



COURT OF APPEAL
    FOR ONTARIO

CITATION: Castrillo v. Workplace Safety and Insurance Board,
    2017 ONCA 121

DATE: 20170213

DOCKET: C60763

Hoy A.C.J.O., Lauwers and Benotto JJ.A.

BETWEEN

Pietro Castrillo

Plaintiff (Appellant)

and

Workplace Safety and Insurance Board

Defendant (Respondent)

Richard A. Fink and Alan McConnell, for the appellant

Neil Finkelstein, Caroline Zayid, and Ljiljana Stanic, for
    the respondent

Heard: September 16, 2016

On appeal from an order of Justice Edward P. Belobaba of
    the Superior Court of Justice, dated June 25, 2015.

Lauwers J.A.:

[1]

This is a proposed class action brought by the appellant, Pietro
    Castrillo, on behalf of a class of injured workers alleged to have been
    wrongfully denied the full extent of benefits to which they were entitled under
    the
Workplace Safety and Insurance Act, 1997
, S.O. 1997, c. 16, (the
    WSIA or the Act), by the respondent Workplace Safety and Insurance Board
    (WSIB or the Board). The action is pleaded in misfeasance in public office,
    bad faith, and negligence.

[2]

The motion judge struck the statement of claim without leave to amend
    under r. 21.01(1)(b) of
the
Rules of Civil Procedure
,

R.R.O. 1990, Reg. 194 as disclosing no cause of action
.
He considered the WSIBs decisions reducing
    the class members non-economic loss benefits (NEL) to be legal decisions
    that fall within the four corners of the privative clause in the WSIA, and
    therefore beyond court challenge.

[3]

For the reasons that follow, I would allow the appeal.

A.

The Factual and Procedural Context

[4]

The facts giving rise to the action are set out in the motion judges
    short endorsement. The appellant was working as a concrete finisher and a pipe
    layer when he sustained a shoulder injury in a work-related accident in October
    2011. He applied for and received the applicable economic loss benefits to
    which he was entitled under the WSIA. He also qualified for a NEL award because
    he was found to have suffered a permanent impairment leaving him with less
    than a full range of motion in his shoulder. The respondent determined the
    appellant was entitled to a 6% NEL lump sum award, but then reduced the award by
    50% to $1,229.50 because of a pre-existing condition, identified as
    osteoarthritis in the injured shoulder.

[5]

The appellant appealed administratively on the basis that the WSIB was
    wrong to reduce the NEL award. Since his pre-existing osteoarthritis had been
    asymptomatic before the work-related injury and had never affected his
    shoulders functionality, it was not a pre-existing impairment. The Appeal Resolution
    Officer allowed the appeal and restored the full amount of the NEL award
    without reduction, and the matter did not go forward to the Workplace Safety and
    Insurance Appeals Tribunal.

[6]

The appellant later learned there were a number of injured workers whose
    NEL awards were similarly reduced by the WSIB on the basis of so-called
    pre-existing conditions that were not true impairments, many of which were also
    reversed on appeal. The appellant discovered the reductions were the result of
    the implementation of an internal WSIB document, which he calls a secret
    policy. Through it, the WSIB adopted a broader interpretation of the term,
    pre-existing impairment, to include asymptomatic pre-existing conditions,
    which had previously been excluded. The appellant asserts this change in
    interpretation was illegally made in order to save WSIB money by reducing NEL
    awards.

[7]

The appellant commenced proceedings under the
Class Proceedings Act,
    1992
, S.O. 1992, c. 6.
The proposed
    class is defined as:

(a) All workers
    whose Non-Economic Loss (NEL) awards for workplace injuries were reduced by
    the Defendant due to pre-existing medical conditions that were not impairments
    negatively impacting upon their pre-accident functioning; and

(b) who also
    incurred expenses pursuing administrative appeals of the Defendants decision
    to reduce their NEL awards.

[8]

The appellant seeks declarations that the WSIB perpetrated a
    misfeasance in public office in how it handled the NEL claims of the class,
    breached its duty to act in good faith to the class, and, in the alternative,
    was negligent. The action seeks damages measured in part by the: legal fees,
    disbursements and other expenses they incurred in administrative proceedings
    overturning the Defendants decisions with respect to their claims for
    Non-Economic Loss awards, along with punitive, aggravated, exemplary and special
    damages.

[9]

The respondent brought a motion under
the
Rules of
    Civil Procedure
to strike the statement of claim, without leave to
    amend, under r. 21.01(1)(b), on the basis that it discloses no reasonable
    cause of action, and, under r. 21.01(3)(a), on the basis that the court has
    no jurisdiction over the subject matter of the action.
[1]
I note that the motion was not brought under r. 21.01(1)(a) for the
    determination, before trial, of a question of law raised by a pleading.

[10]

Based largely on what the motion judge saw as the strength of the
    privative clause in the WSIA, he concluded it was plain and obvious that the
    bad faith, misfeasance and negligence claims on the facts of this case as
    pleaded are certain to fail and should be struck without leave to amend under
    Rule 21.01(1). The motion judge did not mention r. 21.01(1)(b) in his reasons,
    but his order declares that the pleading does not disclose any reasonable
    cause of action.

