Tessier v. Canada Ports Corp., 2004 FC 29

Date: 20040109

Docket: T-923-99

Citation: 2004 FC 29

OTTAWA, ONTARIO, THE 9TH DAY OF JANUARY 2004

PRESENT: THE HONOURABLE MR. JUSTICE MARTINEAU

BETWEEN:

JEAN-MICHEL TESSIER

Plaintiff

- and -

CANADA PORTS CORPORATION

Defendant

REASONS FOR JUDGMENT AND JUDGMENT

[1]        The plaintiff claimed $366,243.12 from the defendant, plus interest and costs.

[2]        The plaintiff was employed by Canadian Pacific Limited (CP) from June 15, 1959 to February 4, 1974, and from September 9, 1974 to February 26, 1977. He subsequently worked for the defendant from March 19, 1977 to February 19, 1996. In particular, the plaintiff was the defendant's president from July 27, 1987 to February 19, 1996.

[3]        In 1977, the plaintiff began contributing to the federal employees' pension fund. At that time, the plaintiff could not transfer to the said pension fund the contributions accumulated in his pension fund with CP. He accordingly transferred the latter to a registered retirement savings plan (RRSP). Nevertheless, it was always possible for the plaintiff to "commute", on the terms set out in the Public Service Superannuation Act, R.S.C. 1985, c. P-36 (PSSA), any period of service entitling him to a pension from a previous employer (sections 6, 7 and 8 of the PSSA).

[4]        Having said that, according to the evidence in the record the commuting by the defendant for the benefit of an employee or officer of years of service with a prior employer, for purposes of increasing his pension, was never made part of the general conditions of employment, remuneration or benefits conferred on employees and officers of the defendant, including its president. On or about May 31, 1995, at the instance of the former executive vice-president, J. Ansary (who was subsequently dismissed for fraud), the acting chairperson of the defendant's board of directors, James B. Powers, who was then in Newfoundland, apparently placed his signature on document P-9, which reads as follows:

WHEREAS the President and Chief Executive Officer of Canada Ports Corporation, Jean Michel Tessier, became an employee of the Corporation on February 26, 1977;

AND WHEREAS BETWEEN June 1, 1966 and February 26, 1977 he had been employed at CP Rail which did not have a reciprocal transfer agreement with Treasury Board at the time of his transfer to the Corporation, his pension contribution was directed to an RRSP and he lost entitlement to a pension benefit from CP Rail for that period;

AND WHEREAS the said President and Chief Executive Officer has faithfully and diligently served the Corporation since February 26, 1977 and proposes to continue his public service to age sixty;

AND WHEREAS the Corporation wishes to assist Jean Michel Tessier in ensuring that his public service superannuation benefit be calculated on his total years of service including CP Rail service as if he had been a contributor to PSSA from June 1, 1966 to his retirement;

AND WHEREAS the Corporation, through the services of William M. Mercer Limited and MLH & A Inc., secured proposals both in 1994 and in 1995;

AND WHEREAS the Board of Directors of Canada Ports Corporation has authorized the Acting Chairman to make appropriate recommendations as evidenced by its resolution passed on March 21, 1995;

AND WHEREAS the Corporation, after consulting its auditors, has now set aside the amount necessary for its contribution to the said Plan in its annual budget;

NOW THEREFORE IT IS AUTHORIZED THAT

the Corporation pay out its contribution as set out in the attached Schedule A which coupled with Mr. Tessier's transfer of registered funds to the PSSA will enable the purchase of 13.75 years of service to allow him to draw a pension at age sixty in an amount equivalent to a full contribution.

[5]        Messrs. Powers and Ansary did not testify at the hearing, while the plaintiff admitted he was not present at the signing of document P-9, the authenticity of which was questioned by the defendant. In any event, on the basis of document P-9 the defendant's former comptroller G. Petrellis (who was also later dismissed) on June 5, 1995, apparently requested Marie-Michèle Robichaud, then the defendant's director of personnel, to proceed with payment of the sum of $366,243.12 to the Receiver General for Canada. This was the cash price of commuting supplied by the Pensions Directorate, Supply and Services Canada (the Pensions Directorate) in an estimate dated May 31, 1995. This amount would then make it possible to commute some 13.75 years of service by the plaintiff with CP.

