André Provost v. Superintendent of Financial Services, 2012 ONFST 14

FINANCIAL SERVICES TRIBUNAL

2012 ONFST 14

Decision No. P0480-2011-1

Date: 2012/05/31

IN THE MATTER OF the Pension Benefits Act, R.S.O. 1990, c.P.8, as amended by the Financial Services Commission of Ontario Act, 1997, S.O. 1997, c.28;

AND IN THE MATTER OF a Notice of Appeal from André Provost in respect of a decision from the Régie des Rentes du Québec pursuant to the Multi-Jurisdictional Pension Plan Agreement regarding Pension Plan 25825 Rio Tinto Alcan;

AND IN THE MATTER OF a Hearing in accordance with subsection 89(8) of the Act.

B E T W E E N:

ANDRÉ PROVOST

Applicant

and

SUPERINTENDENT OF FINANCIAL SERVICES

Respondent

BEFORE:

Elizabeth Shilton,

Member of the Tribunal and Chair of the Panel

Jennifer Brown Member of the Tribunal and the Panel Shiraz Bharmal Member of the Tribunal and the Panel

Appearances:

For the Applicant – Wassim Garzouzi, Raven, Cameron, Ballantyne & Yazbeck LLP

For the Superintendent – Deborah McPhail

Written Hearing

REASONS FOR DECISION

I. INTRODUCTION

1. This case deals with an application by André Provost (the “Applicant”) for an early retirement pension from a pension plan administered by Rio Tinto Alcan (the “Alcan plan”). The case comes to us by an unusual route. The Applicant earned his benefit entitlement under the Alcan plan while employed in Ontario and his substantive pension rights are governed by Ontario law. However, the Alcan plan is registered in Québec, under the supervisory authority of the Régie des rentes. Accordingly, when this problem arose, Applicant’s counsel wrote to the Régie, on the advice of the Financial Services Commission of Ontario, seeking a ruling that the Applicant was entitled to take his benefits from the Alcan plan. By letter dated July 18, 2011, the Régie rendered a decision denying the Applicant’s request on the basis of s.80 of the PBA. It is that decision of the Régie that is before us.

2. Normally, the jurisdiction of the Tribunal under the PBA is limited to reviewing decisions (or intended decisions) of Ontario’s Superintendent of Financial Services. However, situations like the Applicant’s, in which the substantive rights at issue are governed by the laws of a jurisdiction different than that of the supervising regulatory authority, are governed by the Agreement Respecting Multi-Jurisdictional Pension Plans (“Multi-Jurisdictional Agreement”), signed by Québec on April 28, 2011 and by Ontario on May 9, 2011.¹ Section 4 of that Agreement provides as follows:

(4) Any decision that may be made by the major authority for a pension plan that applies the provisions of the pension legislation of a minor authority’s jurisdiction as described in clause (b) of subsection (1) of section 6 is subject to the following rules:

a) the decision shall be made under the procedural provisions of the pension legislation of the major authority’s jurisdiction that would have applied if the matter had arisen under that legislation;

b) the decision shall be deemed to have been made by the minor authority under the procedural provisions of the pension legislation of the minor authority’s jurisdiction that would have applied if the minor authority had made the decision;

c) when the decision is issued by the major authority, it shall include notice to any person receiving the decision as to:

i. the substantive provisions of the pension legislation of the minor authority’s jurisdiction that were applied in formulating the decision that is made;

ii. the recourse provided, if any, from the decision under the pension legislation of the minor authority’s jurisdiction, including the body before whom such recourse may be exercised.

(d) The right to recourse from the decision shall be determined under the pension legislation or other legislation of the minor authority’s jurisdiction as though the decision had been made under the procedural provisions of that legislation.

(5) Exercise of a recourse from a decision referred to in this section does not have the effect of preventing or releasing the major authority from continuing to fulfill its responsibilities with respect to the pension plan as set out in subsection (2).

3. In this case, the major authority is the Régie, and the minor authority is the Financial Services Commission of Ontario. The parties are agreed that pursuant to s.4(4) and (5), we should treat the Régie’s decision as if it were made by the Superintendent, and that recourse from that decision is to this Tribunal. The Multi-Jurisdictional Agreement is a complex document, and may give rise to interpretive difficulties in subsequent cases. Since the interpretation urged upon us for purposes of this case is a reasonable one, however, we will proceed to deal with the merits of the case on that basis. The remedial issues to which the Multi-Jurisdictional Agreement gives rise will be discussed in Part V below.

4. The case raises issues as to the interpretation of s.80 of the Pension Benefits Act, R.S.O. 1990, c.P.8. (“PBA”), a provision addressing pension rights in sale of business/successorship situations. The Applicant seeks a determination that he is entitled to an immediate pension (or its value) from the Alcan plan. He was employed by Alcan from 1977 to 1999, and was a member of the Alcan Plan.² In 1999 Alcan sold part of its business to Eaglebrook Inc. of Canada (“Eaglebrook”), at which time the Applicant became an employee of that company and a member of Eaglebrook’s pension plan. A few years later, Eaglebrook sold some or all of its business to a third company, Kemira. The Applicant became a Kemira employee and a member of Kemira’s pension plan. Having reached the age of 55, the Applicant applied to Alcan for the pension he had left behind him in the Alcan plan. Alcan turned him down on the basis that retirement was a condition of eligibility for pension, and he was not “retired”, since he still worked for a successor employer within the meaning of s.80 of the PBA. Despite his assurances that he no longer worked for Eaglebrook and now worked for a different company, Alcan continued to maintain its position, arguing that although Eaglebrook had left the scene, Kemira was now the successor employer within the meaning of s.80. Accordingly, the case raises the question of whether and how s.80 applies in a “successor to a successor” situation.

5. The Applicant’s claim is further complicated by events that took place involving the Régie at the time of the Applicant’s severance from Alcan. Because the plan was registered in Québec, it was the Régie and not the Superintendent that dealt with the terms on which the pension rights of employees affected by Alcan’s sale of business would be dealt with. With the Régie’s blessing, and indeed in apparent compliance with an order from the Régie made as part of a partial wind up process, Alcan made a commitment to employees in the position of the Applicant that they could either transfer their pension entitlements out of the plan at the time of sale, or leave them in the Alcan plan and claim them as a pension at age 55. The Applicant chose the latter option. Alcan now appears to be saying that s.80 of the PBA does not permit him to exercise that option unless he leaves his employment with Kemira. Accordingly, this case also raises the question of whether s.80, and in particular s.80(3), operates as a statutory bar to all claims for immediate pension from predecessor plans made by members who work for successor employers, regardless of the nature of the exit arrangements made at the time of the original sale of business.

