CONTRACT AND LIABILITY FOR THE ERROR OF AN AGENT?

[17]        There are no material facts in dispute regarding how the erroneous premium and disability benefit amounts arose, and were communicated and selected.

[18]        Investors Group provided its consultants and directors with a booklet called the Personal Choice Benefits Enrollment Guide which explained various benefits provided by Investors Group to its directors and consultants, including four long-term disability insurance options available under its group policy with Great -West. The booklet specified that, with the exception of Option 1, all options were based on “insurable earnings”, and also defined “insurable earnings” as being 70% of the particular consultant or director’s average annual earnings for the previous three calendar years.

[19]        Investors Group erroneously provided Great-West figures for insurable earnings that were 100% of average annual earnings, instead of 70%. Great-West calculated premiums and disability benefits based on the erroneous figures. Investors Group made those erroneously calculated premiums and benefit amounts available to consultants and directors on its online program, which it established for consultants and directors to select which of the four available disability coverage options it wanted at time of enrollment or re-enrollment. Ms. Sorensen selected Option 3. After the consultants and directors made their selection, Great-West produced a Confirmation Statement for Ms. Sorensen and other consultants and directors which confirmed the same erroneously calculated premiums and benefit amounts.

[20]        The Confirmation Statement was approximately one page and one half in length. At the end, it included a note, in print approximately the same size as the premium and benefit information, and prefaced by the words “please note” in bold print, stating:

“Please note: This summary is not a legal document and is subject to change. If there is a difference between the summary and the provisions of the group policy, application form or change form, the forms and policy provisions will prevail. For more detailed information, please refer to your benefits booklet. If you find a discrepancy in the summary, please contact your plan administrator.”

 

[21]        The question is, therefore, whether Ms. Sorensen has a real chance of success on these claims.

[22]        Ms. Sorensen does not dispute the general principle advanced by Investors Group that the group disability policy in question is a contract between Great-West and Investors Group, and that Ms. Sorensen is a third-party beneficiary under that policy, not a party to the contract itself. That general principle is sound and is supported by s. 173 of the Insurance Act, R.S.N.S. 1989, c. 231, and Norwood & Weir’s, Norwood on Life Insurance in Canada, 3^rd ed. (Carswell: 2002), chapter 9, page 212.

[23]        I note that section 3(i) and 3(o)(vi) of the Insurance Act include disability insurance as part of a life insurance policy and in the definition of life insurance. Therefore, the principles in relation to life insurance outlined in Norwood are also applicable to disability insurance.

[24]        Ms. Sorensen argues that the fact that she selected her own coverage by choosing one of the four available options, and that she based her selection on the erroneously calculated premiums and benefits, creates a legal obligation on Investors Group to honor the “arrangement made”, particularly given that there was no evidence she was provided with a copy of the actual policy. She melds this argument with the argument that Investors Group acted as agent for Great-West in confirming Ms. Sorensen’s selection and outlining the policy she had selected. I will address the agency argument later. I will first address the argument that the circumstances created a legal obligation to honor the “arrangement made”.

[25]        There was nothing in the booklet which would lead Ms. Sorensen to believe that she was, under the group policy, entitled to disability coverage premiums and benefits as erroneously calculated. It was consistent with the terms of the Group Policy. It contained the particulars of the group policy information required to be provided to her by virtue of section 179 of the Insurance Act.

[26]        If she did not stop to critically assess the erroneously calculated amounts, the online program and confirmation statement might lead her to believe that she was properly entitled to them. However, unlike the booklet, the Confirmation Statement does not include the information required by section 179(c) of the Insurance Act. There is no evidence that the online program did either. Therefore, neither meets the statutorily mandated specifications of the “certificate or other document” setting forth the required group insurance information for each group insured. Further, as noted, the confirmation statement stated that if it differed from the Group Policy, the terms of that policy would prevail, and referred Ms. Sorensen to the booklet for more detailed information about the policy.

[27]        Ms. Sorensen suggests that there was no difference between the confirmation statement and the policy because the policy did not contain calculation of the monthly benefit, only the formula for that calculation. In my respectful view, particularly where, as in the case at hand, benefit amounts vary according to the beneficiaries’ earnings and the policy does not contain a schedule specifying the benefit amounts for the various levels of earnings, a calculated amount in the confirmation statement that is not consistent with the proper amount calculated in accordance with the policy does constitute a difference between the confirmation statement and the policy.

[28]        Norwood provides helpful comments in determining the effect of discrepancies between the “certificate or other document” and the group policy. I will examine the effect of such discrepancies in the confirmation statement, even though it does not fit within the Insurance Act specifications for a  “certificate or other document”.

[29]        The erroneously calculated online information, though provided by Great-West to Investors Group, was not provided to the group insured directly by Great-West. Therefore, I will address the impact of that erroneous information in discussing the agency issue.

[30]        Norwood, at pages 217 and 218, states:

“This documentation may take the form of a group certificate particularizing the details applicable to the individual group life insured, or it may take the form of a booklet or other descriptive could document, which will describe the group insurance plan in comprehensive terms sufficient to inform the individual of their coverage under the group. …

Most group certificates and booklets provide that they are mere summaries - how else could an insurer condense the entire group policy? -And that, in the event of discrepancy with the terms of the master group policy, the latter will prevail. But, as will be discussed later, the courts have not always been consistent in upholding this caveat in the certificate or booklet.”

 

[31]        At pages 227 to 229, he states:

“[T]he individual group lives insured do not usually know the terms of the master group contract between the group policyholder and the insurer, and they are only entitled to receive a certificate or other document from the group policyholder outlining a summary of the group insurance coverage for which they qualify.

Because a certificate or other document evidences the rights of the individual group lives insured under the master group contract, it has sometimes been suggested that the certificate or other document is itself a ‘contract’ running directly between the insurer and the individual, so that the whole group arrangement is in the nature of a tripartite contract, with certain contractual rights and obligations running between the insurer and the group policyholder and other contractual rights and obligations running between the insurer and the individual group lives insured. Upon analysis, however, it is submitted that the certificate or other document is not in the nature of a contract between the insurer and the individual, but is rather descriptive documentation of rights granted to the individual under the contract between the insurer and the group policyholder.

….

Because the certificate or booklet is merely descriptive documentation summarizing aspects of the group policy, it is the terms of the master group contract which should prevail over the descriptive summary outline in the certificate or booklet, in the event of discrepancy between the terms of the policy and the terms of the certificate or booklet. It is usual for the certificate or booklet to caution that it is only a summary descriptive document, and that the terms of the group policy will prevail, and where, for example, the description of the nature of the benefit in a booklet was not in accord with the benefit available under the group policy, it was held that the terms of the booklet must be overridden.

The courts, however, may seize upon the wording in the booklet or certificate in favour of the group life insured. If the master group policy is ambiguous, for example, the terms of the booklet may be held to prevail. One case even held that an invitation in the booklet or certificate to seek ‘further details’ from the group policyholder was sufficient to constitute the group policyholder as agent of the insurer to bind coverage contrary to the master group policy.