[6]        In fact, on or about June 7, 1995, the plaintiff exercised his option right under the PSSA by completing the required form. A cheque for $366,243.12, taken from the defendant's bank account, was also attached thereto (the amount in question). At the same time, during the summer of 1995, the defendant paid the Receiver General for Canada on behalf of Messrs. Petrellis and Ansary amounts of $199,520.75 and $41,381.74 respectively, so as to also enable them to commute years of service with previous employers (the other amounts).

[7]        In September 1995, the defendant asked the Pensions Directorate to [TRANSLATION] "freeze" the amount in question and the other amounts. At that time, the defendant maintained that the payments in question had been made without the required prior authorization. Formal requests for return of these amounts were subsequently sent by the defendant to the Pensions Directorate in summer 1996. Previously, a notification requesting the plaintiff's cooperation in obtaining the return of the amount in question was also sent to the plaintiff's former counsel in February 1996: there was no reply to this. In fact, on or about November 1, 1996, Her Majesty in right of Canada, represented by the Minister of Public Works and Government Services Canada, returned all the aforesaid amounts to the defendant in consideration of an undertaking by it to be responsible therefor and to indemnify Her Majesty in the event of any action or judgment made against her.

[8]        The method employed by the defendant, to unilaterally obtain the return of the aforesaid amounts - these had already been paid into the pension account of federal public servants, which under subsection 4(2) of the PSSA, was at that time part of the Consolidated Revenue Fund - raises various questions of a legal nature. However, the parties agreed that this was a purely incidental matter, and moreover, the Court notes that Her Majesty is not a defendant to the action at bar. Accordingly, therefore, the question is essentially as to the terms on which the defendant could legally pay the amount in question for the benefit of the plaintiff: the defendant argued in this regard that the necessary prior authorizations were not obtained, and this was disputed by the plaintiff, who maintained that payment of the amount in question was authorized by the defendant's board of directors, which in the circumstances is sufficient.

[9]        As already noted, at the time the amount in question was paid to the Receiver General for Canada, the plaintiff was president of the defendant. It may be recalled here that under subsection 17(1) of the Canada Ports Corporation Act, R.S.C. 1985, c. C-9 (CPCA), the defendant's president is appointed by the Governor in Council to hold office during pleasure for such term as the Governor in Council considers appropriate. Further, the defendant is a parent Crown corporation to which Part X of the Financial Administration Act, R.S.C. 1985, c. F-11 (FAA), and the Crown Corporation General Regulations, 1995, SOR/95-226 (CCGR). Under section 108 of the FAA, any "remuneration" paid to the chairman and chief executive officer of a parent Crown corporation must be fixed by the Governor in Council, whereas "any benefits, other than remuneration" which the latter receives are to be fixed by the parent Crown corporation's board of directors.

[10]      Section 108 of the FAA provides:

[11]      Further, section 7 of the CCGR states:

[12]      In the case at bar, the amount in question corresponds to nearly to three years' salary for the plaintiff. Indeed, the scale of the plaintiff's remuneration, as set by the Governor in Council, was between $106,900 and $125,900. The plaintiff justified the payment to him of such a large sum of money by the fact that the defendant's board of directors wished to [TRANSLATION] "compensate" him for the [TRANSLATION] "excellent work" he had done since becoming president. Clearly, in the Court's opinion, the payment of the amount in question for the benefit of the plaintiff was a "form of monetary compensation" under section 7 of the CCGR. Such a monetary benefit may readily likened to the bonus an employer may pay an employee for his good performance on the job or to the severance pay which he may give the employee when his employment terminates. The fact that it was more beneficial to the plaintiff from a taxation standpoint for the defendant to pay the amount in question to a third party instead (here the Receiver General for Canada) does not in any way alter the essential nature of the payment made in June 1995. The defendant owed no money to Her Majesty and derived no monetary benefit from the exercise by the plaintiff of the option contained in the PSSA. It is clear that under subsection 108(1) of the FAA the payment of the amount in question had previously to be authorized by the Governor in Council; as that authorization was not given, the plaintiff accordingly has no right of action against the defendant.

