Pension Plan for Salaried and Management Employees of Reliance Electric Limited, Registration Number 0292946 v. Superintendent of Financial Services, 2007 CanLII 46169 (ON SCDC)

Lennon, on behalf of the Members of the Pension Plan for Salaried and Management Employees of Reliance Electric Ltd., Registration No. 0292946 v. Superintendent of Financial Services et al. [Indexed as: Lennon v. Ontario (Superintendent of Financial Services)]

87 O.R. (3d) 736

Ontario Superior Court of Justice, Divisional Court,

Ferrier, Kitely and Corbett JJ.

October 31, 2007

Pensions -- Appeals -- Standard of review -- Superintendent of Financial Services consenting to merger of two pension plans following amalgamation of two companies -- One plan having more substantial surplus than other plan -- Employer taking advantage of surplus to enjoy lengthy contribution holiday -- Financial Services Tribunal declining to interfere with Superintendent's decision -- Standard of Review of decisions of Tribunal and Superintendent was reasonableness -- Decisions reasonable.

Pensions -- Surplus -- Superintendent of Financial Services consenting to merger of two pension plans following amalgamation of two companies -- One plan having more substantial surplus than other plan -- Employer taking advantage of surplus to enjoy lengthy contribution holiday -- Merger of two plans and use of surplus from one plan to fund contribution holidays not effecting revocation of irrevocable trust.

Two companies, RAC and Reliance, were amalgamated to form Rockwell. Prior to the amalgamation, the employee pension plans of both companies had an actuarial surplus, but Reliance's was considerably greater than RAC's. The Superintendent of Financial Services consented to the merger of the two pension plans. Rockwell took advantage of the considerable surplus in the merged plans to take a lengthy contribution holiday. The appellant, representing members of the Reliance plan, challenged the Superintendent's decision before the Financial Services Tribunal, arguing that the Reliance Plan was an irrevocable trust and that it was a violation of the terms of the trust to permit the transfer of the Reliance Plan trust assets into the merged plan. Section 81(5) of the Pension Benefits Act, R.S.O. 1990, c. P.8 provides that the Superintendent shall refuse to consent to a transfer of assets that does not protect the pension benefits and other benefits of the members and former members of the original plan or does not meet the prescribed requirements and qualifications. The Financial Services Tribunal declined to interfere with the Superintendent's decision. It noted that the actuarial surplus in a pension plan is neither a "pension benefit" nor an "other benefit" within the meaning of s. 81(5) in the context of a defined benefit plan. While the Reliance Plan imposed a trust on the surplus, the Tribunal concluded that the transfer of the plan assets pursuant to the merger of the pension plans was consistent with that trust. The appellant appealed.

Held, the appeal should be dismissed.

Per Ferrier and Kitely JJ.: The Tribunal did not deny the procedural fairness in the manner in which it admitted evidence of Reliance's 1980 Pension Plan.

The standard of review of the decisions of the Superintendent and the Tribunal was reasonableness. The issue before the Tribunal was not one of pure statutory interpretation. The Tribunal was considering the exercise of discretion under s. 81(5) of the Pension Benefits Act in the context of the interpretation of the pension documents. In that, it had more expertise than the court. [page737]

Actuarial surplus can be used for contribution holidays while a plan is ongoing, and this use of surplus is not a revocation of trust unless the terms of the trust prohibit it. Nothing in the Reliance Plan text precluded a merger with another plan. Section 7(3) of the Regulation under the Pension Benefits Act, R.R.O. 1990, Reg. 909 expressly permits the use of actuarial surplus to fund contribution holidays. Neither the Reliance Plan nor the Rockwell Plan was closed to new members. Neither the Reliance Plan documents nor the Rockwell Plan documents (including the respective trust agreements) prohibited the use of trust funds to fund obligations relating to new beneficiaries of the Plan. The decision of the Tribunal in its interpretation of the plan and trust documents and in declining to overturn the decision of the Superintendent was reasonable. Even if the standard of review was correctness, the Tribunal's decision was correct.

The appellant was not entitled to costs to be paid out of the pension fund.

Per Corbett J. (concurring in the result): The reasons of Ferrier and Kitely JJ. are agreed with, except with respect to the issue of the appropriate standard of review. Questions arising in the common law of trusts and contract are no less questions of law for not being set out in legislation. Such questions of law are reviewable on a standard of correctness.

APPEAL from the decision of the Financial Services Tribunal declining to interfere with a decision of the Superintendent of Financial Services.

Cases referred to Kerry (Canada) Inc. v. Ontario (Superintendent of Financial Services) (2007), 2007 ONCA 416, 86 O.R. (3d) 1, [2007] O.J. No. 2176, 282 D.L.R. (4th) 227, 2007 CarswellOnt 3493 (C.A.), supp. reasons [2007] O.J. No. 3321, 2007 ONCA 605, consd Central Guranty Trust Co. (Liquidator of) v. Spectrum Pension Plan (5) (Administrator of), 1997 1877 (NS CA), [1997] N.S.J. No. 324, 149 D.L.R. (4th) 200, 1997 CarswellNS 246 (C.A.), distd Other cases referred to Armstrong v. Royal Canadian Mounted Police (Commissioner), 1998 9041 (FCA), [1998] F.C.J. No. 42, 156 D.L.R. (4th) 670 (C.A.); Aronowicz v. Aronowicz (2007), 2007 1885 (ON SC), 84 O.R. (3d) 428, [2007] O.J. No. 295 (S.C.J.), supp. reasons [2007] O.J. No. 1041 (S.C.J.); Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817, [1999] S.C.J. No. 39, 174 D.L.R. (4th) 193, 243 N.R. 22; Baxter v. Ontario (Superintendent of Financial Services), 2004 45494 (ON SCDC), [2004] O.J. No. 4909, 192 O.A.C. 293, 43 C.C.P.B. 1 (Div. Ct.); Buschau v. Rogers Comunications Inc., [2006] 1 S.C.R. 973, [2006] S.C.J. No. 28, 2006 SCC 28, 54 B.C.L.R. (4th) 1, 26 E.T.R. (3d) 1, 52 C.C.P.B. 161; Canadian Union of Public Employees (CUPE) v. Ontario (Minister of Labour), [2003] 1 S.C.R. 539, [2003] S.C.J. No. 28, 226 D.L.R. (4th) 193, 304 N.R. 76, 2003 SCC 29; Heilig v. Dominion Securities Pitfield Ltd. (1989), 1989 4284 (ON CA), 67 O.R. (2d) 577, [1989] O.J. No. 217 (C.A.); Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 219 Sask. R. 1, 211 D.L.R. (4th) 577, 286 N.R. 1, 272 W.A.C. 1, [2002] 7 W.W.R. 1, 30 M.P.L.R. (3d) 1, 2002 SCC 33, 10 C.C.L.T. (3d) 157; Lévis (City) v. Fraternité des policiers de Lévis Inc., [2007] S.C.J. No. 14, 2007 SCC 14; MacDougall v. MacDougall, 2005 44676 (ON CA), [2005] O.J. No. 5171, 262 D.L.R. (4th) 120, 205 O.A.C. 216 (C.A.); Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), [2004] 3 S.C.R. 152, [2004] S.C.J. No. 51, 242 D.L.R. (4th) 193, 2004 SCC 54, 45 B.L.R. (3d) 161, 17 Admin. L.R. (4th) 1, affg (2002), 2002 17842 (ON CA), 62 O.R. (3d) 305, [2002] O.J. No. 4407, 220 D.L.R. (4th) 385, 29 B.L.R. (3d) 18, 21 C.C.E.L. (3d) 11 (C.A.); Moreau-Bérubé v. New Brunswick (Judicial Council), [2002] 1 S.C.R. 249, [2002] S.C.J. No. 9, 245 N.B.R. (2d) 201, 209 D.L.R. (4th) 1, 636 A.P.R. 201, 2002 SCC 11; Ontario Teacher's Pension Plan Board v. Ontario (Superintendent of Financial Services) (2004), 2004 7628 (ON CA), 70 O.R. (3d) 61, [2004] O.J. No. 331 (C.A.), affg 2003 32334 (ON SCDC), [2003] O.J. No. 605, 169 O.A.C. 101 (Div. Ct.); Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 1222, [1998] S.C.J. No. 77, [1998] 1 S.C.R. 982, [1998] S.C.J. No. 46, 160 D.L.R. (4th) 193, 226 N.R. 201; [page738] Retirement Income Plan for Salaried Employees of Weavexx Corp. v. Ontario (Superintendent of Pensions) (2002), 2002 23593 (ON CA), 58 O.R. (3d) 380, [2002] O.J. No. 524 (C.A.), varg [2000] O.J. No. 2066, 133 O.A.C. 375, 24 C.C.P.B. 154 (Div. Ct.); Schmidt v. Air Products Canada Ltd., 1994 104 (SCC), [1994] 2 S.C.R. 611, [1994] S.C.J. No. 48, 20 Alta. L.R. (3d) 225, 115 D.L.R. (4th) 631, 168 N.R. 81, [1994] 8 W.W.R. 305, 4 C.C.E.L. (2d) 1, 3 E.T.R. (2d) 1 (sub nom. Stearns Catalytic Pension Plans (Re)); Suresh v. Canada (Minister of Citizenship and Immigration), 2002 SCC 1, [2002] 1 S.C.R. 3, [2002] S.C.J. No. 3, 208 D.L.R. (4th) 1, 281 N.R. 1, 90 C.R.R. (2d) 1, [2002] SCC 1; Sutherland v. Hudson's Bay Co., 2007 30293 (ON SC), [2007] O.J. No. 2979, 60 C.C.E.L. (3d) 64, 61 C.C.P.B. 171 (S.C.J.); Sutherland v. Hudson's Bay Co., [2006] O.J. No. 2009, 53 C.C.P.B. 154 (S.C.J.)

