Date: 20070501
Docket: T-1518-05
Citation: 2007 FC 469
BETWEEN:
DANA P. COUSINS, DONNA M.
KEITH
and CHARLES
M. MCNALLY
Applicants
and
ATTORNEY GENERAL OF CANADA and
MARINE
ATLANTIC INC.
Respondents
Docket: T-1519-05
AND BETWEEN:
CHARLES M.
MCNALLY
Applicant
and
ATTORNEY GENERAL OF CANADA and
MARINE
ATLANTIC INC.
Respondents
Docket: T-1520-05
AND BETWEEN:
DANA P.
COUSINS
Applicant
and
ATTORNEY GENERAL OF CANADA and
MARINE
ATLANTIC INC.
Respondents
APPLICATIONS UNDER s. 18(1) of the Federal
Courts Act. 2002, c. 8, s. 14
REASONS FOR
JUDGMENT
HUGHES J.
[1]
These
three Applications for judicial review seek to raise, as a principal issue,
whether section 29(12) of the Pension Benefits Standards Act, 1982
R.S.C. 1985, c. 32 (2d supp) as amended (PBSA), requires that the
proportional amount of surplus in a federally regulated pension fund existing
at the time of a partial termination of the plan, be paid out. Because of the
close relationship of these three Applications, they were argued together upon
common materials. One set of reasons is provided, and, for the reasons as
provided, I find that two of the Applications will be dismissed as being out of
time, Application T-1519-05 and T-1520-05. The other Application
T-1518-05 will be allowed in part as I find
that section 29(12) of the PBSA requires the payment out of the surplus
attributable to the partial termination of the pension plan.
The Parties
[2]
The
Applicants Cousins, Keith and McNally were all at various times, employees of
the Respondent Marine Atlantic Inc. Marine Atlantic runs ferry services between
various of the Atlantic Provinces some of which services were terminated,
thus terminating the employment of the Applicants with consequent pension plan
effects. The Respondent Attorney General of Canada, has been
joined as a Respondent in these proceedings by the Applicant. The Attorney
General says that he does not appear on behalf of any government department or
crown corporation nor does he represent the interests of the Superintendent of
Financial Institutions, who is a person appointed under the provisions of
section 5(1) of the Office of the Superintendent of Financial Institutions
Act (OSFI) R.S. 1985, c. 18 3rd Supp, and, is assigned certain
duties under PBSA relevant to the issues here. The Attorney General disclaims
any interest in the existence, quantum or direction of payment of the surplus
if any, of the pension plan.
[3]
None
of the Applications are taken as class or representative actions. They affect
only the individual Applicants unless the Court is persuaded to grant Judgment
that approval of particular Reports be dealt with in a way that will encompass
all affected members.
The Issues
[4]
The
Applicants raise but one issue, namely, whether section 29(12) of the PBSA requires
the payment out of the surplus attributable to the terminated portion of a
defined-benefit pension plan. The Respondents raise other issues including
whether some of the Applications were brought in a timely way, whether the
Superintendent has power to re-consider an earlier decision, the standard of
review to be applied by the Court in this review and what remedies are
appropriate.
[5]
To
state the issues in a more formal way, these are the issues which this Court
has been asked to consider:
·
Timeliness: Have the
issues raised in Applications T-1519-05 and T-1520-05 been raised in a timely
manner having regard to the provisions of section 18.1(2) of the Federal
Courts Act, R.S.C. 1989, c. F-7 which require an Application for judicial
review to be brought within 30 days from the time that the decision was first
communicated unless an extension of time is granted by the Court?
·
Reconsideration: Does the
Superintendent have the power to re-consider decisions made several years
earlier as to approving a plan of partial termination that did not provide for
payment out at the time of surplus in the fund?
·
Standard
of Review:
What is the standard to be applied by the Court in judicially reviewing the
decisions of the Superintendent, at issue?
·
Section
29(12):
Does section 29(12) of the PBSA require the distribution of a proportional
share of actuarial surplus when a federally regulated defined-benefit pension
plan is partially terminated or wound up?
Factual History
[6]
Marine
Atlantic is a federal Crown corporation and the successor to ferry services
operated in Atlantic Canada previously by CN Marine. Among these ferry
services were that operated in the Bay of Fundy between New Brunswick and Nova
Scotia (Fundy), that between New Brunswick and Prince Edward Island (PEI) and
that connecting Nova Scotia and Newfoundland and Labrador (Labrador). Certain
head office activities were conducted in Moncton.
[7]
Marine
Atlantic had a
pension plan in place at all material times and, for purposes of the PBSA, is
described as the administrator. The administration of much of the plan was
conducted in consultation with a private consulting actuarial organization, Wm
Mercer, which was retained to advise in particular as to “downsizing” aspects.
The plan is what is described as a contributory defined-benefit pension plan
and is a successor to a plan originally instituted by CN Marine. Employees of
Marine Atlantic pay a percentage of their earnings into the plan, their
employer pays the balance of the costs of the benefits as actuarially
determined. Upon reaching the age of retirement the employee receives a
pension calculated upon a certain formula. The fund is presently held by an
arm’s-length trustee, the Guarantee Trust Company of Canada.
