FINANCIAL SERVICES TRIBUNAL
IN THE MATTER OF the Pension Benefits Act, R.S.O. 1990, c. P.8 (the “Act”) as amended by the Financial Services Commission of Ontario Act, 1997, S.O. 1997, c.28;
AND IN THE MATTER OF a Notice of Intended Decision dated October 28, 2015 to Refuse to Make an Order under subsection 87(2) of the Act relating to the CROWN Metal Packaging Canada LP Pension Plan for Hourly Employees, Registration Number 0474213 (the “Plan”);
AND IN THE MATTER OF a Hearing in accordance with subsection 89(8) of the Pension Benefits Act, R.S.O. 1990, c. P.8.
B E T W E E N:
JOSEF DUDUMAS
APPLICANT
and
SUPERINTENDENT OF FINANCIAL SERVICES
RESPONDENT
and
CROWN METAL PACKAGING CANADA LP
ADDED PARTY
BEFORE:
Florence A. Holden Chair of the Panel and Chair (Acting) of the Tribunal
Patrick Longhurst Member of the Panel and Member of the Tribunal
Jill Wagman Member of the Panel and Member of the Tribunal
APPEARANCES:
For the Applicant – Josef Dudumas, self-represented
For the Superintendent of Financial Services – Jessica Spence, Counsel
For the Added Party Crown Metal Packaging Canada LP – Randy V. Bauslaugh and Dana Peebles, Counsel
REASONS FOR DECISION
I. INTRODUCTION
1This matter comes before us as a result of a Request for Hearing filed by the Applicant, Josef Dudumas, in response to a Notice of Intended Decision (“NOID”) issued by the Deputy Superintendent, Pensions by delegated authority from the Superintendent of Financial Services (“Superintendent”) dated October 28, 2015, to refuse to make an order under subsection 87(2) (a) of the Pension Benefits Act (the “Act”) requiring the Plan administrator, CROWN Metal Packaging Canada LP (“CROWN”) to recalculate the commuted value of the pension benefits transferred to the Applicant pursuant to his election dated April 23, 2014 and the partial wind up of the Plan effective April 1, 2011.
2At a pre-hearing conference held on January 28, 2016, CROWN was added as a full party. The Union was provided notice of this hearing, but did not apply to be a party.
3The parties at that pre-hearing conference agreed to the jurisdiction of the Tribunal in this matter and no other preliminary issues were before us.
4The Applicant alleges that he is entitled to additional benefits under the Plan as a result of his involuntary termination of employment with CROWN and the subsequent partial wind up of the Plan. Specifically his position is that, in addition to his normal pension payable at age 65, he was entitled to an unreduced early retirement pension under section 3.3 of the 2005 Canadian Pension Agreement between CROWN and The United Steelworkers of America Effective From February 14, 2005 until February 10, 2008 (the “2005 Pension Agreement”), which we shall refer to herein as the “70/75 Rule”, and a pension under section 3.5 of the 2005 Pension Agreement which we shall refer to herein as the “30-Year Retirement Rule”, by virtue of the application of subsection 40(1) and section 74 of the Act. He contends that the commuted value of his benefits should reflect an entitlement to all three pensions. Further, his submissions suggest that he also believed that his normal pension had been subject to actuarial reduction and further that the commuted value of his normal pension was incorrectly calculated and not in accordance with the Act and The Canadian Institute of Actuaries Standards of Practice (s. 3500), more properly referred to as the Actuarial Standards Board’s Revised Standards of Practice for Pension Commuted Values (Section 3800) which applied at the date of preparation of the wind up report.
5Having reviewed the evidence of all parties, including a signed Agreed Statement of Facts, all documents filed, and the testimony of the witnesses before us, and having considered the submissions before us, the Tribunal hereby upholds the Superintendent’s NOID. The Applicant has received all of his pension benefits under the Plan and the Act. No recalculation of his benefits is needed.
II. The Issues
6The following two issues were determined by the Tribunal:
a. Has the Applicant received the proper and full benefits to which he is entitled under the Plan and the Act?
b. Based on the answer to issue (a), what order should the Tribunal make or direct the Superintendent to make?
7In addition, CROWN requested costs as against the Applicant in the amount of $10,000.00.
III. THE FACTS
8Based on an Agreed Statement of Facts, documents filed by the Parties, and witness testimony, we find the following key facts:
a. Mr. Dudumas was employed by CROWN from April 9, 1984 until his employment was involuntarily terminated on June 25, 2010 as a result of the permanent closure of the plant located at 7250 Keele Street, Concord, Ontario (“Plant 244”).
b. At the time of his termination of employment he was a member of the United Steelworkers, Local 2514 (the “Union”) and a member of the Plan. His job class for purposes of the Plan was Hourly Job Class 24 and his Special Retirement Supplement hourly rate under the Plan was agreed to be $28.7056.
c. CROWN is the employer and administrator of the Plan.
d. Mr. Dudumas was approximately 53.83 years old and had 26.25 years of credited service under the Plan at the time of his termination. His combined years of age and service equalled approximately 80.