[11]

The motion judges reasons must be read in the context of his introductory
    paragraph:

On the facts of this case, and given the scope and content of the
    s. 118 privative clause, it is plain and obvious and beyond doubt that the bad
    faith and misfeasance in public office claims (and the alternative claim in
    negligence) are not reasonable causes of action. I need not discuss the WSIBs
    additional submissions re jurisdiction, abuse of process, collateral attack, or
    damages (and how legal costs are not recoverable).

B.

Issues

[12]

There are two basic issues in this appeal, which arise with respect to
    each pleaded cause of action, being misfeasance in public office, bad faith and
    negligence:

1.

Is the cause of action properly pleaded?

2.

Does the privative clause in the WSIA prevent the
    appellant from pursuing the cause of action?

C.

Analysis

[13]

The motion judges over-arching error is that he dealt with this matter
    more as a summary judgment motion under r. 20 than as a motion to strike the
    amended statement of claim as disclosing no cause of action under r. 21.01(1)(b).
    He did not interpret the pleading generously, as the cases require, but instead
    deconstructed it for the purpose of determining whether the privative clause in
    the WSIA applied to oust the courts jurisdiction. This was an error in
    principle.

[14]

The framework for assessing whether to strike a pleading under r. 21.01(b)
    of the
Rules of Civil Procedure
on the ground that it discloses no reasonable cause of action is set out by
    Paul M. Perell and John W. Morden,
The Law of Civil Procedure in Ontario
,
    2d ed. (Markham: LexisNexis Canada Inc., 2014), at p. 532:

The following principles apply to a Rule 21 motion to strike a
    pleading for failing to disclose a reasonable cause of action or defence: (a)
    the material facts pleaded must be deemed to be proven or true, except to the
    extent that the alleged facts are patently ridiculous or incapable of proof;
    (b) the claim incorporates by reference any document pleaded and the court is
    entitled to read and rely on the terms of such documents as if they were fully
    quoted in the pleadings; (c) a claimant is not entitled to rely on the
    possibility that new facts may turn up as the case progresses; the facts
    pleaded are the basis upon which the claim is evaluated (d) [the] novelty of
    the cause of action is of no concern at this stage of the proceeding; (e) the
    statement of claim must be read generously to allow for drafting deficiencies;
    and (f) if the claim has some chance of success, it must be permitted to
    proceed.[Internal citations omitted.]

[15]

The claim will only be struck where it is plain and obvious that it
    has no reasonable prospect of success:
Hunt v. Carey Canada Inc.
,
    [1990] 2 S.C.R. 959;
R v. Imperial Tobacco Canada Ltd.
, 2011 SCC 42,
    [2011] 3 S.C.R. 45, at paras. 17-19;
Taylor v. Canada (Attorney General)
,
    2012 ONCA 479, 111 O.R. (3d) 161, at para. 22; and
Trillium Power Wind Corporation
    v. Ontario (Natural Resources)
, 2013 ONCA 683, 117 O.R. (3d) 721, at para.
    30. While the court must accept as true the material facts as pleaded, this
    obligation does not extend to bald conclusory statements of fact unsupported by
    material facts.

[16]

I first consider misfeasance in public office, next bad faith, and then
    negligence.

(1)

Misfeasance in Public Office

(a)

Is the Cause of Action Properly Pleaded?

[17]

To set the legal context, I observe that this court succinctly expressed
    the purpose of the tort of misfeasance in public office in
Freeman-Maloy

v. Marsden
(2006), 79 O.R. (3d) 401, 267 D.L.R. (4th) 37 (Ont. C.A.),
    at para. 10:

The tort of misfeasance in a public office is founded on the
    fundamental rule of law principle that those who hold public office and
    exercise public functions are subject to the law and must not abuse their
    powers to the detriment of the ordinary citizen. As Lord Steyn put it in
Three
    Rivers District Council v. Bank of England (No. 3)
, [2000] 2 W.L.R. 1220,
    at 1230 The rationale of the tort is that in a legal system based on the rule
    of law executive or administrative power may be exercised only for the public
    good and not for ulterior and improper purposes. The underlying purpose of
    the tort of misfeasance in a public office is to protect each citizen's
    reasonable expectation that a public officer will not intentionally injure a
    member of the public through deliberate and unlawful conduct in the exercise of
    public functions:
Odhavji
, [2003 SCC 69, [2003] 3 S.C.R. 263]
supra
at para. 30.

[18]

The motion judge did not set out the elements of the cause of action of
    misfeasance in public office nor determine whether the elements were properly
    pleaded.

(i)

The General Principles

[19]

To pass scrutiny under r. 21.01(1)(b), a pleading of misfeasance in
    public office must allege facts capable of establishing the ingredients of the
    tort, in addition to the usual tort requirements of causation and damages. The
    ingredients are: (1) the defendant must be a public official; (2) the claim
    must arise from the exercise of power as a public official; and (3) the public
    official must have acted with malice or bad faith so as to satisfy the mental
    element:
Freeman-Maloy
, at para. 11.

