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Fiduciary - Crown as Fiduciary. Robertson v. Ontario
In Robertson v. Ontario (Ont CA, 2023) the Court of Appeal considered breach of fiduciary duty, here in a class action addressing multiple COVID deaths in long-term care homes:(3) Motion Judge Strikes Breach of Fiduciary Duty Claim
[22] The motion judge noted that the Supreme Court in Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, [2011] 2 S.C.R. 261, had made clear that in order to establish the existence of a fiduciary duty, the beneficiaries’ vulnerability must arise from their relationship with the fiduciary, and the fiduciary must have a duty to act solely in the best interest of the beneficiaries.
[23] The motion judge found that the residents of the LTC homes in this case were vulnerable due to the realities of aging, related medical issues, and the risks associated with COVID-19, rather than their relationship with the provincial government. Further, Ontario did not own or operate the LTC homes nor did the language of the LTCHA support an arguable fiduciary duty to act solely in the interests of the residents of LTC homes.
[24] The motion judge thus had “no difficulty” concluding that the breach of fiduciary duty claim, on the facts as pleaded, is plainly and obviously doomed to fail and should be struck in its entirety.
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(4) The Motion Judge Did Not Err in Striking the Fiduciary Duty Claim
[66] The motion judge struck the appellants’ fiduciary duty claim in its entirety, finding that the Supreme Court’s decision in Elder Advocates, which also involved elderly residents of LTC facilities, compelled the conclusion that the claim had no reasonable prospect of success.
[67] The motion judge pointed out that in order to establish that a public authority owes a fiduciary duty to a specific class of persons, there must be an undertaking by the alleged fiduciary to act solely and in the best interests of the alleged beneficiaries. The motion judge found that the duty of care language in the preamble to the LTCHA did not support an arguable fiduciary duty to act solely in the interests of the LTC residents, to the exclusion of all others. In fact, s. 174.1 expressly provides that in issuing directives under the Act, the MLTC may take into account interests other than those of the LTC residents. This negated the possibility of any fiduciary duty to act solely in the interests of the residents of LTC homes.
[68] The appellants claim that there is no evidence of an actual conflict between the alleged fiduciary duty and the government’s obligation to act in the public interest. Relying on this court’s decision in Barker v. Barker, 2022 ONCA 567, 162 O.R. (3d) 337, at paras. 81-82, they argue that the motion judge erred in striking the fiduciary duty claim in the absence of such evidence.
[69] I would not give effect to this ground of appeal. As the motion judge appropriately noted, recognition of a fiduciary duty in this case is plainly inconsistent with the wording of s. 174.1 of the LTCHA, which expressly authorizes the MLTC to consider, in addition to the interests of LTC residents, factors that include “the availability of financial resources for the management and operation of the long-term care home system…” As the Supreme Court in Elder Advocates made plain (at paras. 43-45), a statutory discretion to spread limited resources among competing groups is inherently inconsistent with the recognition of a fiduciary duty, which requires utmost loyalty to the beneficiaries’ interest above all others.
[70] In my view, the motion judge therefore correctly struck the fiduciary duty claim. . Bigeagle v. Canada
In Bigeagle v. Canada (Fed CA, 2023) the Federal Court of Appeal considers elements of a fiduciary relationship, here in an indigenous-government context:[55] Following the principles set out in Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24 (Alberta Elders), the motion judge examined the three elements required for the establishment of a fiduciary relationship: an undertaking, a defined vulnerable person or class of persons, and a legal or practical interest (Alberta Elders at para. 36).
[56] She first noted there was nothing in the Royal Canadian Mounted Police Act, R.S.C. 1985, c. R-10 (RCMP Act) or the Criminal Code, R.S.C. 1985, c. C-46 supporting an undivided loyalty towards the Class, as the legislation only supported the interests of all Canadians generally. There was nothing in the statutes that created a trust relationship between the RCMP and the Class. She added that no facts were pled that could establish a private law duty to the Class.