e. The closure of Plant 244 and the related notice of termination of employment were announced by CROWN on March 30, 2010 and implemented over the period from April 16, 2010 to April 1, 2011.
f. The closure of Plant 244 triggered a partial wind up of the Plan effective April 1, 2011. Mr. Dudumas was included in the partial wind up group. He was given formal notice of the partial Plan wind up by memo dated March 29, 2011, and was advised that only monthly pension payments to retirees would be made from the Plan until a partial plan wind up report was prepared and approved by the Superintendent, at which time individual statements would be provided. The notice advised that no lump sum payments would be made prior to such regulatory approval.
g. Mr. Dudumas was also asked by CROWN prior to his actual last day worked to provide documentation to allow him to start collecting an immediate pension and he was distressed by their requests for such documentation. We accept the evidence of Judy Moraes, CROWN’s current HR manager, that CROWN files indicate that Mr. Dudumas refused to initiate an immediate retirement, as was his right, in 2010 and refused to sign any application forms related to non-pension benefits such as life insurance, marital status or group insurance benefits. We find nothing inappropriate in CROWN’s request, but acknowledge in times of stress Mr. Dudumas may have felt uncertain as to why the request was made of him prior to his last day of work. Nonetheless, we find that he clearly understood that election of an immediate retirement pension was an option in 2010.
h. The Partial Wind Up Report on the CROWN Metal Packaging Canada LP Pension Plan for Hourly Employees as at April 1, 2011 (“Report”) indicated an estimated partial wind up deficit of approximately $3.1 million as at April 1, 2011 (the “Partial Wind Up Date”). CROWN had the right to fund the deficit over a period of no more than 5-years. Liabilities for Members such as the Applicant who had the option of an immediate pension under the Plan based on various criteria were determined assuming an immediate annuity purchase as at the Partial Wind Up Date. The classification of the Applicant in the Report in this manner simply reflects the fact that for purposes of establishing the partial wind up liabilities, he was entitled to receive an immediate pension. This assumption did not affect the final calculation or preclude the Applicant from electing a commuted value transfer of his pension benefits. It did not result in compulsory retirement. While Mr. Dudumas was fixated on his characterization as a “pensioner” for purposes of the Report, nothing turns on it.
i. The Superintendent approved the Report on June 17, 2013. Although Mr. Dudumas alleged that the Report did not conform to actuarial standards of practice, he provided no basis or evidence of this allegation and we find no evidence to support this allegation.
j. In an update to Plan members affected by the closure of Plant 244 on July 16, 2013, members were advised that the partial wind up deficit had risen to $6.2 million as at April 1, 2012. CROWN advised that they had already made three annual payments, and 2 additional payments of $1.6 million were required, with the final payment due April 1, 2015. The notice said “In early 2015 you will receive an election form as required under the wind-up report”. Notwithstanding that update, we find Mr. Dudumas made several email and written requests to CROWN to receive his wind up statement and to provide him with details of his commuted value calculation during the period from May 2010 to December 2013. Mr. Dudumas was given his election form on February 27, 2014.
k. On April 23, 2014, Mr. Dudumas signed the election form provided, electing a transfer of the commuted value of his benefits. He made two handwritten notations: one, to change the date of termination to June 25, 2010 from July 1, 2010, and two, to correct his spousal information to indicate his wife, Violeta Dudumas. We accept CROWN’s contention that it corrected the spousal information. We further find, for reasons outlined below, that the July 1, 2010 date of termination used by the actuary was in accordance with the Plan and Act and provided a slightly higher benefit than would have been provided by using the alternative June 25, 2010 date. Reasons for using the July 1, 2010 date were clearly outlined to Mr. Dudumas by CROWN in several letters to him, the latest on February 19, 2015, which letter was provided to the Tribunal.
l. The election form indicated that by signing the form the Member understood the benefit options and agreed that the “election of a transfer shall constitute a full discharge of all obligations under the (Plan)”. The commuted value elected was transferred in accordance with his election in two parts: a portion transferred to a locked-in retirement account (LIRA) and payment of a lump sum, subject to withholding tax, to the Applicant. Mr. Dudumas acknowledged that he received those amounts in his letter to FSCO of August 12, 2014, which amounts we find in total were adjusted with interest to the date of payment.
m. We accept the undisputed testimony of Ms. Moraes that the deficit had been fully funded by February 27, 2015. Mr. Dudumas asked FSCO to review his commuted value calculation. CROWN responded on September 11, 2014 to Mr. Dudumas, and FSCO accepted that response on November 17, 2014. Ultimately the Superintendent issued the NOID on October 28, 2015 which formed the basis of this request for hearing.
