Date: 20080626
Docket: A-266-07
A-267-07
A-269-07
A-270-07
A-271-07
Citation: 2008 FCA 226
CORAM: NOËL
J.A.
BLAIS J.A.
RYER
J.A.
DANA P.
COUSINS and CHARLES McNALLY
Appellants
(A-270-07 and A-271-07)
and
DANA P. COUSINS, DONNA
M. KEITH and CHARLES McNALLY
Appellants (A-269-07)
Respondents
(A-266-07 and A-267-07)
and
ATTORNEY GENERAL OF CANADA
Respondent
(A-270-07, A-271-07,
A-269-07 and A-267-07)
Appellant (A-266-07)
and
MARINE ATLANTIC INC.
Respondent
(A-270-07, A-271-07,
A-269-07 and A-266-07)
Appellant (A-267-07)
REASONS FOR
JUDGMENT
BLAIS J.A.
INTRODUCTION
[1]
This is a consolidated appeal from the decision
of the Applications Judge (2007 FC 469) dated May 1, 2007, in respect of three
applications for judicial review that sought to raise, as the principal issue,
whether subsection 29(12) of the Pension Benefits Standards Act, 1985,
R.S.C. 1985, c. 32 (2nd Supp.) (the “PBSA”), requires that the proportional
amount of surplus in a federally regulated pension plan existing at the time of
a partial termination of the plan be paid out. The Applications Judge dismissed
two of the applications (T-1519-05 and T-1520-05) as being out of time, and
allowed the third application (T-1518-05) in part having found that subsection
29(12) of the PBSA requires the payment out of the surplus attributable to the
partial termination of a pension plan.
[2]
In conformity with the order consolidating these
appeals, these reasons will be filed in file A-266-07, being the lead file, and
copies thereof will be filed in files A-267-07, A-269-07, A-270-07 and
A-271-07.
[3]
With respect, it is submitted that the Applications
Judge erred in his interpretation of subsection 29(12) of the PBSA with the
result that the appeals relating to this portion of his decision in respect of
the application in T-1518-05 should be allowed.
[4]
Given my conclusion on the principal issue of
the interpretation of subsection 29(12) of the PBSA, it will not be necessary
to address the appeals relating to the decision of the Applications Judge in
respect of the applications in T-1519-05 and T-1520-05 or the balance of the
application in T-1518-05, such determinations being now academic.
ISSUES
[5]
The
appeals raise the following four issues:
- Did
the Applications Judge err in determining that two of the three
applications for judicial review are out of time and in refusing to
exercise his discretion to extend the time for filing these applications?
- Did
the Applications Judge err in determining that the Superintendent of
Financial Institutions properly declined to reconsider past approvals of
partial termination reports that did not provide for payment out of
surplus in the pension plan at the time of those partial terminations?
- Did
the Applications Judge err in his determination of the standard of review
to be applied in respect of the decision of the Superintendent of
Financial Institutions interpreting subsection 29(12) of the PBSA?
- Did
the Applications Judge err in his determination that subsection 29(12) of
the PBSA requires the distribution of a proportional share of an existing
surplus when a federally regulated pension plan is partially terminated?
The appeals will be disposed of by addressing issues 3 and 4 only.
BACKGROUND
[6]
Dana P. Cousins, Charles McNally and Donna M.
Keith (collectively, the “applicants”), are former employees of Marine Atlantic
Inc. (“MAI”) and former members of the Pension Plan for Employees of Marine
Atlantic Inc. (the “Plan”). The Plan is registered under the PBSA, and is
regulated by the Office of the Superintendent of Financial Institutions (“OSFI”).
It is not disputed that the Plan is a “defined benefit plan” within the meaning
of subsection 2(1) of the PBSA. For the purposes of the PBSA, MAI is the
administrator of the Plan. The pension fund in respect of the Plan is held by Guarantee
Trust Company of Canada
pursuant to a trust agreement (the “Trust Agreement”).
[7]
In the years between 1997 and 2000, MAI
implemented changes to its operations that resulted in the appellants and other
employees being terminated from their employment with MAI. MAI implemented
partial terminations of the Plan relating to certain employment cutbacks
resulting from the closure of the Bay of Fundy ferry service (the “Bay of Fundy
Termination”), the P.E.I. ferry service (the “PEI Termination”) and the
Labrador ferry service and the Moncton office (the “Labrador and Moncton
Termination”). Cousins, McNally and Keith were affected by the Bay of Fundy
Termination, the PEI Termination and the Labrador and Moncton Termination,
respectively.