Here the group policyholder had incorrectly advised the group life insured that coverage would continue during layoff.

Where no cautionary wording appears in the booklet or certificate to the effect of the terms of the group policy will prevail, the group life insured may be able to argue that they were induced to rely upon the terms of the booklet or certificate, but this is a question of representation of coverage, not an argument that the booklet or certificate constitutes a direct contract between the group life insured and the insurer.”

[32]        There is no dispute that the confirmation statement contained cautionary wording. It has not been suggested, and there is no evidence showing: that there was any relevant ambiguity in the group policy; or that the confirmation statement invited Ms. Sorensen “to seek further details” from Investors Group which resulted in her obtaining erroneous premium and benefit information. Therefore, the situations referred to in Norwood where the wording in the “certificate or other document” was “seized upon” in favor of the group insured do not obtain in the case at hand.

[33]        In addition, as indicated in Norwood, even if the cautionary wording did not exist, it would still not create a direct contract with Ms. Sorensen. It would merely raise an issue of “representation of coverage”.

[34]        Therefore, in my view, leaving aside for the moment the agency issue, no contractual obligation to pay the erroneous benefit amounts was created by the online program or the delivery of the confirmation statement containing those erroneous amounts.

[35]        This conclusion is supported by that in Nusink v. Wyeth-Ayerst Canada Inc., 2005 CanLII 19848 (O.N.S.C.), where the Court held that the wording in the company benefits brochure, which differed from the group policy, did not create legal obligations, because the brochure contained clear language that it was not intended to do so. In that case the brochure stated: “If any discrepancies between the contents of this booklet and the official plan contract should arise, the term of the insurance contracts and plan documents will apply in all cases.” That is very similar to the cautionary wording in the confirmation statement in the case at hand. The brochure in the Nusink case also stated: “In no way does it confer any contractual rights or obligations.” That is somewhat different than the wording in the confirmation statement. However, the confirmation statement in the case at hand does state that it “is not a legal document”. As such, in my view, it is a sufficiently similar to the wording in Nusink  that the same result ought appropriately obtain.

[36]        Ms. Sorensen suggests, based upon Tilden Rent-a-car Co. v. Clendenning (1978), 18 O.R.(2d) 601 (C.A.), that it would be unreasonable and “inconsistent with the overall objectives of the contract” to give effect to the cautionary wording in the case at hand. In my view, the ratio in that case is inapplicable in the case at hand. It was a “ticket case” which dealt with a stringent exclusionary provision in almost illegible print on the back of a contract which was signed quickly to rent a vehicle. The court found that, in those circumstances, there was an obligation to bring the exclusionary clause to the attention of the person renting the vehicle because the car rental company knew or ought to have known that it did not reflect the intention of the person renting the vehicle. In the case at hand, we are dealing with the selection, by a group insured, of one of four predetermined options already established in the group policy between the insurer and the group policyholder. The group insured was not rushed to read the confirmation statement, and the cautionary wording in it was clearly legible and highlighted by a preface in bold print.

[37]        Ms. Sorensen also submitted that the disclaimer clause is not sufficiently clear to defeat a claim for the full erroneous benefit amount where, as in the case at hand, the specified premiums were paid, the claim was filed and accepted, and the disability benefits in the specified amount were paid out for period of time. With respect, I disagree with this submission. To give it effect would, in my view, make it such that the disclaimer clause would have practical effect only if the error was discovered before the claim was filed and accepted. Further, disability benefit payments are generally reassessed on an ongoing basis. The disabled person must generally provide ongoing proof of disability. It would be incongruous with this continuous “requalification” process to require an erroneous benefit amount to be continued to be paid simply because it had started to be paid.

[38]        Ms. Sorensen provided the case of A.C. Hitsman Ltd. v. London Life Ins. Co., 1985 CarswellOnt 960 (P.C.), in support  of her submission that the online program and confirmation statement should be binding , because the group policy was never provided to her. However, in my view, that case is distinguishable for a number of reasons, including those which follow. In Hitsman, it was the group policyholder that was not supplied with a copy of the policy. There is an obligation to provide a copy of the policy to the group policyholder. There is no obligation to provide a copy to the group insured, and, according to Norwood, at page 227, they “do not usually know the terms of the master group contract between the group policyholder and the insurer”. In Hitsman, because the group policyholder was not provided a copy of the policy, the court found that the brochure which the insurer had provided to the group policyholder represented the agreement. However, it noted that the wording related to the coverage for the dental benefits in question was essentially the same in the brochure as in the policy. It found that the dental treatment in question was not excluded by the wording of either the brochure or the policy.

[39]        In the case at hand, Ms. Sorensen had no right to receive a copy of the policy, and there is no dispute that, under the policy, she was not entitled to the level of disability benefits she was receiving and is claiming should continue.

[40]        I will now turn to the agency argument.

[41]        The Court in London Life Insurance Co. v. Baker (1987), 77 N.S.R.(2d) 3 (N.S.S.C., A.D.) engaged in an in-depth discussion of when a group disability policy holder, in that case an employer, would or would not be considered an agent of  the insurer so as to bind it in providing coverage to the employee when the group policy holder had represented to the employee he would be covered.

[42]        The Court noted that the group policy holder will generally not be found to be the agent of the insurer where the group plan is administered by the insurer, as is the case with most such plans. Conversely, the group policyholder of self-administered plans, where it is the group policyholder itself which administers it, basically only providing reports and records to the insurer, will generally be found to be acting as the agent of the insurer. However, the Court emphasized that each case must be decided on its own facts.

[43]        In London Life v. Baker, the insurer denied coverage on the basis that the employee: was not eligible to enroll in the plan in the first place; and, had not become disabled within 31 days of ceasing active full-time employment with the group policyholder. The agent of the insurer had sold the plan to the group policyholder and provided guidance to its principals because they were unfamiliar with group insurance policies. The insurer’s agent had assured the principals of the group policy holder that the employees would be covered during layoffs for “a reasonable period of time”. He also met with those same principals, and also with the respondent employee, Mr. Baker, when he was rehired after a winter layoff, and informed them that Mr. Baker was immediately covered under the policy. Mr. Baker was illiterate.  Not surprisingly, the court found that the representation of the agent for the insurer that the employee was covered immediately bound the insurer to provide coverage. The principals of the group policyholder told its employee, Mr. Baker, that he would continue to be covered while he was laid off. That information was based upon what the insurer’s agent had told them regarding employees being covered during layoffs “for a reasonable period of time”. The premiums were deducted from his pay. In addition, the certificate of insurance provided to the employee, by the insurer, directed him to obtain information regarding benefits from the employer. In those circumstances, the court found that, in providing this information, the employer was acting as the agent of the insurer, so as to bind the insurer to continue coverage.

[44]        However, it is noteworthy that neither the employer nor the employee had provided any erroneous information or misrepresentation to the insurer or its agent. All information provided to the employer and employee by the insurer, through its agent, had been based upon accurate information.