9Finally, we find that the applicable Plan text is the January 1, 2009 Amended and Restated document as filed with FSCO on March 1, 2010, read together with Amendment No 2011-1 to the Plan dated July 12, 2011 and filed with FSCO on July 20, 2011 (the “2009 Plan”). The 2005 Pension Agreement Mr. Dudumas relies upon is essentially an agreement between the Union and CROWN that covered pension and other non-pension benefits. Section 8.1 of the 2005 Pension Agreement provides for its automatic renewal until a change is requested, notice of negotiation of a new agreement is given, or until the expiry of a Canadian Master Agreement. Section 6.1 sets out a grievance process for the resolution of benefit disputes – a process which it appears that the Applicant did not engage. Finally, the 2005 Pension Agreement stipulates at section 2.1 that the Act (which requires the Plan to be administered in accordance with the filed documents) governs, in the event of any conflict between the Agreement and the Act.
We accept CROWN’s submissions that the 2009 Plan was filed with FSCO and note in paragraph 1(j) of its adopting amendment and in Article A of Part I of the 2009 Plan that the 2009 Plan reflects changes to the terms of applicable collective agreements into 2010, as well as compliance and other changes. The 2005 Pension Agreement did not reflect all of the Plan provisions. Certainly the 2009 Plan text indicates prior versions existed and were filed although we expect they may not have been provided to Plan members such as Mr. Dudumas. In practice the Plan text would not be provided, only a summary, except on request.
Consequently we find Parts I and II of the 2009 Plan apply to the Applicant.
10However we find that the essential Plan provisions that determine Mr. Dudumas’ pension benefit are the same under both documents. To be fair to the Applicant, both documents are complicated and require a close familiarity with its provisions to understand how to apply the provisions to a member’s individual circumstance. To assist the Applicant and for completeness, we will address the key provisions in both documents.
IV. statutory framework and analysis
11Mr. Dudumas’ pension benefits are determined under the terms of the Plan, subject to statutory requirements under the Act and related regulations. The parties are agreed that a partial Plan wind up took place due to the closure of Plant 244. In the event of a partial plan wind up, on the effective date of the wind up (which was April 1, 2011), Ontario Plan members are accorded immediate vesting and the ability to “grow-in” to early unreduced pension entitlements offered under the Plan.1 We note that the partial Plan wind up began before the Act was amended to eliminate partial wind ups. The wind up date is essentially a date of convenience for valuation purposes. There is no dispute that the Applicant was included in the wind up.
12Mr. Dudumas claims entitlement to a pension under section 3.3 of the 2005 Pension Agreement (the “70/75 Rule”). The parties agree. This provision has the same effect as section 3.3(a) of Part II of the 2009 Plan text, which is the provision under which CROWN calculated the commuted value of Mr. Dudumas’ pension benefits. Mr. Dudumas has not provided any evidence or argument to show that a different amount would have been calculated by him.
13Section 3.3 of the 2005 Pension Agreement is a form of plant closure or permanent layoff benefit only available to a member when she or he is laid off or unable to continue working through no fault or her or his own. It permits an eligible member to retire with an unreduced pension and a special retirement supplement. We agree it provides some ancillary benefits in excess of those required under the Act.
14Section 3.3 of the 2005 Pension Agreement provides as follows:
3.3 Unreduced Early Retirement – 70/75
On and after the effective date of this Agreement and prior to February 10, 2008, any present Employee under the age of 62 who on the basis of age and continuous service each computed to the nearest full month with any fractional part of a month of less than 15 days disregarded:
(ii) shall have had at least 15 years of continuous service with combined years of age and continuous service equal to 75 or more; and
(a) whose continuous service shall be broken as a result of permanent plant shutdown, layoff (other than voluntary layoff) or absence due to physical disability, or
(b) who is on layoff due to permanent plant shutdown…
shall be entitled to retire with a special retirement supplement and an early pension without reduction, anything in paragraph 3.5 to the contrary notwithstanding. (emphasis ours)
The actual amount of lifetime payments are also subject to limits under the Income Tax Act and to the actual form of pension elected, e.g. lifetime, joint and survivor, etc.
15This provision must then be read in conjunction with section 4.0 to determine a member’s Basic Pension amount. On its plain meaning, under this provision the Applicant would have received an unreduced lifetime monthly pension determined by application of Section 4.0 (c)(ii): namely $53.75 times his years of service (or 26.25 years) or $1,410.9375, rounded to $1,410.94. Instead of being payable at age 65, this amount became payable under the 70/75 Rule immediately to Mr. Dudumas on an unreduced basis at July 1, 2010.
16We find that the supplement referred to as the “Supplement 70/75” in section 4.0 is determined under Section 4.3 as a monthly bridge benefit to age 65 that is the actuarial equivalent to a monthly supplement of $365 payable to age 62. The actuary calculated this monthly supplement amount as $291.11.
17The Special Retirement Supplement referred to in section 3.3 is determined under section 4.0(a) which reads:
a. “Special Retirement Supplement means an amount equal to:
360 hours of pay at the employees “applicable average straight time hourly rate,” minus,
the sum of
three times the amount of monthly pension (the Basic Pension Amount multiplied by the number of years of the employee’s continuous service) (with reduction for survivor benefits) payable to the employee, plus
the amount of any Supplement 70/75 or Supplement Rule of 65 or Pension Bridge Benefit, if any, which is payable to the employee during the first three months immediately following the employee’s retirement date, prior to any supplements.”