[8]
The
pension is administered in accordance with a Plan which, under the provision of
the PBSA must be approved by the Superintendent. The Superintendent also must
approve amendments to the Plan including those amendments that occur when part
of the Plan is terminated such as is the case when part of the Marine Atlantic
operations are terminated and the employees with respect to that part are
terminated. Those amendments are approved by way of approval by the
Superintendent of a report submitted by the administrator.
a) PEI –
Application T-1520-05
[9]
In
1997 Marine Atlantic decided that the Fundy part of its operations would be
terminated. One of the consequences was that several hundred employees were
terminated and the associated part of the pension plan respecting those
employees was terminated. This partial termination of the pension plan
required approval from the Office of the Superintendent (OSFI) by way of
approval of a Partial Termination Report dated October 1997. To that end, the
Wm Mercer organization entered into discussions with OSFI who, by
letter dated December 8, 1997, addressed to Wm Mercer, advised that
the Partial Termination Report was approved. That Report did not provide for
proportional payment out of surplus and states that it did not allocate surplus
assets to members affected by the partial Plan wind-up. Those communications
also included discussions respecting certain Labrador operations thus the
letter addressed those operations as well, stating that partial plan
termination was not necessary for Labrador. In fact subsequently Marine
Atlantic voluntarily entered into a partial plan termination for Labrador. Part of
the December 8, 1997 letter from OSFI to Wm Mercer states:
The third reason for declaring
a partial termination concerns the ownership of surplus. Although there is no
requirement to distribute surplus on partial termination, future rights to
surplus can be established at the time a plan is partially terminated. In the
case of members of the Labrador service who opt for portability, the
administrator has a responsibility to make them aware that they are giving up
any and all rights to a possible share of surplus on total plan termination.
[10]
At
no time did OSFI communicate directly with any of the terminated employees who
were members of the Plan.
[11]
Marine
Atlantic’s evidence
is that in January 1998 it sent a letter to Cousins, the Applicant in
proceeding T-1520-05 stating that OSFI had approved the partial termination
report, and that Marine Atlantic was proceeding with the payment of pension
benefits in accordance with his election. Cousins had elected to receive a
cash payout which would be placed in a private locked-in retirement financial
vehicle. At no time in providing the forms for selection or on the forms
themselves is there any mention of a surplus in the pension fund or what might
become of it.
[12]
Apparently
at some stage Cousins went to the trouble of visiting Marine Atlantic’s offices
and looking at the Report. There is no evidence as to what understanding, if
any, he gained by this exercise.
b) PEI –
Application T-1519-05
[13]
In
a situation similar to that of Fundy, Marine Atlantic terminated its service
between New Brunswick and Prince Edward Island, that service being
replaced by the Confederation Bridge.
[14]
Again,
Wm Mercer on behalf of Marine Atlantic provided to OSFI a Partial
Termination Report. This one was dated February 1998. Again, the Report did
not provide for payment out of funds in surplus as a result of the partial
termination nor did it endeavour to allocate assets to members affected by the
partial Plan wind-up.
[15]
On
April 8, 1998 OSFI wrote a brief letter to Wm Mercer advising that
the Partial Termination Report dated February, 1998 was approved. Again, OSFI
did not communicate directly to any employees.
[16]
In
this case one of the affected employees was McNally, the Applicant in
T-1519-05. Just as in the case of the Fundy termination, McNally was offered
several options by Marine Atlantic and chose to receive a lump sum for
re-investment in a locked-in retirement vehicle. At no time during those
communications was McNally advised that there was a surplus or what was to
become of it.
Subsequent Events
[17]
The
Plan provides for an entity called a Pension Board having some duties to
regulate in respect of the Plan, comprising representatives of Marine Atlantic
and current and former employees who are members of the pension plan. The
minutes of a meeting of the Board held on September 24, 1998, indicate that Mr.
Murphy, an employee representative, was advised that an actuarial surplus existed
in the fund. There appears to have been no discussion as to payment out of
surplus upon the partial termination of Fundy or PEI.
[18]
There
is evidence, by way of newsletters to professionals involved in the pension
business in Canada, that a live
issue in the 1990s and 2000s was how actuarial surpluses existing at the time
of partial wind-up or termination of a plan were to be treated. There is no
evidence however that the Applicants in these three proceedings were aware of
such issues.
[19]
In
Ontario, the issue
as to disposition of surplus funds at the time of partial wind-up was raised in
proceedings respecting a Monsanto Canada Inc. pension plan. The background
facts are set out in the decision of the Financial Services Tribunal which is an
Appendix to the decision of the Ontario Superior Court, Divisional Court,
reported as Monsanto Canada Inc. v. Ontario (Superintendent of Financial
Services (2001), 198 D.L.R. (4th) 105 commencing at page 113.
Essentially, under the provisions of Ontario legislation respecting
pensions, the Ontario Superintendent had refused to approve a plan respecting
partial wind-up without provision being made for proportional pay-out from actuarial
surplus. The matter came before the Financial Services Tribunal which overturned
the Superintendent’s refusal. The Divisional Court allowed an appeal from
the Tribunal.
[20]
The
matter proceeded to the Ontario Court of Appeal which, in a decision reported
at (2002), 62 OR (3d) 305, dismissed the appeal.
[21]
The
Supreme Court of Canada gave leave to appeal and heard the matter, giving a
decision reported at [2004] 3 S.C.R. 152 unanimously dismissing the appeal,
holding, inter alia, that section 70(6) of the Ontario Pension Benefits Act
RSO 1980, c. P. 8 required the distribution of a proportional share of
actuarial surplus when a defined-benefit pension plan is partially wound up.
