Allen Malfair - v. -, 2013 SKPC 054

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2013 SKPC 054 Date: March 19, 2013 File: File # 2011 - 66 Location: Melfort, Saskatchewan _____________________________________________________________________________ Between: Allen Malfair - and - Weyerhaeuser Company Limited Gillian Malfair For the Plaintiff Mylee Powell/Laura Bevan For the Defendant _____________________________________________________________________________ JUDGMENT P. DEMONG, J _____________________________________________________________________________ Introduction [ 1 ] By Summons dated December 5, 2011, the plaintiff (Malfair) brings action against the defendant (Weyerhaeuser) for breach of

contract arising from Weyerhaeuser’s presumed failure to remit 100 % of the premium payments for Extended Healthcare Benefits accruing to Malfair pursuant to a Severance Agreement entered into between Malfair and his then employer Saskfor MacMillan Bloedel Partnership (Saskfor) in September of 1997. [ 2 ] The claim asserts that Weyerhaeuser is the successor corporate entity of Saskfor and assumed Saskfor’s responsibilities under the contract when Weyerhaeuser acquired Saskfor sometime in 1999.

Weyerhaeuser does not dispute this factual allegation and this fact is therefore deemed admitted for the purposes of this lawsuit. [ 3 ] Weyerhaeuser denies that there was a breach of contract, disputes the quantum of damages sought by Malfair and says that even if there was a breach, Malfair is statute barred from proceeding with this claim by virtue of the passage of time. Issues [ 4 ] This matter proceeds to court by way of written Agreed Statement of Facts, the filing of four uncontroverted affidavits, and a request that the court address four issues: 1.

Is Weyerhaeuser’s decision to reduce its share of premiums payment for Malfair’s Extended Health Benefits a breach of contract? 2. Is Weyerhaeuser contractually obligated to pay 100 % of the premiums for Malfair ’ s Extended Health Benefits for his natural life and the life of his spouse? 3. Is Malfair ’ s claim statute barred by operation of The Limitations Act SS 2004 c. L-16.1 (The Act)? 4. If Weyerhaeuser breached the contract what are the damages suffered by Malfair? [ 5 ] With due respect to the parties this court is unable to address issue number 2.

The Provincial Court of Saskatchewan is established pursuant to statute, and its jurisdiction in Civil matters is limited to those types of relief identified in

Section 3 of The Small Claims Act , 1997 c. S-50.11 . [ 6 ] I am satisfied that issue 2 requests that this court make a declaration as to future entitlement, and

Section 3 of the Act does not allow for declaratory relief. As such, this court will deal only with issues 1, 3 and 4. The Facts [ 7 ] Between April of 1975 and September of 1997 Malfair worked at a plywood mill in Hudson Bay, Saskatchewan owned by Saskfor and its predecessor. [ 8 ] On or about the 2 nd day of September, 1997 Malfair received a letter from Saskfor endorsed by Len Pelletier, the Manager of Saskfor’s plywood division, indicating that Malfair’s employment was to be terminated effective immediately. The letter then went on to propose a severance package which Saskfor felt was fair and reasonable.

It offered a 14 month early retiring allowance; a maintenance of life insurance, vision and dental care until Malfair attained the age of 55 years; the availability of counseling services for a period of 6 months; a letter of reference; and the following proposal which is the subject of this legal dispute: “We will continue Extended Health Coverage (EHB) for your natural lifetime and for your spouse, Aline’s natural lifetime, so long as you remain married to her.”. [ 9 ] The severance package was open for acceptance for a period of 14 days and Malfair was clearly advised that “This offer should not be viewed as an opening offer”. [ 10 ] Malfair was invited to endorse and date the letter, which would of course evidence his acceptance of the offer and he did so on what appears to be the 7 th or the 9 th day of September, 1997.

The letter made it clear that upon acceptance Malfair would be releasing Saskfor and its successors from any cause of action arising from his employment and termination. [ 11 ] That termination notice and severance agreement is incorporated by reference to this judgment and identified under Appendix A.