Statutes referred to Arbitration Act, 1991, S.O. 1991, c. 17 Financial Services Commission of Ontario Act, 1997, S.O. 1997, c. 28, ss. 16 [as am.], 17 Pension Benefits Act, R.S.O. 1990, c. P.8, s. 81(5) Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, s. 4.2 [as am.]

Rules and regulations referred to General Regulation, R.R.O. 1990, Reg. 909 (Pension Benefits Act)

Authorities referred to Fratcher, W.F., Scott on Trusts, 4th ed., vol. IV (Toronto and Boston: Little Brown, 1987- )

Kenneth J. Peacocke and Gerald K. Culliton, for appellant. J.A. Prestage, for respondent Rockwell Automation Canada Inc. Deborah MacPhail, for respondent Superintendent of Financial Services.

1FERRIER and KITELEY JJ.: -- This is an appeal from the decision of the Financial Services Tribunal (the "Tribunal"), whereby the Tribunal declined to interfere with a decision of the Superintendent of Financial Services (the "Superintendent"). In that decision, the Superintendent consented pursuant to s. 81(5) of the Pension Benefits Act ¹ to a merger of two pension plans following the amalgamation of two companies. Both plans had an actuarial surplus, one more substantial than the other. After the merger, the employer took advantage of the surplus to enjoy a lengthy "contribution holiday" from paying into the merged plan. [page739] The appellant argues that the merger was unlawful, effecting the revocation of an irrevocable trust.

Background

2Rockwell Automation Canada Inc. ("Old Rockwell") amalgamated with Reliance Electric Limited effective October 1, 1997. The amalgamated company is known as Rockwell Automation Canada Inc. ("Rockwell").

3Prior to the amalgamation, Reliance had a pension plan for its employees (the "Reliance Plan"); Old Rockwell also had a pension plan (the "Allen-Bradley Plan"). After amalgamation, both plans were sponsored by Rockwell and all active members of both plans were Rockwell employees.

4Rockwell resolved to merge the two pension plans into one, subject to obtaining consent from the Superintendent under s. 81(5) of the PBA. On March 30, 1999, the Superintendent consented to the transfer of assets.

5The appellant represents members of the Reliance Plan. He challenged the Superintendent's decision before the Financial Services Tribunal. The Tribunal confirmed the Superintendent's decision. The appellant appeals to this court from the Tribunal's decision.

6For the reasons following, the appeal is dismissed.

Conduct of this Appeal

7This appeal was argued on April 12 and 13, 2007. Subsequently, the Ontario Court of Appeal rendered its decision in Kerry (Canada) Inc. v. Ontario (Superintendent of Financial Services). ² This court sought written submissions respecting the effect of Kerry on the issues in this appeal. This process was completed with delivery of the appellant's reply submissions on July 27, 2007.

The Parties' Positions

8At the heart of this dispute is an actuarial surplus of $8.472 million that was in the Reliance Plan. There were 129 members in the Reliance Plan, so this surplus was substantial. The Allen-Bradley Plan had a surplus of $30,000, with 1,033 members, a negligible surplus. Following merger of the plans, Rockwell took a three-year "contribution holiday". This holiday was funded by the surplus that had come from the Reliance Plan. This "contribution holiday" was extended a further three years. [page740] So Rockwell has been saved six years of contributions to its pension plan in respect to all of the members of the plan, not just the ones originally from Reliance, and it has "paid" for this with the surplus that had been in the Reliance Plan.

9In brief, the appellant argues that the Reliance Plan was an irrevocable trust. He argues that it is a violation of the terms of the trust to permit the transfer of the Reliance Plan trust assets into the merged plan.

10Rockwell agrees that the Reliance Plan was an irrevocable trust. But it says that an expansion of the beneficiary class has always been permitted. It notes that the beneficiary class has been expanded before and says that the merger is no different. An expansion of the number of beneficiaries is not a revocation of the trust, nor is it a breach of trust.

11The appellant says that the surplus in the Reliance Plan was part of the trust held for the benefit of Reliance Plan members. He says that those funds have been used for the benefit of persons who were not beneficiaries of that trust. The respondent Rockwell argues that for this to be so, the membership in the Reliance Plan would have to have been closed. It was not, and the effect of the merger is that all the members of the Allan-Bradley Plan and the Reliance Plan are now members of the same plan. The trust remains in effect, but the beneficiaries have been expanded to include everyone in both of the former plans.

12Rockwell says there has been no misapplication of trust funds, and no revocation or termination of the Reliance Plan trust. It notes that the Reliance Plan is a defined benefit plan and non-contributory. There are sufficient assets to meet the pension obligations of all members. The Reliance Plan had always contemplated that employees of affiliate or subsidiary companies could join the Reliance Plan. In any event, any plan surplus would ultimately be paid out as directed by the company, after all obligations to plan members had been met. The Reliance Plan members have no interest in the surplus, and their pension benefits are unaffected by the merger.

The Tribunal Decision

13Following a thorough review of the relevant documents, the Tribunal made the following determinations. The Reliance Plan commenced in 1965. In 1980, it was consolidated with three other pension plans of Reliance divisions and affiliated companies to form the 1980 Reliance Plan. From 1980 to the merger of the Reliance Plan with the Allan-Bradley Plan, there were various amendments to the Reliance Plan. The appellant agreed that [page741] these later amendments would permit the merger, but argued that these amendments were not, themselves, permitted. Thus the issue was whether the 1965 and 1980 documents permitted mergers.

14The Tribunal made the following findings respecting the 1965 plan:

Based on the 1965 Trust Agreement and plan documents for the Original Reliance Plan, we find that the documents provided contemplated broad powers of amendment to the plan sponsor, which could reasonably be interpreted to include plan merger, and further that the Original Reliance Plan was not closed to new members or to new participating employers when it was established. ³

15There are two material findings here: that the 1965 Plan "could reasonably be interpreted to include plan merger" and that the Plan "was not closed to new members or to new participating employers".

16With respect to the 1980 Plan text, the Tribunal found that it contained a broad power of amendment which includes, by reasonable interpretation, the power of plan merger or consolidation without the need for any express provision. ⁴

17The Tribunal concluded:

-- At all times the Reliance Plan terms and trust agreement permitted merger without conditions;

-- At all times the plan documents contemplated that additional participating employers could be added to the Reliance Plan as well as future employees of Reliance;

-- The Reliance Plan was not closed to new members at the time of the 1998 asset transfer;

-- Benefits accrued by Reliance Plan members to the date of the 1998 asset transfer were not reduced as a result of the transfer.