[8]
In respect of each of the Bay of Fundy
Termination and the PEI Termination, and pursuant to the requirements of the
PBSA, MAI filed partial termination reports with OSFI setting out the accrued
benefits of affected members as determined by MAI. The partial termination
reports in respect of the Bay
of Fundy Termination and the
PEI Termination were approved by OSFI in 1997 and 1998, respectively, and
pension benefits were distributed in accordance with these reports.
[9]
In 1997, OSFI permitted MAI to distribute
accrued benefits, as determined by MAI, to members affected by the Labrador and
Moncton Termination without having filed a partial termination report on the
understanding that such report was forthcoming. In May 2004, MAI filed this
partial termination report which has not yet been approved by OSFI.
[10]
The Bay of Fundy Termination, the PEI Termination and the Labrador and Moncton Termination all
proceeded on the basis that there was no requirement to pay out a proportional
share of the surplus existing in the Plan at the time of the partial
terminations of the Plan to the affected members. Additionally, OSFI did not
require MAI to distribute any surplus relating to any of these partial
terminations of the Plan.
[11]
In July 2004, the Supreme Court of Canada
released its decision in Monsanto Canada Inc. v. Ontario (Superintendent of
Financial Services), 2004 SCC 54, [2004] 3 S.C.R. 152, [Monsanto],
in which it determined that subsection 70(6) of the Ontario Pension Benefits
Act, R.S.O. 1990, c. P.8 (the “PBA”), requires the distribution of a proportional
share of any surplus when a defined benefit plan is partially terminated.
[12]
In letters dated March 8, 2005 and May 11, 2005,
counsel for the appellants, relying on the decision in Monsanto, wrote
to OSFI seeking an order from the Superintendent of Financial Institutions (the
“Superintendent”) for an accounting of the surplus in the Plan at the time of
the partial terminations of the Plan and a distribution, pursuant to subsection
29(12) of the PBSA, of that surplus among the applicants and the other employees
affected by the partial terminations of the Plan.
[13]
In a letter dated August 8, 2005, the
Superintendent refused to direct a distribution of surplus in relation to the partial
terminations of the Plan. In particular, in respect of the Bay of Fundy
Termination and the PEI Termination, the Superintendent stated that OSFI does
not have the legal authority to reconsider the past approval of a partial
termination report unless new information is presented that is material to the
case. The Superintendent went on to note that the Monsanto
decision does not constitute new information in this context. The
Superintendent also pointed to the fact that there is no legislative authority
to reconsider the past approval of a partial termination report regardless of
whether or not surplus currently exists in a pension plan. In respect of the
Labrador and Moncton Termination currently under consideration by OSFI, the
Superintendent disclosed the general position of OSFI whereby if a plan is in a
surplus position at the time of a partial termination but no longer has surplus
assets, there can be no right to a distribution of surplus assets which no
longer exist. Moreover, in light of a recently released public consultation
paper by the federal Department of Finance, the Superintendent was of the view
that it would be inappropriate for OSFI to require that a pension plan
registered under the PBSA distribute all or a portion of any surplus assets on
the partial termination of the plan.
[14]
In his letter, the Superintendent also addressed
the implications of the Monsanto decision. According to the
Superintendent, the reasoning of the Supreme Court of Canada in Monsanto
does not apply to subsection 29(12) of the PBSA; and even if it did, he was of
the view that, unlike the Ontario legislation, there is no general requirement
in the PBSA that all assets be distributed on the full termination of a pension
plan with the result that entitlement to a distribution of surplus depends on
the terms of the particular pension plan. The Superintendent noted that this
determination of entitlement on full termination also applies to a partial
termination. Based on his reading of the Plan, the Superintendent determined
that there was no clear obligation on the part of MAI as administrator of the
Plan, or right on the part of members of the Plan, regarding the distribution
of the assets of the Plan on either a full or partial termination of the Plan.