[12] The supplemental affidavit of Malfair evidences that between April 1975 through until September of 1997 Saskfor paid 100% of thepremiums owing to a Third Party insurer who had provided the Extended Health Care Benefits the plaintiff received while employed. [13] Saskfor continued to remit 100 % of the premiums payable for his healthcare benefits from the date of Malfair’s endorsement of theseverance agreement until November 1999, and after November 1, 1999 and through until May 31, 2010 Weyerhaeuser as successor toSaskfor continued to make payment of 100 % of those premiums. [14] In or about October, 2009, Malfair received a letter from Anne Giardina, the President of Weyerhaeuser.

It was addressed “DearRetired Employee” and identified Malfair by his “Weyerhaeuser employee ID: 228751". [15] It mentions that Weyerhaeuser was announcing benefit changes to employees and retirees in Canada and reads in part: “Weyerhaeuser remains committed to offering benefits to retirees, notwithstanding that many other companies have eliminated retireecoverage, but we must make changes in order to sustain the viability and affordability of our retiree plans. Effective January 1, 2010,Weyerhaeuser is freezing the amount it will pay for the cost of extended health care.

The amount Weyerhaeuser will contribute will be frozen at 50 percent of the January 1, 2010 costs and you will pay 50 percent of thetotal premium.

In future years, when there are increases in premiums, you will pay the full amount of all increases”. [16] By correspondence dated respectively November 24, 2009 and May 13, 2010 Malfair, through his counsel, responded to theOctober 2009 letter advising Anne Giardini that notwithstanding any internal changes Weyerhaeuser may be making to its internalpolicies, they should not affect Malfair because Weyerhaeuser was contractually obligated to pay 100 percent of the premiums necessaryto secure Malfair’s Extended Health Benefits.

Malfair indicated in that correspondence that any payments that Malfair might pay tosecure these continued benefits would be on a without prejudice basis and that he would be looking for reimbursement of those amountsin due course. [17] It should be noted that although Weyerhaeuser had expressed an intention to reduce its payments from 100 percent of the premiumsto 50 percent of the premiums in its October 2009 correspondence Weyerhaeuser continued to pay 100 percent of those premiumsthrough and until the end of May 2010.

Only then did they reduce their payments to 50 percent of the premiums ... and proportionatelyless through the months leading up to this lawsuit. [18] Commencing June 10, 2010 and through until December 31, 2012 Malfair contributed monies to cover a portion of the premiumsnecessary to secure the Extended Health Benefits. This amount, to the end of December 2012 equates to $2,404.29. In January 2013Malfair paid the additional sum of $96.26, up to and until the time this matter proceeded to court.

In total and notwithstanding the$1,312.29 sought in the plaintiff’s Statement of Claim, if I find that there was in fact a breach of a contract, the amount due and owing todate of trial would equate to the sum of $2,505.35.

Issue 1 Did Weyerhaeuser breach its contract with Malfair when it decided to unilaterally reduce its previous practice of paying 100percent of the premiums necessary to secure Malfair’s extended health benefits? [19] The essence of the claim turns on what the parties presumably meant when the plaintiff accepted the defendant’s proposal that: “We will Continue Extended Health Coverage (EHB) for your natural lifetime and for your spouse Aline’s natural lifetime, so long asyou remain married to her.” [20] In an effort to ascertain the true meaning of the clause in issue, this court is guided by the following three steps: 1.

If the words in the clause are clear and unambiguous, then this court need not proceed any further. [See Generally Eli Lilly and Co.Novopharm Ltd.] (SCC), [1998] 2 S.C.R. 129 [S.C.C.]. 2. If a plain literal

interpretation of the clause does not solve the ambiguity, or results in an absurdity, the court should examine theentire document from which the clause is drawn, to ascertain the parties intention. (See Generally B.G. Checo International Ltd. v.British Columbia Hydro and Power Authority (SCC), [1993] 1 S.C.R. 12 at 24-25(S.C.C.). 3. If, upon a consideration of the four corners of the agreement the court cannot ascertain the intentions of the parties, then the court

should look to the factual matrix which existed at the time of the making of the agreement. In so doing this court is guided by the decision in Jacobsen v. Bergman , [2002] B.C.J. No. 343 (B.C.C.A.) , wherein the court stated: “It is not sufficient in interpreting a clause in an agreement to look only at the wording of the clause in order to decide on its meaning and application; instead the clause must be examined in its place in the agreement as a whole.