[20]

Another way of framing the test is that the plaintiff must show: first,
    the public official was engaged in unlawful conduct in the exercise of his or
    her public functions; and, second, the public official was aware that the
    conduct in question was unlawful and was likely to injure the plaintiff:
Trillium
    Power Wind Corporation
, at paras. 38-39, drawing on the Supreme Courts
    decision in
Odhavji Estate v. Woodhouse
, at paras. 28, 30 and 32; see
    also,
Pikangikum First Nation v. Nault
, 2012 ONCA 705, 298 O.A.C. 14,
    at para. 54, leave to appeal refused, [2013] S.C.C.A. No. 10;
St. Elizabeth
    Home Society v. Hamilton (City)
, 2010 ONCA 280, 319 D.L.R. (4th) 74, at
    para. 20;
Granite Power Corporation v. Ontario
(2004), 72 O.R. (3d)
    194 (C.A.), leave to appeal refused, [2004] S.C.C.A. No. 409, at paras. 37-39.

(ii)

The Amended Statement of Claim

[21]

As to the necessary tort elements of damages and causation, the
    appellant conceded in oral argument that he is not seeking more compensation in
    terms of a NEL award, because his appeal of the reduced NEL award had already
    been allowed. However, he argues that to succeed in the internal appeal, he was
    forced to incur unnecessary legal and other expenses he seeks to recover as
    damages in this action. Other class members could have claims for both a higher
    NEL award and similar incidental costs.

[22]

The pleading alleges that WSIB is a public body and its employees
    were at all material times public office holders for which it is both
    directly and vicariously liable for the bad faith acts and omissions of its
    employees.

[23]

The starting point for a detailed discussion of the pleading is the
    WSIA, which defines impairment and permanent impairment in s. 2:

impairment means a physical or functional abnormality or loss
    (including disfigurement) which results from an injury and any psychological
    damage arising from the abnormality or loss;

permanent impairment means impairment that continues to exist
    after the worker reaches maximum medical recovery.

[24]

Section 46(1) provides for the NEL benefit:

46(1)
If a workers injury
    results in permanent impairment, the worker is entitled to compensation under
    this section for his or her non-economic loss.

[25]

Section 47(1) requires the Board to determine the degree of his or her
    permanent impairment, and s.47(2) provides that the determination must be made
    in accordance with the prescribed rating schedule. Section 18 of O. Reg. 178/98
    under the
WSIA
prescribes the American Medical Association
Guides to the Evaluation of
    Permanent Impairment
(third edition revised) as it read on
    January 14, 1991, as the rating schedule for impairment.

[26]

The WSIB had a policy for dealing with pre-existing impairments,
    Operational Policy 18-05-05 (Effect of a Pre-Existing Impairment),  which
    allowed for reductions in NEL benefits to account for pre-existing impairments.
    The pleading states that under that policy, WSIB was permitted to discount NEL
    awards to injured workers on account of pre-existing impairments that were
    measurable. This was [previously] done by calculating the clinical impairment
    before the injury and performing a subtraction from the post-injury
    impairment.

[27]

As to the WSIBs acts or omissions, the pleading alleges, at paras. 17
    and 19, that the WSIBs decision to reduce the appellants NEL award was the
    result of a secret policy adopted by the [WSIB] and revealed in an internal Orientation
    article intended for its staff. This secret policy was to aggressively reduce
    legitimate NEL awards by interpreting Operational Policy 18-05-05 (Effect of a
    Pre-Existing Impairment) to allow for reductions due to pre-existing conditions
    that had no negative impact or impairment on a workers pre-accident
    functioning. The secret policy changed the way in which the WSIB interpreted
    Operational Policy 18-05-05, by equating the technical term impairment with
    condition. This change swept in people like the appellant, whose pre-existing
    condition was asymptomatic and did not interfere with or impair the
    functionality of his shoulder for work purposes.

[28]

The introduction of this new approach in the secret policy was done
    without legal authority, and was pleaded to be: illegal as being contrary to
    the WSIA and its regulations. In particular, the pleading notes that:

From a medical perspective, condition is a non-specific term
    that does not necessarily denote any change in a persons health status. In
    contrast, an impairment is a term that does denote a specific change.

[29]

Moreover, the pleading asserts that the approach is inconsistent with that
    prescribed by the American Medical Association,
Guides to the Evaluation of
    Permanent Impairment
, 3rd ed. (American Medical Association, 1990) (AMA Guides).

[30]

The AMA Guides states, at s. 1.1:

As used in the
Guides
, impairment means an
    alteration of an individuals health status that is
assessed by medical
    means
; disability,
which is

assessed by non-medical means
,
    is an alteration of an individuals capacity to meet personal, social or
    occupational demands[.](Emphasis in original.)

[31]

The AMA Guides states, at s. 2.1:

According to the principles of the
Guides
, the first
    step in assessing an impairment is a thorough medical evaluation, with
    particular attention to the complete clinical and nonclinical history of the
    medical condition(s)



The second step in assessing the impairment is analyzing the
    history and the clinical and laboratory findings to determine the nature and
    extent of the loss, loss of use of, or derangement of the affected body part,
    system, or function.

The third step is comparing the results of the analysis with
    the criteria specified in the
Guides
for the particular body part,
    system, or function.

[32]

Further, the AMA Guides states, at s. 2.2:

Impairment should not be considered permanent until the
    clinical findings determined over a period of time, usually 12 months, indicate
    that the medical condition is static and well stabilized.