[45]        The Court in London Life v. Baker cited, with apparent approval, authority stating that, in the case of an insurer-administered plan, when a group policyholder provides the insurer with erroneous information, and the insurer determines premiums or coverage based on that erroneous information, the group policy holder will not be found to be the agent of the insurer so as to bind the insurer to honour the coverage determined.

[46]        For example, at paragraph 34, the Court cited the following passage from David Norwood, Life Insurance Law in Canada (1977):

Where the insurer administers the group plan, so that it has to rely upon information received from the group policyholder, it would appear that the group policyholder will not be held to be the agent of the insurer, and that the insurer will not be held liable if, on the basis of inaccurate information, the group coverage indicated to the individual is not in accord with the terms of the master group contract. As has been stated in a leading U.S. case [Boseman v. Connecticut General Life, supra]:

When procuring the policy, obtaining applications of employees, taking payroll deduction orders, reporting changes in the insured group, paying premiums and generally in doing whatever may serve to obtain and keep the insurance in force, employers act not as agents of the insurer but for their employees or for themselves

So if the group policyholder reports that a particular individual is actively at work, when in fact he is not, the insurer may rely upon the actively-at-work provisions of the group policy. The fact that the individual received a certificate, etc., from the group policyholder will not prevail as evidence of coverage … .

….

Similarly, if the group policyholder makes an inaccurate report to the insurer about the ranking of an eligible member of the group, or his rate of earnings, etc., so that the insurer issued a certificate showing an amount of insurance which does not correspond to the amount to which the individual would have been entitled under the classification schedule in the group policy, the insurer will not be liable for other than the correct amount of insurance which would have been applicable if the facts had been reported accurately to it. It may be said that discrepancies of this nature fall into the category of clerical error and that, since the group policyholder is not the agent of the insurer, the group policyholder's knowledge of the true facts will not be imputed to it. …

 

[47]        Later in that same passage quoted at paragraph 34, it is noted that a contrary result is more likely to obtain when the plan is self-administered by the group policyholder, such that it determines eligibility and the level of benefits.

[48]        At paragraph 46, the Court in London Life v. Baker cited with apparent approval the factors outlined in the decision of the California Supreme Court in Elfstrom v. New York Life Ins. Co., 63 Cal. Rptr. 35, as being relevant to determining whether a plan is insurer-administered or self-administered, as follows:

The administration of a group policy may be handled either by the insurer itself on the basis of information furnished to it by the employer or, as in the present case, by the employer. If the insurer administers the policy, the employer periodically submits to the insurer the names of its employees and other information relevant to coverage. The preparation of accounting records and changes of beneficiary, as well as other details are handled in the insurer's offices. Ordinarily, an employee who becomes eligible for insurance is required to sign an acceptance card authorizing payroll deductions and indicating his choice of beneficiary. The company then sets up an accounting record for the employee and prepares his certificate of insurance. Other duties of administration include the termination of an employee's insurance upon notice from the employer, adjustment of benefits and premiums as the employee's classification changes, and the recording of changes of beneficiaries. (Gregg, An Analysis of Group Life Insurance, op. cit, supra, pp. 115-118).

Under an employer-administered plan the employer performs these functions, sometimes resulting in a saving in premiums. The only records, regularly exchanged between the employer and the insurer are those pertaining to the calculation and payment of premiums, usually in terms of the number of lives insured, the amount of insurance in force, and specification of charges. These functions are performed by the employer under the direction of the insurance company, which ordinarily provides service visits by a representative to check on the administration of the plan, examine the employer's records, lend assistance to the employer in improving administrative practices, and promote the enrollment of additional employees in the plan.

[49]        Also instructive is the evidence led and accepted in London Life v. Baker regarding the difference between the two types of plans. That evidence is reproduced at paragraph  33 as follows:

London Life markets two broad definitions of administration. The most common administration is what we term regular administration where London Life with information fed to London Life, London Life completes all administrative functions such as determining eligibility of employee [sic] to be insured, determining when he becomes insured, processing applications, calculating premiums, billing premiums, collecting premiums, reviewing claims that are fed to London Life, determining eligibility for payment of claims, actually paying the claims, sending cheques, doing the other details of administrative work, and that is a regular administration, a regular accounting basis, and the vast majority of the group policies that we sell have regular administration. In addition to that, London Life does market what we term self administration or self accounting basis of administration of the group policy. And the difference there is that the employer assumes more responsibility for determining when employees become eligible in accordance with the terms of the group policy. They actually take the applications, they themselves process the applications, and the employees to the list of insured people. They actually issue wallet certificates. They terminate employees when they should be terminated in accordance with the policy. They establish records such as a register of insured employees. They determine the amounts to which the employee is entitled or the amount of benefit to which they are entitled. They actually bill themselves, if you will, for the premiums that are due. They collect the premiums and then they remit the premiums to London Life in a bulk basis. In effect under a self accounting group, the employer in effect does all the administration work, maintains the details of coverage, who is insured, in what amounts, collecting premiums, terminating insurance, and doing all of the administrative work. But as far as London Life is concerned, under those circumstances we would have no record of who is insured or the amounts that are insured, and would depend upon the records of the particular employer in determining that. The only thing we would be involved in is processing the premiums and mostly in that type of administration London Life would be actually a claim adjudicator, we would actually be involved in the payment of claims, but depending upon records of coverage, etc. that would be provided by the employer.

.

[50]        Norwood, at pages 234 and 235, also provided the following helpful comments:

“Group plans are administered either by the insurer, or by the group policyholder as delegated by the insurer, but it may be said that liability for administrative errors will depend entirely on the facts and circumstances, whichever system of administration is in effect. Some insurer-administered groups may still involve the employer as agent of the insurer; some employer-administered groups may result in joint liability between insurer and employer.

Two systems of administration must be contrasted.

1.         In insurer-administered groups, the policyholder merely sends in the applications, reports individual changes in participation, etc., and leaves it to the insurer to check eligibility, issue certificates, and calculate and bill the premiums. Here, the policyholder’s error is more likely to incur liability for the policyholder alone, not insurer, since the insurer can claim it was not party to the error nor was a policyholder acting on its behalf.

2.         In self-administered groups, the insurer delegates functions such as monitoring eligibility, identifying covered participants, calculating net premiums due, etc., which are functions generic to the insurer in its insurance operations. Consequently, negligent administration in self-administered groups are more likely to result to the benefit of the participant, as errors committed by the policyholder qua agent of the insurer, so imposing vicarious liability upon the insurer and leaving the insurer-agent disputes to the insurer and the group policyholder.”

 

[51]        It is reasonable to expect plans to vary and have elements indicative of both types. In my view, it is important to address: whether the plan in question is generally insurer-administered or policy-holder administered; and, more particularly, whether the specific aspect of the administration of the plan that is the basis of the dispute before the court was administered by the insurer or the group policy holder.

[52]        Norwood, at pages 236 and 237, provided the following additional helpful comments:

The group policyholder is the ‘party in the middle’, and it is when the group policyholder fails to conform to the policy terms in its administrative operation of the group plan that issues of legal liability for its errors arise. Who may claim, when both the group life insured and the insurer relied upon the group policyholder?