Further, the agreement as a whole, and the clause in particular, must be examined in the context of the factual matrix which gave rise to the agreement and against which the agreement and the clause were intended to operate”. [ 21 ] The plaintiff has invited this court to de-construct the clause in issue in order to obtain the plain and literal meaning of the words, and in so doing urges this court to conclude that it unambiguously means that the plaintiff and his wife for their respective lifetimes are entitled to those extended health benefits that the plaintiff was receiving the day prior to his termination, in the same measure and to the same extent; and that the employer will pay, for Malfair ’ s lifetime 100 percent of the premiums necessary to secure those benefits. [ 22 ] Employing dictionary

definitions and in particular, the Merriam Webster Online Dictionary the plaintiff breaks down the clause as follows: We ( unambiguously the employer ) will continue ( maintain without interruption a condition or course of action) Extended Health Coverage ( no dictionary definition given ) EHB ( no dictionary definition given ) for your natural lifetime ( the duration of the existence of your physical living being ). [ 23 ] This is fine in so far as it goes, but the plaintiff provides no definition of the clause “ extended health coverage ” , or the qualification to that phrase “ (EHB) ” , and it is this particular phrase which is at the heart of the issue. [ 24 ] The defendant does not offer the same deconstruction, but does offer up a Black’s Law Dictionary definition of the word “coverage”, to mean “an inclusion of a risk under an insurance policy”. [ 25 ] This is certainly the

interpretation of the word “coverage” as it applies to an insurance policy, but I am satisfied that it is not an insurance policy which the court is called upon to interpret. It is, rather, a severance agreement. Coverage, in its broader sense, simply means the act or fact “of covering” and to cover in turn, which has a great many

interpretations, can comfortably mean, according to Merriam Webster’s Online Dictionary “ to defray the costs of, or alternatively to provide protection or security”. [ 26 ] Employing the insurance definition of the term “coverage”, the defendant then invites this court to conclude that the only contractual obligation within the clause was an obligation to continue the plaintiff’s participation in the extended health benefits plan that the employer had in effect, and as that plan exists from time to time. [ 27 ] Implicit in this argument is that the employer was not offering to pay 100 percent of the premium for those benefits, but was only providing an assurance that the plaintiff would continuously be allowed to participate in the employer’s group plan. [ 28 ] Before continuing, I should note that the agreed statement of facts clearly indicated that the moment prior to the plaintiff’s termination, the employer was paying 100 percent of those benefits. [ 29 ] The court also notes that one of the attachments to the affidavit submitted by the defendant, and executed by Deanna Stad, a legal assistant for the defendant, incorporates a copy of the Weyerhaeuser benefit plan, which indicates that the extended health plan is being funded entirely by Weyerhaeuser and that plan could be amended or varied or discontinued unilaterally by Weyerhaeuser. [ 30 ] The affidavit of Deanna Stad also appends a copy of a 1998 extended health benefits package described as “a brief

summary of your benefits”. It makes no mention of the necessity for the plaintiff to make premium contributions. It simply describes a number of the health benefits which are covered through an insurance policy offered by The Great West Assurance Company.

It also points out that coverage will continue until the group policy terminates. [ 31 ] I am satisfied, from a review of the clause, and the arguments made by each of the plaintiff and the defendant, that the clause is at the least, equivocal, if not ambiguous. [ 32 ] The severance agreement does not identify what is meant by the phrase “extended health coverage”, or the qualification to that phrase “(EHB)”. [ 33 ] If the clause was intended as suggested by the plaintiff, it would have read, in effect: “We will continue to fund, at no expense to you, an Extended Health Benefits plan, which will be of like kind and to the same extent as those benefits you were receiving prior to your termination.

Our obligation will continue for your lifetime, and for your spouse Aline’s lifetime, so long as you remain married to you”.

[34] If the clause was intended as suggested by the defendant, it would have read, in effect:: “After termination you will be afforded the opportunity to continue to participate in an Extended Health Benefits plan. However, we willnot guarantee that we will continue to fund this plan on a 100 percent basis. You may at some point in the future be responsible for someor all of the premiums that might be payable.

