The May 15th decision of the Ontario Superior Court (Divisional Court) in Smith v. Casco, 2010 ONSC 2584 underscores the importance of using prescribed forms for spousal waivers.
Jim Smith was a long-term employee of Casco who decided to retire at age 58 effective July 1, 2000. He was then in good health. Mrs. Smith was primarily employed as a housewife. She had a grade nine education. Mr. Smith completed grade ten.
Without discussing the election with his wife, Mr. Smith elected a pension with a five year guarantee which did not include a survivor pension for her beyond the guarantee period of July 1, 2005. She signed a waiver on June 14, 2000 when her husband came home on his lunch hour without reading it over carefully. She did not speak to anyone at Casco about the waiver or seek legal advice, although the form suggested that both parties do so.
Mr. Smith was diagnosed with cancer in November of 2003 and unfortunately died on December 3, 2003. His pension terminated in June 2005. At trial, the judge found that until Mr. Smith’s death, the Smiths were living beyond their means, using up their capital in order to support their lifestyle.
The trial judge also concluded that the company breached its duty of care to the respondent by failing to properly advise her of the implications of signing the survivor pension waiver. In doing so, he applied the reasoning in Deraps v. Labourers Pension Fund of Central and Eastern Canada 179 D.L.R. (4th) 168 (Ont. C.A.).
Furthermore, the trial judge also determined that the survivor pension waiver form tendered by the company was not as easy to understand as the form approved by the Superintendant of Financial Services. He found that even if the respondent had read the form, she would not have been able to understand it without independent legal advice. Mrs. Smith was awarded damages for negligent misrepresentation of $17,949.97 plus a monthly pension during her lifetime of $1,654.93 and fixed costs at $65,000.
Writing for the majority of the Divisional Court, Mr.Justice Matlow ruled that use of a waiver form that differs substantially from the approved form was fatal to the success of Casco’s appeal.
“The implied mandatory statutory requirement that the waiver form, to be valid, had to be in the approved form is set out in clear and unambiguous language and allows for no exception….My characterization of what I consider to be the central issue in this appeal recognizes the importance of the exception created by section 46 (1) [of the OPBA] and the requirement for those who choose to rely on the exemption to comply strictly with the statute,” Matlow concluded.