Court File No. ONTARIO SUPERIOR COURT OF JUSTICE GEORGE STIFEL Plaintiff -and- HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO and GREAT WEST LIFE ASSURANCE COMPANY Defendants TO THE DEFENDANTS Proceeding under the Class Proceedings Act, 1992 STATEMENT OF CLAIM A LEGAL PROCEEDING HAS BEEN COMMENCED AGAINST YOU by the plaintiff. The claim made against you is set out in the following pages. IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer acting for you must prepare a statement of defence in Form 18A prescribed by the Rules of Civil Procedure, serve it on the plaintiffs lawyer or, where the plaintiff does not have a lawyer, serve it on the plaintiff, and file it, with proof of service, in this court office, WITHIN TWENTY DAYS after this statement of claim is served on you, if you are served in Ontario. If you are served in another province or territory of Canada or in the United States of America, the period for serving and filing your statement of defence is forty days. If you are served outside Canada and the United States of America, the period is sixty days. Instead of serving and filing a statement of defence, you may serve and file a notice of intent to defend in Form 18B prescribed by the Rules of Civil Procedure. This will entitle you to ten more days within which to serve and file your statement of defence. IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE.
- 2- Date May, 2012 Local registrar TO: Address of court office GREAT WEST LIFE ASSURANCE COMPANY 400-330 University Ave Toronto, ON M5G 1R8 393 University A venue Toronto, Ontario / MSG IE6 [ 1)-/1 ~( / AND TO: HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO Crown Law Office (Civil) McMurtry-Scott Bldg gth Floor 720 Bay Street Toronto, Ontario M7A2S9
- 3- CLAIM 1. The plaintiff claims: (a) an order pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6 ("CPA") certifying this action as a class proceeding and appointing him as representative plaintiff; (b) an order pursuant to s. 24 of the CPA, directing an aggregate assessment of damages; (c) damages for breach of contract in the amount of $20,000,000; (d) in the alternative, damages for breach of fiduciary duty in the amount of $20,000,000; (e) in the alternative, damages for constructive trust and/or resulting trust in the amount of $20,000,000; (f) in the alternative, as against the defendant, Her Majesty The Queen in Right of Ontario, damages for intentional interference with contractual relations in the amount of $20,000,000; (g) punitive damages for the class in the amount of$1,000,000; (h) prejudgment and post-judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C. 43; (i) costs of this action, including the costs of notice and of administering the plan of distribution of the recovery in this action, plus applicable taxes; and
-4- G) such further and other grounds as may be required by the CPA, or as the lawyers may advise and this Honourable Court may deem just. OVERVIEW 2. The class members obtained long-term disability benefits from Great West Life Assurance Company ("Great West") pursuant to a group benefit plan (the "Plan"). 3. At all times, the benefits were paid by the defendant, Her Majesty the Queen in Right of Ontario (the "Crown") who also instructed and advised Great West on the eligibility of class members to receive benefits, and, the quantification and payment of those benefits. 4. Great West set up and administered the Plan, with funds provided by the Crown. 5. The Crown was the employer of the class members. 6. Class members receiving long-term disability payments also qualified for disability benefits under the Canada Pension Plan ("CPP"). 7. Pursuant to the terms of the Plan, CPP payments received by the class members would be off-set against the disability benefits Great West was obliged to pay. 8. Effective April 1, 1996, both long term disability benefits and CPP payments were indexed for cost of living adjustments ("COLA"). 9. While Great West was entitled under the Plan to offset CPP payments against the long-term disability benefits, it was never entitled to deduct COLA CPP payments against long-term disability benefits. It did so anyway, in clear breach of its obligations to the class members, and upon the advice and direction of the Crown.