6. Notice of the pre-hearing conference in this matter was given to Rio Tinto Alcan and to the Régie des rentes. Neither participated in the pre-hearing conference. Subsequently, notice of the written hearing was given to Rio Tinto Alcan, to the Régie and also to Kemira (the Applicant’s present employer and the company alleged to be a successor employer to Alcan). No notice was given to Eaglebrook, the company to which Alcan sold its business, because the parties were unable to locate this company. None of the entities given notice applied for party status. Accordingly, the parties before us are the Applicant and the Superintendent (standing in for and defending the decision of the Régie). This leaves us in the somewhat unsatisfactory position of having to address important factual and legal issues in the absence of parties who could shed light on the evidence and who may have a significant legal interest in the outcome. We must deal with the case as it comes before us, however, and we have done so.

7. We have determined that in all the circumstances of the case, the Applicant is entitled to an immediate pension under the Alcan plan now that he has reached the age of 55. Our reasons for that conclusion follow.

II. THE FACTS

8. By agreement of the parties, this matter was dealt with entirely by Written Hearing. The evidence was put in through an Agreed Statement of Facts (“ASF”) and Agreed Book of Documents (“ABD”). On the basis of that evidence, we find as follows.

9. The Applicant was employed by Alcan in 1978 to work at a location (the “Location”) in Ottawa, Ontario, and was a member of the Alcan plan. Alcan sold its business at the Location to Eaglebrook in 1999. There is no evidence before us as to the nature of the business Alcan was conducting at the Location, but we are advised that the Applicant’s employment “was transferred to Eaglebrook at that time” (ASF, para. 7). Eaglebrook provided its own pension plan for its employees, including the Applicant, but did not assume the liabilities of the Alcan plan.

10. At that time Alcan, in its capacity as plan administrator, wrote to the Régie advising of the sale of business, and advising that it planned to treat the Ontario employees affected by the sale in accordance with s.80 of the PBA. In that letter, Alcan sought the Régie’s permission to avoid the necessity of filing un rapport de terminaison partielle (the equivalent of a Partial Wind Up Report) (ABD, Tab 2). It appears that the Régie did not accede to that request. It issued a decision on August 12, 1999 partially terminating the plan. However, in the exercise of its power under paragraph 2° of Article 240.3 of the Supplemental Pension Plans Act, RSQ, c R-15.1 as it stood at that time, the Régie exempted the plan from many of the provisions of that Act applicable to wind-ups, on condition that Alcan take certain steps with respect to those plan participants affected by the sale. One of those steps was that Alcan confirm that it had offered affected employees with vested rights the option to maintain their rights in the plan or to transfer them out to another plan, an annuity or a locked-in account.³ The Regie’s decision clearly contemplated that these rights might be superior to those provided by the plan itself; accordingly, a condition of the order was that Alcan provided affected employees with new pension statements. We understand that in September 1999 Alcan subsequently filed a Rapport sur la Terminaison Partielle with the Régie which complied with the Régie’s conditions. That Report confirmed the choices that had been given to employees in the Applicant’s position (i.e. those whose benefits were vested but who had not yet reached the age of 55 or accumulated a combined age and years of service of 75). They included two options: to transfer the commuted value of their benefits to a locked-in account, or to take a deferred pension commencing at age 55 at the latest.⁴ The Applicant chose the deferred pension option, and consequently left his entitlement in the Alcan plan.

11. From July 1, 1999 to April 11, 2004, the Applicant was employed by Eaglebrook and joined Eaglebrook’s pension plan. Eaglebrook then sold all or part of its business to another company, Kemira. The only evidence before us about the nature of that sale transaction is a single paragraph of the ASF which reads as follows:

Effective April 11, 2004, Eaglebrook sold the business at the Location [i.e. the former Alcan location in Ontario] to Kemira Chemicals Canada Inc. (“Kemira”). The Applicant’s employment with Eaglebrook was terminated and the Applicant became an employee of Kemira at that time” (ASF, para. 15).

12. The Applicant is still employed by Kemira. Kemira also has a pension plan, which the Applicant joined. That plan did not take over the liabilities of the Eaglebrook plan. At the present time therefore, the Applicant has accrued rights in three pension plans: the Alcan plan (a contributory defined benefit pension plan), the Eaglebrook Plan (a defined contribution pension plan with voluntary membership), and the Kemira Plan (a defined contribution pension plan with voluntary membership).

13. In 2009, sometime after the Applicant turned 55, the Applicant wrote to Alcan seeking to trigger his entitlement under the Alcan plan. His precise request to Alcan was to transfer his entitlement out of the Alcan plan and into a locked-in account. Alcan initially refused his request, apparently on the understanding that he was still working the Eaglebrook. When the Applicant pointed out that he had ceased to work for Eaglebrook in 2004 and was now working for a third employer, Kemira, Alcan took legal advice and continued to refuse his request, taking the position that Kemira was also a successor employer within the meaning of s. 80 of the PBA.

14. It appears to be common ground between the parties that, apart from the possible impact of s.80 of the PBA, the Applicant meets the plan’s qualifying conditions for an early retirement pension on reaching age 55. He is also clearly eligible for an immediate pension under the terms of his severance from Alcan, reflected in the partial termination report following the decision of the Régie in 1999.

III ISSUES AND ARGUMENT

15. The core issue between the parties, then, is whether s.80 of the PBA stands in the way of the Applicant’s right to claim an immediate pension (or its value) under the Alcan plan. The parties broke this down into three sub-issues in the pre-hearing conference memo, as follows:

16. Is Kemira Chemicals Canada Inc., Mr. Provost’s current employer, a successor employer to Rio Tinto Alcan within the meaning of section 80 of the Act?

17. Is the Pension Plan for Employees of Kemira Chemicals Canada Inc., Ontario registration number 1055003 (the “Kemira Plan”) a successor pension plan to Rio Tinto Alcan’s pension plan within the meaning of section 80 of the Act, in view of the fact that the Rio Tinto Alcan plan is a defined benefit pension plan and the Kemira Plan is a defined contribution pension plan?