[33]

The pleading states that the WSIB: has no authority to expand the
    definition of impairment to discount for non-measurable pre-existing conditions,
    because the AMA Guides does not equate impairment with condition. By
    defining the term disability, the AMA Guides specifically does not intend to
    import the word condition into impairment.

[34]

The pleading adds that effectively expanding the definition of
    impairment was: illegal as being contrary to the WSIA and its regulations. It
    points out that WSIB implicitly admitted its lack of authority by amending its
    policies effective November 1, 2014 in an attempt to give the authority it
    previously did not have regarding deductions for conditions (WSIB Operational
    Policy 10-05-03). The new policy, entitled Determining the Degree of
    Permanent Impairment, is a good deal more elaborate than the secret policy. (I
    note that the appellant does not challenge the legality of the new policy. I
    read this as confining the claims in this action to the period in which the secret
    policy was operating.)

[35]

In addition to alleging lack of legal authority, the pleading states
    WSIBs actions were motivated by a desire to reduce costs, and: the Defendant
    knew it was acting illegally and that its actions would harm the Plaintiff and
    Class, which makes its actions therefore, malicious in nature.

[36]

In effect, the pleading asserts that reducing costs was an improper
    purpose for WSIBs change in the interpretation of its policy. In doing what it
    did, the pleading asserts WSIB breached its duty of good faith to the appellant
    and class, who as injured workers were in a vulnerable position and dependent
    upon the Defendant to appropriately exercise its statutory responsibility in
    good faith.

(iii)

The Principles Applied

[37]

WSIB concedes it owes a general public law duty, to the public and to
    workers, to act in good faith, and not maliciously or in bad faith. I do not
    take the WSIB as disputing the allegations in the pleading that it is a public
    body and its employees are public officials; these are constituent elements of
    the tort, as is the allegation that the appellant has suffered damages.

[38]

With respect to the requirement of a culpable mental state, the
    respondent draws on
Odhavji,
at
    para. 28, where the Supreme Court said: In order for the conduct to fall within
    the scope of the tort, the officer must deliberately engage in conduct that he
    or she knows to be inconsistent with the obligations of the office.

[39]

The law, as set out in
Freeman-Maloy
, is that the claimant need
    not allege or prove actual malice in order to make out the mental element of
    the cause of action of misfeasance, only bad faith. Although the pleading in
    this case does assert that WSIBs actions were malicious in nature, it is
    really focused on WSIBs bad faith. As I interpret the pleading, the assertion
    of bad faith arises from the allegation that WSIB made the policy change for an
    improper purpose and without due authority.

[40]

WSIB challenges the adequacy of the pleading on three bases. First, it asserts
    that the pleading fails to plead facts necessary to support a claim for bad
    faith or misfeasance in public office. WSIB adds: The appellant makes bald
    allegations that actions were taken in bad faith, and has not provided any
    facts in support. In oral argument and in the factum, WSIB asserts that it is
    not sufficient for the appellant to baldly claim a law was breached.

[41]

In my view, WSIBs baldness challenge to the pleadings falls short for two
    reasons. First, many of the specific facts would be in the respondents
    knowledge and would become evident once the statement of defence is served, and
    document production and discovery takes place, as this court observed in
Trillium Power Wind Corporation
, at paras.
    60-61:

We are alive to the problem pointed out by the Federal Court of
    Appeal in
St. Johns Port Authority

v. Adventure Tours Inc.,
2011 FCA 198, per Stratas J.A., at para. 63 that a bald pleading is especially
    problematic in cases alleging abuse in public office. Stratas J.A. pointed out
    that: it is all too easy for a plaintiff who is aggrieved by governmental
    conduct to assert, perhaps without any evidence at all, that the government
    acted, knowing it did not have the authority to do so, intending to harm
    the plaintiff. That said, we do not agree with the motion judge that the
    pleading is completely bald. This pleading is detailed and as fact-specific
    as the appellant can be at this stage of the proceeding. The allegations link
    to actual events, documents and people.

To quote Moldaver J.A., in
Granite Power
at para. 40,
    on the facts pleaded, including the particulars, there exists a narrow window
    of opportunity for [the appellant] to make out its claim in misfeasance. The
    appellant cannot provide more particulars now because many of the necessary
    supporting facts would be within Ontario's knowledge and control, and there has
    been no document production or discovery.

[42]

Second, the appellant relies in part on some known facts that are rooted
    in the legislation, the regulations, the policies and the documents in order to
    found its allegations about improper purpose and bad faith.

[43]

At this stage of the proceeding, before the defendant has pleaded and
    before document production and discovery, the pleading is adequate. To
    paraphrase
Trillium Power Wind Corporation
, at para. 61, the appellant
    cannot provide more particulars now because many of the necessary supporting
    facts would be within WSIBs knowledge and control, and will be revealed as the
    process unfolds.

[44]

The second ground on which WSIB disputes the adequacy of the pleading relates
    to improper purpose. WSIB takes the position that the only improper purpose
    alleged by the Appellant is an attempt to cut costs, which it states is
    inadequate in pleading terms.