[22]
Apparently,
the Monsanto proceedings at some stage became known to some former
employees of Marine Atlantic since the evidence shows that by about January
2003 a Philip Mountain, one such former employee, was contacting former
employees and inviting them to join an informal Committee for the purpose of
promoting their interests in actuarial surplus existing at the time of their
termination. The Applicants Cousins, McNally and Keith became aware of
Mountain’s efforts and this Committee some time in 2003-2005 time period.
[23]
There
is little evidence as to the early efforts of this Committee however it seems
to be confined to the contacting of former employees and the writing of sporadic
letters to politicians. It was not until early 2005 that the Committee
contacted OSFI for the first time. In what is apparently an e-mail from Keith to
OSFI, an inquiry was made as to the surplus and whether OSFI intended to
“revisit” cases similar to Monsanto. Keith said that her Committee was
“looking for directions” and “names of individuals or firms that may assist”
including a “roster of counsel”. A responding e-mail was sent by OSFI on
January 19, 2005 stating, inter alia:
The Office of the
Superintendent of Financial Institutions (OSFI) is currently reviewing our
position on partial terminations in light of the Monsanto decision. All federally
registered pension plans have been advised that any recent partial terminations
are still subject to our comments on the surplus issues raised by the Monsanto
decision, and how it affects federally regulated plans.
With respect to your request
for direction from our office, please be aware that you would need to seek your
own legal advice on this matter. Our office cannot provide you with a roster
of counsel.
[24]
It
is to be noted that, in this response, OSFI advised that only recent partial
terminations which were still subject to its comments were under
consideration. By March of 2005 the Committee of ex-employees had retained
legal counsel and letter writing began in earnest.
Labrador/Moncton/Re-Visitation
– T-1518-05
[25]
On
May 5, 2004, Wm Mercer on behalf of Marine Atlantic sent a Report to OSFI
respecting the termination of the Labrador service and the Moncton
Head Office (Labrador/Moncton). That Report provided for the return of surplus
to Marine Atlantic upon the total wind-up of the Plan and total discharge of
plan liabilities. This report was not, as of the date of institution of these
proceedings, approved or disapproved by OSFI. I was advised at the hearing of
these Court proceedings that the matter is still pending.
[26]
On
March 8, 2005, the newly retained counsel for the ex-employee Committee wrote a
letter to OSFI stating:
We are counsel to a committee
of former employees of Marine Atlantic Inc. whose employment were (sic) terminated
in conjunction with the privatization of the Bay of Fundy service, the closure
of the PEI service and the closure of the company’s offices in Moncton, NB in
and around the year 1997. The discontinuance of these parts of the business
resulted in a partial termination of the above Plan within the meaning of
Section 29 of the PBSA.
[27]
There
followed, in that letter, a request for certain information and counsel’s views
as to the recent decision of the Supreme Court of Canada in Monsanto.
The letter ended with the following request.
As a result, we request the
Superintendent immediate (sic) issue an order for an accounting of the surplus
in the Plan at the time of the partial termination in and around 1997 and a
distribution of that surplus among our clients and the other employees affected
by the termination.
[28]
Much
correspondence followed including that from counsel for Marine Atlantic. A
definitive reply to Applicants’ counsel’s letter of March 8, 2005 was provided
by OSFI on August 8, 2005 which begins:
Your letter of March 8, 2005
to Ms. Krista Johnson indicates that you are counsel to a committee of former
employees of Marine Atlantic Inc., and requests that OSFI take certain actions
in relation to the Pension Plan for Employees of Marine Atlantic Inc. I will
first address the points related to the request by your client, Ms. Donna
Keith, for information from the administrator for the Marine Atlantic plan pension
and then the issues concerning the Supreme Court of Canada’s decision in the
“Monsanto” case and your submissions contained in your letter to Ms. Carol
Taraschuk, Legal Counsel to OSFI, dated May 11, 2005.
[29]
With
respect to the specific plan in place at the Marine Atlantic OSFI said:
Your letter of May 11, 2005 to
Ms. Taraschuk argues that, apart from any rights that plan members may have
under the PBSA, the terms of the Marine Atlantic pension plan entitle plan
members affected by a partial plan termination to a distribution of surplus.
In particular, your letter refers to a provision dealing with the return of
assets to the Company once all liabilities have been discharged upon the
termination of the plan, and notes that “a determination concerning the proper
legal recipient of the surplus has yet to be adjudicated by a Court of
competent authority”. Based on the information presented, and our reading of
the plan documents, there does not appear to be a clear obligation on the part
of the plan administrator, or right on the part of plan members, regarding the
distribution of plan assets on either a full or partial termination of the
plan.
[30]
As
to the request to re-visit earlier decisions as to Fundy and PEI, OSFI stated
that it had no authority to re-open or reconsider the matter unless new
information was presented. Monsanto did not constitute such new
information. It said:
With regard to past partial
terminations for which the partial termination report has been approved by
OSFI, OSFI does not have the legal authority to re-open or reconsider an
approval once it has been granted, unless new information is presented that is
material to the case. Further, the Supreme Court of Canada’s decision in the Monsanto case does not
constitute new information in this context. In addition, there is no
legislative authority to re-open or reconsider a past approval. As such,
regardless of whether or not surplus currently exists, we are not in a position
to re-open the approvals of the partial termination reports in respect of the
Bay of Fundy service and the PEI
service.
[31]
As
to consideration to be given to situations, such as Labrador/Moncton, currently
under consideration by OSFI, it was pointed out that there was recently
released a public consultation paper and thus it would be inappropriate to take
action at this time. The letter concluded:
It would, therefore, be
inappropriate at this time for OSFI to require that pension plans registered
under the PBSA distribute all or a portion of excess assets on the partial
termination of the plan.