Where the group policyholder is in breach of its basic contractual obligations to the insurer, it would seem that the insurer should not be liable to the group life insured. Where the policyholder defaults in its agent-administrator role, the insurer may be vicariously liable to the group life insured for errors committed by the policyholder as the insurer’s agent.

….

[W]here the group policyholder is obliged under the group contract to take certain steps in carrying out its role under the group plan, the major difficulty is to determine whether failure to do so constitutes a breach of the contract with the insurer (which the group life insured cannot pursue), or an administrative default which may be judged to be an error by the group policyholder as the insurer’s agent, or an error by the group policyholder in performing its own obligations to the group lives insured.

The general principle is stated in a leading United States case as follows:

It is impossible to say that the employer is the agent of the insurer … so that the employer’s failure to do what it is required to do as a party to the contract shall somehow constitute performance of its terms …. When procuring the policy, obtaining applications, taking payroll deduction orders, reporting changes in the insured group, paying premiums and generally in doing whatever may serve to obtain and keep the insurance in force, employers act not as agents of the insurer but for their employees or themselves.

But it is a principle that is inconsistently applied in the courts of both the United States and Canada as they struggle to distinguish failure by the group policyholder to perform its contractual obligations and failure by the group policyholder to perform its administrative functions. As one court put it, the case decisions are ‘hopelessly’ in conflict.

It is submitted that where the group policyholder is not called upon to make subjective judgments, but merely to report objective facts to the insurer, the courts will be more likely to relieve the insurer of vicarious liability. An example would be where the group life insured is not de facto actively at work, or is not de facto in a category qualifying for coverage under the group plan. Where, conversely, the subjective judgment of the group policyholder is involved, the group policyholder’s error may bind the insurer.”

 

[53]        In the case at hand, there are no disputed factual elements in relation to the way the group disability insurance plan in question is administered, even though there is a dispute in relation to whether the undisputed factual elements make it an insurer -administered plan or a policy-holder administered plan. The undisputed factual elements include the following.

[54]        The insurer, Great -West: calculated premiums and benefits based upon the amount of insurable earnings of consultants and directors as provided by Investors Group; communicated those to Investors Group; produced a confirmation statement outlining premiums and the benefit amounts to which the consultants and directors would be entitled, based upon the option they had selected at enrollment and re-enrollment, and provided the confirmation statement to them; was the contact for any questions regarding benefit amounts for which the consultants and directors would be eligible; received and processed claims for payment of long-term disability benefits; received information from claimants to prove entitlement; where applicable, obtained consents from claimants and obtained information from other sources;  advised consultants and directors having submitted a long-term disability claim whether or not the claim was accepted, and, if accepted, what the monthly benefit amount, and deductions therefrom, would be; according to page D1 of the group insurance policy, had “full responsibility for the assessment of the person’s entitlement to benefits”;  and, according to page E2 of the group policy was required to give 30 days’ notice of termination of benefits having lasted for a year or more.

[55]        The group policy-holder, Investors Group: provided consultants and directors with a booklet referred to as the Personal Choice Benefits Enrollment Guide, explaining various benefits provided to them by Investors Group, including a table outlining the four long-term disability insurance options available to them under the group policy with Great-West, and specifying what the associated benefits were based on (i.e. “insurable earnings”); provided a document entitled Disability Income Benefits: Consultants Guide; provided an online program containing, among other things, the information supplied by Great-West regarding the benefit amounts to which the consultants would be eligible, which online program they could use in selecting their disability coverage options; had available the forms required for consultants and directors to submit a claim for disability benefits; refunded overpaid premiums to consultants and directors arising from its error in relation to the amount of insurable earnings; and, advised consultants and directors that the disability benefit amounts they were receiving were incorrect and would be reduced to the correct amount on notice, as well as that Great-West would be informed of Investors Group’s error in calculating and reporting insurable earnings.

[56]        Considering these undisputed factual elements, I am of the view that they strongly support an inference, and clearly lead to a finding, that the group policy in question fits in the general category of insurer-administered plans. More importantly, the specific aspect of the administration of the plan that is the basis of the dispute before the court, i.e. the determination of premiums and benefits, was, without question, administered by Great-West.

[57]        In addition, the error in question was committed by Investors Group in carrying out its obligation to “merely report objective facts to the insurer” relating to insurable earnings, more particularly the objective figure which represented 70% of the consultants’ and directors’ average annual earnings for the previous three complete calendar years. Their error was to report 100% of the average annual earnings, instead of 70%. That was an objective factual error. It was not an error which involved subjective judgment. According to Norwood, that also makes it less likely that the insurer should be found to be vicariously liable.

[58]        In my view, Investors Group was providing the insurable earnings amounts on behalf of the consultants and directors, so as to make it possible for them to secure the amount of disability benefit coverage to which they were entitled based upon their level of earnings.

[59]        Based on these points, in my view, in the circumstances of this case, there is no evidence or material fact in dispute, which could reasonably result in a finding that Investors Group was the agent of Great-West so as to render Great-West liable for Investors Group’s error in calculating insurable earnings, and representing the resulting erroneous premium and disability benefit amounts to the consultants and directors.

[60]        In my view, Ms. Sorensen has no real chance of success in relation to her claims that: Great-West and Investors Group breached their contract with her; and, Investors Group was acting as agent for Great-West making it liable for Investors Group’s errors.

[61]        Therefore, I must dismiss those claims

 

ISSUE 3:    SHOULD SUMMARY JUDGMENT BE GRANTED ON THE CLAIM FOR NEGLIGENT MISREPRESENTATION?

[62]        The test for negligent misrepresentation is set out at paragraph 33 of Queen v. Cognos Inc., [1993] 1 S.C.R. 87, and reads as follows:

“The required elements for a successful Hedley Byrne claim have been stated in many authorities, sometimes in varying forms. The decisions of this Court cited above suggest five general requirements: (1) there must be a duty of care based on a "special relationship" between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted.”

 

[63]        Investors Group has conceded, for the purposes of this motion, that the first three elements of this test have been met. However, it submits that there is no or insufficient evidence of reliance to raise a genuine issue for trial on its claim for negligent misrepresentation damages.

[64]        I agree with Investors Group that damages for negligent misrepresentation include such reliance losses as would put the plaintiff in the same position she would have been in the misrepresentation had not been made; but, do not include such expectation losses as would put her in the position she would have been in if the misrepresentation was true: Rainbow Industrial Caterers Ltd. v. Canadian National Railway Co., [1991] 3 S.C.R. 3, paras 20 to 22; Stasiuk v. Sun Life Assurance Co. of Canada, 2001 ABQB 130, paras 70 and 71, aff’d 2003 ABCA 95; and, Smith v. Union of Icelandic Fish Producers Ltd. (S.I.F.), 2005 NSCA 145, para 116.

[65]        Ms. Sorensen provided affidavit evidence that if the correct monthly disability benefit figure had been provided to her, instead of the misrepresented figure, she would have, among other things:

1.                 explored other options for private insurance coverage to ensure sufficient income;

2.                 restructured her investments to ensure sufficient income; and,

3.                 down-sized by moving into an apartment instead of purchasing a smaller home.