[15]
On September 6, 2005, the applicants brought an
application for judicial review (T-1518-05) challenging the August 8, 2005 decision
of the Superintendent. Applications for judicial review were also brought on
the same date challenging the approvals of the partial termination reports in
respect of the Bay of Fundy Termination and the PEI Termination in 1997 and
1998, respectively (T-1520-05 and T-1519-05). The three applications for
judicial review raised the common issue of whether subsection 29(12) of the
PBSA requires the payment out of a proportional share of surplus that exists at
the time of a partial termination of a federally regulated defined benefit plan.
[16]
The Applications Judge dismissed the
applications in T-1520-05 and T-1519-05 as being instituted too late as well as
the portion of the application in T-1518-05 concerning the Superintendent’s
refusal to reconsider the decisions in T-1520-05 and T-1519-05. Accordingly, the only issue remaining to be determined by the
Applications Judge, which this Court will address, is the portion of the
application in T-1518-05 concerning whether, for the purposes of the Labrador
and Moncton Termination, subsection 29(12) of the PBSA requires the distribution
of a proportional share of the surplus attributable to the partial termination
of a federally regulated defined benefit plan.
ANALYSIS
Subsection 29(12) of the PBSA
Standard of Review
[17]
The Applications Judge addressed the issue of
the standard to be applied in reviewing the Superintendent’s interpretation of
subsection 29(12) of the PBSA. The Applications Judge observed that the Supreme
Court of Canada in Monsanto had conducted a thorough pragmatic and
functional review in respect of the decision of the Ontario Financial Services
Tribunal on an issue virtually identical to the one before him. Following the
decision in Monsanto, he determined that the standard of correctness
should be adopted noting that there were no persuasive grounds for granting the
Superintendent any deference on the pure question of law before him. He did not
find it material that in Monsanto the body under review was not the
Ontario Superintendent but rather the Financial Services Tribunal.
[18]
In Dunsmuir v. New Brunswick, [2008] S.C.J. No. 9 (QL),
2008 SCC 9 [Dunsmuir], the Supreme Court of Canada stated that a
two-step process is to be followed in determining the standard to be applied in
reviewing the decision of a tribunal. At paragraph 62, Bastarache and LeBel JJ.
stated:
62 In
summary, the process of judicial review involves two steps. First, courts
ascertain whether the jurisprudence has already determined in a satisfactory
manner the degree of defence to be accorded with regard to a particular
category of question. Second, where the first inquiry proves unfruitful, courts
must proceed to an analysis of the factors making it possible to identify the
proper standard of review.
[19]
The Applications Judge was of the view that the
decision of the Supreme Court of Canada in Monsanto satisfactorily
determined that the interpretation of subsection 29(12) of the PBSA is a
question of law in respect of which the appropriate standard of review is
correctness.
[20]
With
respect, I am of the view that the Applications Judge erred in summarily
relying on the conclusion reached in Monsanto without further analysis.
In fact, he failed to consider or give sufficient weight to the following
facts:
(a) In Monsanto, the body
under review was not the Ontario Superintendent but the Financial
Services Tribunal. This body is entirely distinguishable from the Superintendent
and is, instead, a purely adjudicative tribunal (for which there is no equivalent
in the federal scheme) that reviews decisions of the Superintendent;
(b) Unlike the Superintendent’s
office, the Financial Services Tribunal is not the regulatory body that has the
advantage of being closer to the dispute and the industry;
(c) The Financial Services
Tribunal has no policy function as part of its pensions mandate, which finding
was crucial to the determination by the Supreme Court of Canada that the
Financial Services Tribunal does not have any greater expertise relative to the
courts in statutory interpretation that warrants deference;
(d) The decisions of the Financial
Services Tribunal are subject to a statutory right of appeal; and
(e) The sole issue before the
Financial Services Tribunal was a specific legal question as to the
interpretation of one provision of the relevant legislation.
[21]
The
standard of review analysis, left unconsidered by the Applications Judge,
involves the following four factors:
- The
presence or absence of a privative clause or statutory right of appeal;
- The
relative expertise of the decision-maker;
- The
purpose of the decision-maker as determined by the interpretation of the enabling
legislation; and
- The
nature of the question at issue, in particular whether it relates to a
determination of law or fact.