In view of the considerations
set out above – regarding pension plans registered under the PBSA generally and
the partial terminations of the Pension Plan for Employees of Marine Atlantic
Inc. in particular – OSFI does not intend to order an accounting of the surplus
in the Pension Plan for Employees of Marine Atlantic Inc. at the time of the
partial termination referred to in your letter or to order a distribution of
assets from that plan.
[32]
Thus,
one of the Applications for judicial review before the court, T-1518-05, seeks
to challenge two decisions of OSFI. One is the decision not to revisit the
earlier Fundy and PEI decisions. The other deals with the pending
Labrador/Moncton situation asking for mandamus to require that OSFI only
approve a report that provides for immediate distribution of surplus.
Terminology
[33]
Like
other arcane fields of law with which this Court must deal, the field of
pension law has its own terminology some defined by statute, some by case law
or usage in the field. The following terms are used in discussions as to
circumstances in these proceedings:
·
“Actuarial
surplus” sometimes just referred to as “surplus” was explained by Cory J. in
the Supreme Court of Canada decision of Schmidt v. Air Products of Canada
Ltd., (1994), 115 D.L.R. (4th) 631 at page 665 and by Deschamps
J. in Monsanto at paragraphs 21 and 22. This is an amount of money that
is never certain during the continuation of the plan. It exists only on
paper. It results from actuarial calculations and is a result of assumptions
used by the actuary. At any given time, such as at valuation for funding
purposes, a calculation can be made, using those assumptions so as to provide a
“snapshot” as to what actuarial surplus there is at that time.
·
“assets”
is used in the common sense as the sum of that which is within the plan that
has value.
·
“benefits”
as defined in Schmidt at page 665, benefits are of two types, one is the
benefit to which an employee is entitled under the provisions of the plan.
That is an amount fixed by a formula. Other benefits are those to which
employees may be entitled upon termination of the plan.
·
“contribution
holiday” is a term referred to in Schmidt at pages 664-665 and Monsanto
at paragraphs 45 and 46. It means that while an employer and/or employee are
usually expected to pay contributions into a plan according to a formula, if
the plan has “surpluses”, the contributors (usually the employer) may take a
“holiday” from contributing for a period of time while the surplus is reduced.
As stated in Schmidt at page 665, subject to the terms of the plan the
taking of a contribution holiday represents neither an encroachment upon the
trust nor a reduction of accrued benefits.
·
“defined-benefit
plan” and “defined-contribution plan” are both defined terms in the PBSA
section 2. Each are mutually exclusive: a defined-benefit plan includes
provisions clearly stating certain benefits for the employees, a defined-contribution
plan clearly states what contributions are to be made. As stated in Monsanto,
at paragraph 21, surplus can only arise in defined-benefit plans because, in
contrast to defined-contribution plans, benefits or plan liabilities are not
contingent upon the level of nor the return on contributions.
·
“pension
plan’ is defined in section 4(2) of the PBSA. Without repeating that section in
full, it includes a plan to provide pension benefits to employees to which the
employer is required to contribute. As stated by the Ontario Court of Appeal
in Huus v. Ontario (Superintendent of Pensions) (2002), 58 OR (3d) 380
at paragraph 30, quoting in part from Schmidt, supra, pensions
are not a gift from the employer, they are earned by the employee, they are a
trade-off of wages and benefits on the one hand, and a pension fund on the
other.
·
“termination”
is a defined term in the PBSA section 2. It means the cessation of crediting
benefits to plan members and includes not only a voluntary termination but
also, as set out in sections 29(1) and (2) of that Act, a revocation of the
plan and termination declared by the Superintendent.
·
“winding-up”
is a defined term in the PBSA section 2. It means the distribution of the
assets of a pension plan that has been terminated. Thus the PBSA contemplates
that winding-up is a step which follows termination.
This
definition must be contrasted with the provisions of the Ontario Pension
Benefits Act, supra,
which was considered by the Supreme Court in Monsanto. The Ontario Act,
section 1(c) defines “wind-up” as “the termination of a pension plan
and the distribution of the assets of the pension fund”. Thus, Ontario views
wind-up as including termination.
Role of the
Superintendent
[34]
The
Superintendent and Office of the Superintendent of Financial Institutions
(OSFI) are entities established by the federal Office of the Superintendent
of Financial Institutions Act, supra. The Superintendent and OSFI
are charged with supervisory roles over a number of federally regulated
financial institutions as set out in the Schedule to Part 1 (Section 6) of
that Act. They include banks, credit unions, Green Shield, insurance
companies, pension funds and trust and loan companies.
[35]
As
stated by the Ontario Court of Appeal in Huus, supra the
Superintendent owes a high duty to employees with pension plans, similar to a
fiduciary duty imposed on trustees. While that Court was speaking of the
Ontario Superintendent, that case was considered with approval by the Supreme
Court of Canada in Buschau v. Rogers Communications Inc., 2006 SCC 28 at
paragraphs 55 and 56 in considering the role of the federal Superintendent. In
Buschau the Supreme Court at paragraph 56 said that the federal Superintendent’s
power under section 29(2)(a) of the PBSA becomes almost a duty when employees
ask him to act.
[36]
It
is appropriate now to turn to the issues raised in these proceedings.
Issue No. 1 - Timeliness
[37]
The
first issue is:
Have the issues raised in
applications T-1519-05 and T-1520-05 been raised in a timely manner having
regard to the provisions of section 18.1(2) of the Federal Courts Act, R.S.C. 1989, c.