[45]

I would find the pleading of an improper purpose to be adequate in
    strictly pleadings terms, since there is a line of authority supporting the
    proposition that a public authority cannot use its spending power in a manner
    inconsistent with its mandate:
Re Doctors
    Hospital and Minister of Health
(1976), 68 D.L.R. (3d) 220 (Ont.
    Div. Ct.). This is a specific application of the more general proposition that
    a statutory power must only be used for a proper purpose: see
Re Multi-Malls Inc. et al. and
    Minister of Transportation and Communications et al

(1977), 14 O.R. (2d) 49
(C.A.);
Oakwood Development Ltd. v. St. François Xavier (Rural
    Municipality)
, [1985] 2 S.C.R. 164, at para. 15;
Roncarelli v.
    Duplessis
, [1959] S.C.R. 121, at p. 140; and
Padfield v Minister of
    Agriculture, Fisheries and Food
, [1968] A.C. 997 (H.L.) at p. 1030.

[46]

However, WSIB responds that s. 1 of the Act obliges the Board to
    accomplish its purposes in a financially responsible and accountable manner. I
    set out s. 1 to provide context:


1.
The purpose of this Act is to accomplish the following
in a financially
    responsible and accountable manner
:

1.       To promote health and safety in workplaces.

2.       To
    facilitate the return to work and recovery of workers who sustain personal
    injury arising out of and in the course of employment or who suffer from an
    occupational disease.

3.       To
    facilitate the re-entry into the labour market of workers and spouses of
    deceased workers.

4.       To
    provide compensation and other benefits to workers and to the survivors of
    deceased workers. (Emphasis added.)

[47]

WSIB asserts that the underlined words in s. 1 of the Act provide a full
    answer, and permit the Board to reduce the payment of benefits to injured
    workers in order to save money.

[48]

I would reject this argument for two reasons. First, this is not a valid
    argument in a pleadings motion under r. 21.01(1)(b). It is a substantive
    argument on a question of law that would normally be pursued on a summary
    judgment motion under r. 20, if not on a motion under r. 21.01(1)(a) for the
    determination, before trial, of the question of law raised by a pleading. That
    is not, however, the way in which WSIB pursued this motion, nor is it the basis
    upon which the motion judge decided it.

[49]

Second, what the legislature intended to be the reach of the expression,
    in a financially responsible and accountable manner, requires a fuller
    exposition than would be permitted in a pleadings motion. The exercise of
    statutory power is subject to principles, and any decision to reduce benefits would
    engage possible limits that have not been laid out in the argument, and on
    which I will say no more. It would not be possible, on this record, to conclude
    that the legislature intended to permit the WSIB to arbitrarily, as is alleged,
    adjust a single category of statutory benefits while leaving all the others
    untouched.

[50]

The third ground, on which the WSIB challenges the pleading, is by characterizing
    the appellants complaints as those of a disgruntled claimant who seeks to
    elevate his complaint beyond the reach of the privative clause by gratuitously
    adding in allegations of bad faith and misfeasance in public office. This, WSIB
    asserts, is a collateral attack on its decision regarding his entitlement.

[51]

I do not take that view of the appellants claims. He is not complaining
    about a specific decision regarding his personal entitlement, as occurred in,
    for example,
Aird. v. WSIB
,
Aird v. WSIAT
, 2010 ONSC 3600, at paras.
    14-15, and
Pagourov v. Science Applications
    International Corporation
,
2007 CanLII 7398, at para. 12, affd 2007 ONCA
    745. Nor do I see his claims as a collateral attack to circumvent the WSIB as
    an expert tribunal, as described in
Garland
    v. Consumers Gas Co
., 2004 SCC 25, [2004] 1 S.C.R. 629, at para.
    71 and
R. v. Consolidated Maybrun Mines Ltd
.,
    [1998] 1 S.C.R. 706. Nor is this pleading linked to the specific circumstances
    of the appellants complaint; it challenges the legality of the WSIBs actions
    across a category of benefits and a class of persons. I would see this class
    action as categorically different, not as a collateral attack on the WSIBs
    specific determination of the appellants entitlement.

[52]

In my view, the appellant has adequately pleaded the cause of action of
    misfeasance in public office and has provided adequate particulars of the
    claim.

(b)

Does the Privative Clause in the WSIA Prevent the Appellant from
    Pursuing Misfeasance in Public Office?

[53]

The respondent makes two submissions with respect to the privative
    clause in the WSIA. First, it asserts that: the Act ousts the jurisdiction of
    the court in favour of the Board in this case. (I assume this was the original
    basis for WSIBs challenge of the appellants pleading under r. 21.01(3)(a) of
    the
Rules of Civil Procedure
, that: the court has no jurisdiction
    over the subject matter of the action.) Second, WSIB argues that the Act prevents
    the court from awarding the appellant incidental costs in relation to
    proceedings under it.

[54]

In respect of the first issue, the privative clause in the WSIA, s. 118,
    is strongly worded:

118.  (1)

The Board has exclusive jurisdiction to
    examine, hear and decide all matters and questions arising under this Act
,
    except where this Act provides otherwise.


(2)
Without limiting the generality of subsection (1),
the Board has exclusive
    jurisdiction to determine
the following matters:



2.       Whether personal injury or death has been
    caused by an accident.

3.       Whether an accident arose out of and in
    the course of an employment by a Schedule 1 or Schedule 2 employer.



7.       Whether loss of earnings has resulted
    from an injury.

8.
Whether permanent impairment has resulted
    from an injury, and the degree of the impairment
.




(3)

An
    action or decision of the Board under this Act is final and is not open to
    question or review in a court.