[22]
Even if this Court concludes that the
Superintendent was engaged in deciding a pure question of law, the standard of
reasonableness ought to apply. The Supreme Court of Canada in Pushpanathan v. Canada (Minister of Citizenship and
Immigration), [1998] 1 S.C.R. 982, [1998] S.C.J. No. 46 (QL), and more
recently in Dunsmuir, has noted that even a pure question of law may
be decided on the basis of reasonableness where the tribunal is interpreting
its own statute and/or other factors of the standard of review
analysis suggest that such deference is the legislative
intention.
[23]
Moreover,
the decisions of the Superintendent were discretionary. While the decisions
approving the partial termination reports in respect of the Bay of Fundy
Termination and the PEI Termination were obviously subject to the discretion of
the Superintendent, the decision on August 8, 2005 as to whether the
Superintendent could revisit such approvals 7 or 8 years later and as to
whether to order an accounting of the surplus in the Plan at the time of the
partial terminations of the Plan was similarly discretionary.
[24]
In the circumstances of this case, the Superintendent
was required to exercise his discretionary powers in the face of a range of
policy-laden remedial choices that involved the balancing of multiple sets of
interests of competing constituencies. These are precisely the circumstances
where the Supreme Court of Canada has urged a higher degree of deference. In Baker
v. Canada (Min.
of Citizenship and Immigration), [1999] 2 S.C.R.
817, [1999] S.C.J. No. 39, (QL) at paragraph 56, the Supreme Court of Canada acknowledged
the particular deference to be accorded by the courts when reviewing
discretionary administrative decisions:
56 … The pragmatic
and functional approach can take into account the fact that the more discretion
that is left to a decision-maker, the more reluctant courts should be to
interfere with the manner in which decision-makers have made choices among
various options.
[25]
The
Applications Judge failed to undertake any meaningful analysis of the appropriate
standard of review and, instead, applied a standard applicable to a disparate
body under a different legislative regime. All of the factors under the
standard of review analysis point to the August 8, 2005 decision of the
Superintendent being given a high degree of deference. For the foregoing
reasons, the Applications Judge’s conclusion concerning the appropriate standard
of review was in error and the standard of reasonableness should apply.
[26]
In
any event, even applying a standard of correctness, the Superintendent’s
decision should stand for the reasons provided below.
Interpretation of
subsection 29(12) of the PBSA
[27]
In addressing the interpretation that should be
given to subsection 29(12) of the PBSA, the Applications Judge began his
analysis with the decision in Monsanto. He agreed with the Supreme Court
of Canada that the starting point was the principle of statutory interpretation
that “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”. The examination of the
grammatical and ordinary sense of subsection 29(12) and the scheme of the PBSA
constituted the crux of his analysis.
[28]
The
Applications Judge determined that “the ordinary and grammatical sense of
subsection 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”.
[29]
In
considering the rights that a plan member has in respect of a terminated plan
under the scheme of the PBSA, the Applications Judge observed the following:
(a)
Paragraph
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;
(b)
Subsection
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;
(c)
Subsections
29(7) and (8) of the PBSA preserve the assets of the plan for the benefit of
members;
(d)
Subsection
29(11) of the PBSA provides that where a plan has been terminated, the
Superintendent “may” direct a plan administrator to distribute the assets of
the plan if insufficient activity has been undertaken to wind up the plan;
(e)
The
Superintendent’s discretion under subsection 29(11) of the PBSA is limited to
that of ascertaining when it is reasonable to delay the winding-up for a
reasonable period of time. The PBSA does not contemplate a situation where the
assets will remain in a plan forever;
(f)
In light
of subsection 29(12) of the PBSA, subsection 29(11) cannot be limited to a
final termination and applies on a partial termination with the result that if
the Superintendent is of the view that the plan administrator has not taken
reasonable steps to wind up the relevant portion of the plan on a partial
termination, the Superintendent must step in and see that such steps are taken
in a reasonable fashion.
[30]
Based
on these observations, the Applications Judge found that the scheme of the PBSA
is consistent with requiring that there be a proportional distribution of
surplus on or shortly after partial termination. The Applications Judge went on
to reach the following conclusion at paragraph 83 of his reasons:
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.
[31]
Accordingly,
the Applications Judge allowed the application in T-1518-05 to the extent that
a mandamus should be issued directing that the Superintendent not
approve a partial termination report in respect of the Labrador and Moncton Termination
that does not provide for wind-up of the affected part of the Plan and the
proportional distribution of surplus within a reasonable time.