F-7 which require an application for judicial review to be brought within 30
days from the time that the decision was first communicated unless an extension
of time is granted by the Court?
[38]
This
issue pertains only to the decisions of the Superintendent as to the partial
termination of the Marine Atlantic pension plans relating to Fundy and PEI, Applications,
T-1519-05 and T-1520-05. The request to re-consider those decisions is dealt
with in the next issue, Issue No. 2 in the context of Application T-1518-05.
[39]
Section
18.1(2) of the Federal Courts Act, supra, provides that an Application
for judicial review of a decision of a federal board or tribunal must be
brought within 30 days from the time that such decision was first communicated
by the board or tribunal to the party affected, unless the Court permits
otherwise.
[40]
There
is no dispute between the parties that the Superintendent and OSFI come within
the definition of a federal board or tribunal within the meaning of section
18.1(2) of the Federal Courts Act, supra.
[41]
Applicants’
counsel argues that neither the Superintendent nor OSFI actually communicated
to the affected member of the pension plan, the decisions respecting the
termination of the Fundy or PEI plans. What did happen, counsel argues,
is that OSFI sent a letter stating its decisions only to Wm Mercer, acting
as an actuarial consultant to Marine Atlantic. Counsel argues that the
Superintendent had a higher duty, citing Huus, supra, to
communicate directly with the affected members. A copy of the relevant letters
was only provided by the OSFI to the affected members, through their counsel,
on August 8, 2005 and these proceedings were launched within 30 days of that
time. Therefore, relying on Atlantic Coast Scallop
Fisherman v. Canada (Minister of Fisheries and Oceans) [1995] F.C.J.
No. 1347 (FCA) (QL) at paras 6 and 7, counsel argues, the proceedings were
commenced in a timely fashion.
[42]
Respondents’
counsel argue that while there was no direct communication from OSFI to the
affected members in 1997 or 1998, the plan administrator, Marine Atlantic,
communicated extensively with the affected members advising them that OSFI had
approved the termination report and making that report available for viewing
upon request. Even if they didn’t see the report, or if they saw it, didn’t
understand it, the effect of the report was known to the members as they were
given several options as to remaining in the plan or cashing out. It was clear
that no provision was made for payment out at that time from actuarial
surplus. Relying on Peace Hills Trust Co. v. Saulteaux First Nation,
2005 FC 1364 particularly at paragraphs 43 and 44 Respondents’ counsel argue
that the notification received by the affected members was sufficient.
[43]
I
am satisfied that the communications between the affected members and Marine
Atlantic were sufficient to inform those members that a decision had been made
by OSFI, which decision had the effect, by its silence, that actuarial surplus
existing at the time of termination was not going to be the subject of a
proportionate payment out at that time. In Atlantic Coast Scallop, supra,
the Federal Court of Appeal, at paragraph 7, found that while a decision had
apparently been made “at some point in time”, the information received by the
affected persons was ambiguous. In Peace Hills, supra, it was
determined, at paragraphs 43 and 44, that the persons affected were advised of
the substance of the decision and its effect and that this was sufficient to
constitute a communication. The situation in the Fundy and PEI Applications is
similar to that of Peace Hills, the affected members were in the 1997
and 1998 period clearly aware as to what benefits they would be receiving and,
therefore, what they would not be receiving. That included no pay-out, at that
time, from actuarial surplus. The two Applications at issue here, commenced in
2005, Fundy and PEI, were years out of time.
[44]
Applicants’
counsel made a second argument and asked for leave to do so orally, namely that
the Court should exercise its discretion under section 18.1(2) and permit the Applications
to proceed notwithstanding the 30-day time limit. In the originating Applications
filed with the Court, the Applicants did not ask for relief of this kind. The
issue as to timeliness was first raised by the Respondents in their memoranda
of argument filed prior to the hearing. Applicants filed no responding
material. No motion was brought by any party prior to the hearing, on the
timeliness issue. I allowed oral argument on this point to be made by all
parties at the hearing.
[45]
The
factors to be considered by the Court as to whether leave beyond the 30-day
period ought to be granted have been clearly established in Grewal v. Canada (Minister of
Employment and Immigration), [1985] 2 C.F. 263 (FCA) a decision frequently
cited by this Court in these circumstances. These factors are:
1. Does an
arguable case exist;
2. Did the Applicants
show a continuing intention to commence proceedings in a timely fashion;
3. Is there a
satisfactory reason for the delay; and
4. What
prejudice exists in respect of the other parties.
There is one overriding consideration
expressed at page 282 of Grewal that only if the ultimate search for
justice outweighs the necessity of setting the parties’ rights at rest will
leave be granted.
[46]
The
first factor requires no further consideration at this stage, the matter will
be considered substantively later in the Reasons.
[47]
The
second factor requires a consideration of the actions of the Applicants Cousins
and McNally. There is no evidence that either of them in the 1997 or 1998
period or at any time up until at least 2003 took any steps that might lead to
a challenge to OSFI’s decision as to actuarial surplus, nor is there any
evidence that they had any intention of doing so. Nothing seems to have
happened at least until 2003 when Keith, Cousins’ wife and McNally became
involved in a Committee concerned with the disposition of actuarial surplus.
