Deborah Joan McPhail

Appeal from Ontario pension litigation concerning whether an employer could charge plan administration expenses to a pension trust fund, take contribution holidays in a defined benefit component, and use actuarial surplus from that component to satisfy contribution obligations for a newly added defined contribution component.

The majority held that reasonableness review applied to the Financial Services Tribunal's determinations, upheld the finding that most plan expenses were payable from the fund, and confirmed that the defined benefit contribution holidays were permitted under the plan text.

The majority further held that it was reasonable for the Tribunal to permit defined contribution holidays once retroactive amendments designated defined contribution members as beneficiaries of the same trust.

The Tribunal lacked authority to order costs from the fund because the fund was not a party, and the courts properly declined to award the appellants' costs from the fund because the litigation was adversarial.

Following a successful appeal regarding the right to issue third party claims, the appellants sought costs.

The parties agreed on the quantum of costs but disputed the timing of payment.

The Court of Appeal ordered costs payable forthwith, finding no special circumstances to justify a delay in payment.

Following a successful appeal by the employer regarding the administration of a pension plan, the parties made written submissions on costs.

The pension committee argued that its costs should be paid out of the pension fund on a substantial indemnity basis, relying on traditional trust principles.

The Court of Appeal rejected this argument, adopting the 'pension trust approach' which limits costs from the fund to cases involving the due administration of the trust or claims advanced for the benefit of all beneficiaries.

Finding the litigation to be adversarial, the Court ordered the committee to pay the employer's costs of the appeals on a partial indemnity basis.

The employer appealed a Divisional Court decision that overturned a Financial Services Tribunal ruling regarding the administration of a pension plan.

The Court of Appeal restored the Tribunal's decisions, holding that the employer was entitled to pay most plan expenses from the pension fund and to take contribution holidays using the actuarial surplus for both the defined benefit and defined contribution components of the plan.

The Court also found that while the notice of the conversion option was inadequate, the Superintendent was not required to refuse registration of the amended plan.

Finally, the Court held that the Tribunal lacked jurisdiction to order costs payable from the pension fund.

The appellants, former employees and beneficiaries of a pension plan, appealed two decisions of the Financial Services Tribunal regarding the employer's handling of the plan.

The Divisional Court held that the employer was not permitted to pay plan administration expenses out of the trust fund, as such amendments constituted an invalid revocation of the trust.

However, the Court upheld the employer's right to take contribution holidays in the defined benefit plan.

The Court also ruled that the employer could not use surplus funds from the defined benefit plan to cross-subsidize its contributions to a newly created defined contribution plan, and that the employer failed to provide proper statutory notice of the plan conversion.

The Tribunal's decision that it lacked jurisdiction to award costs out of the pension fund was upheld.

The appellants, representing members of a salaried pension plan, appealed a decision of the Financial Services Tribunal that upheld the Superintendent's consent to merge their plan with an hourly-paid plan.

The appellants argued the merger would dilute their plan's surplus and that the surplus constituted 'other benefits' protected under s. 81(5) of the Pension Benefits Act.

The Divisional Court held that the Tribunal had jurisdiction to hear the matter and that the appropriate standard of review was reasonableness simpliciter.

On the merits, the Court found that an actuarial surplus in an ongoing defined benefit plan is not an 'other benefit' under s. 81(5), and dismissed the appeal.

This is a note reporting that the Supreme Court of Canada dismissed the appeal from the Court of Appeal for Ontario's decision in Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services).

The case involved the distribution of an actuarial surplus upon the partial wind up of a defined benefit pension plan under the Pension Benefits Act.

Appeal concerning whether terminated members of a defined benefit pension plan are entitled to immediate distribution of a proportional share of actuarial surplus on a partial wind-up.

The Court held that the applicable standard of review of the Financial Services Tribunal’s interpretation of s. 70(6) of the Pension Benefits Act was correctness.

Applying the modern principle of statutory interpretation to the text, scheme, and purpose of the legislation, the Court concluded that s. 70(6) requires the realization and distribution of the affected members’ pro rata share of surplus as of the effective date of partial wind-up, if they are otherwise entitled.

The appeal was dismissed with costs.

The appellant pension board appealed a Divisional Court decision that a deceased member's former spouse was entitled to a portion of his pre-retirement death benefits pursuant to a separation agreement.