- 5-10. The class members plead that the defendants are liable to them for damages. THE PARTIES 11. The plaintiff, George Stifel, is an individual, resident of Southwold, Ontario. 12. The defendant, the Crown, was the employer of the class members, including the plaintiff. The class members worked in every ministry operated by the province of Ontario and in a number of agencies, boards and commissions again operated by the province of Ontario. 13. The defendant, Great West, is a provider of group insurance policies throughout Canada. Great West operates throughout Canada, including in Ontario. 14. The particulars of the insuring agreement entered into between the Crown on the one hand and Great West on the other are known to those parties. However, the plaintiff understands that while disability benefits under the Plan were paid to him by Great West, the Crown had an equivalent liability to Great West for the amount of those payments. The plaintiff pleads that the Crown was a party to the Plan. 15. Further, the plaintiff pleads that at all material times, Great West acted on the instruction and advice of the Crown in determining how to calculate or determine benefit eligibility and amount. THE CLASS 16. The plaintiff brings this action on his own behalf and on behalf of all persons who were employed by The Province of Ontario who were:
-6- (a) civil servants not represented by the Ontario Public Services Employees' Union, the Ontario Provincial Police Association or the Association of Management, Administrative and Professional Crown Employees of Ontario; (b) members ofthe legislative Assembly of Ontario; (c) employees in the Caucuses of the Legislative Assembly; (d) teachers employed under contract by the Provincial Schools Authority; (e) members and employees of Agencies, Boards and Commission as approved by management Board of Cabinet; (f) employees ofthe Ontario Small Claims Court; (g) any other employees or persons designated by the Government as having the right to participate in the insurance provided by Great West. and who received long term disability payments from Great West after April 1, 1996 while also receiving CPP disability benefits. THE PLAN 17. Mr. Stifel is a retired engineer who commenced employment with the Ministry of Labour in 1974. 18. As part of his employment contract with the Ministry of Labour, Mr. Stifel was provided with long term disability benefits from Great West under Group Plan Number 44500 (the "Plan".)
- 7-19. In or around May 8, 1993, Mr. Stifel became unable to work due to severe depression. Mr. Stifel qualified for long term disability benefits in or around November 15, 1993. 20. The Plan provided the following relevant terms and conditions for payments made to members who qualified as disabled: AMOUNT OF INSURANCE 1. An employee's Monthly Benefit Amount shall be an amount equal to: (a) in respect of a GO Transit employee, 75% of his Monthly Earnings. (b) in respect of any other employee, 66 2/3% of his Monthly Earnings. It is specifically provided, however, that an employee's Monthly Benefit Amount shall be calculated based on Monthly Earnings in effect on the date his disability [sic] commences including any retroactive adjustments in earnings which have an effective date on or prior to the date his disability commenced. AMOUNT PAYABLE *** The Monthly Benefit payable will be the amount to which an employee is entitled at the date of disability according to the Amount of Insurance provision including any retroactive adjustments in Monthly Earnings which have an effective date on or prior to the date of disability. This amount will be reduced by other income to which the employee may be entitled (A) from any of the following sources toward which the Employer makes a contribution: 1. Disability benefits payable under the Canada Pension Plan or Quebec Pension Plan (C.P.P. or Q.P.P.) including benefits for dependents but excluding benefits payable directly to a dependent. Subsequent changes to the initial C.P.P. or Q.P.P award will not affect the benefit payable unless such changes are: (a) As a result of a change in the benefit formula under the Canada Pension Plan or Quebec Pension Plan, subject to review with the Group Policyholder.