18The key issue before the Tribunal was whether the Superintendent's consent should be set aside as having contravened s. 81(5) of the PBA:

The Superintendent shall refuse to consent to a transfer of assets that does not protect the pension benefits and other benefits of the members and former members of the original pension plan or does not meet the prescribed requirements and qualifications. [page742]

19The Tribunal noted that the actuarial surplus in a pension plan is neither a "pension benefit" nor an "other benefit" within the meaning of s. 81(5) in the context of a defined benefit plan:

If. . . ."other benefits" includes surplus, then an employer would be required to fund a pension fund to maintain the current level of actuarial surplus in the pension plan, a result which in our view is contrary to the specific funding regime set out in the PBA and regulations (see s. 55(1)). ⁵

20While the Reliance Plan imposes a trust on the surplus, the Tribunal concluded that the transfer of the plan assets pursuant to the merger of the pension plans was consistent with that trust.

Issues in this Court

21In addition to the central question concerning whether the Tribunal erred in refusing to set aside the Superintendent's consent to the transfer of assets, the appellants submit they were denied procedural fairness by the Tribunal. Since procedural fairness lies at the root of the Tribunal's jurisdiction, we address that issue first.

A. Procedural Fairness

22The appellant raises the following matters which he says were procedurally unfair:

(a) the Tribunal erred in admitting the 1980 Plan into evidence through the affidavits of Susan G. Seller and Paul Christiani and the certificate of K. David Gordon;

(b) in the alternative, the Tribunal erred in denying the appellant the opportunity to cross-examine Ms. Seller and Mr. Christiani on their affidavits and Mr. Gordon on his certificate;

(c) the Tribunal erred in failing to admit into evidence certain documents tendered by the appellant;

(d) the Tribunal erred in finding that the appellant conceded "points, facts and evidence" when he had not done so; and

(e) the Tribunal erred by disregarding the evidence of Roger Brideau. [page743]

Applicable principles

23Procedural fairness, as a fundamental element of natural justice, is a matter for the court to decide:

Procedural fairness goes to the manner in which the administrative authority went about making its decision, whereas standard of review relates to the end product of the deliberations that produced the decision. ⁶

24Procedural fairness is at the core of an administrative tribunal's decision-making power. Without it, the tribunal's decision must be overturned, without any necessity of undertaking a standard review analysis of the decision.

(a) Admissibility of the 1980 Plan

25The appellant had concerns about whether the 1980 Plan document, as tendered, was an accurate and complete copy of that document. Having these concerns, it opposed admitting copies of the document into evidence. Absent the appellant's consent, it became necessary to prove the documents. This was done in three ways:

(a) a certified copy was tendered by the Superintendent;

(b) a copy was provided attached to an affidavit from the Plan actuary, P. Christiani attesting that it was a copy of the Plan found in the actuary's files;

(c) a copy was provided attached to an affidavit from Susan Seller of Reliance's solicitors, attesting that it was a copy of the Plan found in the solicitor's files.

26The certified copy is admissible by statute. ⁷ The Tribunal did not have the jurisdiction to refuse to receive the copy of the Plan under the certificate. The certified copy "shall be received in evidence in any proceeding as proof, in the absence of evidence to the contrary. . . . and is admissible [in evidence] to the same extent and has the same evidentiary value as the document or thing of which it is a copy". ⁸

27The Superintendent made her file available to the appellant for inspection, if the appellant had concerns about whether [page744] there were competing copies of the Plan documents in the Superintendent's files. The appellant did not take that opportunity. The appellant argued that such a review would have been fruitless, since it could be presumed that there were no other documents in the Superintendent's files that would shed light on the subject.

28The FSCO is a complete answer to the appellant's objection on this point. If the appellant were correct in respect to the Seller and Christiani affidavits, then the only copy of the 1980 Plan before the Tribunal would have been the certified copy, which the Tribunal would have had to take as correct.

29We conclude that the Tribunal was required to receive the 1980 Plan into evidence pursuant to the certificate. We find that the opportunity to review the Superintendent's files afforded the appellant procedural fairness in respect to the certified copy of the 1980 Plan. Thus the 1980 Plan was properly admitted into evidence before the Tribunal.

(b) The Seller and Christiani affidavits

30The appellant objected to these affidavits being filed without requiring the affiants to testify in person. This issue was raised in a pre-hearing conference with the Tribunal Chair, who afforded all sides an opportunity to be heard. The appellant did not object to this pre-hearing procedure at the time, before the full panel of the Tribunal, or before us. The appellant does not challenge the jurisdiction of a single member of the Tribunal to make this ruling prior to the hearing. ⁹ Rather, the appellant takes the position that the substance of the ruling is wrong.

31The two impugned affidavits were not themselves controversial. They confirm that copies of the 1980 Plan, as attached to the affidavits, were found in the files of the Plan's actuaries and solicitors.

32The right to cross-examine is not absolute. ¹⁰ An administrative tribunal is in charge of its own procedure: so long as the parties are treated fairly, deference should be accorded to the Tribunal's procedures. ¹¹ However, in an adversarial hearing, such as that conducted before the Tribunal, parties ordinarily should be permitted to challenge contested evidence by cross-examination. [page745] Here, though, the appellant did not have a competing version of the 1980 Plan. Rather, the appellant wanted to cast doubt on the integrity of the copies of the 1980 Plan that were available on the basis of minor inconsistencies between the certified copy and the copies attached to the Seller and Christiani affidavits. The inconsistencies did not affect the substance of the 1980 Plan. Even if questions were raised about the document as a result of cross-examination, the Tribunal would still have had to make findings about the content of the 1980 Plan on the best evidence before it. It would not have been reasonable for the Tribunal to dismiss the 1980 Plan entirely because of the minor inconsistencies: it is clear from the evidence that there was a 1980 Plan, and that the Trust Agreement was to be read in conjunction with it. It would have been wrong to proceed otherwise.

33We do not see that the refusal to permit cross- examination had a material effect on the outcome. Had we concluded otherwise, we would have excluded the Seller and Christiani affidavits. ¹² In this event, the Tribunal would have had one copy of the 1980 Plan before it -- the certified copy -- and the result would have been the same.

34The only other possible remedy would have been to remit the matter back to the Tribunal, for cross-examination on the Seller and Christiani affidavits. The appellant did not ask us to do that -- rather, he submitted that we should exclude all copies of the 1980 Plan on the basis that cross-examination had been denied. We disagree. There was a 1980 Plan. It must be construed with the 1980 Trust Agreement. The Tribunal's task was to make factual findings on the basis of the best evidence before it. If there were minor imperfections in the evidence, the answer does not lie in simply ignoring the available evidence.

35The appellant's concerns with the 1980 Plan documents arise because of differences in the form of the documents. One version of the document contains three lines of text repeated on two pages, while the others do not. There is a "mystery" of staple marks present on some, but not all pages. These are all matters [page746] that could be raised in argument as to weight, but they are not sufficient to overcome the admissibility of the certified document in the Superintendent's files. If there had been a competing version of the document, then the Tribunal would have had to weigh the evidence in favour of the competing versions. Here, the substance of the versions of the Plan was identical. The Tribunal made no error in admitting the copies into evidence. It then relied upon the best evidence before it to determine the content of the Plan. This was the correct way to proceed.

(c) Documents tendered by the appellant

36The appellant takes the position that the Tribunal ought not to have refused to accept into evidence certain documents tendered by the appellant when it accepted the Certificate from Mr. Gordon and the Seller and Christiani affidavits, without permitting cross-examination.

37The appellant has not shown that the documents it sought to tender were relevant. On that basis alone the Tribunal would have been entitled to exclude them. Further, the documents had not been agreed, and were not put into evidence in any fashion -- that is, they were not certified and they were not attested to by a witness either through oral testimony or by way of affidavit evidence. The Tribunal was correct in requiring some evidentiary foundation for the admissibility of this evidence.

38The appellant placed this issue in contrast to the admission of the 1980 Plan into evidence. While both rulings deal with admissibility of documents, there the similarity ends. For the reasons set out above, the 1980 Plan was clearly relevant. Admission of the 1980 Plan was mandatory under the FSCO. The sufficiency of the evidentiary foundation for the copies tendered in the Seller and Christiani affidavits may be questioned, but clearly there was at least some foundation. There was no foundation provided for the appellant's documents, and the Tribunal was correct in excluding them.