18. What order, if any, should the Superintendent be directed to make?

In his Written Submissions, the Applicant has also asked us to consider whether “the special circumstances of this matter, specifically the Order of the Régie at the time of the sale in 1999, justify allowing this application” (Applicant’s Written Submissions, para. 8). The Superintendent has described this as an “added” issue, but has not raised any objection to its consideration (Superintendent’s Written Submissions, para. 12). The issue is clearly material to the Applicant’s claim to an immediate pension from the Alcan plan, and in the absence of any objection by the Superintendent, we are prepared to address it as part of our general consideration of all the facts and circumstances bearing on the core question of the impact of s.80 on the Applicant’s claim.

16. For convenience in organizing our decision, we have renumbered and slightly reframed these issues as follows:

17. Is Kemira a successor employer to Rio Tinto Alcan within the meaning of s.80 of the Act?

18. Is the Kemira Plan a successor plan to the Alcan plan within the meaning of s.80 of the Act, in view of the fact that the Alcan plan is a defined benefit pension plan and the Kemira Plan is a defined contribution pension plan?

19. Do the special circumstances of this case, included the Régie’s 1999 decision, justify allowing this application?

20. What order, if any, should the Superintendent be directed to make?

21. The relevant portions of s.80 of the PBA are as follows:

(1) Where an employer who contributes to a pension plan sells, assigns or otherwise disposes of all or part of the employer’s business or all or part of the assets of the employer’s business, a member of the pension plan who, in conjunction with the sale, assignment or disposition becomes an employee of the successor employer and becomes a member of a pension plan provided by the successor employer,

(a) continues to be entitled to the benefits provided under the employer’s pension plan in respect of employment in Ontario or a designated jurisdiction to the effective date of the sale, assignment or disposition without further accrual;

(b) is entitled to credit in the pension plan of the successor employer for the period of membership in the employer’s pension plan, for the purpose of determining eligibility for membership in or entitlement to benefits under the pension plan of the successor employer; and

(c) is entitled to credit in the employer’s pension plan for the period of employment with the successor employer for the purpose of determining entitlement to benefits under the employer’s pension plan.

(2) Clause (1) (a) does not apply if the successor employer assumes responsibility for the accrued pension benefits of the employer’s pension plan and the pension plan of the successor employer shall be deemed to be a continuation of the employer’s plan with respect to any benefits or assets transferred.

(3) Where a transaction described in subsection (1) takes place, the employment of the employee shall be deemed, for the purposes of this Act, not to be terminated by reason of the transaction.

(4) Where a transaction described in subsection (1) occurs and the successor employer assumes responsibility in whole or in part for the pension benefits provided under the employer’s pension plan, no transfer of assets shall be made from the employer’s pension fund to the pension fund of the plan provided by the successor employer without the prior consent of the Superintendent or contrary to the prescribed terms and conditions.

(5) The Superintendent shall refuse to consent to a transfer of assets that does not protect the pension benefits and any other benefits of the members and former members of the employer’s pension plan or that does not meet the prescribed requirements and qualifications.

(11) In this section,

“successor employer” means the person who acquires the business or the assets of the employer.

18. Before laying out the parties’ arguments, we propose to review the basic scheme of s.80 as it relates to employee pension rights in predecessor plans, since it is necessary to understand that scheme in order to understand the arguments. Section 80 (together with its predecessor, s. 29 of the PBA, R.S.O. 1980, c. 373) is generally understood to serve the protective purpose of shielding employees from some of the negative pension consequences that might otherwise flow from a sale of the business in which they have been employed. In Gencorp Canada Inc. v. Superintendent of Pensions (PCO, August 31, 1994), in a decision subsequently endorsed by both the Divisional Court and the Court of Appeal (Gencorp Canada Inc. v. Ontario (Superintendent of Pensions) 1995 10654 (ON CTGD), [1995] O.J. No. 3768 (Div. Ct.), aff’d 1998 2947 (ON CA), [1998] O.J. No. 961 (C.A.), the Pension Commission of Ontario noted that “[t]he purpose of the s.29 is to deem a non-termination of employment under the Gencorp plans to ensure continuity of membership for calculations such as service and vesting and to prevent Transferred Employees from losing their previous years of service in the calculation of future benefits under the new plans” (p.11). The Tribunal reaffirmed this protective purpose in Horgan and Anand v. Superintendent of Financial Services et al., August 1, 2001, FST Decision No. P0120-2000 and P0147-2001-1 (“Horgan and Anand”), and most recently in Ratansi et al v. Superintendent of Financial Services and the Ontario Pension Board, FST Decision No. P0473-2011-1 (“Ratansi”).

19. Section 80 (1) gives enhanced pension rights to employees like the Applicant in a situation where their employer sells a business to a new employer who takes over the business but does not take over the pension liabilities. Absent the provisions of s.80, such employees would, in the normal course, cease to be active members of their former employer’s plan and would be treated for purposes of the new employer’s pension plan in the same way as any other new employee. If they qualified for immediate or deferred benefits from the predecessor plan, they would be entitled to those benefits, but they would lose the right to accrue any additional service in that plan for purpose of qualifying for service-based benefits. In the successorship situations to which it applies, s.80 gives employees the right to have their service in the successor plan count as service in the predecessor plan for purposes of “determining entitlement to benefits” under the predecessor plan. This enhanced service feature is reciprocal; these employees also have the right to count service in the predecessor plan in order to qualify for any service-based benefits in the successor employer’s plan. In order to ensure that employees entitled to these enhancements are not expelled from plan membership, and that predecessor plans are not wound up or partially wound up by the Superintendent on the basis of the employee terminations (either of which could defeat the purpose of s.80(1)), s.80(3) goes on to say that “the employment of the employee shall be deemed, for the purposes of this Act, not to be terminated by reason of the transaction”.

20. The Superintendent’s basic argument in support of the Régie’s decision is a simple one. He argues that “a member affected by a sale cannot retire and commence receiving a pension from the original employer’s plan without terminating employment or retiring from the successor employer’s plan” (Superintendent’s Written Submissions, para. 22). Section 80(3) deems employment with Alcan to continue; therefore the employee cannot be treated as retired from Alcan until he retires from his successor employment. Fundamental to this proposition is the assumption that an employee cannot collect a pension without retiring.