We also reserve the right to amend or change the type of benefits you receive, and/orcancel the plan at any time”. [35] Because the clause is ambiguous, the court is obliged to look to the broader agreement, and the “factual matrix” in which thatagreement and clause was intended to operate as at the time it was prepared. [36] The document under consideration is a letter of termination with immediate effect which incorporates a series of inducementsoffered to the plaintiff which would constitute a severance package, which, according to the letter, “meets or exceeds our legal obligationin the circumstances”. [37] I am satisfied that the severance package was drafted with view to entice the plaintiff to accept these inducements rather than to suefor wrongful dismissal. [38] In considering what inducements to offer, I think it is fair for the court to assume that the employer knew or at least recognized thatif these inducements were not accepted, then the plaintiff might sue for damages for wrongful dismissal.

I am further satisfied that thelaw is well settled that in awarding damages for wrongful dismissal, a court may assess damages not only for loss of wages, but also forthe replacement cost of those fringe benefits which would have been available to the plaintiff for a reasonable period of time followinghis termination.

According to the the plaintiff’s affidavit and the agreed statement of facts, one of the fringe benefits was that theplaintiff had, while employed by the employer, a 100 percent premium top up for his extended health benefits. [39] I think that objectively viewed Malfair’s employer was prepared to offer the plaintiff the package of benefits he was receiving at thetime of his employment, and on the same terms and conditions that he was receiving at the time of his employment. I am also satisfiedthat the plaintiff would not have carefully parsed the meaning of the phrase in question in an insurance context.

He was beingterminated, and being offered a package of inducements to accept upon termination. I am satisfied that objectively, a person in hissituation would have reviewed that clause and would have said to himself “Well it looks like they will give me what I already have, butfor my lifetime.” [40] Were this court to accept the defendant’s

interpretation ... participation in a plan, which may or may not be funded by theemployer, which may be amended from time to time, or discontinued at any given time at the sole option of the employer ...it would doharm to the remainder of the clause indicating that the employer was offering the plaintiff a benefit to operate continuously and withoutabatement, and for his natural lifetime. [41] I think that the defendant is attempting to incorporate into this severance agreement a plan which the defendant chooses toparticipate in. This however, was not what was offered to the plaintiff.

What was offered to the plaintiff, was a contractual obligation tocontinue his extended health coverage qualified by the following insertion “(EHB)”. [42] In this court’s view, the initials at the end of this phrase mean “Extended Health Benefits” and they seek to clarify the “extendedhealth coverage” portion of the clause. In that sense, then, the word “benefits” would also have to be interpreted, and while that phrasealso has many meanings, depending on context it is capable of the following

interpretation, again employing the Merriam Webster’sOnline Dictionary ...”A payment or service provided for under an annuity, pension plan, or insurance policy”. [43] I am satisfied that the

interpretation urged upon this court by the plaintiff is more in keeping with the intentions of the parties. Thatis to say, that the plaintiff’s former employer was offering to the defendant extended health benefits of the type or kind he was receivingimmediately prior to his termination of like kind, and to the same extent, and which would be fully funded by the employer for hislifetime. [44] In coming to this conclusion, the court has given consideration to the principle of Contra Proferentem. [45] That principal stipulates that when an ambiguity arises in the

interpretation of a contract, the clause in question is interpreted againstthe interest of the party who drafted it rather than against the interest of the party in who’s favor it was stipulated. [46] In employing this principle, I am mindful of the Alberta Court of Appeal’s restriction on the use of this principle set forth Ironsidev. Smith, 1998 ABCA 366 , [1998] A.J. No. 1225, at paragraph 66: “Contra Proferentem should not be used to construe an agreement against its drafter unless it is clear that the non-drafting party had nomeaningful opportunity to participate in the negotiation of the instrument.

In most commercial situations each party will bargain,insisting on certain concessions and giving up others. Although one party may take charge of drafting, the agreement is a product ofnegotiations. The use of contra proferentem is contingent on an absence of meaningful negotiating ability. ... In my view the circumstances surrounding this severance agreement comply with the Alberta Court of Appeal’s concern.

[ 47 ] The plaintiff was terminated effective immediately. He was being offered a severance package but the employer specifically noted in the severance agreement: ... This offer should not be viewed as an opening offer. As stated, we believe that this offer is both fair and reasonable. We are prepared to discuss minor changes, but we believe this generously recognizes your 22 ½ years with the Company”. [ 48 ] From a review of the severance agreement, it would appear that the employer was not prepared to make any significant or meaningful changes to the offer.