That Committee however seems to have done little until after the decision of
the Supreme Court of Canada in Monsanto, reversing the lower Courts, was
made public in 2004. That decision was favourable to the interests of the
affected members. It is a clear inference that the Committee was waiting for
that decision and, if it was unfavourable, the Committee would have done
nothing more. Once the favourable decision was released at the end of July
2004, that Committee may have been spurred into further action. It was not,
however, until January 2005 that the Committee contacted OSFI including a peculiar
request that OSFI correctly rejected, that OSFI advise as to what steps should
be taken and for information as to suitable legal counsel. This is the first
time that the evidence shows any intention to take legal action to protect or
determine the interests of the Committee which included McNally, Keith and
Cousins’ wife.
[48]
I
find that there was no continuing intention of either Cousins or McNally to
bring legal action but only a belated intention arising in 2003 or 2004, several
years after the relevant events, to take action if the outcome of Monsanto
was seen as favourable.
[49]
The
third factor requires consideration as to whether a satisfactory reason for
delay has been shown in the evidence. No such reason has been shown. As
discussed in respect of the second factor above, nothing was done for several
years. No evidence from the Applicants addresses the delay in a way that
provides any satisfactory explanation.
[50]
The
fourth factor requires consideration of prejudice to the other parties. In
this regard the statements of the Federal Court of Appeal in Canada v. Berhad
2005 FCA 267 as repeated with approval in Canada (Attorney General) v. Trust
Business Systems, 2007 FCA 89 at paragraph 28 are important:
In Canada v. Berhad, [2005]
F.C.J. No. 1302, 2005 FCA 267, Létourneau J.A. wrote that the thirty-day limit
for commencing judicial review applications is in the best interest of the
public because it brings finality to administrative decisions and security to
those who comply with the decision or who enforce compliance with it. At
paragraph 60 he stated:
The importance of that public
interest is reflected in the relatively short time limits for the commencement
of challenges to administrative decisions – within 30 days from the date on
which the decision is communicated, or such further time as the Court may allow
on a motion for an extension of time. That time limit is not whimsical.
It exists in the public interest, in order to bring finality to administrative decisions
so as to ensure their effective implementation without delay and to provide
security to those who comply with the decision or enforce compliance with it,
often at considerable expense. [Emphasis added]
[51]
Applicants’
counsel relies on Grewal, supra, at page 282 as well as Huard
v. Canada (Procureur general) 2007 CF 195 at paragraphs 91 to 96 to argue
that even a delay of several years should not dissuade the Court from granting
an extension of time where a great injustice might otherwise occur. That
injustice, counsel argues, is that those affected by the Labrador termination
might have an opportunity to obtain funds from actuarial surplus whereas those
affected by the Fundy and PEI terminations will not. That could be the
result, but I do not view this as an injustice. Those affected by the Fundy
and PEI terminations
had several years in which to take any dispute they perceived to the Courts. The
Court should not condone an exercise whereby a party can be permitted to seek
redress well after an event because the law, in a subsequent decision, has been
clarified or changed. This would invite opportunistic litigation. A party who
is truly concerned about a decision affecting their situation should be
expected to take steps at the time, even if the law is unclear, rather than
wait for several years until a favourable judicial interpretation materializes.
[52]
Therefore,
I deny the oral Application to extend the time for filing Applications
T-1519-05 and T-1520-05. As a result, those Applications are dismissed. I
will, however, in deciding Issue No. 4, later in these Reasons, consider the
issue raised in those Applications as to the interpretation of section 29(12)
of the PBSA.
Issue No. 2 - Reconsideration
[53]
The
second issue is:
Does the Superintendent have
the power to re-consider decisions made several years earlier as to approving a
plan of partial termination that did not provide for payment out at the time of
surplus in the fund?
[54]
Applicants’
counsel wrote to OSFI on March 8, 2005 asking, among other things, that OSFI
reconsider its decisions respecting Fundy and PEI, made in
1997 and 1998, which decisions had the effect of not providing for payment out
of actuarial surplus at that time. The reply by OSFI on August 8, 2005 was
that the PBSA did not provide for such reconsideration and, absent a material
change in circumstances, (Monsanto was not one) no such reconsideration
would be made.
[55]
It
was quite correct for OSFI to state, and no counsel for any party disputes,
that the PBSA makes no provision for reconsideration of such decisions. The
intent of Parliament not to make such provision is clear in that section 32(2)
of the PBSA does make provision for reconsideration of certain other decisions
such as refusal to register a plan or to revoke or cancel such registration.
[56]
Just
as final decisions of a Court are not to be revisited except under very limited
circumstances, decisions of a tribunal are not open for reconsideration just
because there has been a change in circumstances, such as a change in the
jurisprudence. Justice Sopinka in Chandler v. Alberta Association of
Architects [1989] 2 S.C.R. 848 at page 861 said:
Apart from the English
practice which is based on a reluctance to amend or reopen formal judgments,
there is a sound policy reason for recognizing the finality of proceedings
before administrative tribunals. As a general rule, once such a tribunal has
reached a final decision in respect to the matter that is before it in
accordance with its enabling statute, that decision cannot be revisited because
the tribunal has changed its mind, made an error within jurisdiction or because
there has been a change of circumstances. It can only do so if authorized by
statute or if there has been a slip or error within the exceptions enunciated in
Paper
Machinery Ltd. V.J. O. Ross Engineering Corp., supra.
[57]
I
find, therefore, that OSFI made no reviewable error in refusing to reconsider
its decisions in the Fundy and PEI cases.
Issue No. 3 – Standard
of Review
[58]
The
third issue is:
What is the standard to be
applied by the Court in judicially reviewing the decisions of the
Superintendent, at issue?