Under this formula, Mr. Dudumas would receive a Special Retirement Supplement of:
360 times $28.7056 (his agreed hourly rate) or $10,334.016, minus
(3 times $1,410.94) plus (3 times $365) which equals $5,327.82,
resulting in a Special Retirement Supplement of $5,006.20.
This Special Retirement Supplement under section 4.0 is converted into an actuarially equivalent monthly bridge benefit payable to age 65. The actuary in this case converted this amount into a monthly bridge payment of $54.99. These amounts are the same amounts reflected on his election form and consistent with the 2005 Pension Agreement. There was no evidence offered that the commuted value amounts calculated in respect of these benefits were contrary to the Plan, Act or the Actuarial Standards Board’s Revised Standards of Practice for Pension Commuted Values (Section 3800). We see no reason to require any recalculation under the 2005 Pension Agreement.
18We do acknowledge, in our view, that the Plan has a terribly complicated plan design.
19The equivalent provision in the 2009 Plan text has slightly different eligibility criteria and entitles a member to an unreduced pension and a special retirement supplement:
3.3 Eligibility for an Unreduced Early Pension
(a) 70/75/80 Rule
If specified in the applicable Pension Agreement or Company Designation, where a Member who:
(ii) shall have attained the minimum age [of 50 years];
(iii) shall have completed the minimum Continuous Service [of 15 years] and has also completed at least 15 years of Continuous Service at the end of a layoff period, at the end of an absence due to physical disability or at the date of shutdown, if applicable;
(iv) shall have the combined years of age and Continuous Service (each computed to the nearest full month where any part of a month involving fewer than 15 days is disregarded) [of 65 years]; and
(v) is eligible for Retirement in accordance with one of the following provisions, provided such provision is specified in the applicable Pension Agreement or Company Designation:
(1) the Member's Continuous Service has been broken as a result of permanent plant shutdown, layoff or absence due to physical disability; [or]
(2) the Member is on layoff due to permanent plant shutdown…
the Member shall be entitled to Retire and receive a Special Retirement Supplement, a supplement determined pursuant to Section 4.4 of this Part II, and an Early Pension without reduction determined pursuant to Section 4.4 of this Part II, which shall be known as a 70/75/80 Rule Pension. (emphasis ours)
20Mr. Dudumas’ pension benefit was determined in accordance with section 3.3(a) of Part II of the 2009 Plan text on the basis of his involuntary lay off, the closure of Plant 244, his age being more than 50 years, his continuous service being more than 15 years and his combined age and service being more than 65 years.
21The “Special Retirement Supplement” referred to in section 3.3(a) is calculated under Section 4.0(a) of the 2009 Plan and produces an amount as under section 4.0(a) of the 2005 Pension Agreement, namely $5,006.20. The “supplement” and unreduced early pension amounts determined under Rule 4.4, read in conjunction with Tables 12 and 13 of Part II at pages 85 and 91 respectively, produce the same amounts as under the 2005 Pension Agreement, namely a monthly supplement of $291.11 to age 65, and an unreduced immediate lifetime benefit of $1,410.94. We accept that the pension amounts produced under both documents are the same and Mr. Dudumas has offered no evidence otherwise. In fact he provided no alternative calculations of any kind.
22We turn now to the Applicant’s claim that the commuted value of his benefits does not include the value of his normal pension. He does not appear to understand that the unreduced early retirement 70/75 pension he has received under section 3.3 of the 2005 Pension Agreement is a more valuable benefit than the deferred normal lifetime pension that he would not otherwise have received until age 65 under section 3.0 of the 2005 Pension Agreement (or section 3.0 of Part II of the 2009 Plan) had there been no wind up which would simply have been the $1,410.94 lifetime pension. He does not have an entitlement to a double stream of pension payments. That is not the meaning or purpose of subsection 40(2) of the Act. Subsection 40(2) of the Act merely states that:
“An ancillary benefit for which a member has met all eligibility requirements under the pension plan necessary to exercise the right to receive payment of the benefits shall be included in calculating the member’s pension benefit or the commuted value of the pension benefit.”
In this case, Mr. Dudumas became entitled on plant closure to ancillary benefits including the portion of his unreduced lifetime pension starting immediately on July 1, 2010 of $1,410.94, and to monthly bridge benefits payable to age 65, consisting of a Special Retirement Supplement of $54.99 and a 70/75 Supplement of $291.11. These amounts we find were included in the calculation of his commuted value transfer and the provisions of section 40(2) of the Act are satisfied. They represent the greatest value that he could have received under the Plan and Act.