21. The Applicant’s first argument, as framed by Issue No. 1, does not require us to directly confront the question of whether the Superintendent is right or wrong in this interpretation of the impact of s.80(3). The Applicant argues simply that his current employer, Kemira, is not a successor employer within the meaning of s.80. He acknowledges that Eaglebrook was a successor to Alcan. He no longer works for Eaglebrook, however; he now works for a third company, Kemira. He argues that “[t]here was no sale or relationship between Alcan and Kemira and therefore, section 80(1) is not engaged” (Applicant’s Written Submissions, para. 36). In his view, there can be no “successor to a successor” under s.80; the impact of s.80 does not carry through beyond the first disposition of the business. Once the Applicant ceased to work for Eaglebrook, therefore, the force of s.80(3) was spent.

22. The Superintendent takes the contrary position. He argues that s.80, in effect, follows the business. He points to the definition of “successor employer” as “the person who acquires the business or the assets of the employer” (s.80(11)). He submits that “[i]t is ....clear that Kemira acquired the same business or assets from Eaglebrook at the same location where the Applicant was employed” (Superintendent’s Written Submissions, para. 15). In his view, this makes Kemira a successor employer to Alcan within the meaning of s.80 of the Act, notwithstanding the intervention of Eaglebrook. For the proposition that s.80 can have impact beyond the first “successorship”, he relies on the decision of this Tribunal in Imperial Oil Limited v. Superintendent of Financial Services, October 21, 2002, FST Decision No. P0169-2001-1 (“Imperial Oil”). For the proposition that if Kemira is a successor employer the Applicant cannot claim his pension from Alcan until he ceases to be employed by Kemira, he relies on Horgan and Anand, supra (see also Ontario Pension Board (Victor Burns), Decision Number P0116-2000-1).

23. With regard to the second issue as well, it is not necessary for the Applicant to directly challenge the Superintendent’s interpretation of s.80(3). On this issue, the Applicant argues that even if Kemira is a successor employer, s.80 as a whole has no application when the plans are of different types. He points to the fact that the Alcan plan is a defined benefit plan, and the Kemira Plan is a defined contribution plan. He argues that where the plans are as different as these two plans, s.80 has no purchase. His argument depends primarily on s.80(5) of the PBA, which requires the Superintendent to refuse his consent to a transfer of assets between pension plans in a sale of business situation where that transfer “does not protect the pension benefits or other benefits of the members and former members”. He argues that s.80(5) does not permit “the transfer of assets between two plans unless they are identical” (Applicant’s Written Submissions, para. 38). Consistency demands, he submits, that ss. 80(1) & (3) also be interpreted as applying only where the plans are the same. The Superintendent responds by pointing out that there is no statutory basis for applying s.80 only where the successor plan is identical to the original plan; nor is there any authority in the case law for that proposition. On its face, s.80(5) has no application, since no asset transfer is involved.

24. It is only when we reach the third issue, which asks us to consider the impact of the events surrounding the original sale of business and the Régie’s 1999 decision, that it is necessary to confront the question of whether s.80(3) stands as an absolute bar to any immediate claim for pension from a predecessor plan made by a member who continues to work for a successor employer. The Applicant argues that even if Kemira is a successor under the Act, he should be entitled to an immediate pension at age 55 from the Alcan plan because Alcan agreed to this arrangement at the time he left Alcan. Alcan offered him two options at that time: to take his entitlement out of the Alcan plan immediately, or to leave it there until he reached the age of 55. This latter option was not made conditional on retirement from Eaglebrook (or any other subsequent successor). The Applicant chose the latter option; he argues that Alcan cannot now resile from that agreement by introducing an additional condition. The Superintendent counters that any agreement between the Applicant and Alcan at the time of the transfer cannot override s.80 of the Act: Re St. Mary’s Paper Inc. (1994), 1994 1232 (ON CA), 19 O.R. (3d) 163 (C.A.). And it would violate s.80(3), he argues, to permit the Applicant to collect his pension from Alcan while still working for Kemira.

25. In order to evaluate this argument, it is necessary to determine what effect s.80(3) has in this situation. At the time the parties filed their submissions in this case, in February and March of 2012, Horgan and Anand, supra and Burns, supra were the two Tribunal decisions most directly relevant to the issue of s.80(3) in the context of an application for pension from a predecessor plan. On May 7, 2012, the Tribunal issued its decision in Ratansi, supra addressing the impact of s.80(3) in similar circumstances. Since the parties had not had the opportunity to address the Ratansi decision, we invited them to make supplementary written submissions on the application of that decision to the facts of this case. We have taken those supplementary submissions into account in reviewing their arguments here. The Applicant relies on Ratansi as “confirm[ing]that there exists no statutory bar preventing [him] from collecting his pension benefits or to transfer [sic] the benefits to a locked-in retirement account” (Applicant’s Supplementary Submissions, May 16, 2012). The Superintendent, by contrast, views Ratansi as “distinguishable on the facts and on the law” (Superintendent’s Supplementary Submissions, May 16, 2012). He points out that the Alcan plan contains no equivalent to the provision in the plan at issue in Ratansi, which permitted plan members who were still employees to withdraw from plan membership and become eligible for immediate pension. He also points out that there was no equivalent in the Ratansi case to the Régie’s 1999 decision. He continues to press his initial submissions with respect to deemed continuation of employment under s.80(3), arguing that to permit individual employees to withdraw from plan membership of their own volition while their rights were still affected by s.80(3) is the functional equivalent of permitting them to waive the minimum standards of the PBA.

26. With respect to the fourth issue, the issue of what order should be made, the parties made no initial submissions. In our view, this case raises an important question of first impression: how an order from this Tribunal should be framed in the context of the Multi-Jurisdictional Agreement. Accordingly, we also requested and received supplementary written submissions on that issue. We discuss this issue in Part V below.

IV DECISION

a. Introduction

27. The Applicant has not worked for Alcan since 1999. At the time he left Alcan’s employ to work for Eaglebrook, he was offered and accepted a deferred pension in the Alcan plan, which he could collect when he reached the age of 55. Alcan’s agreement to pay him that pension at age 55 was confirmed by the terms of the Rapport sur la Terminaison Partielle filed by Alcan with the Régie. The Applicant, having reached the age of 55, has come forward to claim his pension. Alcan now tells him that because of s.80 of the PBA, he is not in fact entitled to claim that pension at age 55; he will only be entitled to claim it when he ceases working for a successor employer. In our view, that conclusion is not correct.