[59]
The
Supreme Court of Canada in Monsanto, supra, at paragraphs 6
through 16 of its Reasons conducted a thorough pragmatic and functional review
of the situation respecting the decision of the Financial Services Tribunal
on an issue virtually identical to the one under consideration here.
[60]
I
find that there is little difference in the situation in this case and that
considered in Monsanto. Neither the Ontario nor federal
statutes provide for a privative clause. The nature of the problem is
identical. The relative expertise is the same: the federal Superintendent is
a general body having duties in respect of several financial institutions just
as the Ontario Superintendent does. As earlier discussed, that Court in Buschau
equated the functions performed by the Ontario Superintendent with those of the
federal Superintendent. The fact that in Ontario a Tribunal
reviewed the decision of the Superintendent before it was considered by the
Court, is not material. The purpose of the legislation is the same. For the
purposes of the issue of section 29(12) before the Court, that is an issue of
law.
[61]
Therefore,
I conclude, following the Supreme Court of Canada in Monsanto at
paragraph 16, that there should be a lower degree of deference, and that a
standard of review of correctness should be adopted in this case. There are no
persuasive grounds for the Court to grant the Superintendent any deference on
the pure question of law before the Court in this case.
Issue No. 4 – Section
29(12)
[62]
The
fourth issue is:
Does section 29(12) of the
PBSA require the distribution of a proportional share of actuarial surplus when
a federally regulated defined-benefit pension plan is partially terminated or
wound up?
[63]
Section
29(12) of the PBSA reads as follows:
Where a plan is terminated in
part, the rights of members affected shall not be less than what they would
have been if the whole of the plan had been terminated on the same date as the
partial termination.
[64]
Applicants’
counsel argues that, just as the Supreme Court found in Monsanto, where
there is a partial termination and wind-up of a pension plan, there must be a
proportional payment out of actuarial surplus at that time.
[65]
Respondents’
counsel argue first that the provisions of the PBSA when read as a whole
provide for payment out only upon the final termination and wind-up of the
whole of the plan. Alternatively, they argue that section 29(12) gives to the
Superintendent an unfettered discretion to approve a Report which provides, or
one that does not provide, for proportional payout upon partial termination.
It is clear, however, that such discretion would not exist if a proper
interpretation of section 29(12) in law, required a payment out upon partial
termination and wind-up.
[66]
All
parties are agreed that a further, unresolved issue remains, namely, who is the
proper person entitled to receive the payment out, if any. The parties are all
agreed that this issue should not be resolved at the present time on the
present record but should be left to a later time, if required.
[67]
Consideration
of section 29(12) of the PBSA must begin with the decision of the Supreme Court
in Monsanto and the interpretation that it gave to the section 70(6) of
the Ontario Pension Benefits Act, supra. Section 70(6) reads as
follows:
On the partial wind up of a
pension plan, members, former members and other persons entitled to benefits
under the pension plan shall have rights and benefits that are not less than
the rights and benefits they would have on a full wind up of the pension plan
on the effective date of the partial wind up.
[68]
The
Supreme Court in Monsanto began its analysis by stating what is now the
cardinal principle of statutory interpretation in Canada quoting from Bell
ExpressVu Limited Partnership v. Rex [2002] 2 S.C.R. 559 at para 26 which
in turn cited Dreidger, Construction of Statutes (2nd ed.
1983) at p. 87:
Today there is only one
principle or approach, namely, the words of an Act are to be read in their
entire context and in their grammatical and ordinary sense harmoniously with
the scheme of the Act, the object of the Act, and the intention of Parliament.219
[69]
The
Historical Context and Object of the Act discussion by the Supreme Court in Monsanto
with respect to the Ontario legislation would be the same, in any material
respect, if the discussion were to be about the federal legislation, the PBSA.
The conclusion reached as to the Historical Context by the Supreme Court at
paragraph 24 is similarly appropriate here:
The historical context, though
not determinative, may provide some insight into the legislature’s intention
regarding the effect of s. 70(6). Through its statutory interventions, the
legislature has sought to clarify some aspects of the relationship between
employers and employees in pension matters. Steps have been taken to improve
many employee rights but the importance of maintaining a fair and delicate
balance between employer and employee interests, in a way which promotes private
pensions, has also been a consistent theme. It is in light of this background
that the legal meaning of the provision must be interpreted in accordance with
the accepted approach to statutory interpretation.
[70]
Similarly,
the conclusion at paragraph 47 of Monsanto, as to the Object of the Act
respecting section 70(6) of the Ontario statute is equally
applicable to section 29(12) of the federal statute:
Section 70(6) was enacted to
ensure that Affected Members on partial wind-up are not in a worse position
than a future full wind-up group. This requirement of equity provided by s.
70(6) is in relation to other rights provided for under the Act. As far as the
distribution of surplus is concerned, the object of the Act and s. 70(6) strongly
promote an interpretation that requires this distribution to occur at the time
of the partial wind-up rather than later.
[71]
An
examination of the Grammatical and Ordinary Sense of section 29(12) and the
Scheme of the PBSA requires a more detailed analysis.
Grammatical and Ordinary
Sense
[72]
Section
29(12) of the PBSA reads:
(12) Where a plan is
terminated in part, the rights of members affected shall not be less than what
they would have been if the whole of the plan had been terminated on the same
date as the partial termination.