23Mr. Dudumas also claims entitlement to additional pension amounts under section 3.5 of the 2005 Pension Agreement. This provision entitles a member with 30 years of continuous service to an unreduced pension and a special retirement supplement:
3.5 30-Year Retirement
On and after the effective date of this Agreement and prior to February 10, 2008, any present Employee under the age of 62 who shall have had at least 30 years of continuous service shall, upon application as provided in paragraph 4.12, be entitled to retire at any time thereafter with a special retirement supplement and a full "30-year'' pension. (emphasis ours)
24On its face, Mr. Dudumas was not eligible for a 30-Year pension under Section 3.5 (the “30-Year pension”) because he did not have 30 years of continuous service either at February 10, 2008 or at his date of termination. There is no requirement for CROWN to consent to the application of a 30-Year pension if a Plan member otherwise meets the age and service eligibility requirements. It is not a “consent benefit” as alleged by the Applicant. A “consent benefit” is defined under Regulation 909 of the Act, which applies to the determination of Plan wind up benefits to be:
“an ancillary benefit, other than a plant closure benefit or a permanent layoff benefit, the eligibility requirements for which include the consent of an employer or, in the case of a jointly sponsored pension plan, the consent of the employer or the administrator” (emphasis ours).
The classification of a benefit as a pension or ancillary benefit does not determine eligibility for the benefit. Since the provision is not a consent benefit, Section 74(7) of the Act does not apply. Even if it had been a consent benefit a member would still have to have met all of the other eligibility conditions under the Plan, namely 30 years of service.2
25The same is true for the corresponding provision in the 2009 Plan text. The only difference between these two provisions is that the 2009 Plan text refers to the “30-Year pension as the “Special Full Early Pension.” The only condition is a minimum 30 years of Continuous Service:
3.4 Eligibility for a Special Full Early Pension
If specified in the applicable Pension Agreement or Company Designation, any Member not eligible for a 62 & 10 Pension who:
(b) shall have completed the [30 years] of Continuous Service;
which is set out in Table 6 of this Part II, shall be entitled to Retire and receive a Special Retirement Supplement, and a pension determined pursuant to Section 4.5 of this Part which shall be known as a Special Full Early Pension.
26The amount of the 30-Year pension under Section 3.5 is the same as under the Unreduced Early Retirement - 70/75 pension under Section 3.3, but the latter was payable to Mr. Dudumas on July 1, 2010, whereas the 30-Year pension would not be payable to Mr. Dudumas until he had 30 years of Continuous Service, which would have been on April 1, 2014. He can get one but not both pensions, and he was awarded the Unreduced Early Retirement - 70/75 pension which yielded the higher value.
27For completeness, we note that Subsection 74(1) of the Act, as it appeared on the effective date of the wind up, entitles a member of a pension plan whose age plus years of continuous service in the pension plan equals at least 55 on the effective date of the wind up to “grow-into” an immediate unreduced pension, a deferred unreduced pension or a deferred reduced pension, depending on the terms of the pension plan:
“74. (1) A member in Ontario of a pension plan whose combination of age plus years of continuous employment or membership in the pension plan equals at least fifty-five, at the effective date of the wind up of the pension plan in whole or in part, has the right to receive,
(a) a pension in accordance with the terms of the pension plan, if, under the pension plan, the member is eligible for immediate payment of the pension benefit;
(b) a pension in accordance with the terms of the pension plan, beginning at the earlier of,
(i) the normal retirement date under the pension plan, or
(ii) the date on which the member would be entitled to an unreduced pension under the pension plan if the pension plan were not wound up and if the member’s membership continued to that date; or
(c) a reduced pension in the amount payable under the terms of the pension plan beginning on the date on which the member would be entitled to the reduced pension under the pension plan if the pension plan were not wound up and if the member’s membership continued to that date.”
28Section 74(1) of the Act does not apply, as the Applicant alleges, to permit him to “grow-into” 30 years of pensionable service for the purpose of an additional lifetime pension under section 3.5 of the 2005 Pension Agreement. He alleges that he would become entitled to the 30-year pension at age 62 in 2014 by virtue of the application of Section 74 of the Act. The value of that 30-year pension would have been less than the value that he received on plant closure. His interpretation of the law, on which he provided no argument in law or applicable precedent, is patently unreasonable. Mr. Dudumas was already entitled under the Unreduced Early Retirement - 70/75 in Section 3.3 to an unreduced pension and supplementary and bridge benefits. There is nothing to grow-in to, in fact or in law. He has already received the maximum benefit at the highest value under the Plan. He is not entitled to “double dip” or “triple dip” into the pension fund for the same period of service. This is clearly not the intent of the law. We find no merit in his position.
29We agree with Superintendent’s counsel that “grow-in” benefits under section 74 of the Act do not entitle a pension plan member to additional pensionable service. In this case Mr. Dudumas has received the value of his unreduced “pension benefit” at the earliest date he could possibly qualify for it under the 2009 Plan (or the 2005 Pension Agreement) based on his pensionable service to his date of termination of employment.
30In any event, Part I, Article E, section 2 of the 2009 Plan entitled “Non-Duplication of Benefits” prohibits duplication of “pension or deferred benefits”. Section 4.11 of the 2005 Pension Agreement is to similar effect: pension and other benefits that are payable must be reduced by the amount of other payments. Since the pension and ancillary benefits paid to the Applicant were the most generous that could be paid under the 2009 Plan (or the 2005 Pension Agreement), payment of any other pension stream (such as a 30-Year pension) would be entirely offset.