28. The core legal issue here is embedded in a particularly complex fact situation. We are not presented with a simple “seller and buyer” successorship scenario; instead, we must grapple with the application of s.80 in a potential “successor to a successor” situation. The fact that the plan in question is registered in Québec although the pension rights of the Applicant are governed by Ontario law, adds an additional complication to the Applicant’s pension history. It was the Québec regulator, the Régie, that dealt with the rights of plan members at the time of Alcan’s sale of business to Eaglebrook. Although the Applicant’s rights must now be determined under Ontario law, the Régie’s order made at the time of sale is an important part of the evidentiary context within which the Applicant’s rights must be determined.

29. Despite these complications, this case, distilled to its essence, raises a fairly simple proposition: is Alcan bound to fulfill its commitment to the Applicant to allow him to claim his pension entitlement when he reached the age of 55, or is it prevented from doing so by s.80(3) of the PBA as long as he continues to work for Kemira? On the basis of the evidence before us, we are sceptical that the Applicant’s current employer, Kemira, is a successor employer within the meaning of s.80(3); if it is not, then the Applicant is clearly entitled to the pension he seeks. For reasons set out more fully below, however, we do not base our decision on that ground. In our view, Alcan made a commitment at the time it sold its business to allow affected employees who left their pension entitlements in the plan to begin receiving a pension at age 55 at the latest. As we see it, regardless of whether or not there is a deemed continuation of employment under s.80(3), there is no impediment to Alcan in fulfilling that commitment, and it should do so.

30. We address the issues one by one, below.

Issue # 1: Is Kemira a successor employer to Rio Tinto Alcan within the meaning of s.80 of the Act?

31. The Applicant is currently employed by Kemira. Although Alcan did not sell its business to Kemira, the Superintendent nevertheless asserts that Kemira is a successor employer to Alcan within the meaning of s.80 of the PBA. In their written submissions, the parties have addressed Issue #1 as if it were strictly a question of law: as if the key and only question were whether or not a “successor to a successor” is bound by the provisions of s.80 of the PBA. This approach overlooks a prior and even more fundamental question: whether or not Kemira is in fact a successor employer to Alcan. If Kemira did not purchase Alcan’s business within the meaning of that section, s.80 clearly does not apply to any claim by the Applicant from the Alcan plan, and there is no need to address the complex legal question of whether, when and how s.80 may apply in a “successor to a successor” situation.

32. On the evidence before us, we know very little about the facts surrounding the Eaglebrook-to-Kemira transaction. Indeed, we know very little about the initial transaction involving the sale from Alcan to Eaglebrook. In its communications with the Régie, however, Alcan appears to have proceeded on the assumption that s.80 applies to the rights of the affected Ontario employees, and neither party before us has directly challenged that assumption.

33. But what is the evidence before us about the subsequent transaction between Eaglebrook and Kemira? The only direct evidence as to the nature of that transaction is the one short paragraph we have already quoted from the ASF:

Effective April 11, 2004, Eaglebrook sold the business at the Location [i.e. the former Alcan location in Ontario] to Kemira Chemicals Canada Inc. (“Kemira”). The Applicant’s employment with Eaglebrook was terminated and the Applicant became an employee of Kemira at that time” (ASF, para. 15).

34. If we comb the documentary record filed in this case, we also find some indirect evidence contained in a May 30, 2011 letter from Alcan (Rio Tinto) to Applicant’s counsel, in which the writer indicates that he had confirmed with someone from human resources at Kemira that Kemira had bought Eaglebrook, that the former employees of Alcan were now working for Kemira, and that they were eligible for membership in Kemira’s pension plans (ABD, Tab 18).⁵ This evidence is hearsay upon hearsay, the letter writer’s (or the informant’s) conclusion that Kemira had become “un employeur successeur” is clearly ambiguous (does he believe that Kemira is a successor to Eaglebrook or to Alcan?), and is in any event a conclusion of law which cannot bind us. This evidence provides some support for the conclusion that Kemira bought Eaglebrook’s business. It does not focus, however, on the really important question here, which is whether what Kemira purchased was Alcan’s business. The sparseness of the evidence on this issue presumably reflects the reality that neither the Applicant nor the Superintendent – the only parties before us – were privy to the corporate transactions that lie at the factual heart of this issue. Even if Alcan had participated in the hearing, the quality of the evidence might not have been much improved, since it appears that Alcan was unaware of the Eaglebrook-to-Kemira transaction until it was brought to its attention by the Applicant several years after it had taken place.

35. We have little doubt that in the proper case, s.80 can bind a “successor to a successor”, at least for some purposes. Indeed, the Tribunal has already addressed this issue in Imperial Oil Limited, supra. That case involved the question of whether Imperial Oil should be ordered to partially wind up its pension plan as a result of the termination of a credit card business it had formerly owned. Imperial Oil had sold the business to General Electric Capital Canada Inc. (“GE Capital”). GE Capital in turn had apparently spun off the credit card business to a third, affiliated company. It was this third company, GE Capital Canada Retailer Financial Services Company, that terminated the credit card business, and with it, the transferred employees. Prior to Imperial Oil, the Tribunal had already determined in GenCorp Canada Inc. v. Ontario (Superintendent of Pensions), supra, that a termination by a successor employer could trigger a wind up in the predecessor plan. Imperial Oil argued, however, that a termination by a “successor to a successor” could not have the same effect. The Tribunal rejected this argument:

It seems clear to us that the deemed continuation-of-employment provision in subsection 80(3) of the Act is capable of applying more than once to a transferred employee so that his or her employment is continued through sequential sales of the business in which the employee is engaged (p.7).

We agree. In a case in which there is clear continuity of the business within the meaning of s.80, it may indeed be necessary, in order to effect the purposes of the Act, to find that the predecessor employer continues to carry the liabilities imposed by s.80.