[73]
This
provides that on “termination” of part of the plan, the “rights” of the members
affected “shall not be less” than what they would have been if the whole of the
plan had been “terminated” “on the same date”. Thus the ordinary and
grammatical sense of section 29(12) is that members affected by a partial
termination are to be put in the same position in respect of distribution of
surplus as those affected by a final termination, but as of the date of the
partial termination
Scheme of the Act
[74]
In
considering the scheme of the PBSA, the word “terminated” is defined in section
2 of the PBSA as a “cessation of crediting benefits” and, unlike the
Ontario statute, does not include “winding-up which is defined in section 2 of
the PBSA as the “distribution of assets” of a plan that “has been
terminated”. There is no doubt that termination and wind-up under the PBSA
are two different concepts and that termination must precede wind-up. However,
one must consider what the “rights” of a member are in respect of a terminated
plan when considering section 29(12).
[75]
In
considering the “rights” of a member, section 28(1)(d) of the PBSA provides
that upon termination of the whole or part of a plan, the administrator
is required to provide to the affected member a written statement of the
member’s pension benefits and other benefits payable under the plan.
28(1) A pension plan shall
provide
…
(d) that, where a member of
the plan retires, ceases to be a member of the plan or dies, or where the whole
or part of the plan is terminated, the administrator shall give to that member
(or, in the case of termination, each member) and to the member’s spouse or
common-law partner (and, in the case of the member’s death, the member’s legal
representative) a written statement, in prescribed form, of the member’s
pension benefits and other benefits payable under the plan, within thirty days,
or such longer period as the Superintendent may allow, after the date of the
retirement, cessation of membership, death or termination, as the case may be.
[76]
Further,
in considering the “rights” of a member, section 29(6) of the PBSA requires
that, on termination of the whole of a pension plan, the employer shall top-up
any shortfall in the assets of the plan:
(6) On the termination of the
whole of a pension plan, the employer shall pay into the plan all amounts that
would otherwise have been required to be paid to meet the prescribed tests and
standards for solvency referred to in subsection 9(1) and, without limiting the
generality of the foregoing …
[77]
Sections
29(7) and (8) of the PBSA preserve the assets of the plan for the benefit of
the members:
(7) On the termination or
winding-up of the whole of a pension plan, no part of the assets of the plan
shall revert to the benefit of the employer until the Superintendent’s consent
has been obtained and provision has been made for the payment to members and
former members and their spouses, common-law partners, beneficiaries, estates
or successions of all accrued or payable benefits in respect of membership up
to the date of the termination or winding-up and, for that purpose, those
benefits shall be treated as vested without regard to conditions as to age,
period of membership in the plan or period of employment.
(8) On the termination of the
whole of a pension plan, all assets of the plan that are to be used for the
purpose of providing pension benefits or other benefits continue to be subject
to this Act.
[78]
Section
29(11) of the PBSA provides that where a plan has been terminated, the
Superintendent “may” step in and require action by the administrator if
insufficient activity has been undertaken to wind-up the plan:
(11) Where the whole of a
pension plan has been terminated and the Superintendent is of the opinion that
no action or insufficient action has been taken to wind up the plan, the
Superintendent may direct the administrator to distribute the assets of the
plan in accordance with the regulations made under paragraph 39(j), and may
direct that any expenses incurred in connection with that distribution be paid
out of the pension fund of the plan, and the administrator shall forthwith
comply with any such direction.
Partial termination of the
plan
[79]
The
Respondents’ counsel argue that the word “may” in this sub-section means that
there is a discretion in the Superintendent to direct a winding-up or not and
some examples were given, all of which illustrate not that winding-up would
never happen, but that it would be delayed. Those counsel also argue that this
provision applies only to a final termination thus a winding-up can only occur,
if directed by the Superintendent on final termination.
[80]
I
disagree. First, as to the use of the word “may”, the Act does not contemplate
a situation where the assets will remain in a plan forever. At some point
there must be a winding-up. The Superintendent’s discretion is limited to that
of ascertaining when it is reasonable to delay the winding up for a reasonable
period of time.
[81]
Second,
subsection 29(11) cannot be limited to final termination only in view of
subsection 29(12) which provides that a member’s rights on partial termination
are the same as those on final termination. Thus, on partial termination the
Superintendent, if it is perceived that the administrator has not taken
reasonable steps to wind-up the relevant part of the plan, must step in and see
that such steps are taken in a reasonable fashion.
[82]
Thus,
the scheme of the Act is consistent with requiring that there be a proportional
distribution of surplus on or shortly after partial termination.
Conclusion as to Section
29(12)
[83]
Having
regard to all the relevant considerations, I find that section 29(12) of the
federal Pension Benefits Standards Act, supra, requires
proportional distribution of the surplus attributable to the wound up
part of the plan. Wind-up must occur within a reasonable time from termination
and, if winding-up does not occur within a reasonable time after termination,
the Superintendent shall step in and require that it be done.
Remedies
[84]
Having
regard to the Reasons provided , I find that:
1.
Applications
T-1519-05 and T-1520-05 are dismissed as being instituted too late;
2.
That
part of the application T-1518-05 dealing with the Superintendent’s refusal to
reconsider the Fundy and PEI decisions is dismissed as there is no
provision in the PBSA or otherwise for such reconsideration.
3.
That
part of application T-1518-05 dealing with the Labrador/Moncton situation is
allowed to the extent that a mandamus will issue directing that the
Superintendent not approve a report that does not provide for wind-up of the
affected part of the plan and the proportional distribution of actuarial
surplus within a reasonable time.
[85]
As
to costs, the success was divided and no costs will be awarded to any parties.
May
1, 2007
Toronto,
Ontario
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