Markus F. Kremer

The parties made written submissions on costs following an appeal decision that yielded divided success.

The Court of Appeal held that neither party should pay costs to the other under the usual loser-pays rule.

However, because both parties acted to protect or advance the interests of the pension plan fund on their respective successful issues, the court awarded each party $15,000 in costs per court level, payable from the fund.

The appellants, former employees receiving pensions under the Bank of Canada Pension Plan, brought a proposed class action alleging the Bank improperly extracted funds from the Plan to cover administration costs.

The Bank successfully moved under Rule 21 to strike the claim for direct distribution of the extracted funds to class members and obtained a declaration that the action could not proceed under the Class Proceedings Act due to s. 37(a).

On appeal, the Court of Appeal upheld the striking of the direct distribution claim, finding that restitution to the Plan was the appropriate equitable remedy.

However, the Court allowed the appeal in part, holding that s. 37(a) does not preclude the action from being brought as a class proceeding simply because it could be brought as a representative proceeding under Rule 10 of the Rules of Civil Procedure.

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.

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.

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.

The applicant employer sought a hearing before the Financial Services Tribunal regarding the Superintendent's proposal to refuse approval of a partial wind-up report for a pension plan.

The report failed to provide for special early retirement pensions under section 7.3 of the plan.

The Tribunal found that the special early retirement pension was an 'ancillary benefit' under the Pension Benefits Act, and that the employer's consent required by the plan was deemed to be given upon partial wind-up pursuant to subsection 74(7) of the Act.

The Tribunal directed the Superintendent to carry out the proposal to refuse approval of the report.

The applicant, Monsanto Canada Inc., brought a preliminary motion for orders directing the Superintendent of Financial Services to disclose documents and answer interrogatories regarding past practice on partial wind up reports.

Monsanto argued this information was relevant to its claim of legitimate expectation.

The Financial Services Tribunal granted the motion, finding that the requested information was arguably relevant to a non-frivolous issue, sufficiently particularized, and not privileged.