(d) Tribunal mischaracterized appellant's position on evidence

39The Tribunal stated in its reasons ¹³ that the Seller and Christiani affidavits were "undisputed". This was not a fair characterization of the appellant's position on this evidence. The admissibility of these affidavits was contested. The authenticity [page747] of the attached copies of the 1980 Plan was not admitted. But there was no evidence before the Tribunal inconsistent with the evidence set out in the Seller and Christiani affidavits. Given the position taken by the appellant on these points, it would have been more artful to set out the appellant's position with greater specificity. However, this statement was, literally, correct: the admissibility of the affidavits was challenged, but the contents were not disputed by contrary evidence. In any event, this characterization of the appellant's position had no bearing on the result.

40The Tribunal stated in its reasons ¹⁴ that "both parties seemed to agree that [the Comm-Tec sale] was irrelevant . . . . and offered no evidence otherwise". That was not the position taken by the appellant, as indicated in para. 84 below. Nevertheless, this mischaracterization of the appellant's position had no bearing on the result.

41The Tribunal stated in its reasons ¹⁵ that the appellant's evidence disclosed that a particular company booklet related to hourly-rated employees. This was not correct. ¹⁶ This was a minor error in stating the evidence and had no bearing on the result.

(e) The evidence of Roger Brideau

42The appellant also submitted that the Tribunal failed to take account of important evidence adduced by the appellant, the testimony of the appellant's sole witness at the hearing, Roger Brideau. Mr. Brideau testified to the sale of Reliance's Comm-Tec division to K-Tec. This transaction was irrelevant at best, and arguably favourable to the respondents' position. It was not necessary for the Tribunal to refer to this evidence.

Conclusion as to procedural fairness

43We conclude as follows:

(a) the Tribunal properly admitted into evidence copies of the 1980 Plan. The Tribunal found that these copies were the best evidence of the 1980 Plan, and accepted them as such. The Tribunal made no error in doing so;

(b) the Tribunal did not err in refusing to permit cross- examination on the certificate. It may have been preferable for the [page748] Tribunal to have permitted cross-examination on the impugned affidavits. However, in the circumstances of this case, the refusal to permit cross-examination had no impact on the result;

(c) the Tribunal did not err in refusing to admit into evidence the documents tendered by the appellant. These documents had no possible relevance. Moreover, for the documents to have been of any use, it would have been necessary to put them into evidence through a witness. Given the circumstances under which the documents were tendered, it was not an error to require the affiants to testify in person, even though Ms. Seller and Mr. Christiani had not been required to testify. The provenance of the documents tendered by the appellant was quite different from that of the documents tendered under the Seller and Christiani affidavits, and thus the decisions were different for good reasons;

(d) the Tribunal erred in finding that the appellant had conceded "points, facts and evidence" when he had not done so. However, the Tribunal's reliance upon these so-called concessions was not material to the outcome; and

(e) the Tribunal did not err in failing to refer to the evidence of Roger Brideau in its decision.

44It is clear from the Tribunal's reasons, taken as a whole, that it did hear the appellant's argument. It concluded, as do we, that the appellant's concerns were answered fully in the 1965 and 1980 Reliance Trust and Plan documents.

45The proceedings were fair. There is no basis for interfering with the Tribunal's decision on the ground of procedural unfairness.

46We now turn to the Tribunal's decision.

B. Standard of review

47The Superintendent's decision to approve the asset transfer application under s. 81(5) was entitled to deference by the Tribunal and both the Superintendent's decision and the Tribunal's decision are entitled to deference from this court. As noted by the Divisional Court in Baxter v. Ontario, supra, the question of whether an asset transfer complies with s. 81(5) of the PBA "is a matter that lies at the heart of the Tribunal's regulatory mandate and the interpretation of that provision is squarely within the Tribunal's jurisdiction". The decisions of [page749] the Superintendent and the Tribunal may be interfered with only if they are unreasonable. ¹⁷

48In Kerry (Canada) Inc., supra, the Ontario Court of Appeal has recently held that the standard of review is reasonableness when considering decisions of the Tribunal except when considering issues of pure law or jurisdiction. The court drew the distinction in the following way in Kerry [at paras. 25 and 40]:

In Monsanto, the issue to be decided was the interpretation of s. 70(6) of the Act (the PBA) -- a matter of pure law. Unlike Monsanto, however, most of the questions raised by this appeal and cross-appeal are not matters of pure statutory interpretation -- they are polycentric questions of mixed fact and law, many of which are highly technical and others which involve the exercise of discretion.

Unlike Monsanto which decided a question of statutory interpretation without reference to the terms of particular pension plan documentation, in this case the Plan documents are the basis on which this issue must be decided. In construing those documents, the Tribunal members were required to draw on their knowledge and understanding of pensions. Although the Tribunal has no expertise relative to the courts in applying legal principles, it does have relative expertise in interpreting pension documents.

(Emphasis added)

49The appellant here argues that the issue before the Tribunal was an issue of pure statutory interpretation. We disagree. The Tribunal was considering the exercise of discretion under s. 81(5) of the PBA in the context of the interpretation of the pension documents. In that, it has relative expertise.

50As noted by the appellant, s. 81(5) is not mentioned in Kerry. Kerry is not a case of merger. Nevertheless, Kerry is authority for the proposition that if the Tribunal was applying the provisions of the PBA to facts, which facts included pension plan and trust documentation, and was interpreting the meaning of those documents, the standard of review is reasonableness.

51Finally, the appellant points to Central Guardian Trust Co. (Liquidator of) v. Spectrum Pension Plan (5) (Administrator of). ¹⁸

52Spectrum was decided before Monsanto, Baxter and Kerry. It was a direct appeal from a decision of the Superintendent, not from a Tribunal which had, as in this case, recognized expertise.

53Furthermore, Spectrum is in the context of a different statutory regime. Significantly, the nature of the question in[page750] Spectrum was surplus entitlement on windup. Here the question is whether plan merger is contemplated by the plan and trust documents.

54We conclude that the standard of review of the Tribunal's decision is reasonableness.

C. Analysis and discussion

55The central question facing the Superintendent and the Tribunal was whether the plan and trust documents, reasonably interpreted, permitted the merger.

56General principles of trust law do not impede merger of pension plans. The settlor of a trust may reserve broad powers to itself, including the power to add beneficiaries to the trust:

The Settlor may reserve a power to alter the trust in any way he sees fit; or he may reserve a power to modify it only in some particular, such as altering the powers or duties of the trustee, or changing the beneficiaries, or cutting down or increasing the . . . . interests of the beneficiaries. ¹⁹

57This principle has been endorsed by the Supreme Court of Canada:

The settlor of a trust can reserve any power to itself that it wishes provided the reservation is made at the time the trust is created. A settlor can choose to maintain the right to appoint trustees, to change the beneficiaries of the trust or to withdraw the trust property. ²⁰

58The Court of Appeal has dealt with the merger of defined benefit plans where one plan had a surplus and the other did not:

For myself, I see no reason why the two pension plans of merging companies cannot be merged into one continuing plan just as the two companies amalgamate into one continuing company. Certainly there can be no loss of benefits for the beneficiaries of either plan without their consent. But that does not happen in the merger of plans such as that in the case at bar. It is a defined benefit plan and the benefits remain. It makes no difference that one plan may be in surplus and the other is not. There is no obligation for an employer contribution until actuarial figures require it. The merger is not unlike the situation resulting from an expansion of the company staff and a large influx of new members to the plan. ²¹

59The appellant submits that Kerry supports its argument that Rockwell's use of the actuarial surplus from the Reliance [page751] Plan to fund contributions for the merged Rockwell Plan is a revocation of trust. We disagree. Kerry confirms that actuarial surplus can be used for contribution holidays while a plan is ongoing, and that this use of surplus is not a revocation of trust unless the terms of the trust prohibit it.

60The appellant relies upon para. 68 of Kerry, in which the Court of Appeal states:

I disagree also with the Divisional Court's view that to permit the company to pay the Plan Expenses from the Fund amounted to a revocation of trust. Revocation is the return of (some or all of) the trust funds to the person who placed the funds in trust. So, for example, revocation occurs when an employer withdraws surplus monies from a pension fund. Payment of expenses to a third party does not fall within that definition as no money was returned to the company.