36. But has there been a clear continuity of Alcan’s business in this case? Where there are a series of sale transactions of this type, we cannot simply assume that the original business has remained intact within the meaning of s.80. What we are told is that Eaglebrook bought a part of Alcan’s business, linked to a particular location (the “Location”). We are told that Kemira bought a business from Eaglebrook. We do not know whether it bought all of Eaglebrook’s business, or only part of it, but we do know that Kemira’s purchase included the business Eaglebrook had been carrying on at the former Alcan Location. We know that the Applicant continued to work at the Location throughout these changes, which suggests some degree of continuity of the work performed there; precisely how much continuity we do not know, in part because we have not been told what kind of work the Applicant performed. Is this a sufficient basis on which to make a finding, surely one of mixed fact and law, that Kemira is a successor employer to Alcan?

37. The factual threshold to trigger a successorship situation under s.80 does not appear to be a particularly high one. We have referred to this situation as a “sale of a business”. But in fact, s.80 can be triggered not just by a sale, but by any form of disposition. Furthermore, it need not be a disposition of a whole business, or even part of a business; the section can be triggered by a disposition of “all or part of the employer’s business or all or part of the assets of the employer’s business”. But the very breadth of this language suggests some degree of caution in its application. On a literal reading, the potentially quite costly liabilities imposed on both predecessor and successor pension plans by s.80 could follow not just the sale of a business, but also the lease (or perhaps even the loan) of a single asset, as long as at least one employee went with it. We doubt if this was the intention of the legislature. While the threshold may be low, it is nevertheless real; a determination of whether or not it has been crossed in a case in which as “successor to a successor” situation is alleged would require a purposive reading of s.80(1) and a careful contextual analysis of the relevant facts.

38. In view of our holding on Issue # 3, below, we need not decide this issue in this case, and we are reluctant to do so for two reasons. First, the parties themselves did not make argument on this aspect of Issue #1; they appear to have proceeded on the joint assumption that Alcan’s business had passed to Kemira, although they drew different legal conclusions from that. Second, a finding on this issue has the potential to affect the rights of parties not before us: not just Alcan, Eaglebrook and Kemira, but also those employees other than the Applicant who may wish to rely on rights conferred by s.80(1) to enhance their pension benefits. If pressed, we would have found it difficult to make a finding of successorship based on the evidence before us. A more complete evidentiary record, however, might yield different results. Accordingly, we leave the issue to be decided, if necessary, in another case.

Issue #2: Is the Kemira Plan a successor plan to the Alcan plan within the meaning of s.80 of the Act, in view of the fact that the Alcan plan is a defined benefit pension plan and the Kemira Plan is a defined contribution pension plan?

39. There was very little argument directed to this issue by either party. It arises only if Kemira is a successor employer, an issue on which we have expressed some doubt. Assuming that it is, however, the Applicant asserts that s.80 nevertheless would not apply to this situation on the ground that the section applies only where the plans involved are similar in kind. He cited no direct authority for that proposition, however, and offered no sound policy rationale for why that should be the case. It is true that the value to plan members of the rights accorded by s.80(1) will vary depending on the nature (and the terms) of the predecessor and successor plans; those rights may have considerably less value in defined contribution plans than they do in defined benefit plans. But there appears to be no statutory basis on which we could find that s.80 applies only where the plans are similar in kind. Accordingly, we reject this argument.

Issue #3: Do the special circumstances of this case, included the Régie’s 1999 order, justify allowing this pension application?

40. The Applicant argues here that regardless of what the outcome might be in other ‘successor to a successor’ cases, he is entitled to take his pension from the Alcan plan now that he has reached the age of 55 because he was promised by Alcan that he could do so at the time he left Alcan to go to work for Eaglebrook. He relies on the documentary evidence surrounding Alcan’s dealings with the Régie in 1999 at the time of the original sale of business, including the Régie’s decision ordering a partial termination and the Rapport sur la Terminaison Partielle filed with the Régie in response to that decision.

41. As we understand the evidence, Alcan, in its capacity as plan administrator, wrote to the Régie advising of the sale of business. It would appear that under the Québec statute, a sale of this type may trigger a partial termination (in Ontario terms, a partial wind up). Alcan sought the Régie’s permission to avoid the necessity of filing a partial termination report, advising that it proposed to treat Ontario employees in accordance with their rights under s.80 of the PBA. Under Article 240.3 of the Supplemental Pension Plans Act, RSQ, c R-15.1 as it stood at that time, the Régie had the discretion to exempt specific plan terminations from the more onerous of the termination requirements. In this case, it ordered a partial termination, but decided to exempt Alcan from certain statutory requirements, on condition that, among other things, Alcan confirm that it had offered the affected employees the option either to maintain their rights in the plan or to transfer them out to another plan, an annuity or a locked-in account. The Rapport sur la Terminaison Partielle filed by Alcan confirmed that those choices had been given. More specifically, it confirmed the precise choices that had been offered, including that plan members in the Applicant’s position (i.e. those whose benefits were vested but who had not yet reached the age of 55, or accumulated a combined age and years of service of 75) had been given two options: to transfer the commuted value of their benefits to a locked-in account, or to take a deferred pension commencing at age 55. The Applicant chose the second option.

42. The course of action followed here by Alcan and the Régie departs to some degree from what would likely have happened in a sale of business situation had the Alcan plan been registered in Ontario. In Ontario, where plan members are terminated in non-successorship situations, employees such as the Applicant whose rights have vested are entitled to choose among the “portability” options provided under s.42(1), which include the two options offered by Alcan. Where plans are wholly or partially wound up, they are entitled to those same portability rights, enhanced by whatever additional entitlements they may acquire as a result of the wind up (s.73(1),(2); s.70(6)). Where there is a successorship and s.80 applies, however, the deemed continuation of employment provision in s.80(3) is normally interpreted to preclude the application of these statutory provisions. It is likely, therefore, that had this been strictly an Ontario situation, the Applicant would not have been given the transfer options he was offered (although there appears to be nothing in the PBA that would preclude them.) However, regardless of what might have happened, what did happen is that he was offered these options. As part of the severance arrangements between the Applicant and Alcan, there was an agreement that he would be permitted to claim his pension from the plan when he reached the age of 55. Furthermore, this was no ordinary agreement; it was an agreement that, on the evidence before us, was reached in compliance with the conditions of the Régie’s order.