The Court of Appeal held that pension benefits, including pre-retirement death benefits, may be transferred under a domestic contract without the aid of s. 48(13) of the Pension Benefits Act.

The court also determined that the 50 per cent limit on transfers under s. 51(2) applied to the pre-1987 benefits, and that the calculation date for the benefits was the date of the member's death.

The appeal was dismissed and the cross-appeal was allowed in part.

This is a supplementary reasons for judgment regarding costs following an appeal and a Rule 59 motion concerning a pension plan death benefit.

The successful appellant sought substantial indemnity costs payable out of the pension plan fund.

The court found that the litigation clarified a problematic part of the Pension Benefits Act, benefiting members and administrators of plans throughout Ontario.

Applying the principle that costs of litigation necessary for the administration of a trust should be paid from the trust, the court awarded the appellant substantial indemnity costs of $40,000 plus disbursements, payable by the Board from the funds of the Plan.

The Ontario Teachers' Pension Plan Board brought a motion to amend a previous Divisional Court order regarding the allocation of a deceased member's pre-retirement death benefit between his former spouse and his surviving spouse.

The court held that the former spouse's entitlement under a separation agreement was not limited to benefits accrued after 1986, as the Pension Benefits Act provisions allowing assignment of pension benefits on marriage breakdown applied to both pre-1987 and post-1986 benefits.

However, the court found that section 51(2) of the Act limited the former spouse's entitlement to 50% of the benefits accrued during the period of marriage, which ended on the date of their divorce.

The appellant employer sought to partially wind up its defined benefit pension plan following a corporate reorganization and plant closure, without distributing the $3.1 million pro rata share of the actuarial surplus to the affected members.

The Superintendent of Financial Services refused to approve the report, but the Financial Services Tribunal ordered its approval, relying on the doctrine of legitimate expectations and its interpretation of the Pension Benefits Act.

The Divisional Court overturned the Tribunal's decision.

On appeal, the Court of Appeal affirmed the Divisional Court, holding that section 70(6) of the Pension Benefits Act requires the distribution of surplus on a partial wind up, and that the doctrine of legitimate expectations cannot be used to create substantive rights or override statutory obligations.

The appellant appealed a Financial Services Tribunal decision that directed the Superintendent not to order the Ontario Teachers' Pension Plan Board to pay her a pre-retirement death benefit.

The appellant and the deceased plan member had separated and executed a separation agreement dividing the pension, but the deceased later remarried.

The Divisional Court held that under section 48(13) of the Pension Benefits Act, the subsequent spouse's entitlement to the death benefit is subject to the former spouse's interest set out in a valid domestic contract.

The appeal was allowed and the Board was ordered to pay the appellant her share of the benefit.

Following the sale of a business, the Superintendent of Pensions approved the transfer of pension assets and liabilities from the exporting employer to the importing employer without giving notice to the importing employer's employees.

The employees applied for judicial review, arguing a breach of natural justice.

The Court of Appeal dismissed the appeal, holding that the Superintendent's procedure was reasonable.

The court found that the employees' interests would be adequately protected at the second stage of the process, when the importing employer applied to amend its pension plan, at which point notice and an opportunity to make submissions would be provided.

The employer applied to the Superintendent of Pensions to transfer pension assets to a consolidated plan.

Simultaneously, retired employees requested a partial wind-up of the plan to distribute an accumulated surplus following a plant closure.

The Superintendent approved the transfer without formally deciding or adequately considering the retirees' wind-up request.

The Divisional Court set aside the Superintendent's consent and ordered the assets returned.

On appeal, the Court of Appeal upheld the Divisional Court's decision, finding the Superintendent's failure to consider the wind-up request rendered the transfer consent unreasonable.

The Court of Appeal only set aside the Divisional Court's order mandating an automatic referral of any future wind-up decision to the Financial Services Tribunal.

The Superintendent of Financial Services appealed a decision of the Financial Services Tribunal regarding the partial wind-up of a pension plan by Monsanto Canada Inc. The Tribunal had ruled that Monsanto was not required to distribute pension surplus on a partial wind-up and that Monsanto had a legitimate expectation based on past regulatory practice.

The Divisional Court allowed the appeal, adopting the dissenting reasons of the Tribunal.

The Court held that section 70(6) of the Pension Benefits Act requires the distribution of surplus on a partial wind-up, and that the doctrine of legitimate expectation cannot justify disregarding the requirements of the law.