[32]
For the reasons that follow, I am of the view
that the Applications Judge erred his interpretation of subsection 29(12) of
the PBSA.
[33]
In my view, the essence of this case is the
degree to which the decision of the Supreme Court of Canada in Monsanto
applies, and by extension, the degree to which the Ontario PBA and the federal
PBSA overlap.
[34]
The decision in Monsanto addressed the
interpretation of subsection 70(6) of the PBA which is similar to subsection
29(12) of the PBSA. These provisions are reproduced below:
|
70.
…
(6) 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.
29.
(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.
|
70.
…
(6) À la
liquidation partielle d’un régime de retraite, les participants, les anciens
participants et les autres personnes qui ont droit à des prestations en vertu
du régime de retraite ont des droits et prestations qui ne sont pas
inférieurs aux droits et prestations qu’ils auraient à la liquidation totale
du régime de retraite à la date de prise d’effet de la liquidation partielle.
29.
(12)
Les droits des participants en cas de cessation partielle d’un régime doivent
être au moins égaux à ceux qu’ils auraient eus si la cessation avait été
totale
|
[35]
In
Monsanto, the Supreme Court of Canada recognized that subsection 70(6)
of the PBA requires that the rights and benefits of members affected by the
partial wind-up of a pension plan are not to be less than those rights and
benefits that would be available to these members if there was a full wind-up
of the plan on the date of the partial wind-up. The Supreme Court of Canada
went on at paragraph 34 of its reasons to describe the role of subsection 70(6)
of the PBA:
34 ... in this statutory scheme, the role of
s. 70(6) appears to be as a residual deeming provision reflecting the
legislature's intent of assuring that rights on partial wind-up are not less
than those available on full wind-up, whether granted under the Act or under
the terms of the Pension Plan.
As a matter of logic, the Supreme Court of
Canada found it clear that if there is a surplus distribution on a full wind-up
of a pension plan, then subsection 70(6) of the PBA requires that there should
also be a surplus distribution on a partial wind-up of the pension plan.
[36]
At paragraph 26 of the reasons in Monsanto,
it was recognized that there was no dispute in that case that on the full wind-up of
the pension plan, all members had the right to a surplus distribution:
26 Where the
disagreement lies is with regard to the timing of distribution following a
partial wind-up of a plan in which there is an actuarial surplus. The
respondent reasons that, since (i) s. 70(6) requires the rights and benefits on
a partial wind-up to not be less than those available on full wind-up, and (ii)
all parties agree that surplus distribution would occur on a full wind-up
(Court of Appeal judgment, at para. 43; see also s. 79(4)), then (iii) s.
70(6) must require surplus distribution on a partial wind-up. In contrast, the
appellants argue that, at most, s. 70(6) requires the vesting of the right to
participate in surplus distribution in a potential future full wind-up because
it is only on final wind-up that an actual, rather than actuarial, surplus can
exist. In my opinion, the former interpretation accords better with the
ordinary and grammatical meaning of the section. [Emphasis added.]
[37]
Subsection
79(4) of the PBA, referred to in the passage from Monsanto, provides
that where a pension plan is silent as to the distribution of surplus on a wind-up,
the pension plan will be construed to require the distribution of a proportional
share of any surplus among affected members on the date of the wind-up:
|
79.
…
(4) A pension plan that does not provide for payment of surplus
money on the wind up of the pension plan shall be construed to require that
surplus money accrued after the 31st day of December, 1986 shall be
distributed proportionately on the wind up of the pension plan among members,
former members and any other persons entitled to payments under the pension
plan on the date of the wind up.
|
79.
…
(4)
Un régime de retraite qui ne prévoit pas le paiement de sommes excédentaires
à la liquidation du régime de retraite s’interprète comme exigeant que les
sommes excédentaires accumulées après le 31 décembre 1986 soient réparties
proportionnellement, à la liquidation du régime de retraite, entre les
participants, les anciens participants et les autres personnes qui ont droit
à des paiements aux termes du régime de retraite à la date de la liquidation.
|
[38]
In Monsanto,
the members’ entitlement to a surplus distribution on the full wind-up of
the pension plan was key to the determination at paragraph 31 of the reasons that
the members were equally entitled to such a distribution on the partial wind-up
of the plan pursuant to subsection 70(6) of the PBA:
31 In
sum, [subsection 70(6)] indicates that the assessment of rights and benefits is
to be conducted as if the Plan was winding up in full on the effective date of
partial wind-up. The realization of rights and benefits, including the
distribution of surplus assets, then occurs for the part of the Plan actually
being wound up. Therefore, the Affected Members, if entitled, may
receive their pro rata share of the surplus existing in the fund on a
partial wind-up, as if the Plan was being fully wound up on that day. [Original
emphasis removed and my emphasis added.]