(Emphasis added)

61Thus, unlike the withdrawal of surplus, the use of actuarial surplus to fund contribution holidays is not a return of trust funds to the company. It is not a withdrawal of funds from the pension plan.

62In Kerry, the Court of Appeal held that the use of actuarial surplus that accrued with respect to one group of members in the pension plan to fund contribution obligations for another group is not a revocation of trust for five reasons [at paras. 100-106]:

First, nothing in the original Plan and Trust documents prohibited the taking of contribution holidays. Consequently, as I explain more fully in the following section, Schmidt v. Air Products of Canada Ltd., 1994 104 (SCC), [1994] 2 S.C.R. 611, [1994] S.C.J. No. 48 provides that the company has the right to use the actuarial surplus to fund its contributions while the Plan is ongoing. It is significant to note that Schmidt establishes that right even where, as here, the trust agreement provides that the fund is to be used exclusively for the benefit of plan members.

Consequently, to the extent that the Divisional Court's decision is premised on the notion that the Plan members were entitled to surplus while the Plan was ongoing, I respectfully disagree. Schmidt makes it clear that members of a pension plan have no entitlement to the actuarial surplus in an ongoing pension plan. Justice Cory explained in Schmidt that members in plans with exclusive benefit language or the equivalent are entitled to "two distinct types" of benefits: the benefits promised under the pension plan and the right to share in surplus remaining on plan termination (654-55 S.C.R.).

Second, s. 9 of the Pension Benefits Regulations, R.R.O. 1990, Reg. 909, provides that after a plan conversion, surplus can be used to fund employer contributions. Section 9 reads as follows:

9. If an amendment to a pension plan with defined benefits converts the defined benefits to defined contribution benefits, the employer may offset the employer's contributions for normal costs against the amount of surplus, if any, in the pension fund after conversion.

Although the Plan has introduced a defined contribution component, rather than been fully converted, this provision confirms that an employer is [page752] entitled to use the actuarial surplus to fund contributions where a defined benefit arrangement is not maintained.

Third, the company was at liberty to introduce a new category of Plan member: there is nothing in law or the Plan documentation to prevent such an action. The Plan text expressly permits the company to unilaterally amend the plan (s. 22). Thus, the company could amend the Plan to introduce a new category of member. So, for example, if there were part-time employees for whom the company wished to provide a pension, it could create a new category of members and permit the part-time employees to become Plan members in that category.

Fourth, if the company introduced a new category of Plan member, it would be entitled to take contribution holidays in respect of that new category (Schmidt). The fact that overall Plan membership was expanded through inclusion of a new category of member would not alter the company's right to take contribution holidays.

Fifth, cross-subsidization is not prohibited by the Trust agreement. What is prohibited is the use of the Fund for other than the exclusive benefit of Fund beneficiaries. Once the Part 2 members are designated Fund beneficiaries, use of the Fund's surplus by way of contribution holidays in respect of them meets the requirement that the Fund be used exclusively for the benefit of Fund beneficiaries.

63We turn then to the Plan and Trust documents in the case at bar.

64The appellant traces the history of the Reliance Plan back to 1940, when the Ohio-based parent company of Reliance established a retirement plan for its employees. In 1959, the Canadian subsidiary of the American parent company adopted the plan "as amended and restated as of November 1, 1958".

65The Trust Agreement for the plan prohibited diversion of the Trust Fund for "purposes other than the exclusive benefit of employees, participants and their beneficiaries". A company booklet dated July 1960 stated that the trust was "irrevocable", and that Trust Funds would never be diverted to any purpose other than the exclusive benefit of employees and their beneficiaries.

66The Tribunal found that the Reliance Plan's inception was the 1965 Plan. This finding was not challenged before us. Accepting this finding, as we do, it then follows that the history of pension arrangements prior to 1965 is irrelevant.

67Relevant provisions of the 1965 Trust Agreement are as follows:

Article II Section 1. All cash and other assets shall be maintained and applied by the trustee as a separate Trust Fund for the exclusive benefit of the participants and their beneficiaries, if any, under the Plan in accordance with the provisions hereinafter set forth.

Article II Section 2. . . . . Provisions against Diversions. It shall be and is hereby made impossible, upon the termination of the Plan or this Trust or [page753] any part thereof, or pursuant to any amendment, modification or alteration of the Plan or this Trust Agreement or otherwise, for all or any part of the corpus or income of the Trust Fund to be used for or diverted to, purposes other than for the exclusive benefit of the employees and former employees of the Company under the Plan, and such employees' beneficiaries, if any, under this Trust.

68The 1965 Reliance Plan was merged with plans from two other divisions of Reliance in 1980, the "Toledo Scale" and "Dodge Division".

69The 1980 Plan is described as a "consolidation" of the three plans. The 1980 Trust Agreement provides as follows:

Section I . . . . The Trust Fund shall be held by the Trustee in trust and be dealt with in accordance with the provisions of this agreement. At no time shall any part of the Trust Fund be diverted to purposes other than those pursuant to the terms of the Plan, other than such part as may be required to pay taxes, fees or expenses.

Section II The Trustee shall...on the written direction of the Company, make payments out of the Trust Fund... [T]he written directions shall include a certification . . . . that such direction is in accordance with the terms of the Plan.

Section XII The Company reserves the right . . . . to amend . . . . this Agreement . . . . provided further that no such amendment shall authorize or permit, at any time prior to the satisfaction of all liabilities with respect to the members and their beneficiaries under the Plan, any part of the Trust Fund to be used for or diverted to purposes other than those provided for under the terms of the Plan or for the payment of fees, expenses and taxes as provided for herein.

If, pursuant to the Plan, subsidiaries and/or affiliates of the Company are included thereunder, the Trustee shall be advised . . .

(Emphasis added)

70The 1980 Reliance Plan was express that the Trust Agreement and the Plan were to be read together. The fourth recital to the Trust Agreement reads:

AND WHEREAS the Company has consolidated the Former Plans by establishing the Reliance [Plan] (hereinafter referred to as the Plan), a copy of this is attached hereto and collectively made part hereof, as it may be amended from time to time.

71Section XII of the Trust Agreement provides:

If, pursuant to the Plan, subsidiaries and/or affiliates of the Company are included thereunder, the Trustee shall be advised . . . .

72Section XIII of the Trust provides:

Wherever in this agreement the word "Company" is used, it shall be deemed to mean and shall include any other company with which the company may amalgamate . . . . whether under its present name or any other . . . . [page754]

73Section 2.01 of the Plan provided as follows:

Adoption of Plan by Affiliated Companies: Divisions. An Affiliated Company or a Division may adopt this Plan for itself and its eligible Employees. . . In such event the word "Company" herein shall also refer to such Affiliated Company or Division . . . .

74Section 15.01 of the Plan provided:

15.01 Amendment. The Company . . . . shall have the right to amend or change the Plan at any time . . . . in any respect; provided, however, that no amendment shall be effected to deprive a Pensioner or a member of a benefit which has accrued . . . .

(Emphasis added)

75The Tribunal found that the Reliance Plan and Trust Agreement permitted merger under the 1965 documents and under the 1980 documents. Thus the post-1980 amendments expressly permitting merger were found to be consistent with the earlier documents.

76As Grange J.A. noted in Heilig, ²² merger is one way in which plan membership may be expanded. As noted above, the 1965 Plan permitted participation by employees in affiliated companies. It makes no difference if the corporate relationship is brought about by amalgamation rather than affiliation.

77The 1980 Plan is clear on this point, provided the trust is read together with the plan. The appellant does not challenge this approach to interpretation. The Supreme Court of Canada has ruled on this point of interpretation of pension plans:

The context and the purpose of pension plans do not generally lend themselves well to the common law rule. Moreover, a pension trust is not a stand-alone instrument. The Trust is explicitly made part of the Plan. It cannot be terminated without taking into account the Plan for which it was created and the specific legislation governing the Plan. ²³

78The use of the word "consolidation" rather than "merger" in describing the 1980 transaction does not distinguish the 1980 transaction and the merger of the Reliance Plan with the Allen-Bradley Plan. In 1980, there was a merger of three plans -- Reliance and the Dodge and Toledo Scale divisions of Reliance. In ordinary corporate law parlance, a "division" is a separate operating arm of the same corporation.