[66]        In her oral testimony she explained that her main investment was her practice or business. She indicated that she had a part-time assistant. She could have brought that person on full-time instead, or hired someone else, so as to increase the annual revenue upon which her benefits would be based. She indicated that, since the first erroneously high benefit figure was provided to her for the 2007- 2008 year, she would have had time to make adjustments to increase her benefits amount before she went on disability. She added that she could have adjusted her director and consultant tasks to maximize her income from her own efforts. She further added that she could have continued her business longer before going on disability. She indicated she could have let go her director’s position and duties and focused on her consultant duties. However, she acknowledged that most people take on the position of director to increase their income. She could have hired extra help to assist her with the consultant portion of her business. As her Parkinson’s disease resulted in a gradual deterioration of function, there was some flexibility in the date she chose to go on disability. She applied for LTD benefits in March 2009. Her doctor was of the view that she had been disabled since June 2008. However, she was of the view that the benefit amount provided to her was sufficient for her anticipated needs, so she “put her health first”.

[67]        Investors Group disputes this reliance evidence. I was asked to reject it on the basis that, despite repeated requests for disclosure and production of evidence supporting reliance, none was provided until shortly before the summary judgment motion. I have already concluded that I am not to engage in such a fact-finding process in this summary judgment motion. However, Investors Group also argues that Ms. Sorensen has no real chance of success even if her evidence is accepted. Therefore, I will continue to the second stage of the summary judgment inquiry, in relation to this fourth element of the test for negligent misrepresentation, as if Ms. Sorensen’s evidence was not in dispute.

[68]        In my view, it is reasonably open to a trial judge to find that Ms. Sorensen reasonably relied on the misrepresented excessive benefit figures in leaving her insurance and business operation/investment situation as it was, without seeking to alter or prolong it, and purchasing the smaller home, instead of moving into an apartment. Therefore, she has a real chance of establishing reasonable reliance.

[69]        Investors Group does not dispute the evidence of detriment resulting from alleged reliance. Rather, it submits that that evidence shows no detriment or is too speculative to establish that any damages resulted from the purported reliance.

[70]        The Statement of Claim pleads liability for damage sustained by Ms. Sorensen as a result of the negligent misrepresentation and claims general and special damages.

[71]        Ms. Sorensen purchased a smaller house in Bedford in 2008. The evidence was that the assessed value of the residence rose by about $57,000 from 2009 to 2014. She agreed that the fair market value of the residence had also gone up. There was no evidence of how much it had risen. The mortgage dated December 12, 2008, from Ms. Sorensen to Home Trust Company in the total amount of $260,482.50, bears an interest rate of 5.55%. Therefore, by January 1, 2014, she would have paid about $72,000 in interest, and the principal would have been paid down by only about $11,000. Therefore, her interest costs less principal payments would have exceeded the rise in assessed value during the period from the beginning of 2009 to the beginning of 2014 by about $4,000. More likely than not, the basic rent for an apartment in Bedford, excluding utilities, would have cost her at least seven times that much over the same five-year period. There is no evidence of the yearly expenses for taxes, insurance, and maintenance on the house, to determine whether those expenses would have exceeded the extra costs of renting. Ms. Sorensen had the opportunity to put her best foot forward by presenting and comparing respective expenses versus equity built. She did not do so. Therefore, I cannot find, on the evidence, that Ms. Sorensen has a real chance of success in establishing detriment arising from her choosing to purchase the smaller home instead of renting an apartment.

[72]        The remainder of the detriment alleged relates to damages arising from taking no alternative action because the erroneously high benefit amount misrepresented was considered to be sufficient.

[73]        In Smith v. Union of Icelandic Fish Producers Ltd., supra, the Court concluded that the seller of a fish processing business relied, to his detriment, on a misrepresentation by the purchaser that he would be employed as a consultant for five years, because it resulted in him not seeking better terms or an alternative buyer.

[74]        The court outlined its reasoning at paragraphs 120 to 122 as follows:

120     … [D]amage, or detriment, as an element of the cause of action in negligent misrepresentation may be understood to mean an injury rather than a sum money to compensate for its infliction. Consistent with this view, the House of Lords approved the following description of what actual damage means in Nykredit Mortgage Bank Plc. v. Edward Erdman Group Ltd. (No. 2), [1997] H.L.J. No. 52:

 

... any detriment, liability or loss capable of assessment in money terms and it includes liabilities which may arise on a contingency, particularly a contingency over which the plaintiff has no control; things like loss of earning capacity, loss of a chance or bargain, loss of profit, losses incurred from onerous provisions or covenants in leases. They are all illustrations of a kind of loss which is meant by 'actual' damage. ...

 

121     The House thus recognized that losing the chance to bargain for different terms or being subject to onerous provisions in covenants may constitute damage or detriment for the purpose of determining when a cause of action in negligence is complete. Similarly, in Manuge v. Prudential Assurance Co. Ltd. (1977), 27 N.S.R. (2d) 183; [1977] N.S.J. No. 667 (Q.L.) (S.C.T.D.), Hart, J. (as he then was) recognized that the loss of the opportunity to bargain for different terms was detriment for the purpose deciding whether a cause of action in negligence had been established. In my view, this approach makes eminent sense particularly in a case such as this one in which the issues of liability and damages have been severed for separate trials.

 

122     In this case, Mr. Smith's reliance on SIF's representations at the very least deprived him of the opportunity to negotiate (or to try to negotiate) more acceptable terms or seek out another buyer. They also induced him, as the judge found, to subject himself to the provisions of the non-competition agreement without the corresponding benefit of the place with SIF that he had been assured was there for him. These are the sorts of detriment or damage recognized by the House of Lords in Nykredit and by Hart, J. in Manuge. In my opinion, in the context of the separate trials of liability and damages in this case, that is sufficient to permit Mr. Smith to have the opportunity to prove his damages at an assessment if he can.

[75]        In Michaud v. PMM Assurance & Services Inc., 2005 NBCA 66, the plaintiff transferred funds from a guaranteed investment into another investment in reliance upon the defendant’s negligent misrepresentation that the guarantee would continue to apply to the second investment. The plaintiff would only have received a financial benefit from the guarantee if the funds in the initial investment were below a specified amount at maturity or on the plaintiff’s death. The court found that detriment arose from the lost opportunity to avoid a possible future investment loss. At paragraph 28, it noted that to award damages for loss of such a chance, there must be “a real and substantial chance of avoiding a future loss”. Paragraph 28 states:

In the final analysis, the loss of a chance is considered, at the time of the trial, as a harm that stems from the loss of the opportunity to avoid a future and contingent financial loss. If the judge believes there is, the possibility that the future harm will occur must be taken into account in calculating the amount of damages awarded. Thus, the assessment of the current value of the lost chance at the day of the trial is based on possibility. This method is now settled in Canadian case law and it is only logical that it be applied. It is essentially a rule of proportionate compensation: the more contingent or hypothetical the chance, that is to say, the lower the possibility that the event will occur, the lower also the value of the chance that the plaintiff has had taken from him or her.

