FINANCIAL SERVICES TRIBUNAL

2002 ONFST 1

Decision No. P0155-2001-1

Date: 2002/01/08

IN THE MATTER OF the Pension Benefits Act, R.S.O. 1990, c. P.8, as amended (the "PBA");

AND IN THE MATTER OF a proposal by the Superintendent of Financial Services (the "Superintendent"), pursuant to the PBA, to refuse to consent to the payment of surplus out of The Independent Order of Foresters Fieldworkers' Pension Plan, Registration No. 0354399 (the "Plan");

AND IN THE MATTER OF a proposal by the Superintendent, pursuant to the PBA, to refuse to approve a wind up report in respect of the Pension Plan;

AND IN THE MATTER OF a hearing in accordance with subsection 89(8) of the PBA;

BETWEEN:

THE INDEPENDENT ORDER OF FORESTERS

Applicant

-and-

SUPERINTENDENT OF FINANCIAL SERVICES and IRVIN GRAINGER

Respondents

BEFORE:

Mr. Colin H.H. McNairn

Vice Chair of the Tribunal and Chair of the Panel

Mr. Louis Erlichman

Member of the Tribunal and of the Panel

Ms. Heather Gavin

Member of the Tribunal and of the Panel

APPEARANCES:

For The Independent Order of Foresters:

Ms. Lisa J. Mills

For the Superintendent of Financial Services:

Mr. Mark Bailey

Ms. Deborah McPhail

For Mr. Irvin Grainger:

Mr. Gerald Owen (by conference telephone)

HEARING DATE:

December 7, 2001

REASONS FOR ORDERS

Background

A motion was brought before the Tribunal to determine the nature of the notice to be provided of the hearing in this proceeding. The proceeding before the Tribunal was commenced by way of a Request for Hearing filed on April 11, 2001 by The Independent Order of Foresters (the "IOF") challenging a Notice of Proposal of the Superintendent of Financial Services (the "Superintendent") dated March 19, 2001. In that Notice, the Superintendent proposes to refuse consent to an application by IOF for the withdrawal of surplus from the Independent Order of Foresters Fieldworkers' Pension Plan (the "Plan") on its wind up effective December 31, 1997, and to refuse approval of the wind up report in respect of the Plan filed by IOF. The stated basis for the proposed refusals is that IOF had not demonstrated that the excess assets in the Plan constituted surplus for the purposes of the PBA and that the Plan and the assets held in the fund of the Plan were subject to a trust for the benefit of the members and, therefore, no part of those assets could be properly paid to IOF even if they constituted surplus.

IOF's application for the withdrawal was made to the Superintendent on the basis that at least two-thirds of the Plan members had consented to a surplus distribution proposal under which IOF would share in a distribution of the surplus on a 50-50 basis with the members, former members and other persons entitled to benefits under the Plan, a group totaling 225 individuals. In soliciting consents to the surplus distribution proposal, IOF sent to the Plan members, on September 2, 1999, a Notice of Surplus Application that, in accordance with the requirements of the PBA and the Regulation under the PBA, advised recipients of the Notice that they could make submissions to the Superintendent concerning IOF's application, within 30 days of receipt of the Notice. Additional notice was given, at a later date, by publication in the Globe and Mail and La Presse. That notice also advised of the right to make submissions to the Superintendent concerning IOF's application, within 30 days of the date of publication. A number of submissions were, in fact, made to the Superintendent about the application. The Superintendent sent copies of the Notice of Proposal to those who had made submissions as well as to the IOF, as required by subsection 89(3.1) of the PBA. One of those individuals, Irvin Grainger, applied for and has been granted party status in this proceeding.

On November 20, 2001, IOF sent a letter to Plan members updating them on the application process and the next steps in the proceeding before the Tribunal. No notice was given of the time and place of the hearing before the Tribunal, however, as this was not yet established.

Arguments

The Superintendent, supported by Mr Grainger, took the position that notice of the hearing should be given by mail to the members and former members of the Plan and by newspaper publication, all at the expense of IOF.

IOF took the position that notice of the hearing need not be given to those members and former members of the Plan who had declined to avail themselves of the opportunity to make submissions to the Superintendent in connection with IOF's surplus withdrawal application. It argued that the regulatory scheme under the PBA involves a multi-step process that is really a continuum, the final stage of which is a hearing before the Tribunal should there be a request for hearing. That scheme simply provides for notice to Plan members in connection with any proposed application for surplus withdrawal to the Superintendent but not for notice (except for notice to those who are parties) at the stage of any subsequent Tribunal hearing. The requirements of procedural fairness, IOF argued, were satisfied by the initial notice, subject to any common law requirement to give further notice to "known opponents", such as those who had objected to the application before the Superintendent. In any case, IOF claimed, its letter of November 20, 2001 made any further notice to members and former members of the Plan unnecessary. Finally, IOF maintained that if any notice of hearing were to be required, the cost should be borne out of the Plan, and not by IOF.