79We were not told whether the Reliance and Allen-Bradley operations have been maintained in separate "divisions", or are [page755] now one operating unit. If they are separate divisions within the same operating company, then the situation is analogous to the 1980 merger of the Reliance and Dodge plans. If Reliance and Allen-Bradley operations are now united into one operating entity within Rockwood, then the situation is analogous to Reliance expanding its workforce. It matters not whether the expansion was by hiring an additional ten workers, or an additional 1,000 workers.

80The pension surplus is not reserved for the benefit of members in the Plan at the time the surplus was generated. It is subject to a trust in favour of the membership, as that membership may change from time to time.

81The appellant notes that s. III(d) of the Trust Agreement authorizes a limited commingling of funds for investment purposes:

. . . . upon the written direction of the Company, the Trustee may commingle for investment purposes, the assets of the Trust Fund with the assets of one or more similar trust funds as may be specified . . . .

The appellant argues that in expressly authorizing commingling of assets for the limited purposes of investment, by necessary implication, merger of assets for other purposes is not permitted. We disagree. Section III addresses permitted investments by the trustee. It is not relevant to increases in membership in the plan or merger of the plan with other pension plans.

82As noted in Kerry, once the two plans have been merged, there is no "cross-subsidization"; there is one plan, with one funding obligation. ²⁴

83The appellant submits that the Reliance Plan members have lost the security of the cushion afforded by the surplus in the Reliance Plan. That is so. But this is well-trod legal terrain, and it is addressed in the Tribunal's decision. To reiterate, the surplus is not a "pension benefit or other benefit" under the pension plan. Actuarial calculations determine the assets required to fund the pension plan liabilities. Employers are required to fund liabilities, not actuarial surpluses. Plan members are not entitled to the comfort of a maintained surplus.

84The appellant submits that his position is bolstered by the arrangements made by Reliance upon the sale of one of its divisions in 1995, prior to the merger with Rockwell. This was the sale [page756] of the "Comm-Tec" division to K-Tec Holdings in August 1995. As part of this sale, assets and liabilities related to Reliance's Comm-Tec employees were transferred to a plan sponsored by K-Tec Holdings. A pro rata share of the pension plan surplus was also transferred, leading the appellant to conclude as follows:

Essentially, there was a transfer of a pro-rata share of the surplus from the Reliance Plan to the Comm-Tec employees of approximately $2 million, being the share of surplus attributable to the Comm-Tec employees. These funds came out of the Reliance Fund, without any objection by the Reliance (sic) or Rockwell.

(Emphasis added)

The bolded portion of this quotation is incorrect. The money was not paid to the employees. It was paid into the K-Tec pension plan. There is no information before us as to whether there were other K-Tec employees also enrolled in that plan. There is no information whether K-Tec could, or did, add additional employees to the pension plan later. There is no information whether K-Tec could, or did, take a holiday from contributions on the basis of any surplus in its plan. There is no information about the entitlement to any surplus in the K- Tec plan. A portion of the pension plan surplus followed the departing employees into the plan of their new employer. This evidence does not assist the appellant: the entire surplus in the Reliance Plan followed the Reliance employees into the Rockwell Plan, just as a pro rata share of the plan surplus followed the Comm-Tec employees into the K-Tec Plan.

D. Summary and conclusion on the merits

85To summarize, the merger and use of actuarial surplus from the Reliance Plan to fund contribution holidays for the merged Rockwell Plan was not a revocation of trust:

-- nothing in the original Reliance Plan text precludes a merger with another plan;

-- Subsection 7(3) of the PBA Regulation, R.R.O. 1990, Reg. 909 expressly permits the use of actuarial surplus to fund contribution holidays;

-- neither the Reliance Plan nor the Rockwell Plan was closed to new members;

-- Rockwell was entitled to take contribution holidays with respect to new members;

-- neither the Reliance Plan documents nor the Rockwell Plan documents (including the respective trust agreements) [page757] prohibit the use of trust funds to fund obligations relating to new beneficiaries of the plan.

86The decision of the Tribunal in its interpretation of the plan and trust documents and in declining to overturn the decision of the Superintendent, was reasonable.

87The appellant submitted that the standard of review is correctness. As discussed above, we disagree. Nonetheless, even if the standard was correctness, we would dismiss the appeal on the merits, being of the view that the Tribunal's decision is correct.

Costs

88Upon the conclusion of the hearing of this appeal, it was agreed that costs were neither sought by nor against the Superintendent. So ordered.

89The appellant asked that in the event he was unsuccessful on the appeal, his full solicitor-client costs be paid out of the pension fund. He asked for time to file written submissions and did so including a costs outline totalling $52,300. The respondent Rockwell seeks costs of $31,706.78 against the appellant and it too filed written submissions on the question of the appellant's costs being paid out of the pension fund.

90The essence of the appellant's position is contained in the following submissions:

The appellant has reasonably brought this appeal for a determination of whether the original pension plan and trust documents permitted a merger of plans and commingling of trust funds such that Rockwell could use Reliance Plan funds for contribution holiday purposes in respect of the Allen- Bradley Plan employees. There are important considerations with respect to plan interpretation, trust fund terms, revocation, surplus entitlement, cross-subsidization, etc., as well as the application of the recent Aegon, Baxter and Kerry decisions. The interpretation and ambit of the Pension Benefits Act was also in issue.

This was not an adversarial proceeding between beneficiaries, and in fact, no plan beneficiaries objected to the proceeding or asserted a position adverse to the appellant. As noted in the Title of Proceedings, Mr. Lennon brought this appeal "on behalf of the members of the Pension Plan for Salaried and Management Employees of Reliance Electric Limited".

This case, as other pension plan cases, was complex and novel, touching on significant matters of public policy in the area of pensions and trusts, application of current pension jurisprudence, and the interpretation of pension benefits legislation. As was argued in the Ontario Teachers' decision"it is consistent with the purpose of the PBA as public welfare legislation intended to advance the interests of pension plan members and beneficiaries for the Plan to pay the appellant's costs".

91The appellant refers to several cases in support of its position, chiefly Ontario Teachers' Pension Plan Board v. Ontario (Superintendent of Financial Services), ²⁵ [page758] and Schmidt v. Air Products of Canada Ltd. ²⁶ where all parties received their costs on a full indemnity basis from the funds at issue.

92In the Ontario Teachers' Plan decision, after a review of several authorities, the Divisional Court held as follows:

In our view the submissions of the appellant are persuasive. The litigation will clarify what has been a problematic part of the PBA for pension and family practitioners, and members and administrators of pension plans. This benefits not only the members of this plan, but members and administrators of plans throughout Ontario. The cases cited show that in such circumstances it is appropriate that the plan bear the costs. This is a proper case on the facts set out above for such an order. Ms. Stairs will have her costs throughout on the substantial indemnity scale, payable by the Board.

93The respondent refers to Sutherland v. Hudson's Bay Co. ²⁷ which involved claims by one set of beneficiaries in a merged plan that some plan assets were held exclusively for their benefit to the exclusion of other members of the merged plan. When the plaintiffs lost a partial summary judgment motion, Cullity J. rejected the proposition that they should nonetheless recover their costs from the Plan assets:

As I indicated at the beginning of this endorsement, I do not consider this to be a case in which I could properly order that a costs award against the plaintiffs is to be paid out of the pension trust funds. I do not accept that there is any special rule applicable to pension cases that entitles members who make claims to surplus to have the litigation financed out of it -- or otherwise out of the pension fund -- irrespective of the outcome of particular motions, or of the proceedings as a whole.

Orders for the payment of costs out of trust funds are most commonly made in either of two cases. One is where the rights of the unsuccessful parties to funds held in trust are not clearly and unambiguously dealt with in the terms of the trust instrument. In such cases, the order is sometimes justified by describing the problem as one created by the testator or settlor who transferred the funds to the trust. The other case is where the claim of the unsuccessful party may reasonably be considered to have been advanced for the benefit of all of the persons beneficially interested in the trust fund. In addition, a trustee will ordinarily be entitled to a full indemnity for legal expenses -- including costs -- reasonably incurred in protecting or administering the fund: cf., Meredith v. Plaxton (2002), 2002 32496 (ON SC), 62 O.R. (3d) 427 (S.C.J.).