(4)

No
    proceeding by or before the Board shall be restrained by injunction,
    prohibition or other process or procedure in a court or be removed by
    application for judicial review or otherwise into a court. (Emphasis added.)

(i)

General Principles

[55]

The question of whether legislation can oust the jurisdiction of a
    Superior Court in a manner consistent with the constitutional principle of the
    rule of law was addressed by the Supreme Court in
Crevier v. A.G. (Quebec) et al.
, [1981] 2 S.C.R. 220, at pp. 236-238.
    This is not an antique proposition that has been superseded by the flow of time
    and jurisprudence. The court reiterated it in
Dunsmuir v. New Brunswick
, 2008 SCC 9, [2008] 1 S.C.R. 190,
    at paras. 27-31, and 52.

[56]

In
Crevier
, the Supreme
    Court considered a privative clause in the Professional Code of Quebec that
    excluded recourse to the supervisory authority of the Quebec Superior Court.
    Chief Justice Laskin, on behalf of the court, held, at p. 234:

In my opinion, where a provincial Legislature purports to
    insulate one of its statutory tribunals from any curial review of its
    adjudicative functions, the insulation encompassing jurisdiction, such
    provincial legislation must be struck down as unconstitutional by reason of
    having the effect of constituting the tribunal a s. 96 [of the
Constitution
    Act 1867
] court.

[57]

The underlying logic was expressed by Martland J. in
Executors of Woodward Estate v. Minister of Finance
,
    [1973] S.C.R. 120, at p. 127, to which Laskin C.J. referred to in
Crevier
,
    at p. 236:

[I]f such a tribunal has acted beyond its jurisdiction in
    making a decision, it is not a decision at all within the meaning of the
    statute which defines its powers because Parliament could not have intended to
    clothe such [a] tribunal with the power to expand its statutory jurisdiction by
    an erroneous decision as to the scope of its own powers.

[58]

Although
Crevier
concerned a tribunal exercising an
    adjudicative function, the logic applies equally to agencies that do more than
    adjudicate, but also make policy and regulate, like the WSIB.

(ii)

The Privative Clause and the
    Motion Judges Reasons

[59]

The motion judge stated his view that the WSIA
:
provides a complete
    and comprehensive code for workplace injury compensation determinations, which
    clearly reflects legislative intent. He observed that the WSIB and the Appeal
    Tribunal are protected by the toughest privative clause known to Ontario law,
    citing this courts description of s. 118 in
Rodrigues
    v. Ontario (Workplace Safety and Insurance Appeals Tribunal)
, 2008 ONCA 719,

92 O.R. (3d) 757, at para. 22.

[60]

As noted above, the privative clause in the WSIA, s.118, is strongly
    worded. The motion judge identified the gist of the appellants claim as
    this: the WSIBs interpretation of the applicable Regulation and what
    constitutes a pre-existing impairment was wrongly decided. This he
    interpreted to be the true import of the language in the statement of claim,
    [which] includes words such as illegal had no legal authority [and] contravened
    the Regulation. In the motion judges view: This claim falls squarely within
    the four corners of the privative clause and cannot be considered or reviewed
    by this Court. I interpret this decision as accepting WSIBs argument that the
    courts jurisdiction was ousted by the privative clause, although the motion
    judge did not use that word.

[61]

Further, the motion judge interpreted the allegations of bad faith,
    misfeasance in public office and negligence as relating to how the Board handled
    the claims of the plaintiff and Class for non-economic loss awards, to be: legal
    decisions that fall within the four corners of the privative clause.

[62]

This too, in my view, must be read as a finding by the motion judge that
    the privative clause ousted the courts jurisdiction.

[63]

Based on his view of the comprehensive reach of the privative clause,
    the motion judge concluded, it is therefore plain and obvious that the bad
    faith, misfeasance and negligence claims on the facts of this case as pleaded
    are certain to fail and should be struck without leave to amend under Rule
    21.01(1).

(iii)

The Principles Applied

[64]

I find the motion judges decision to be inconsistent with his other
    findings, first, that: the WSIBs otherwise strong privative clause would not
    preclude a bad faith or misfeasance in public office claim in appropriate circumstances,
    and second, that: If the WSIB crosses the line and abuses its power, it is
    not immune from claims filed in Court.

[65]

As I observed at the outset, the motion judges overarching error was in
    approaching this motion as though it were a summary judgment motion rather than
    a motion to strike the amended statement of claim as disclosing no cause of
    action under r. 21.01(1)(b). His determination amounts to a substantive legal
    decision that the appellant has no chance of success, based on the facts of
    this case as pleaded, even if, as I have found, the claim of misfeasance in
    public office has been properly pleaded. With respect, this is not an available
    determination in a pleadings motion. It is an argument that could be made in
    the context of a motion for summary judgment, or perhaps in a motion under r. 21.01(1)(a),
    but that is not what happened here.

[66]

The cases make it clear that, as a general principle, the legislature
    cannot completely oust the jurisdiction of the Superior Court, including, most
    pertinently, an allegation of misfeasance in public office related to its use
    of statutory power for an improper purpose.