[57] The motion judge then considered the vulnerability of the members of the Class under the second branch of the test. She noted the special relationship between Indigenous peoples and Canada, but was not persuaded that the duty of loyalty set out in Alberta Elders had been extended to all Indigenous peoples in all situations. In her view, it was “unfair to project this antiquated idea that Indigenous peoples are ‘wards of the state’” (Reasons at para. 115).
[58] She concluded that the fact that the Class and the victims were Indigenous was insufficient to automatically establish the existence of a fiduciary duty. She also noted that while the Class may be composed of vulnerable individuals in their own right, neither the statement of claim nor the relevant legislation supported the existence of a special relationship between the RCMP and the Class.
[59] As the first two elements for establishing a fiduciary relationship were not demonstrated, she found it unnecessary to deal with the third element.
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[76] I agree that the circumstances in Alberta Elders did not involve Indigenous peoples. The class in that case consisted of elderly residents in Alberta’s long-term care facilities who alleged that the government artificially inflated their accommodation charges to subsidize the cost of medical expenses. They had initiated a class action against the province of Alberta and several regional health authorities claiming a breach of fiduciary duty, negligence, bad faith in the exercise of discretion, and/or unjust enrichment.
[77] Even so, it remains that one of the questions before the Supreme Court of Canada was whether the pleading of a breach of fiduciary duty disclosed a cause of action, assuming the facts pled to be true. The Supreme Court examined the principles relating to the imposition of a fiduciary duty, including in the governmental context. As the pleadings of Ms. BigEagle contained allegations suggesting a fiduciary relationship between Indigenous peoples and the Crown, the motion judge referred to the principles set out by the Supreme Court to determine if an ad hoc fiduciary duty existed as a result of the relationship, and if so, whether it gave rise to a private law duty of care to the Class. The motion judge acknowledged the special relationship between Indigenous peoples and Canada, including the existence of the Crown’s fiduciary duty to Indigenous peoples with respect to their land, but agreed with the Supreme Court that vulnerability alone was insufficient to ground a fiduciary claim (Alberta Elders at para. 28).
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[98] The Supreme Court of Canada noted in Alberta Elders, “[f]iduciary duty is a doctrine originating in trust. It requires that one party, the fiduciary, act with absolute loyalty toward another party, the beneficiary or cestui que trust, in managing the latter’s affairs” (at para. 22). “The party asserting the duty must be able to point to a forsaking by the alleged fiduciary of the interests of all others in favour of those of the beneficiary, in relation to the specific legal interest at stake” (at para. 31). To hold that the RCMP has a fiduciary duty towards the Class would be incompatible with its duty to the public in general. . Canada (Attorney General) v. Jost
In Canada (Attorney General) v. Jost (Fed CA, 2020) the Federal Court of Appeal considered breach of fiduciary duty in a class action case against the federal Crown:[32] Fiduciary duty is a legal doctrine originating in trust law. It requires that one party (the fiduciary) act with absolute loyalty toward another party (the beneficiary) in managing the latter’s affairs: Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, [2011] 2 S.C.R. 261 at para. 22.
[33] Fiduciary obligations have been found to arise in the context of relationships having specific characteristics. These include some discretion or power residing in the fiduciary, the ability of the fiduciary to unilaterally exercise that discretion or power in a way that will affect the beneficiary’s interests, and the vulnerability of the beneficiary to the exercise of power: Elder Advocates, above at para. 27.
[34] The types of relationships that will give rise to a fiduciary duty are not closed. However, for a fiduciary duty to arise outside of previously established categories of fiduciary relationships, the purported fiduciary must clearly undertake to act in the best interests of the beneficiary, whether expressly, or by necessary implication: Elder Advocates, above at paras. 30-32, 36.
[35] There must also be a defined person or class of persons who are vulnerable to the fiduciary’s control, as well as a legal or substantial practical interest on the part of the beneficiary or beneficiaries that stands to be adversely affected by the alleged fiduciary’s exercise of discretion or control: Elder Advocates, above at para. 36.