I do not see why the practice in the first two cases I have referred to should not apply to pension trusts in the same way as to any other trusts. However, I do not think they can be applied to the costs payable to the Defendants on [page759] this motion. The first case is obviously different as the plaintiffs' claims relate to the propriety of the Defendants' exercise of their fiduciary powers and obligations with respect to the Dumai trust fund. The second is not applicable as, although the plaintiffs seek a declaration that they are the only persons beneficially interested in the defined benefit component of the Dumai Pension Plan, this is an issue in the proceedings. It was precisely because the plaintiffs are, in effect, denying the existence of certain rights of other persons now treated by the Defendants as members and beneficiaries of the Dumai plan, that I ordered such persons to be represented. In consequence, it would be to beg a question that is very much in issue in this case to hold that the plaintiffs are the only persons beneficially interested in any discrete part of the Dumai trust fund . . . . It may be appropriate to order an interim award of costs out of the assets of a pension trust fund in some cases involving disputes about the propriety of an employer's conduct in connection with the purported exercise of its powers as administrator, or otherwise. I made such an order in favour of the individuals added as parties pursuant to my earlier direction. Interim awards are governed by different principles and the position of those involuntary parties was very different to that of the plaintiffs who initiated the proceedings and who were substantially unsuccessful on the motion by the Defendants.

94Following the receipt of these submissions, the Court of Appeal ruled on costs in Kerry ²⁸ in which Kerry (Canada) Inc. was awarded its costs in the Divisional Court and the Court of Appeal on a partial indemnity basis.

95The Committee which sought relief against Kerry sought to have its costs, on a substantial indemnity basis, paid from the fund. That position was rejected by the Court of Appeal; the Committee was ordered to pay Kerry's costs as fixed by the court.

96The Court of Appeal reviewed Re Buckton and Sutherland. It found favour with the approach of Cullity J. in Sutherland. The categories in Buckton were found not helpful in the pension trust context.

97Gillese J.A. summarized the two categories of cases in which an award of costs from the fund may be appropriate [at paras. 10-13]:

By contrast, the two categories set out in the pension trust approach reflect different public policy reasons for granting costs from the trust fund. The first category reflects the public interest in ensuring that all trust funds, including those in which pension monies are held, are properly administered. If there is ambiguity about the rights of beneficiaries, those administering the pension fund are to be encouraged to bring the matter to the courts for direction so that when they perform, they do so in accordance with the law. By awarding costs from the pension trust fund, there is no penalty or disincentive to seeking such direction.

That same public policy interest exists when direction is sought by the beneficiaries in pursuance of their right to compel due administration of the [page760] trust. To be meaningful, beneficiaries must be able to exercise that right without risk of costs consequences, so long as they act reasonably.

The second category of court proceedings referred to in the pension trust approach are those proceedings taken for the benefit of all of the beneficiaries. As all beneficiaries stand to reap the benefits of such a proceeding, an award of costs from the trust fund is fair as all beneficiaries bear the cost of the proceedings.

Under the pension trust approach, unless a court proceeding fits within one of those two categories, the usual civil litigation costs rules ought to apply.

98Here, the appellant's central claim was that the former members of the Reliance Plan have a right to all of the Reliance Plan assets that are now merged in the Rockwell Plan, to the exclusion of all other members of the Rockwell Plan.

99Furthermore, although the claim required an interpretation of the Trust and Plan documents, the reasonable interpretation of those documents led to no other tenable conclusion on the facts and the law than that found by the Tribunal. As indicated above, we found the Tribunal's decision to be not only reasonable, but also correct.

100Finally, the claim here was not on behalf of all plan members, and could not reasonably be said to be necessary to advance the due administration of the plan. The claim here was for the exclusive benefit of the appellant and those he represents. It was contrary to the interests of the remaining plan members. The claim was adversarial.

101In these circumstances, we decline to order that the appellant's costs be paid out of the fund, nor shall the costs award against the appellant be paid out of the fund.

102The written submissions focused on entitlement to costs and whether costs would be paid from the fund. Other than submitting costs outlines, counsel did not comment on the amount claimed. Having reviewed the costs outline submitted by Mr. Prestage on a partial indemnity basis, we order costs to the respondent against the appellant fixed at $30,000 including disbursements and GST.

103CORBETT J. (concurring): -- I agree with my colleagues on the procedural fairness and costs issues. I also agree that the Tribunal was correct on the merits and that the appeal should be dismissed. I take a different approach to the standard of review for this appeal.

104The appellant says that the standard of review is correctness. Rockwell says that it is reasonableness. The Superintendent acknowledges that the standard may be a "moving target" in [page761] the jurisprudence, but joins with Rockwell in submitting that the standard is reasonableness in this case. At its heart, this appeal involves a determination of whether the pension plan merger was lawful. This is reflected in the statement of the issue in paras. 1, 9 and 10 of my colleagues' reasons. To answer this question, the Tribunal had to construe the pension plan documents, consider the history of the pension plan, and apply common law contracts and trusts law. In my respectful view, this decision-making process does not transform a "question of law" into a "polycentric question of fact and law".

105As noted by Gillese J.A. in Kerry,

Following the Supreme Court of Canada's decision in Monsanto . . . ., there can be no question that when hearing appeals from Tribunal decisions that involve pure questions of law, the court is to apply a standard of review of correctness. ²⁹

106Also as noted in Kerry, it is now clear "that multiple standards of review can apply to different matters decided by a tribunal in the course of a single proceeding". ³⁰ And so the standard of review is assessed using "the pragmatic and functional approach to determine the appropriate standard of review for each issue under appeal". ³¹ Thus the starting point for the analysis of the standard of review is identification of the issue on appeal. In this case, the issue may be stated broadly: was the pension plan merger lawful? The issue may be stated more narrowly: was the membership of the Reliance Plan closed? But whether the question is framed narrowly or broadly, it is still a question of law: was the merger a breach or revocation of trust, or was it not? Once the question on appeal is identified, the standard of review for that question is determined by applying the factors identified in Pushpanathan: ³² (1) the presence or absence of a privative clause; (2) the expertise of the decision-maker relative to that of the court; (3) the purpose of any relevant legislative provisions; and (4) the nature of the question under review.

107These factors are reviewed in both Monsanto and Kerry in the context of appeals from the Tribunal. As noted in both decisions, there is no privative clause in the Pension Benefits Act, R.S.O. 1990, c. P.8: [page762] there is a full right of appeal to the Divisional Court from the Tribunal.

108In respect to the second factor, the Court of Appeal finds in Kerry:

In my view, the Tribunal has a greater relative expertise on questions concerning pension plan documents. In that regard I would echo the comments of Goudge J.A. in Monsanto . . . .: ³³

The Act gives the Tribunal the central adjudicative role in the specialized administrative structure set up to regulate pensions in Ontario. While the Tribunal deals with other regulated sectors in addition to pensions, the Financial Services Commission of Ontario Act requires that, to the extent practicable, members are appointed with experience and expertise in the regulated sectors and that they are assigned to cases which draw on that experience and expertise. Hence the Tribunal must be seen as having a relative expertise in adjudicating questions relating to pensions. This points to a more deferential standard of review.

Although Deschamps J. took a different view of the Tribunal's expertise in Monsanto, that view related to the Tribunal's expertise to decide a question of pure law. In my view, the opinion expressed by Goudge J.A., set out above, remains relevant to questions of mixed fact and law. ³⁴

109The Court of Appeal's finding that the Tribunal "has a greater relative expertise on questions concerning pension plan documents" is binding on this court. On the basis of this finding, the "relative expertise" branch of Pushpanathan "points to a more deferential standard of review", since the construction of pension plan documents is central to the issue on appeal.

110The third branch of the Pushpanathan test is not of great assistance to the analysis in this case. The Superintendent's decision was made under s. 81(5) of the Pension Benefits Act. However, the question on appeal does not concern the interpretation of that section. Nor does the question on appeal concern the metes and bounds of the discretion available under s. 81(5). The question on appeal is one aspect of the decision-making process under s. 81(5), but not an aspect in respect to which the operation of discretion is in play. Simply put, the issue on this appeal is whether the merger of the pension plans is inconsistent with the Reliance Plan. If it is, then the transfer of assets would be a breach of trust and would trigger a revocation of the trust. The Superintendent does not have discretion to permit breaches of trust.