- 8- (b) Due to an error in the original determination of the amount of the award. (c) As a result of a change in dependent status. 2. Retirement benefits under the Canada Pension Plan or Quebec Pension Plan (C.P.P. or Q.P.P.) to which the employee is entitled on his own behalf 3. Benefits payable under any workers' compensation act, excluding any portion that was being received by the employee prior to becoming Totally Disabled. 4. Retirement or disability benefits provided by the Employer. 21. While the parties clearly contracted and contemplated that CPP benefits received by disabled employees would be offset against the total amount paid by Great West, at no point was it ever contemplated that COLA to CPP could be offset. 22. In the absence of explicit contractual language, the defendants had no entitlement to offset CPP COLA against the long term disability benefits it was obliged to pay. STIFEL'S CLAIM 23. At the time Mr. Stifel first qualified for disability benefits he was 52 years old (DOB: August 31, 1941). 24. Immediately, Great West advised him that he should also be seeking CPP disability benefits. In a letter dated December 15, 1993, Great West advised Mr. Stifel that: many people are unaware of the benefits available to them as a result of disability under the Canada Pension Plan. It appears that you may be entitled to CPP disability benefits and we are asking that you file an application, if you have not done so already.
- 9- While Great West cautioned Mr. Stifel that "benefits will be adjusted by the amount of CPP disability that you are entitled to receive", Great West was silent that it intended to keep for itself or the Crown any CPP COLA. 25. At the time that Mr. Stifel became entitled to disability benefits, the "Social Contract" enacted by Ontario's government had frozen COLA to wages and benefits paid to civil service employees, including long term disability benefits. 26. Effective April 1, 1996, the freeze enacted as a result of the Social Contract was lifted. 27. The lifting of the freeze entitled Mr. Stifel to COLA on his long term disability benefits to a maximum of 2.0% based on the average annual increase in the Ontario Consumer Price Index published by Statistics Canada. 28. Great West advised Mr. Stifel, that it would begin to apply COLA to his disability benefits effective January 1, 1997, and retroactive to April1, 1996. 29. For the time period between March 1 and 31, 1996, Mr. Stifel was entitled to a monthly disability benefit in the amount of $4, 702.22. He also received a CPP disability benefit in the amount of $854.74. Accordingly, the net amount paid to him by Great West (prior to tax) was $3,847.48 30. On January 1, 1997, Mr. Stifel's disability benefit increased by COLA, 1.9%, to $4,796.26. Similarly, his CPP entitlement increased by 1.9%, to $871.83. 31. In calculating the amount it owed to Mr. Stifel, Great West deducted the entirety of the CPP, including the COLA, against the benefit.
- 10-32. The plaintiff pleads that the defendant was only entitled to deduct the pre-cola CPP, $854.74, against his disability benefit. 33. The plaintiff pleads that Great West's conduct in this regard amounts to a breach of contract, or, in the alternative, that Great West holds the amount of the CPP COLA in trust for him. 34. The plaintiff pleads that Great West life carried out the breach of contract with full knowledge that it had no entitlement to retain the CPP COLA for itself. 35. The plaintiff pleads that the Crown and Great West engaged in lengthy discussions about how to treat the COLA CPP offset, and whether COLA should be applied to CPP for the purposes of the offset. While, initially, the defendants were of the view that the COLA should not be applied to CPP, they thereafter changed their minds, and decided to treat the calculation of the benefit to be paid in the manner designed to permit them to pay-out the least amount possible. 36. The plaintiff pleads that by the defendants turning their minds to this issue, and then by ignoring the contractual provisions set out in the Plan, they acted in bad faith, and exhibited without remorse their intention to deny the plaintiff and the class members their contracted entitlements. 37. The plaintiff pleads that his damages for January 1997 were $17.09. The plaintiff pleads that throughout the entirety of the time period that he received disability benefits from Great West after January 1, 1997, in every case, and at every month, Great West kept for itself the CPP COLA. The full value ofthe plaintiffs loss will be particularized in advance of trial.