31Finally, we will address Mr. Dudumas’ allegation that the calculation date for his payment should be “the most favourable to [him]”, given that his termination date was June 25, 2010. He provided no argument as to which specific date should have been used for his pension calculation.
32Continuous Service in the 2009 Plan text, which is used to calculate Mr. Dudumas’ pensionable service in the Plan, is defined in section 5.0 of Part II of the 2009 Plan text (emphasis added):
5.0 Continuous Service
The term “Continuous Service” as used in this Part II means, unless otherwise specified, service prior to last Retirement in the employ of the Company calculated from the Member’s last hiring date…
…Continuous Service shall be computed to the nearest full month, where any part of a month involving less than 15 days is disregarded.
33This language also appears in section 3.3 of the 2005 Pension Agreement (emphasis added):
…any present Employee under the age of 62 who on the basis of age and continuous service each computed to the nearest full month with any fractional part of a month of less than 15 days disregarded…
and in section 3.3(a)(iv) of the 2009 Plan text (emphasis added):
(iv) shall have the combined years of age and Continuous Service (each computed to the nearest full month where any part of a month involving fewer than 15 days is disregarded) [of 65 years]…
34We concur with the Superintendent that the purpose of “rounding” is clear: efficiency. It is simply easier to do calculations with rounded numbers.
35Mr. Dudumas was terminated from his employment with Crown on June 25, 2010 and therefore the Plan’s actuary rounded up to July 1, 2010 in accordance with the Plan terms.
36This rounding up had a positive impact (adding approximately $13,000 according to the Plan actuary) on the commuted value of Mr. Dudumas’ pension benefits for two reasons:
a. Mr. Dudumas was credited with an entire month’s service for June, 2010, rather than 25 days;
b. The interest rates used to calculate the commuted value for the month of July, 2010 were more favourable than the interest rates for the month of June, 2010.
37As the Superintendent’s view is that the approach the Plan actuary took was acceptable to the Superintendent because it produced a higher commuted value for Mr. Dudumas than he would have had if the actuary had calculated his commuted value as of his actual date of termination, we see no reason to disturb the date chosen for valuation purposes.
38Pension plan members are entitled to pension benefits provided in accordance with the Act. They are not entitled to demand a valuation date that produces the most advantageous commuted value calculations; however, as in this case, it is always open to a pension plan to offer its members greater than the minimum required by the legislation.
39As to the Applicant’s contention that the commuted value of his normal pension was incorrectly calculated and not in accordance with the Act and Actuarial Standards Board’s Revised Standards of Practice for Pension Commuted Values (Section 3800), we find that he offered no evidence of any error in calculation or non-compliance with actuarial standards. Consequently we see no reason to disturb the Superintendent’s approval of the Report and the assumptions therein as the basis used in the calculation of the Plan liabilities.
40In conclusion for all of the reasons outlined above, we find no support for any of the Applicant’s positions and therefore uphold the Superintendent’s NOID. There is simply no basis before us to find other than Mr. Dudumas received all of the proper and full benefits that he was entitled to under the Plan and the Act under issue a). In our view, the Superintendent need do nothing further and the NOID is upheld.
41We strongly urge Mr. Dudumas to review his decision not to apply for health and insurance benefits. He is at serious risk of losing those financial benefits by his apparent unwillingness to make decisions in his own self-interest.
V. COSTS
42Finally we turn to CROWN’s motion at the conclusion of the hearing for $10,000 in costs as against the Applicant. Submissions were rendered orally.
43The primary authority for the Tribunal to order costs flows directly from section 24 of the Financial Services Commission of Ontario Act, (the “FSCO Act”) which reads:
24(1) The Tribunal may order that a party to a proceeding before it pay the costs of another party or the Tribunals’ costs of the proceeding.
(3) The Tribunal shall determine the amount of an order for costs in accordance with the rules of the Tribunal.
44We are mindful of the fact that the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal (“Rules”) as noted in the GM case3 to which CROWN counsel made no reference, “are intended to provide assurance to prospective parties that involvement in Tribunal proceedings will not expose them to the danger that the Tribunal might order them to pay the legal costs of other parties simply because their position has not been successful. They run this risk only if they engage in irresponsible conduct in the course of the proceeding.” It was noted that the Tribunal has never made an award of costs in a pension case under the Rules, or the predecessor rules.
45CROWN urges the Tribunal to apply Rule 41.01, under which the Tribunal may order costs
“Where the conduct or course of conduct of a party in a proceeding before the Tribunal has been unreasonable, frivolous or vexatious, or a party has acted in bad faith during a proceeding, the Tribunal may order the offending party to pay all or part of another party’s costs in the proceeding.” (emphasis ours)
46CROWN is relying only on the “unreasonable” provision of the section. Counsel cited the case of Propane Levac Propane Inc. v. Macauley case4 for the proposition that a failure to accept or respond to a generous offer... may be properly considered under the rubric of “unreasonable” behaviour to the proceeding”. That case can be distinguished on its facts in that it referred to settlement offers which were more favourable than the trial judgement. In this case, CROWN argues that the Applicant’s failure to accept their offer of payment of outside advice to avoid a hearing was unreasonable.