43. What is the legal effect of this agreement, made in the shadow if not under the compulsion of the Régie’s order? While he points to the fact that we do not have a great deal of evidence surrounding the agreement, the Superintendent does not strenuously contend that there was no agreement. He argues, however, that an agreement cannot override the PBA: St. Mary’s, supra. He argues that it would violate the PBA to permit the Applicant to claim a pension while he is “deemed to be employed” by Alcan pursuant to s.80(3).

44. It is, of course, an incontrovertible proposition that parties cannot contract out of rights conferred by the PBA. In our view, however, there is no conflict between the PBA and the requirement that Alcan fulfill its commitment to commence paying the Applicant’s pension when he reached the age of 55. We do not see s.80(3) as a statutory barrier to such payment. It is true that at the time the parties made their written submissions in this case, the leading Tribunal decision on this issue, Horgan and Anand, supra, appeared to view s.80(3) as a bar to a pension claim from a predecessor plan by an employee who was still employed by a successor employer (see also Ontario Pension Board (Victor Burns), Decision Number P0116-2000-1). Since that date, however, the Tribunal has issued its decision in Ratansi, supra, which took a much less categorical approach to s.80(3) than Horgan and Anand. In Ratansi, the Tribunal pointed out that s.80(3) on its face provides only that predecessor employment is deemed not to be terminated by the sale, and then only for the purposes of the PBA. Under the Ratansi approach, s.80(3) is not a statutory prohibition against a member collecting a pension from a predecessor plan while continuing to work for a successor employer; the implications of the statutory language for a pension application such as the Applicant’s must be determined on a case-by-case basis. In Ratansi itself, the Tribunal found that six of the Applicants were entitled to immediate pensions from the predecessor plan, notwithstanding that they continued to work for the successor employer.

45. Applying this analysis to the Applicant’s argument on this issue, it is important to note that his claim to pension does not turn on whether or not his employment with Alcan was terminated by the sale. Instead, it stands primarily on the basis of the Régie’s order and the terms of the agreement with Alcan pursuant to the Alcan plan.

46. In his supplementary submissions, the Superintendent attempts to distinguish Ratansi by pointing out that the plan in this case is framed quite differently than the plan at issue in that case. It is true that there is no clear right in this plan to cease plan membership without ceasing employment. It is far from clear, however, that the plan text supports the Superintendent’s submission that the Applicant could not claim his pension solely under the terms of the plan text until he “retires” (or terminates employment with a successor employer). The plan does not create a special category for members who have gone to work for successor employers. The category into which the Applicant most clearly fits is the category of members entitled to a deferred pension (Articles 12.03-12.04). Such persons remain plan members under the language of the plan unless they have exercised their right to take their entitlement out of the plan as a lump sum prior to reaching age 55 (Article 12.04 (b)). Those who leave their entitlements in the plan, however, are entitled to a regular pension on reaching “Normal Retirement Date” (i.e. age 65); there is no additional condition respecting employment status (Article 12.03 (a)). Article 12.04 (a) permits them to commence receiving a deferred retirement pension earlier than the “Normal Retirement Date” once they reach the age of 55. The Superintendent points to Article 3.08, which provides that:

The individual shall remain a Member until all benefits accumulated by him under the Plan are paid, in particular, by means of a transfer to another retirement plan or a lump sum payment, or upon termination of the plan.

He might also have pointed to Article 3.06, which provides that:

A member may not terminate his membership in the Plan while he remains in the employment of the Company or an Affiliated Company unless he receives the payment of a lump sum in accordance with subsection 12.05 (c).

Unlike the Ratansi plan, however, there is no need to terminate membership under this plan in order to collect a pension; as contemplated by Québec law, it appears that pensioners continue to be members. Accordingly, the fact that the Applicant continues to be a plan member appears to have no bearing on his claim for pension.

47. For members entitled to a deferred pension, therefore, the category into which the Applicant appears to fall, there is no obvious obstacle under the plan text to a claim for an immediate pension. Regardless of how the plan text itself should be interpreted, however, the Applicant is clearly entitled to his pension under the agreement made at the time of the original sale. It was contemplated by the Régie that the conditions it attached to its order might provide benefits superior to those in the plan. If they have done so in this case, they must nevertheless be complied with.

48. We will address briefly the Superintendent’s argument that to permit the Applicant to claim his pension is to permit him to waive a statutory right, contrary to the general rule that there can be no contracting out of minimum standards. We simply fail to see how that argument is applicable to this case. We have made no finding that the Applicant can avoid the impact of s.80(3). We have simply found that properly interpreted, s.80(3) does not stand in the way of his claim. No “purpose of the Act”, within the meaning of s.80(3), is in any way thwarted by that determination.

49. Section 80(3) is therefore no barrier to the Applicant’s right to claim to an immediate pension from the Alcan plan. Accordingly, we hold that he became entitled to claim that pension when he reached the age of 55.

V. ORDER

a. The Form of the Order

50. The Applicant seeks an order:

a) Directing Alcan to begin payment of the Applicant's Pension benefits, retroactively from November 1, 2009; or

b) Directing Alcan to transfer the benefits to a locked-in retirement account within 30 days of the Order.

c) Such further directions and other relief as counsel may request and the Financial Services Tribunal may permit.

51. This request raises two issues. The first relates to part b) of the proposed order: the request to transfer the benefits to a locked-in account. As noted above, the Applicant’s initial request was not for payment of a periodic pension, but for a transfer of his entitlement into a locked-in account. This was one of the two options that had been made available to him at the time of the original sale of business. He did not choose it at that time; instead, he chose to leave his pension in the plan as a deferred pension. We accept the submission of the Superintendent that the transfer option reflected in the Rapport sur la Terminaison Partielle was a “one time”- only offer; once the Applicant made his election to take a deferred pension, the lump sum offer was off the table. The Applicant points to no provision under the PBA which entitles him to demand a lump sum transfer under the circumstances of this case, and any rights he might have had under the plan text to a lump sum transfer appears to have expired once he reached the age of 55 and became entitled to a pension (see Article 12.04 (b)). What we have determined is that he is entitled to a pension in pay. He has asked us to make our order retroactive to November 1, 2009, the date he specified in his initial request to Alcan. The Superintendent has provided no reason why this date is inappropriate.