111The final branch of the test concerns the nature of the question under review. As is clear from Kerry, if the question on [page763] appeal is a question of mixed fact and law, or a matter of discretion, greater deference will be warranted. ³⁵ If the question is a "pure question of law" concerning statutory interpretation, then the correctness standard will apply, as found in Monsanto and noted in Kerry. What of questions of law that are not solely questions of statutory interpretation, and which involve construction of pension plan documents?

112On my reading of Kerry, the Court of Appeal stopped short of equating the categories of "questions of pure law" and "issues of statutory interpretation". I also conclude that the language used by Deschamps J. in Monsanto does not equate the two. "Issues of statutory interpretation" is an overlapping subset of the broader category of "questions of law". Questions arising in the common law of trusts and contract are no less questions of law for not being set out in legislation. On the language of Monsanto, such questions of law are also reviewable on a standard of correctness.

113Construction of legal documents involves questions of fact and questions of law. However, the fact that both aspects are present does not transform the legal analysis into a mixed question of fact and law. Perell J. has recently considered this question in an analysis of the standard of review from an arbitrator under the Arbitration Act, 1991, S.O. 1991, c. 17. ³⁶ I agree with Perell J.'s analysis, and adopt it. ³⁷ I appreciate that the Tribunal has expertise in deciding questions of law related to pensions documents. Specialized tribunals, such as the Tribunal, may find their jurisprudence accorded greater persuasive authority than is accorded decisions of generalist tribunals and courts. But the respect accorded an expert tribunal does not change the standard of review from correctness for questions of law.

114In this regard, it should be borne in mind that appellate review does not exist solely for the purpose of rectifying errors in courts and tribunals below. It also exists to harmonize legal principle across legal disciplines, to settle issues of principle that are in conflict in lower court and tribunal decisions, and, where appropriate, to harmonize provincial and national legal standards. [page764]

115For these reasons, I find that the standard of review is correctness. I would dismiss the appeal, with costs as directed by my colleagues.

Footnotes

1. 1R.S.O. 1990, c. P.8 (the "PBA").
2. 2(2007), 2007 ONCA 416, 86 O.R. (3d) 1, [2007] O.J. No. 2176, 2007 CarswellOnt 3493 (C.A.).
3. 3Tribunal Reasons, p. 12.
4. 4Tribunal Reasons, p. 14.
5. 5Baxter v. Ontario (Superintendent of Financial Services), 2004 45494 (ON SCDC), [2004] O.J. No. 4909, 43 C.C.P.B. 1 (Div. Ct.), at paras. 65-66.
6. 6Canadian Union of Public Employees (C.U.P.E.) v. Ontario (Minister of Labour), 2003 SCC 29, [2003] 1 S.C.R. 539, [2003] S.C.J. No. 28, at paras. 100-103; Moreau-Bébrubé v. New Brunswick (Judicial Council), [2002] 1.S.C.R. 249, 2002 SCC 11, [2002] S.C.J. No. 9, at paras. 74-75.
7. 7Financial Services Commission of Ontario Act, 1997, S.O. 1997, c. 28 ("FSCO"), ss. 16 and 17.
8. 8FSCO., ss. 16 and 17.
9. 9Such a process is authorized by s. 4.2(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22.
10. 10Armstrong v. Royal Canadian Mounted Police (Commissioner), 1998 9041 (FCA), [1998] F.C.J. No. 42, 156 D.L.R. (4th) 670 (C.A.), at pp. 678-79 D.L.R.
11. 11Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817, [1999] S.C.J. No. 39, 174 D.L.R. (4th) 193, per L'Heureux-Dubé J.
12. 12Ms. Seller's affidavit states that she is a partner in Baker & Mackenzie, Reliance's solicitors respecting pension matters during the 1980s. Ms. Seller says she located the attached copy of the 1980 Plan in Baker & Mackenzie's files. Ms. Seller does not attest to any other personal knowledge of the document. Mr. Christiani's affidavit indicates that his firm, Wyatt & Company, were actuaries for the Reliance Plan until the mid-1990s, and that he worked on the file. Mr. Christiani attests that he believes the attached copy of the 1980 Plan "represents" the Plan as of January 1, 1980.
13. 13Tribunal Reasons, pp. 1 and 20.
14. 14Tribunal Reasons, p. 19.
15. 15Tribunal Reasons, p. 16.
16. 16Rockwood correctly concedes this error. See Appeal Book, tab 30, p. 273.
17. 17Retirement Income Plan for Salaried Employees of Weavexx Corp. v. Ontario (Superintendent of Pensions), [2000] O.J. No. 2066, 24 C.C.P.B. 154 (Div. Ct.), at para. 20, varg (2002), 2002 23593 (ON CA), 58 O.R. (3d) 380, [2002] O.J. No. 524 (C.A.), at para. 23.; and Baxter, supra, at paras. 49 and 54.
18. 181997 1877 (NS CA), [1997] N.S.J. No. 324, 1997 CarswellNS 246 (C.A.).
19. 19Fratcher, W.F., Scott on Trusts, 4th ed., vol. IV (Toronto and Boston: Little Brown, 1987-), at p. 381.
20. 20Schmidt v. Air Products Canada Ltd., 1994 104 (SCC), [1994] 2 S.C.R. 611, [1994] S.C.J. No. 48, at p. 643 S.C.R., per Cory J.
21. 21Heilig v. Dominion Securities Pitfield Ltd. (1989), 1989 4284 (ON CA), 67 O.R. (2d) 577, [1989] O.J. No. 217 (C.A.), at p. 582 O.R., per Grange J.A.
22. 22Supra, note 21.
23. 23Buschau v. Rogers Communications Inc., 2006 SCC 28, [2006] 1 S.C.R. 973, [2006] S.C.J. No. 28, at paras. 2 and 16, per Deschamps J.
24. 24See Kerry, supra [fn. 2], at paras. 93-117. See also Sutherland v. Hudson's Bay Co., 2007 30293 (ON SC), [2007] O.J. No. 2979, 60 C.C.E.L. (3d) 64 (S.C.J.), at paras. 166-74, per Siegel J. The decision in the Sutherland case was released during preparation of these reasons and was forwarded to us by counsel on consent. We did not require further submissions from the parties in respect to it.
25. 252003 32334 (ON SCDC), [2003] O.J. No. 605, 169 O.A.C. 101 (Div. Ct.), affd as to costs (2004), 2004 7628 (ON CA), 70 O.R. (3d) 61, [2004] O.J. No. 331 (C.A.).
26. 261994 104 (SCC), [1994] 2 S.C.R. 611, [1994] S.C.J. No. 48, 115 D.L.R. (4th) 631.
27. 27[2006] O.J. No. 2009, 53 C.C.P.B. 154 (S.C.J.), at paras. 10-12.
28. 28[2007] O.J. No. 3321, 2007 ONCA 605; forwarded to us on consent of counsel.
29. 29Kerry, at para. 24.
30. 30Kerry, at para. 25. See also Lévis (City) v. Fraternité des policiers de Lévis Inc., [2007] S.C.J. No. 14, 2007 SCC 14.
31. 31Kerry, at para. 25.
32. 32Pushpanathan v. Canada (Minister of Citizenship and Immigration)1998 778 (SCC), [1998] 1 S.C.R. 982, [1998] S.C.J. No. 46, at paras. 29-38. See Kerry, at para. 28.
33. 33(2002), 2002 17842 (ON CA), 62 O.R. (3d) 305, [2002] O.J. No. 4407 (C.A.), at para. 29.
34. 34Kerry (C.A.), at paras. 30 and 31.
35. 35Kerry (C.A.), at para. 33. See also Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, at para. 26; Suresh v. Canada (Minister of Citizenship and Immigration), 2002 SCC 1, [2002] 1 S.C.R. 3, [2002] S.C.J. No. 3, at paras. 29-30.
36. 36Aronowicz v. Aronowicz (2007), 2007 1885 (ON SC), 84 O.R. (3d) 428, [2007] O.J. No. 295 (S.C.J.).
37. 37See also MacDougall v. MacDougall, 2005 44676 (ON CA), [2005] O.J. No. 5171, 262 D.L.R. (4th) 120 (C.A.), per Lang J.A. and Housen v. Nikolaisen, supra.