 

[76]        Ms. Sorensen acknowledged that her shares invested in Investors Group could not be changed, and she had no stocks or bonds she would have done anything different with. Therefore, there is no evidence she has suffered any loss of chance in relation to those types of investments.

[77]        Ms. Sorensen testified that she did not approach anyone to see whether, with her pre-existing diagnosis of Parkinson’s disease, she could have obtained other disability insurance coverage. It appears unlikely that she would have been able to validly obtain such coverage. Therefore, in my view, on the evidence provided, Ms. Sorensen: did not have a real and substantial chance of obtaining such additional coverage; and, thus has not suffered a compensable loss of opportunity to avoid a future loss by obtaining such additional coverage.

[78]        Ms. Sorensen did provide evidence that the annual revenue upon which the disablility benefit calculations were based could be increased by greater or more effective effort on her part and by paying someone to provide her additional assistance in her business. Allegedly relying upon the erroneous benefit amounts, she simply continued in the same manner she had, making no adjustments to her business as her primary investment. In my view, had she made such adjustments in one or more of the years upon which her ultimate benefits were based, there is a real and substantial chance that she would have been able to increase her revenue, which would have translated into increased disability benefits. Therefore, if she was pleading negligent misrepresentation of benefit levels communicated to her before May of 2008 (i.e. the benefit level which was initially erroneously paid), the loss of the chance to make such adjustments so as to ultimately increase disability benefits would constitute a detriment for the purposes of this fifth element of the negligent misrepresentation test. Consequently, she would have a real chance of successfully establishing detrimental reliance by forgoing such restructuring before May of 2008. However, Ms. Sorensen has only pled misrepresentation of the disability benefit level communicated to her in May of 2008. That was based on her revenue in the preceding three calendar years and applied to disability occurring between September 1, 2008 and August 31, 2009. She went on disability in March of 2009.  So, increasing her income between May 2008 and March 2009 would have not increased her disability benefits. Therefore, she suffered no detriment from loss of the chance to increase her income so as to increase benefits by relying on the erroneously represented disability level communicated to her in May 2008.

[79]        Nevertheless, she also testified that she could have delayed her claim for disability and continued to pursue her business, with hired help, because of the gradual nature of her decline in function. I cannot find that it would be unreasonable for the trial judge to conclude that she had a real and substantial chance of increasing her revenue by utilizing hired help during such period of extension so as to increase her benefit level, even if it meant less actual net revenue to her during the period of extension. Consequently, she has a real chance of successfully establishing that the loss of the chance to put into effect such an extension with readjustment to increase revenue and disability benefits constituted a detriment for the purposes of the fifth element of the negligent misrepresentation test.

[80]        Based on these points, in my view: even though her case appears weak at this stage of the proceedings, she has a real chance of successfully establishing a claim for damages resulting from negligent misrepresentation of the long-term disability benefits she would receive; and, and I must dismiss the summary judgment motion as it relates to the claim for negligent misrepresentation.

 

ISSUE 4:    SHOULD SUMMARY JUDGMENT BE GRANTED ON THE ESTOPPEL CLAIM?

[81]        In her Statement of Claim, Ms. Sorensen pleads that Investors Group and Great-West are estopped from reducing her disability benefits below the amount represented because she relied upon that representation.

[82]        I will determine whether she can advance a claim in estoppel in the circumstances of this case before assessing whether she has a real chance of success in establishing the elements of the applicable test or tests for estoppel.

[83]        Ms. Sorensen’s position is that Investors Group and Great -West have a legal obligation to continue paying disability benefits at the erroneously high level they represented would be paid if she became disabled between September 1, 2008 and August 31, 2009.

[84]        Our Court of Appeal, in Ford v. Kennie, 2002 NSCA 140, at paragraphs 37 to 42, highlighted the difference between estoppel by representation and promissory estoppel as being that “[e]stoppel by representation results from the representation of the present existing fact, not an intention with respect to the future”, while promissory estoppel “encompasses representations of intention or promises, not simply of fact”. In my view, the representation in the case at hand, although based on existing revenue levels, is a representation of an intention or promise as to contingent future disability benefit payments. Therefore, the applicable form of estoppel is promissory estoppel.

[85]        G.H.L. Fridman, Q.C., in The Law of Contract in Canada, Sixth Edition (2011 Thomson Reuters Canada Ltd.), at pages 122 to 127, stated the following in relation to when the doctrine of promissory estoppel may be advanced:

“Cases subsequent to High Trees, both in England and in Canada, have … shown that the only true function of this doctrine is to affect existing contractual rights, not to manufacture contracts out of such ‘promises’ or ‘representations’. Numerous statements in English and Canadian cases can be cited to support the proposition that this use of estoppel can be made only to affect accrued or inchoate rights, not to produce contractual relations where the essential ingredients of a contract, such as consideration or a clear and ascertained agreement as to terms, are lacking.

….

… In the context of contract, such estoppels operate ‘as a shield and not a sword’. They may be raised by way of defence to an action brought on the original contract. They may not be utilized to create a contractual right upon which an action for breach of such contract can be founded.

….

… [T]he law in Canada, as well as England, has not yet accepted that there can be contracts, or relationships akin to contracts, between parties merely in consequence of some statement or other conduct by one party which induces another party to act, or refrain from acting, in reliance on such statement or conduct. Situations like that might give rise to some liability in tort (if there were fraud or negligence), or to possible restitutionary recovery where one party has been unjustly enriched or benefited by the other; or possibly, one party has been unjustly impoverished; or to the modification or qualification or suspension of contractual rights and obligations as between the parties in question, where there was such a contract already between them. Beyond these possibilities, the law has not proceeded.”

 

[86]        I agree with this description of the current state of the law related to promissory estoppel in Canada.

[87]        I have already concluded that Ms. Sorensen has no real chance of success in relation to her claims that: Great-West and Investors Group breached their contract with her; and, Investors Group was acting as agent for Great-West making it liable for Investors Group’s errors. The finding of no chance of success on the breach of contract issue was based on: the group disability policy being a contract between Great-West and Investors Group, with Ms. Sorensen being a third-party beneficiary of, not a party to, the contract; and, the erroneous statement raising only an issue of representation of coverage.

[88]        Therefore, there are no accrued or inchoate contractual rights as between Ms. Sorensen and Great-West or Investors Group to modify, qualify, suspend, alter, or otherwise affect. She cannot use the representation to create such contractual rights.

[89]        Consequently, in my view, in the circumstances of the case at hand, Ms. Sorensen cannot invoke the estoppel doctrine to force Great-West or Investors Group to continue paying the erroneously high disability benefit amount represented to her.

[90]        Investors Group has counterclaimed for return of disability benefits overpaid to Ms. Sorensen before the error was discovered. Ms. Sorensen has raised, as a defence to that counterclaim, that both Investors Group and Great-West are estopped from claiming a return of those overpaid benefits. There has been no summary judgment motion to strike this defence to the counterclaim, and Investors Group has undertaken that it will not seek return of the overpaid benefits if Ms. Sorensen’s claim is dismissed on summary judgment. However, by way of contrasting example only, and without deciding the issue, in my view, that is a use of the estoppel doctrine that would appear to be permissible.