[39]
It is
important to recognize that, for the purposes of the PBA, the termination of a
pension plan coincides with the distribution of assets. The Ontario statute defines “wind-up” to
mean the termination of a pension plan and the distribution of the
assets of the pension fund. This strong and inextricable connection between the
termination of a pension plan and the distribution of assets in the Ontario scheme underpinned the
Supreme Court of Canada’s reasoning in Monsanto. In contrast, such a
connection is absent in the PBSA. Under the federal scheme, “termination” is
defined to mean the cessation of crediting of benefits to plan members
generally and “winding-up” is defined separately to mean the distribution of
the assets of a pension plan that has been terminated. While the PBSA
contemplates that winding-up is a step that follows the termination of a
pension plan, there is no provision in the PBSA that compels the distribution
of assets to be done on the termination of a pension plan.
[40]
Subsection
29(11) of the PBSA, on which the Applications Judge relied, does not grant a
right to any member to force a distribution of assets on the termination of a
pension plan. At most, that provision gives members the ability to ask the
Superintendent to (a) form an opinion that no action or insufficient action has
been taken to wind-up a pension plan that has been terminated; and, b) if such an
opinion has been formed, to exercise a discretion to direct the administrator
of the plan to distribute the assets of the plan in accordance with the
regulations made under paragraph 39(j) of the PBSA.
[41]
While
paragraph 39(j) of the PBSA enables the Governor in Council to make
regulations respecting the distribution of the assets of a pension plan that is
being wound-up, the Crown submits that no such regulations exist. Arguably, the
Superintendent could be powerless to direct a distribution of assets on
winding-up in the absence of any regulation under paragraph 39(j) of the
PBSA.
[42]
I have no
hesitation in concluding that subsection 29(11) of the PBSA simply grants a
discretionary power to the Superintendent to order a distribution of assets in
a limited set of circumstances. That provision certainly gives no right to members to a
distribution of a proportional share of any surplus existing
at the time of the partial termination of a pension plan. The Applications Judge
was incorrect to hold otherwise.
[43]
The
fact that, unlike the PBA, the PBSA treats “termination” and “winding-up” as
separate and distinct terms that occur at two different periods of time is relevant to the
interpretation of subsection 29(12) of the PBSA. Whereas subsection 70(6) of
the PBA equalizes the rights of members on a partial and full wind-up,
subsection 29(12) of the PBSA equalizes the rights of members on a partial and
full termination. The PBSA defines a “surplus” to mean the amount by which the
assets of a pension plan exceed its liabilities (i.e. the pension benefits owed
to members). Assets and liabilities cannot be precisely determined until a plan
is wound-up. As such, the existence of any actual or real surplus is determined
at some point after the termination of a plan, and the distribution
thereof would be the final step in the wind-up process. Accordingly, the
federal scheme itself appears to preclude a right to a distribution of surplus
from being a right on termination subject to subsection 29(12) of the PBSA. The
suggestion by counsel for the applicants that while a right to a distribution
of surplus crystallizes after the time of termination, such right is somehow
retroactive to the time of termination is without any merit.
[44]
The significant
differences between the PBA and the PBSA are not limited to the
definition of wind-up. For example, contrary to the Applications Judge’s view, subsection
29(6) of PBSA is in fact different from subsection 75(1) of the PBA in that only
the latter ensures that the employer is responsible for any deficit in the
pension plan on wind-up, whereas, the former limits the obligation of the
employer, essentially, to the payment of any accrued contribution obligations
that are outstanding at the time of the termination of the particular plan.