47While there is no requirement that a party secure legal counsel in these proceedings, this is one case in which it is undeniable in our view that experienced pension counsel would have been helpful to the Applicant. However Mr. Dudumas is self-represented and his lack of success in these proceedings is not a reason of itself for a cost order. It is up to the Superintendent to defend the NOID.
48In determining whether a party’s conduct has been unreasonable, frivolous or vexatious, or whether a party has acted in bad faith, Rule 42.01 requires the Tribunal to consider “all relevant circumstances including evidence that a party:
d. failed to cooperate with other parties during preliminary proceedings or at the hearing;
e. advanced a position that was frivolous, vexatious or manifestly unfounded;
... or
g. refused to admit facts or documentary evidence not in dispute and which it should have reasonably admitted.”
49We turn first to the application of Rule 42.02(e). The Applicant in this instance offered no real dispute as to the facts of the case. His arguments as to entitlement to additional benefits reflected a fundamental lack of understanding of the Plan provisions, the Act and the law, and in our view, resulted in an unreasonable claim to multiple pension streams for the same or projected periods of service. He offered no evidence or rationale or alternative argument as to the calculation of his benefits, but simply alluded that the actuary was unprofessional and not in compliance with the law and professional standards in calculating his commuted value entitlement. Indirectly his appeal of the Superintendent’s decision suggests the same unwarranted position with respect to FSCO staff. His distrust of CROWN extended to his consistent refusal to apply for health and insurance benefits to which he was entitled at no cost, but at considerable risk for his failure to apply. The lack of any merit in his legal arguments or rather a lack of legal argument does lead us to conclude, based on the findings of fact and law that we have made, that he was irresponsible in commencing an action which was manifestly unfounded. Our findings of fact and conclusions regarding the issues reflect our reasoning in this regard. Mr. Dudumas had no reasonable likelihood of success and raised no question of fact or law that could not be easily determined by the regulator. Not only did he receive all of his entitlements in accordance with his election form, he did not dispute receipt of those amounts. We do find his positions manifestly unfounded and consequently unreasonable.
50CROWN also relies on the application of Rule 42.01(d) in assessing the Applicant’s conduct, namely that the Applicant “failed to cooperate with other parties during preliminary proceedings or at the hearing”. Specifically CROWN relies on its repeated written offer to Mr. Dudumas to permit him to choose a pension lawyer or pension actuary to assist him, in determining to proceed with the hearing at a cost to CROWN of up to $5,000.00. CROWN counsel verbally made this offer known to the panel chair at the pre-hearing conference on January 28, 2016; however evidence of the offer was not presented until the hearing, at which time we find the offer had expired. It appears from documents submitted at the hearing, that this offer was repeated on several occasions from February 26, 2016 until April 20, 2016. Mr. Dudumas does not dispute the offer was made to him and that he was advised that a motion on costs would be made at the hearing. While we would not go so far as to find his refusal of the offer of itself constitutes a failure to cooperate during preliminary proceedings or at the hearing, we do find it relevant as a factor under Rule 42.02 as discussed below.
51CROWN also relied on Rule 42.01(g), namely that the Applicant “refused to admit facts or documentary evidence not in dispute and which it should have reasonably admitted.” In this regard, CROWN refers to the Applicant’s refusal to admit the 2009 Plan text into evidence. As the Applicant is self-represented we give this aspect little weight. As there may have been a question as to the application of the appropriate text or a conflict between the Plan provisions, we would not award costs on this basis alone.
52Having found Mr. Dudumas’ claim to be unreasonable, in determining the appropriate amount of costs, Rule 42.02 requires the Tribunal to consider “all relevant circumstances, including:
a) The nature and duration of the conduct or course of conduct at issue;
b) The degree and duration of the bad faith at issue;
c) The extent of the prejudice caused to the party requesting costs;
d) The amount of costs incurred by the party requesting costs; and
e) the conduct or course of conduct of the party requesting costs.”
53All parties acknowledge the Applicant’s unfettered right to a hearing. In our view adjudicators should exercise restraint and use our power to award costs in limited circumstances. Certainly an unrepresented applicant unfamiliar with the legal process should not be punished for his conduct in applying for a hearing. Nor should a lack of success lead to an automatic award of costs against an applicant. One advantage of a tribunal process is that it is intended to be a less costly and faster process than the courts, and self-represented applicants are common. As a result, we are, for general reasons of access to justice, reluctant to impose more than nominal costs in this case for reasons below.
54In reviewing the factors listed in Rule 42.02, we find under (a) that the Applicant’s irresponsible conduct lasted about 4 months (the length of time for which an offer of outside counsel or actuarial advice was made).