[91]        In the brief filed on behalf of Ms. Sorensen dated March 10, 2014, estoppel by representation was put forward as the applicable doctrine. I have already stated my conclusion that promissory estoppel is the applicable doctrine. However, I will later address estoppel by representation in any event.

[92]        In the brief submitted on her behalf dated April 21, 2014, authority is cited in support of the submission that promissory estoppel can be used to force continued payment of the erroneously high disability benefits because it is pled only in support of her causes of action in breach of contract and negligent misrepresentation.

[93]        In my view, paragraph 13 of the Statement of Claim clearly pleads estoppel as an alternative claim, as opposed to a supportive doctrine.

[94]        In addition, in my view, the authorities presented on behalf of Ms. Sorensen as supporting use of promissory estoppel to force continued payment of the erroneously high benefit amount either do not support that proposition or are distinguishable.

[95]        The following passage from W. David Rankin, “Concerning an Expectancy Based Remedial Theory of Promissory Estoppel”, (2011) 69 U.T. Fac. L. Rev. 116 was quoted in support of the proposition advanced:

“It is sometimes said of this doctrine of promissory estoppel that it operates as a ‘shield’, but never as a ‘sword’. While this maxim is occasionally interpreted to mean that a plaintiff may never raise an estoppel, this view has been criticized and rejected in both Canada and England. It is more correct to say that the maxim means simply that-- because the promise must have regard to the non-enforcement of an existing right-- promissory estoppel cannot operate independently as a cause of action. That cause of action must be based on some pre-existing right held against the defendant, and a promissory estoppel may either complete the plaintiff’s case (say, by negating one of the defendant’s contractual defences), or it may be invoked by a defendant to defend against the assertion of the plaintiff’s strict legal rights. In other words, a promise can only raise an estoppel if the promisor and the promisee have a pre-existing legal relationship. Without such a relationship, no cause of action can lie. The doctrine should not be considered as turning on whether the party seeking to raise the estoppel is a defendant or plaintiff.”

 

[96]        In the case at hand, there is no evidence of any right held by Ms. Sorensen to receive disability benefits in the erroneously high amount which she held against either Investors Group or Great-West and which pre-existed the representation. Therefore, in my view, this passage does not support the result suggested by Ms. Sorensen.

[97]        In Mentuck v. Canada, [1986] 3 F.C. 249 (T.D.), the Court, at paragraphs 30 to 34, concluded that, in the circumstances, all the elements of an enforceable agreement had been concluded, including consideration in the form of detriment suffered as a result of agreeing to do what had been requested by the defendant. It was noted, at paragraph 35, that the doctrine of promissory estoppel only played a “supplementary part in reinforcing the leading roles of expectation and reliance”. Therefore, the case was not decided based on the doctrine of promissory estoppel. The factual circumstances of that case were as follows. In order to resolve a situation which arose on an Indian reserve, the Department of Indian Affairs asked the plaintiff to move off of the reserve and relocate elsewhere. In exchange, the department offered to compensate him for the value of the land that he had been farming on the reserve and any incidental losses, as well as for the cost of moving. The plaintiff agreed, shut down his farming operations on the reserve, sold off all his farming equipment, and moved. The Department had attempted to argue that the agreement was conditional as opposed to concluded, and thus not enforceable, on the basis that the final compensation figure was subject to review by the Minister. That argument was rejected.

[98]        In the case at hand, there was no such offer, acceptance and consideration to form a contract. Ms. Sorensen simply selected the same one of the four coverage options that she always selected. She was not asked to refrain from restructuring her director/consultant business, nor to delay her LTD application.

[99]        In relation to the decision in Tudale Explorations Ltd. v. Bruce (1978), 20 O.R.(2d) 593 (S.C.) presented on the behalf of Ms. Sorensen, I agree with the following comments at page 125 of Fridman, The Law of Contract in Canada, Sixth Edition:

“[I]t was … said by the court that the position of Teck in this case was such that it was not the plaintiff seeking to wield the sword, but the defendant claiming the benefit of a shield. Teck’s claim was based upon the contract. ‘The promise of extension is set up only as a defence of Tudale’s assertion that their rights under that contract had expired.’ Hence, … the decision in this case did not require the conclusion that the conduct of the parties created a contract by estoppel; the facts involved the variation or waiver of strict contractual rights in consequence of conduct which could involve an estoppel. The case, in fact, is yet another illustration of the application of the doctrine as a ‘shield’ in the way in which other decisions have stated and used the doctrine. The dicta in that case, which seem to support the use of estoppel as a ‘sword’ as well as a ‘shield’, contradict decisions and dicta in other Canadian cases, including decisions of courts higher in rank than the Divisional Court. Whatever was said in the Tudale case to suggest that contracts can arise out of estoppel cannot stand with the manifold indications in Canadian cases, echoing what has been said in English decisions, that the doctrine of ‘promissory estoppel’ or ‘equitable estoppel’ operates only to modify or qualify previously created contractual rights and obligations and can provide only a defence to an action brought on duly and validly created contracts. This restriction of the application of promissory estoppel was reiterated in Brandt Tractor Ltd. v. Pardee Equipment Employee Assn. in which it was held that promissory estoppel arose only where there was a contract or other legal relationship between the parties which gave one party legal rights, which it then, by word or deed, promised not to enforce.”

 

[100]   Brandt Tractor Ltd. v. Pardee Equipment Employees Association, 2006 ABQB 327, bears similarities with the case at hand. The employer, Brandt Tractor, had been collecting and remitting union dues in relation to a group of employees who, under an old collective agreement were represented by the union. A new collective agreement came into effect which, in the employer’s view, excluded that group of employees from the bargaining unit represented by the union. Therefore, shortly after the new collective agreement came into effect, it stopped collecting and remitting the dues. The union grieved. The Arbitration Board found that the group of employees were indeed excluded by the new collective agreement. However, it found that “the employer was estopped from relying on the strict interpretation of the scope clause until the next round of collective bargaining”. The Court found that the Board had erred in its application of the doctrine of promissory estoppel, stating, at paragraph 27:

Justice Stevenson observed in Smoky River Coal that promissory estoppel exists where there is a contract or other legal relationship between the parties which gives one party legal rights which it then, by word or deed, promises not to enforce. It does not arise, as in this case, where an employer provided benefits over and above those required by the collective agreement and then unilaterally stopped providing those benefits

 

[101]   Similarly, in the case at hand, the Defendants provided disability benefits in excess of the amount provided for in the Group Policy. However, following a grace period after they discovered their error, they reduced the benefit payments to the correct amount. In my view, there was no contract or legal relationship giving Ms. Sorensen legal rights to the excess amount, and the Defendants did not, by their words or actions, promise that they would not reduce payments to the correct amount following discovery of any error resulting in excessive payments.