[45]
In addition to the fact that Monsanto concerned
a materially different legislative scheme, it is significant that all parties
in Monsanto agreed that all members were entitled to a surplus
distribution on the full wind-up of the plan. In Buschau v. Rogers
Communications Inc., 2006 SCC 28, [2006] 1 S.C.R. 973, [Buschau], the
Supreme Court of Canada
identified the sources of entitlement to surplus at paragraph 17 of its reasons:
17 … As the Court said in Schmidt,
"[t]he right to any surplus is crystallized only when the surplus becomes
ascertainable upon termination of the plan" (p. 654). Entitlement is
determined by consulting the Plan, the Trust agreement (Schmidt, at
para. 48) and the relevant legislation (Monsanto Canada Inc. v. Ontario (Superintendent of Financial
Services),
[2004] 3 S.C.R. 152, 2004 SCC 54, at para. 39).
[46]
Applying
Buschau, to support his conclusion that subsection 29(12) of the
PBSA provides for the distribution of surplus to affected members on a partial
termination, it was incumbent on the Applications Judge to ground the members’
right in either the PBSA, the Plan or the Trust Agreement. Subsection 10(6) of
the PBSA, which requires that every pension plan that is filed for registration
must provide for the use of surplus during the continuation of the plan and on
its termination, establishes
that surplus entitlement must be determined by the wording of the relevant
pension plan. While the Plan was registered prior to the enactment of
subsection 10(6) of the PBSA, the Plan explicitly states that “when all
liabilities of the Plan have been legally discharged, any balance of the Fund
then remaining shall be returned to the Company, subject to the consent of the
Superintendent”. The Trust Agreement merely provides that in the event of the
termination of the Plan, the trustee will, subject to the satisfaction of all
liabilities with respect to the members under the Plan, dispose of the pension
fund in accordance with the written direction of MAI that must be consistent
with the terms of the Plan.
[47]
As
discussed at paragraph 66 of the reasons of the Applications Judge, all parties
agree that entitlement, if any, to a distribution of the surplus in the Plan is
an unresolved issue to be left for another time. While I recognize that
negotiations may be underway to establish the proper recipient(s) of a
distribution of surplus following the full termination of the Plan, for the
purposes of these appeals the applicants have not established such an
entitlement so as to trigger the application of subsection 29(12) of the PBSA
on a partial termination.
[48]
Given
this admission by all parties that it takes negotiations to determine an
entitlement to surplus and that those negotiations occur after there has
been a termination, it is hard to conclude that a member has any right to
surplus at the time of the termination.
[49]
In
summary, the distinctions between the Ontario legislation considered in Monsanto
and the federal legislation at issue in this case are material and justify distinguishing
Monsanto and not treating it as a binding authority for the suggestion
that members of a federally regulated pension plan have a right to a
distribution of surplus at the time of a partial termination under the PBSA.
Such legislative distinctions must be respected by the Court and given meaning.
[50]
Additionally,
I conclude that the applicants have failed to convince me that members of the
Plan, or more specifically members affected by the Labrador and Moncton
Termination, have a right to a distribution of surplus on a full termination of
the Plan; therefore, such a right cannot be said to exist on a partial
termination of the Plan pursuant to subsection 29(12) of the PBSA as suggested.
[51]
As mentioned
in paragraphs 25 and 26 herein, the conclusion of the Superintendent on the
question of the statutory interpretation of subsection 29(12) of the PBSA is
supportable on either the standard of reasonableness or correctness.
[52]
For
the foregoing reasons, I would allow the appeals of MAI and the Crown.
CONCLUSION
[53]
Given
my conclusion that the applicants have failed to establish that, for the purposes of the Labrador and Moncton Termination, subsection
29(12) of the PBSA requires the distribution of a proportional share of the
surplus attributable to the partial termination of a federally regulated
defined benefit plan,
the two remaining issues regarding the timeliness of the applications in T-1520-05
and T-1519-05 and the Superintendent’s refusal to reconsider the decisions in
T-1520-05 and T-1519-05 need not be considered.
[54]
Therefore,
I would allow the appeals in files A-266-07 and A-267-07 with one set of costs
in file A-266-07; and dismiss the appeals in files A-269-07, A-270-07 and
A-271-07 with one set of costs in favour of Marine Atlantic Inc. in file
A-269-07.
“Pierre
Blais”
“I
agree.
Marc Noël J.A.”
“I
agree.
C. Michael Ryer J.A.”
Email this Content