[13]      Having said that, even if under subsection 108(2) of the FAA the payment of the amount in question were to be regarded as one of the "benefits other than remuneration, provided to a director, chairman or executive officer of a parent Crown corporation for his services in respect of that office", the awarding of such a benefit to the plaintiff still had to be previously approved by the defendant's board of directors, and that was not the case here.

[14]      Under subsection 19(1) of the CPCA, the board of directors is responsible for directing and managing the defendant's affairs, subject to the powers and duties which it may delegate to an executive committee. The resolution of the board of directors dated March 21, 1995 (Exhibit D-2, Tab 38, and Exhibit D-14) (the same one referred to in document P-9), reads as follows:

The Acting Chairman be authorized to pursue the overall compensation of the Canada Ports Corporation president and Chief Executive Officer and make appropriate recommendations for subsequent approval by Privy Council Office.

[15]      As can be seen, the wording of the resolution of March 21, 1995, is clear. In this regard, the testimony of Roza Aronovitch, who at the time was acting as "Vice-President Legal and Realty Services, General Counsel and Corporate Secretary", is conclusive and confirms the authenticity of this resolution of the board of directors. Accordingly, no final decision was taken by the board of directors. It is clear that the amount and the special procedures for payment to the plaintiff of "overall compensation" was still to be determined. Additionally, the [TRANSLATION] "final" decision would have to be taken by the Privy Council Office (and so the Governor in Council). In this regard, the resolution of March 21, 1995, gave the acting chairperson of the board of directors, James B. Powers, only a very limited power of recommendation.

[16]      Further, it is clear from the evidence in the record and the consistent testimony of Roza Aronovitch and Nicole Sauvé (who succeeded her as the defendant's secretary), that document P-9 was neither a resolution of the board of directors nor a resolution of the defendant's executive committee. Additionally, document P-9 is contrary to the clear wording of the board of directors' resolution of March 21, 1995. Accordingly, the authorization contained in document P-9 is ultra vires the authority delegated by the board of directors to the acting chairman of the board of directors and so cannot be set up against the defendant.

[17]      In conclusion, for the reasons stated above, the plaintiff has no right of action against the defendant. Consequently, it is not necessary to deal with the alternative defences put forward by the defendant nor to discuss here the consequences of a subsequent decision by the Pensions Directorate on June 6, 1997, to recognize only the last period of employment with CP as the period entitling the plaintiff to a pension for the purposes of the option exercised by him.

JUDGMENT

[18]      For the reasons mentioned above, the Court dismisses the plaintiff's action, with costs to the defendant.

Certified true translation

Suzanne M. Gauthier, C Tr, LLL

                                     FEDERAL COURT

                              SOLICITORS OF RECORD

DOCKET:                                                                         T-923-99

STYLE OF CAUSE:                                                         JEAN-MICHEL TESSIER v. CANADA PORTS CORPORATION

PLACE OF HEARING:                                                   QUÉBEC, QUEBEC

DATE OF HEARING:                                                     DECEMBER 8, 2003

REASONS FOR JUDGMENT AND JUDGMENT: MARTINEAU J.

DATED:                                                                            JANUARY 9, 2004

APPEARANCES:

Louis Masson                                                                      FOR THE PLAINTIFF

Marie-Claude Martel

Bernard Letarte                                                                   FOR THE DEFENDANT

Patrick Vézina

SOLICITORS OF RECORD:

Joli-Coeur, Lacasse, Geoffrion, Jetté, St-Pierre                    FOR THE PLAINTIFF

Québec, Quebec

Morris Rosenberg                                                                FOR THE DEFENDANT

Ottawa, Ontario