[36] The Supreme Court has, however, also observed that the Crown’s broad responsibility to act in the public interest means that situations where it will be found to owe a duty of loyalty to a particular person or group will be rare: Elder Advocates, above at para. 44.
[37] According to the Attorney General, the Supreme Court has previously held that a fiduciary duty does not attach to the relationship between the government and members of a public sector pension plan: Professional Institute of the Public Service of Canada v. Canada (AG), 2012 SCC 71, [2012] 3 S.C.R. 660 at para. 142 [PIPSC].
[38] It is true that the Supreme Court concluded that a fiduciary duty did not arise on the facts of the PIPSC case. It is, however, important to note that PIPSC involved claims by various unions and associations seeking relief on behalf of their members that would require Canada to return some $28 billion in actuarial surpluses to government-run pension plans.
[39] It was in that context that the Supreme Court concluded that the Government of Canada did not owe a fiduciary duty to plan members with respect to the actuarial surpluses in the pension plans. In coming to this conclusion, the Supreme Court had particular regard to the requirement that the alleged fiduciary undertake, either expressly or impliedly, to act in accordance with a duty of loyalty. The Court observed that it was "“critical that the purported beneficiary be able to identify a forsaking of the interests of all others on the part of the fiduciary, in favour of the beneficiary, in relation to the specific interest at issue”": PIPSC, above at para. 124. In the absence of any such undertaking on the part of the Government, the Court found that the fiduciary claim could not succeed: PIPSC, above at paras. 124-127.
[40] The Supreme Court reiterated in PIPSC that an alleged duty of loyalty founded on the exercise of government power was "“inherently at odds”" with the Government’s duty to act in the best interests of Canadian society as a whole: above at para. 127. That said, the Court did not determine that a fiduciary relationship could never exist between the Government, as administrator of a pension plan, and the members of the plan. Indeed, the Court expressly stated that it was unnecessary to determine "“the precise ambit of any potential fiduciary duty that might arise between the government, as pension plan administrator, and the beneficiaries of the Plan or whether the relationship inherently carries with it some set of fiduciary obligations”": PIPSC, above at para. 120.
[41] Given that the Supreme Court has expressly left the door open to the possibility that the administrator of a governmental pension plan may, in some cases, owe a fiduciary duty to plan members, and subject to the comments below, it cannot be said at this point that it is plain and obvious that Mr. Jost’s fiduciary claim has no reasonable prospect of success.
[42] There is also jurisprudence from other courts that arguably supports Mr. Jost’s argument that the Crown owes a fiduciary duty to members of the Reserve Plan.
[43] That is, the Ontario Court of Appeal determined that the Crown owed a fiduciary duty to disabled military veterans when administering pension funds that had been paid to veterans and were being administered on their behalf: Authorson (Guardian of) v. Canada (AG) (2000), 2002 CanLII 23598 (ON CA), 215 D.L.R. (4th) 496, 58 O.R. (3d) 417 (C.A.). Authorson involved a class action brought on behalf of veterans whose pensions and allowances were administered for them by the federal Department of Veterans Affairs because the veterans were incapable of doing it for themselves. Although the Ontario Court of Appeal’s decision was subsequently overturned by the Supreme Court on other grounds, it is noteworthy that the Crown conceded before the Supreme Court that it did indeed act as a fiduciary vis-à-vis the veterans: Authorson v. Canada (AG), 2003 SCC 39, [2003] 2 S.C.R. 40 at paras. 2, 8.
[44] The facts in Authorson are admittedly different from the facts in this case. In Authorson, the funds had already been paid to the pensioners and were being administered on their behalf. That said, the decision of the Ontario Court of Appeal nevertheless leaves open the possibility that the Crown may, in certain situations, be found to owe a fiduciary duty to members of government-administered pension plans. This further supports my finding that it is not plain and obvious that the fiduciary claims advanced here have no reasonable chance of success.
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