55Crown alleged bad faith under (b) on the basis that Mr. Dudumas’ position on the alleged failure of the actuary to meet professional standards with no supporting evidence. CROWN provided no legal arguments to support a finding of “bad faith” in this regard, and so we give this allegation no weight.
56Under (c), prejudice caused to CROWN we find was limited to the cost and effort required to defend the allegations. There was no evidence that this proceeding otherwise impeded the ongoing Plan administration or operations of CROWN. The Applicant did make allegations of unprofessional conduct by the actuarial firm retained by CROWN, and indirectly FSCO staff, but we find that these allegations do not constitute prejudice to CROWN. We give this circumstance no weight.
57Under (d), we wish that Mr. Dudumas had taken the offer to secure professional help as in our view, any experienced pension lawyer or pension actuary should have easily been able to assess his case and to identify the lack of supporting argument and law in his favour. If he did seek outside advice, it did not appear to come from a qualified source. Consequently he did force CROWN to increase its legal and actuarial costs related to this matter.
58CROWN did not provide us with any evidence of their costs, other than for counsel to state that they significantly exceeded the amount in question. Nor was there any evidence before us as to whether CROWN incurred these costs directly, or whether they were paid from another source such as the Plan fund, if permissible. In the absence of any actual evidence as to costs it is difficult for the Tribunal to assess the costs incurred by CROWN under Rule 42.02(e). However given the appearance of two senior legal counsel before us and the advice rendered by the actuarial firm, we would not be surprised if related costs were in the thousands of dollars. That being said, in the absence of hard evidence we would not award the $10,000 claimed. We note that CROWN indicated that it would be satisfied by a nominal award of costs.
59Under (e), we are also mindful that despite repeated requests for detailed information as to his pension calculations, a detailed response does not appear to have been made by CROWN until after this matter commenced, namely in February of 2016. CROWN may well have avoided the hearing had it been more forthcoming in 2014-2015. The Plan is a complicated document. While CROWN may have felt it was acting in the Applicant’s best interests in asking him to complete forms in 2010 and in its subsequent correspondence, it did little until 2016 to satisfy Mr. Dudumas’ concerns. As a result, any claim for costs is significantly reduced in our view.
60CROWN’s counsel did not provide any compelling case law to support their claim. We accept in principle unrepresented parties may have costs awarded to or against them: see Kerry (Canada) Inc. v. Ontario (Superintendent Financial Services), 2004 ONFST 6 Decision No. P0191-2002-5.
61The Sussman5 case can be readily distinguished on its facts as in that case proceedings were unreasonably delayed or prolonged by the applicant including an expansion into issues outside the jurisdiction of the Tribunal. Unsubstantiated allegations against witnesses were made and irrelevant matters arose in that case. No such similar allegations were made in this case.
62In this case however, the Applicant refused to seek qualified external advice, at no personal cost. That decision, in our view, does not appear to have been made in defence of his personal interests. In fact he provided no explanation for his refusal. We do find this troubling as in our view, this hearing could well have been avoided if such advice had been sought. Given Mr. Dudumas’ apparent distrust of CROWN however, we are not sure even independent advice would have been reasonably considered by him. Mr. Dudumas simply wanted to exercise his right to a hearing, regardless of the offer. However, we feel his lack of arguments before us and unwillingness to consider the offer led to the Tribunal being asked to referee a matter more properly considered solely by the Superintendent as the regulator.
63The motion for costs was made at the conclusion of the hearing and the Applicant was given an opportunity to reply. However we note that the Applicant is self-represented and CROWN’s oral submissions and limited case law were only presented at the conclusion of the hearing, offering the Applicant a limited opportunity to reply. His response was essentially that he was entitled to request a hearing and should not be penalized for doing so.
64The Superintendent took no clear position, but did comment that any award should be nominal, while alluding to the existence of other cases where costs were not awarded, such as the GM case6. The facts in GM we find can be easily distinguished on its facts.
65Consequently considering all of the factors above based on our finding that the claim was unreasonable we award CROWN nominal costs only in the amount of $500.00.
VI. ORDERS
66The Tribunal orders that the Superintendent’s NOID be upheld and no further action taken.
67As to costs, the Applicant is ordered to pay the sum of $500 in costs to CROWN.
Dated at Toronto, this 16th day of August, 2016.
“Florence A. Holden” Florence A. Holden
“Jill Wagman” Jill Wagman
“Patrick Longhurst” Patrick Longhurst
Footnotes
- Navistar Canada Inc. v. Ontario (Superintendent Financial Services) 2014 ONFST 8, para 20.
- PPG Canada Inc. v. Ontario (Superintendent Financial Services), 2015 ONFST 10, paragraph 33.
- General Motors of Canada Limited v. Ontario (Superintendent Financial Services), 2015 ONFST 39, paragraph 22.
- Propane Levac Propane Inc. v. Macauley, 2011 ONSC 293, paras 10-11.
- Sussman Mortgage Funding Inc. v. Ontario (Superintendent Financial Services), 2003 ONFST 2, Decision No. M0073-1999-5
- Op cited.