At the same time it should be noted that the plaintiff was being terminated immediately. He was, under the circumstances, at a distinct disadvantage, and of course had no meaningful input into either his termination or the severance package offered. Issue 3 Is Malfair ’s claim statute barred by operation of The Limitations Act SS 2004 c. L-16.1 (The Act)? [ 49 ] The defendant maintains that if there was a breach of contract, then and in any event, the plaintiff’s claim is statute barred by virtue of

Section 5 of The Limitations Act which limits the time within which the action may be commenced two years from the date of the discovery of the cause of action. [ 50 ] The defendant says that because the plaintiff was notified of the implementation of cost sharing premiums in October 2009 and had consulted counsel by November of 2009, then it was apparent that the plaintiff knew of the defendant’s position and should have commenced an action within two years of that date ...the month of October, 2011. [ 51 ] The plaintiff maintains that the time starts to run not when a party expresses an intent to do a thing but rather, time starts when the plaintiff knew or ought to have known that loss or damage had occurred, and because the defendant only stopped paying premiums as at the end of May 2010, it is at that point in time that the plaintiff began to suffer a loss.

The plaintiff maintains that because he commenced his action in December of 2011, he is well within the two year limitation period. [ 52 ]

Section 2 (

a) of The Limitations Act reads: 2. In this Act: (a) “Claim” means a claim to remedy an injury, loss or damage that occurred as a result of

an act or omission; ... [emphasis added] [ 53 ]

Section 5 of the Act reads: 5 Unless otherwise provided in this Act, no proceedings shall be commenced with respect to a claim after two years from the day on which claim is discovered. [ 54 ]

Section 6 of the Act reads as follows: 6(1) Unless otherwise provided in this Act and subject to subsection (2), a claim is discovered on the day on which the claimant first knew or in the circumstances ought to have known: (

a) that the injury, loss or damage had occurred : ...[emphasis added] [ 55 ] Arguably the defendant takes solace in Section 6 (2) which states:

(2) A claimant is presumed to have known of the matters mentioned in clauses (1)(

a) to (

d) on the day on which the act or omission on which the claim is based took place, unless the contrary is proved.. [ 56 ] With respect however, the plaintiff’s claim for breach of contract seeks damages for the actual loss of premium payment to which he believes he is otherwise entitled. [ 57 ] In the circumstances, I am satisfied that the limitation period began to run when the plaintiff’s loss first occurred and, in my view, that loss arose in June of 2010, when it became apparent to the plaintiff that the defendant was going to act on its expressed written intention to reduce its proportionate share of the premiums to be paid.

[ 58 ] The defendant’s argument is akin to neighbour A, who, frustrated with the shade thrown onto his land by the giant oak tree on neighbour B’s adjoining property sends a letter to B advising him of A’s intent to chop the tree down ... and two years and five months later, with chainsaw, letter and thumb tack in hand crosses onto B’s property, cuts down the tree and tacks a letter to the stump which advises B that he has no remedy ... he is statute barred. [ 59 ] The plaintiff is claiming for a loss that occurred to him and which arose as at June 1, 2010.

In the court’s view, the limitation period began to run from the date that he first had to start contributing to premiums for the extended healthcare benefits he was receiving, and his claim, brought in December, 2011 is well within that limitation period. Conclusion [ 60 ] For the reasons set out above, the court has determined that; 1. Weyerhaeuser’s decision to reduce its shared premium payments for Malfair’s extended health benefits was a breach of contract; 2. Malfair’s claim is not statue barred by operation of The Limitations Act SS 2004 c. L16.1; 3.

The measure of damages offered by Malfair as a result of the defendant’s breach equates to $2,505.35. [ 61 ] As a result, the plaintiff is entitled to judgment in the sum of $2,505.35. [ 62 ] The plaintiff is entitled to his pre-judgment interest on the aforementioned amount which is somewhat difficult to fix having regard to the ongoing nature of the loss over a period of time. The court awards pre-judgment interest in the sum of $75.00. [ 63 ] In addition, the plaintiff is entitled to his costs which are fixed at $125.00. Paul Demong, J