[102]   Ms. Sorensen cited Canada (Attorney General) v. Adamoski, 2004 CarswellBC 3142 (S.C.) in support of the proposition that an inadvertent error, such as a mistake of fact, can found an estoppel argument. However, in that case, the promise in question altered the creditor/debtor relationship between the parties. In addition, the doctrine of promissory estoppel was used by Mr. Adamoski as a shield to defend against the plaintiffs attempt to collect a student loan debt from him. The circumstances and the Court’s conclusion are summarized at paragraphs 44 to 47 as follows:

“44        In the case at hand, Mr. Lopez made assurances to Mr. Adamoski that he was no longer required to make payments on a student loan because it was mistakenly believed that the loan had been extinguished on account of a pending or actual bankruptcy of Mr. Adamoski. Mr. Lopez's statements were intended clearly to affect the legal relations between the parties. The plaintiff independently conveyed the same assurance and, in that respect, made the same representation to Mr. Adamoski through the issuance of its statement of account. Before any attempts were made to rectify this mistake (and on this point I note it was another 2-1/2 years before the matter apparently even drew the plaintiff's attention again), Mr. Adamoski acted and relied upon or, at a minimum, was influenced by those assurances in that he did not proceed with his bankruptcy which he deposes he otherwise intended to do. In the circumstances it was entirely reasonable for Mr. Adamoski to rely on those assurances, and they are binding on the plaintiff.

45        I accept that if not for such representations, Mr. Adamoski would have forged ahead with his application for bankruptcy status as he could no longer bear the student debt load facing him, which, as I mentioned earlier, was his only debt at the time. Accordingly, he altered his position to his detriment.

46       …  [U]nder the current bankruptcy legislation, and unlike the applicable earlier 1994 version, a bankrupt can no longer necessarily extinguish his Canada student loan debt through bankruptcy. Therefore, even if Mr. Adamoski were to declare bankruptcy today, he no longer has the benefit of the former version of the legislation which would have granted him the opportunity to extinguish his Canada student loan indebtedness in bankruptcy. At the end of the day, Mr. Adamoski adopted a course of conduct "inaction" so to speak, which cannot only be described as detrimental, it is materially prejudicial.

47        I conclude that the plaintiff is estopped from pursing any legal action against Mr. Adamoski with regard to the repayment of his outstanding Canada student loan debt, being the subject matter of this litigation. I dismiss the plaintiff's claim, and award costs to Mr. Adamoski payable at scale 3.”

 

[103]   In the case at hand, the Defendants had no such legal right to pursue recovery from Ms. Sorensen which they represented they would not pursue. Ms. Sorensen is not using the doctrine as a shield against such pursuit by the Defendants. In addition, the representation did not alter what Ms. Sorensen did in connection with the relationship between her and the Defendants relating to the disability insurance coverage options. She confirmed in her evidence that she chose the same coverage options that she had always chosen. She did not provide any evidence indicating that, if the erroneous coverage amount had not been represented, she would have selected any other option.

[104]   The only evidence of potential injurious reliance is that she did not perceive any need to attempt to delay her disability claim and restructure her business and duties so as to increase her revenue base. She acknowledged that she did not know whether such restructuring would result in such increase, and that it could result in decrease. It simply resulted in her not taking steps which had the possibility of increasing or decreasing her revenue base. If the court were to find that the erroneously represented amount prevented the Defendants from reverting to the correct benefit amount it would clearly over-compensate Ms. Sorensen and result in an unjustified windfall to her. That would be contrary to the equitable purpose of the doctrine of promissory estoppel.

[105]   Even if Ms. Sorensen can advance a claim in estoppel in this case and/or estoppel by representation applies, in my view, she does not have a real chance of success in establishing either form of estoppel. Both promissory estoppel and estoppel by representation require a clear and unambiguous representation: Ford v. Kennie, para 37; Wilson v. BMO Nesbitt Burns Inc., 2011 NSSC 373, para 36;  Downey v. Cranston, 2012 NSCA 49, para 47; and, Fridman, The Law of Contract in Canada, page 129. In Downey v. Cranston, at paragraph 52, the Court concluded that pension statements containing a declaration that they were for information only did not provide an unambiguous representation. Similarly, in the case at hand, the confirmation statement clearly stated that: it was a summary; if there was any difference between it and the group policy, application form or change form, the forms and policy would prevail; it was not a legal document; and, it was subject to change. Therefore, in my view, the confirmation statement did not contain a clear and unambiguous representation.

[106]   There is no evidence of any such warning or disclaimer on the online program. However, by the time Ms. Sorensen received the confirmation statement it would have been clear to her that the representation was subject to change and, if it differed from the policy or forms, it would be overridden by them. That would have corrected any potential misunderstanding regarding whether or not the representation on the online program was clear and unambiguous. Further, at that point, she still would have been in a position to delay her disability claim and attempt to increase her revenue base by restructuring her business and duties. So she could no longer claim detrimental reliance on a clear and unambiguous representation.

[107]   Based on these points, I am of the view that Ms. Sorensen has failed to show, on this motion, that she has a real chance of success in advancing or establishing a claim in estoppel in the main action herein.

 

CONCLUSION

[108]   Based on the foregoing I conclude the following.

1.     The evidence and lack of evidence shows that there is no genuine issue for trial in relation to Ms. Sorensen’s claims: that Great-West and Investors Group breached their contract with her; that Investors Group was acting as agent for Great-West making it liable for Investors Group’s errors; and, in estoppel. Ms. Sorensen has no real chance of success in establishing those claims. I, therefore, grant Investors Group’s motion for summary judgment on those claims and dismiss them. Consequently, the claims contained in paragraphs 10, 11, and 13 of the statement of claim are dismissed.

2.     The evidence does raise a genuine issue for trial in relation to Ms. Sorensen’s claim of damages resulting from negligent misrepresentation and she has a real chance of successfully establishing it. Therefore, I dismiss Investors Group’s motion for summary judgment on that claim.

 

 

ORDER

 

[109]   I ask counsel for Investors Group to prepare the order.

 

FURTHER DIRECTIONS UNDER CPR 13.07

[110]   Saunders J.A., at paragraphs 19 and 20 of  Fougere v. Blunden Construction, supra, stated:

19     In our view the wise and creative application of CPR 13.07 in conjunction with CPRs 5 and 6 will offer judges the necessary flexibility to decide which cases need to be weeded out because the claim or the defence is doomed to fail, and then go on to decide whether those cases which deserve to be heard on their merits ought to be adjudicated in the abbreviated, less rigorous process of an application, or should instead be reserved for the more traditional trial by action format.

20     This is precisely the same approach commended by Justice Karakatsanis in Hryniak where she urged judges to play a leading role in finding alternative measures which will produce adjudicated outcomes that are proportionate, timely, less costly, accessible and fair.

 

[111]   Bearing in mind those comments, I ask the parties to, by December 5, 2014, advise the Court, in writing, of their position in relation to directions pursuant to Rule 13.07 in connection with the claim which has not been dismissed on this motion for summary judgment.

 

COSTS

[112]   If the parties are unable to resolve the issue of the costs of this motion,  I ask that they provide written submissions on the issue, also by December 5, 2014.

 

 

MUISE, J.