52. The second issue relates to the proper form of the order. The Applicant seeks an order directed to Alcan. In cases such as this one dealing the administration of a pension plan, the Tribunal does not normally direct substantive orders to parties other than the Superintendent. As the Tribunal explained in Kernius and Ontario Power Generation v. Superintendent of Financial Services, FST Decision No. P0303-2008-1:

In cases arising under the PBA, the jurisdiction of the Tribunal is normally engaged only after the Superintendent has dealt with an issue under that Act, and has either proposed to make an order, or refused to make an order. In such cases, while the Tribunal may draw upon the general order-making powers with which it is endowed by the FSCO Act and the SPPA, its primary substantive order-making power stems from s.89(9) of the PBA.

That section now provides that:

At or after a hearing, the Tribunal by order may direct the Superintendent to carry out or to refrain from carrying out the intended decision, to take such action as the Tribunal considers the Superintendent ought to take in accordance with this Act and the regulations, and for such purposes, the Tribunal may substitute its opinion for that of the Superintendent.

A matter such as the one before us would normally commence with a Notice of Intended Decision (a “NOID”, formerly a Notice of Proposal) issued by the Superintendent under s.87(1) of the PBA. It would come before the Tribunal in the form of a request for hearing filed in response to that NOID under s.89(6). If the Tribunal, after holding a hearing, agrees with the position of the Superintendent, the Request for Hearing is dismissed and the Superintendent is directed to proceed with the Intended Decision. If the Tribunal disagrees with the position of the Superintendent, it orders that the Intended Decision be set aside, and that the Superintendent issue a decision in terms set out in the Tribunal’s order. In either case, the decision directed to a party other than the Superintendent comes from the Superintendent, rather than directly from the Tribunal.

53. Accordingly, had this matter come before us in the normal course under s.89 of the PBA, we would have directed the Superintendent to make an order directed to Alcan. The fact that the matter comes before us under the Multi-Jurisdictional Agreement raises unique issues, however, which the Tribunal has not yet had an opportunity to address.

54. As noted above, the Multi-Jurisdictional Agreement provides that the decision at issue (i.e. the decision of the Régie) be “deemed to be made by the minor authority under the procedural provisions of the pension legislation of the pension legislation of the minor authority’s jurisdiction that would have applied if the minor authority has made the decision” (s.4(4)(b)). It goes on to provide that “[t]he right to recourse from the decision shall be determined under the pension legislation or other legislation of the minor authority’s jurisdiction as though the decision had been made under the procedural provisions of that legislation” (s.4(4)(d)).

55. In our view, since Ontario would have followed a NOID procedure in cases like this one, the Multi-Jurisdictional Agreement requires us to treat the Régie’s decision as a NOID under the PBA. This application should therefore be treated as a Request for Hearing. (We note that the Applicant actually filed a Notice of Appeal rather than a Request for Hearing. No objection was taken to this manner of proceeding, however, and both parties took the position that we should treat the matter as if we were dealing with a NOID.) Accordingly, we decline to issue an order directly against Alcan. Instead, we will follow the usual procedure in NOID cases and direct our order to the Superintendent. As we understand Multi-Jurisdictional Agreement, once the Superintendent issues his order to Alcan in compliance with our order, it then becomes the responsibility of the Régie to take any steps necessary to enforce that order (s.4(6)).

THE ORDER

56. In accordance with the above reasons, we order that:

(a) The decision of the Régie dated July 18, 2011 be set aside; and

(b) The Superintendent order Rio Tinto Alcan as administrator of Pension Plan 25825 registered in Québec to commence payment to the Applicant André Provost of the pension to which he is entitled under the Plan, retroactive to November 9, 2009.

Dated at Toronto, Ontario, this 31^st day of May, 2012

“Elizabeth Shilton”

Elizabeth Shilton,

Member of the Tribunal and Chair of the Panel

“Jennifer Brown”

Jennifer Brown

Member the Tribunal and the Panel

“Shiraz Bharmal”

Shiraz Bharmal

Member of the Tribunal and the Panel

un document préparé par l’administrateur et contenant les confirmations suivantes: 

- que tous les participants visés ont eu la choix entre le maintien de leurs droits dans le régime ou le transfert de leur valeur, quel que soit leur âge, dans un compte de retraite immobilisé, dans un autre régime de retraite ou dans un contrat de rentes délivré par un assureur et, pour les participants dont les droits n’ont pas – en tout ou en partie - à être immobilisés, le paiement en un seul versement ou le transfert dans un régime enregistré d’épargne-retraite de la partie non immobilisée de leur droits ;

- qu’un nouveau relevé été remis aux participants dans le cas ou la présente décision a pour effet de modifier les droits qu’ils ont en vertu du régime. 

Option a) Une rente différée conformément aux termes du régime incluant la rente égale en valeur à l’excédent des cotisations de l’employé et intérêts sur 50% de la valeur de la pension accumulée. La date du début du service de la rente la plus rapprochée est la première des dates suivantes : le premier du mois qui suit la date à laquelle il atteint l’âge de 55 ans ou la date à laquelle son âge, ses années de participation, et les points accordés au 1<sup>er</sup> juillet 1996, totalisent 75 points (emph. added).

Option b) La valeur de transfert de la rente différée en a) versée dans un compte de retraite immobilisé.

Footnotes

1. 1The text of this agreement can be found at http://www.capsa-acor.org/en/init/mulit_juris_plans/AgreementByQuebecAndOntarioMay2011.Eng.pdf
2. 2At the time of the original sale, the company’s corporate name appears to have been Alcan Aluminium Ltd.; at some point along the way, it became known as Rio Tinto Alcan. These changes are not material to the issue before us, and we refer to the company as Alcan and Rio Tinto Alcan interchangeably.
3. 3The Régie’s August 12, 1999 decision (Décision N°: D-025825-99-032, ABD, Tab 4) required Alcan to file :
4. 4The “Descriptions des Prestations et des Options” attached to the Partial Wind-Up Report describes the Options as follows:
5. 5The letter stated : « Un représentant des ressources humaines de Kemira nous a confirmé la date de l’acquisition de Eaglebrook par Kemira, soit le 11 avril 2004. Cette personne a confirmé que tous les employés en cause dans le transfert d’Alcan à Eaglebrook, dont M. Provost, étaient a l’emploi de Kemira et qu’ils étaint admissibles à participer au régime à cotisations déterminées de Kemira, devenue par le fait même un employeur successeur » .