[67]

It is, nonetheless, possible that the specific determinations made by
    the WSIB in this case could ultimately be found to be a proper use of the
    Boards authority, once the evidence is in about who did what, when and why.
    One would expect those facts to be revealed through the statement of defence,
    and through the document production and discovery process. Although the
    appellant has tendered a secret policy, consisting of three pages of the
    Boards orientation manual, the Board might well be found on the evidence to have
    taken an even-handed and fully authorized approach to its reduction of NEL benefits.
    These are not matters that could or should be assessed on a pleadings motion.

[68]

I now turn to WSIBs second argument, which is that the appellant cannot
    succeed in its claim for reimbursement of costs thrown away in relation to the
    pursuit of his appeal rights under the WSIA, because the Act forecloses an
    award of legal costs.

[69]

I agree with the Board that s. 133 of the Act permits the WSIB to pay
    reasonable travel and living expenses of, and other allowances for, (a) a
    worker and his or her witnesses, among others, and that the Board has
    repeatedly held that other allowances do not include legal costs: see
Canada (Canadian Human Rights Commission) v. Canada
    (Attorney General)
,
2011 SCC 53, [2011] 3 S.C.R. 471, at para. 40; and
Decision

168/92
, [1992] O.W.C.A.T.D. No. 271.

[70]

However, the claim for the payment of incidental expenses by way of
    damages in this case is outside the process established by the Act altogether.
    If the WSIB has conducted itself in a way that takes it outside of the shelter
    of the privative clause, which is the appellants allegation in the amended
    statement of claim, the argument is that the Board cannot shield itself under s.
    133 of the WSIA in respect of the damages claim. The fact that the damages
    claim is measured by costs thrown away might not negate the claim.

(2)

Bad Faith

(a)

Is the Cause of Action Properly
    Pleaded?

[71]

The amended statement of claim tends to lump together the allegation
    that the WSIB committed a breach of duty to act in good faith with the
    allegation of misfeasance in public office. The appellant pleads that the
    Board owed a duty of good faith to the appellant and class, who as injured
    workers were in a vulnerable position and dependent upon the Defendant to
    appropriately exercise its statutory responsibility in good faith. The
    pleading states that the WSIB and its employees have a duty to act in good
    faith in exercising their statutory responsibilities, and that the Board is
    both directly and vicariously liable for the bad faith acts and omissions of
    its employees.

[72]

The appellant proffers two authorities for the proposition that there is
    a free standing cause of action for breach of a duty of good faith. The first
    is
Whiten v. Pilot Insurance Co
.,
    2002 SCC 18, [2002] 1 S.C.R. 595. That case concerned the availability of a bad
    faith claim in the context of an insurance contract, and in my view has no
    application here.

[73]

The second case is
Gouthro v. Workplace Safety and Insurance Appeals
    Tribunal et al
, 2014 ONSC 7289 (Div. Ct.), in which the applicants claim
    for judicial review was dismissed on the basis that the age limitation on the benefits
    set out in s. 43 of the WSIA did not contravene s. 15(1) of the
Charter
. The case did not deal with the
    issue of good faith.

[74]

I agree with the WSIBs submission that bad faith is not, in itself, a
    free standing cause of action:
Alberta v.
    Elder Advocates of Alberta Society
, 2011 SCC 24,
[2011] 2 S.C.R. 261, at
    para. 78. There, the Supreme Court said that bad faith, in tort, is an element
    of misfeasance in public office. The elements of bad faith are therefore
    properly pleaded as incidental to the claim in misfeasance in public office,
    but the free standing claim for relief set out at paras. 51-57 of the amended
    statement of claim should be struck. I would grant leave to amend, but only for
    the appellant to better tie the bad faith allegation to the claim of
    misfeasance in public office, if so advised.

[75]

In light of this conclusion, since the bad faith allegation folds into
    the misfeasance in public office claim, I need not undertake a separate
    analysis of the reach of the privative clause respecting bad faith.

(3)

Negligence

(a)

Is the Cause of Action Properly
    Pleaded?

[76]

The appellant pleads negligence in the alternative to his claim for
    misfeasance in public office. The pleading is brief:

62.     If it is determined that the Defendant did not commit a
    misfeasance in public office, which is not admitted, the Plaintiff pleads in
    the alternative that the Defendant was negligent in how it reduced the NEL
    awards of the Plaintiff and the Class.

63.     The Defendant owed the Plaintiff and the Class a duty
    of care arising from the relationship created when the Plaintiff and Class
    became recipients of benefits under the compulsory workers compensation scheme
    established pursuant to the
WSIA
and administered by the Defendant.

64.     The Defendant breached the duty of care and failed to
    meet the requisite standard of care it owed the Plaintiff and Class when it
    negligently decided that Operational Policy 18-05-06 (Effect of a Pre-Existing
    Impairment) allowed for the reduction of NEL awards due to pre-existing conditions
    that had no negative impact or impairment on a workers pre-accident
    functioning.

[77]

The respondent submits that it owes no private duty of care to
    individual workers: the Boards role in interpretive and adjudicative, and its
    role in administering statutory benefits is inconsistent with a finding of a
    private law duty of care.