Analysis

This Tribunal has the authority under section 22 of the Financial Services Commission of Ontario Act, 1997 (the "Governing Act") to "determine what constitutes adequate public notice" for a proceeding before the Tribunal. The term "public notice" implies notice to persons who may not be parties to a

particular proceeding and would, at least, embrace notice by newspaper publication.

The Tribunal also has the authority under section 22 of the Governing Act to "make rules for the practice and procedure to be observed" for a proceeding before the Tribunal. The Tribunal has adopted Interim Rules of Practice and Procedure, pursuant to this provision, that apply generally to proceedings before it. Those Rules do not constrain the authority of the Tribunal to determine what constitutes adequate public notice of a hearing. Indeed, Rule 22.02 reinforces the authority of the Tribunal to provide for notice beyond the immediate parties to a proceeding by requiring the Tribunal to provide written notice of a hearing "to the parties and others as required by law, and as the Tribunal considers necessary" (emphasis added).

On this motion, we heard arguments as to what notice of hearing is required, in the circumstances of this case, by the terms of the PBA and the Regulation under it and by the common law rules of natural justice and fairness. While these sources may be instructive in some situations, we are not limited by them as we have the authority to decide, in a particular case, what public notice is adequate and to whom we consider notice to be necessary. In other words, these sources simply establish the minimum requirements of notice.

In deciding on the appropriate notice of the hearing in this case, we have considered Rule 39.04 of the Interim Rules of Practice and Procedure. That Rule sets out the criteria for determining whether to grant a person party status in a proceeding before the Tribunal. Therefore, the Rule is not directly applicable to the question we have to decide on this motion. However, the criteria established by the Rule can be usefully applied, by analogy, to ascertain those who might have a legitimate interest in receiving notice of the hearing, since such notice would give them the basic information that would enable them to decide whether they should apply for party status. Applying the principles of Rule 39.04, we believe that given the likelihood that members and former members of the Plan would have a genuine interest in the issues raised by this case and the likelihood that some members of that group might be able to make a useful, and perhaps different, contribution to the understanding of those issues, they should be given notice of the hearing before the Tribunal.

We are not persuaded that notice to all members and former members of the Plan is unnecessary at this stage simply because general notice of IOF's application to the Superintendent for approval of a distribution of surplus from the Plan was required and provided at an earlier stage. While in some sense the hearing before the Tribunal can be viewed as a continuation of the application process before the Superintendent, the Tribunal is a separate body that does not simply review decisions or proposed decisions of the Superintendent but hears each case "de novo". In this particular proceeding, there have been developments in the case that suggest to us that a fresh notice, focusing on the hearing before the Tribunal, should be provided. For one thing, over two years have elapsed since the original notice of the surplus withdrawal application was given and it did not refer to the possibility of a hearing before the Tribunal, which has now materialized. For another thing, the position taken by the Superintendent on the application, as evidenced by the Notice of Proposal, may result in some members or former members of the Plan now wishing to become involved - whether as parties or in some other way - even though they were prepared to stand on the sidelines at the earlier stage. It is not just those who might object to the surplus withdrawal application that might be inclined to participate in the hearing in some way, but also those who support the application, who might now feel the need to get actively behind the application given the Superintendent's proposed refusal. This is not to say that we would necessarily take a different view of the desirability of notice of the hearing to members and former members of the Plan had the Superintendent proposed to approve the surplus withdrawal application.

We do not think that IOF's letter of November 20, 2001 makes notice of the hearing to those who received the letter unnecessary. That letter does not indicate the time and place of the hearing nor does it indicate how to contact the Registrar of the Tribunal for further information about the hearing, all of which would be provided by a properly worded notice of hearing.

Since the original notice of IOF's application for surplus withdrawal was given by a mailing to members and former members of the Plan and by newspaper publication, we think that the notice of the hearing before the Tribunal should be given in the same manner.

When this Tribunal requires notice of hearing to be provided to plan members who are not represented by a union, the practice has been for the costs and, generally, for the logistics of effecting notice, once the form is settled, to be assumed by the applicant in the matter if the applicant is the plan sponsor. We see no reason for departing from that practice in this case.

Disposition

At the end of the hearing of the motion on December 7, 2001, we made the following orders;

We order that notice of the hearing in this matter be provided by ordinary mail to all members and former members affected by the wind up of the Independent Order of Foresters Fieldworkers' Pension Plan who would be potentially entitled to participate in a distribution of surplus of the plan on its wind up effective December 31, 1997. We also order that appropriate newspaper notice of the hearing be provided.

We order that the Applicant bear the costs of the provision of notice of hearing, subject to any arrangement for the allocation of those costs to the pension plan should the Applicant's application for withdrawal of surplus from the plan be ultimately approved and subject to any order for costs that the Tribunal might order at the end of this proceeding.

DATED at Toronto this 8^th day of January, 2002.

“Colin H.H. McNairn” __ “Louis Erlichman”

Colin H.H. McNairn, Louis Erlichman,

Chair of the Panel Member of the Panel

“Heather Gavin”

Heather Gavin,

Member of the Panel