- 11 - THE DEFENDANTS' ACTS AGAINST THE CLASS 38. The plaintiff pleads that in all circumstances, the defendants treated the class member in a uniform manner in that: (a) the class members were all entitled to long term disability benefits under the Group Plan; (b) the class members were all entitled to keep the CPP COLA; (c) in all cases, the defendants wrongly and in breach of the Plan offset the CPP COLA against the long term disability benefit. 39. The full particulars of the names and identities of the class members, and the amount of damage each class member suffered, is in the exclusive purview of the defendants. BREACH OF CONTRACT 40. The Plan, as an insurance benefit plan, was a contract of adhesion. It must be interpreted contra proferentem. In the absence of an explicit clause permitting the defendants to retain the CPP COLA, the defendants were not entitled to do so. The plaintiff, and the class members, plead that the defendants breached the contract by refusing to pay to them the full amount of the benefit to which they were entitled. 41. The plaintiff, and the class members, are entitled to be re-paid the entirety of the benefits to which they were entitled under the Plan. FIDUCIARY DUTY
- 12-42. The plaintiff and the class members were all in vulnerable position, reliant on the defendants to properly pay them their monthly disability insurance benefits. 43. The plaintiff pleads that as an individual on long term disability insurance, he was particularly and uniquely vulnerable to the defendants. 44. The defendants failed to properly account to the class members for their disability insurance benefits, instead, helping themselves to funds that they had no colour of right to retain, and that were impressed with a trust in favour of the class. 45. The plaintiff and the class members are entitled to damages as a result of the defendants' wrongful act. CONSTRUCTIVE TRUST 46. In the alternative, the plaintiff, and the class members, plead that the defendants are trustee of the funds they retained. The plaintiff, and the class members are entitled to a disgorgement of the funds the defendants held, and continue to hold, in contravention of the terms ofthe Plan. INTERNATIONAL INTERFERENCE WITH CONTRACTUAL RELATIONS 47. To the extent that the Crown was not a party to the Plan, the plaintiff pleads that it intentionally interfered with the Plan, a contract, by instructing Great West that it could deduct COLA to CPP for the purposes of calculating the plaintiffs benefit payment. 48. The plaintiff pleads that the Crown had knowledge of the Plan, that the Crown intended for Great West to breach the Plan by applying COLA to CPP in calculating the
- 13- amount to be paid, that the Crown instructed and advised Great West to breach the Plan, that Great West did breach the Plan, that damages were suffered by the plaintiff as a result, and that there is no justification for anything that the Crown did in this respect. PUNITIVE DAMAGES 49. The defendants knew that they had no entitlement to retain the CPP COLA, and made an informed decision to wrongfully maintain these funds for their own benefit, with hope they would not be called to account for their conduct. 50. The defendants' conduct m this regard was flagrant, high-handed, egregious, reprehensible, and constituted a marked departure from ordinary standards of decent commercial behaviour. 51. In particular, the defendants knew that the individuals who would be denied funds were on long term disability, and thus, were more vulnerable to manipulations of their payments. 52. The conduct ofthe defendants is deserving of an award ofpunitive damages. OTHER 53. The plaintiff pleads and relies on the CPA, and the Courts of Justice Act. 54. The plaintiff proposes that this action be tried in the City of Toronto, in the province of Ontario.
- 14- May 2012 Sack Goldblatt Mitchell LLP Barristers & Solicitors 20 Dundas St. West, Suite 1100 Toronto, ON M5G 2G8 Michael Mitchell LSUC #: 16992N Jordan Goldblatt LSUC#: 50755H Tel: ( 416) 979-6400 Fax: (416) 591-7333 Lawyers for the Plaintiff
GEORGE STIFEL d HER MAJESTY THE QUEEN IN LIGHT an OF ONTARIO et al Plaintiff Defendant CJ)- rd ~SJ0$/-oxJ~ Court File No.: ONTARIO SUPERIOR COURT OF JUSTICE Proceeding commenced at Toronto STATEMENT OF CLAIM Sack Goldblatt Mitchell LLP Barristers & Solicitors 20 Dundas St. West, Suite 1100 Toronto, ON M5G 2G8 Michael Mitchell LSUC#: 16992N Jordan Goldblatt LSUC#: 50755H Tel: (416) 979-6400 Fax: (416) 591-7333 Lawyers for the Plaintiff F:\09-2245\00420086.DOCX