[78]

In order to establish a duty of care in negligence, three elements are
    necessary: (1) The harm complained of must have been reasonably foreseeable;
    (2) There must have been sufficient proximity between the plaintiff and the
    defendant that it would be fair and just to impose a duty of care; and (3)
    There must be no residual policy reasons for declining to impose such a duty:
Williams v. Toronto (City)
, 2016 ONCA 666, 402 D.L.R. (4th) 678;
Cooper v. Hobart
, 2001 SCC 79, [2001] 3
    S.C.R. 537;
Edwards v. Law Society of Upper
    Canada
, 2001 SCC 80, [2001] 3 S.C.R. 562;
Childs v. Desormeaux
, 2006 SCC 18, [2006]
    1 S.C.R. 643;
Syl Apps Secure Treatment
    Centre v. B.D.
, 2007 SCC 38, [2007] 3 S.C.R. 83; see also
Anns v. Merton London Borough Council
,
    [1978] A.C. 728 (H.L.); and
Kamloops (City
    of) v. Nielsen
, [1984] 2 S.C.R. 2.

[79]

There is no real issue in this case about the first element,
    foreseeability. The WSIB knew precisely what the effects would be on the class.

[80]

As this court noted about the second
Cooper
element of
    proximity: [T]he proximity inquiry will focus initially on the applicable
    legislative scheme and secondly, on the interactions, if any, between the
    regulator or governmental authority and the putative plaintiff:
Taylor v. Canada (Attorney General)
, 2012
    ONCA 479, 111 O.R. (3d) 161, at para. 75. In terms of this courts language in
Taylor
, what must be assessed are the
    interactions between WSIB and the class members. Does the Boards involvement
    in evaluating the claims of the class members bring the Board into relational
    proximity to them?

[81]

The third
Cooper
element considers whether there
    residual policy reasons to decline to impose a duty of care on WSIB. These are
    not concerned with the relationship between the parties, but with the effect of
    recognizing a duty of care on other legal obligations, the legal system and
    society more generally:
Cooper
,
    at para. 37: see also
Hill

v. Hamilton
‑
Wentworth Regional Police Services Board
, 2007
    SCC 41, [2007] 3 S.C.R. 129, at para. 31;
Syl
    Apps
, at para. 32; and
Fullowka v.
    Pinkertons of Canada Ltd.,
2010 SCC 5, [2010] 1 S.C.R. 132
, at para. 57.

[82]

Justice Cromwell explained in
Fullowka
,
    at para. 57, that in order to oust a
prima facie
duty of care once the first two
Cooper
elements have been established in the plaintiffs favour, the residual policy
    considerations must be more than speculative. He stated: They must be
    compelling; a real potential for negative consequences of imposing the duty of
    care must be apparent.

[83]

The analysis of the second and third
Cooper
elements is both
    fact and policy intensive in the context of a statute, as this court noted in
Williams
and as the case law demonstrates. That analysis was not undertaken by the
    motion judge or by the parties.

[84]

The WSIB has not satisfied me that the appellant has inadequately
    pleaded the elements of a negligence claim against the WSIB. The pleading
    refers to the relationships and to the interactions between the Board and the
    class members in the statutory context. The stage is set for the development of
    evidence relating to the application of the second and third
Cooper
elements.

(b)

Does the Privative Clause in the WSIA Prevent the Appellant from
    Pursuing Negligence?

[85]

I am not persuaded that the application of s. 118 of the WSIA leads to the
    result that the appellants negligence claim has no reasonable prospect of
    success. I note that s. 179 supports the argument that the WSIB is open to a
    negligence suit in the proper circumstances. It provides:

179. (1)
No action or other proceeding for
    damages may be commenced against any of the following persons for
an act or
    omission done or omitted by the person in good faith in the execution or
    intended execution of any power or duty under this Act
:

1. Members of the board of directors, officers
    and employees of the Board.

...

5. Physicians who conduct an assessment under
    section 47 (degree of permanent impairment).

6. Persons who are engaged by the Board to
    conduct an examination, investigation, inquiry, inspection or test or who are
    authorized to perform any function.

(2)

Subsection
    (1) does not relieve the Board of any liability to which the Board would
    otherwise be subject in respect of a person described in paragraph 1, 4, 5 or 6
of subsection (1).



(4)
No action or other proceeding may be
    commenced against a health care practitioner, hospital or health facility for
    providing information under section 37 or 47 unless he or she or it acts
    maliciously. (Emphasis added.)

[86]

Section 179 does shield certain people from personal liability for acts
    and omissions undertaken in good faith. But it also clearly recognizes that the
    Board may be vicariously liable for any such actionable acts or omissions.

D.

Disposition

[87]

For these reasons, I would allow the appeal and set aside the motion
    judges order striking the amended statement of claim without leave to amend
    and dismissing the action. However I would strike paras. 51-57 of the amended
    statement of claim relating to the bad faith claim, with leave to amend, in
    accordance with these reasons. The parties do not seek costs.

P. Lauwers J.A.

I agree Alexandra Hoy
    A.C.J.O.

I agree M.L. Benotto

Released: February 13, 2017





[1]

The motion judge did not mention

sub-rule
    21.01(3)(a) of the
Rules of Civil Procedure
in his reasons, and the
    respondent did not raise it in the factum or in oral argument. I do not address
    it further, except to observe that it is usually invoked where an arbitration
    clause or a forum selection clause is in issue, which is not the case here.


