Citation: Hiscocks v. Ontario (Superintendent Financial Services), 2016 ONFST 5 Decision No. P0629-2015-1 Date: 2016/03/15

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 April 10, 2015, of the Superintendent of Financial Services to Refuse to Make an Order under section 87(2)(c) of the Act relating to the DRS Technologies Canada Company Employees Pension Plan, Registration Number 1040112;

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.

and

BEFORE:

Florence A. Holden Chair of the Panel and Chair (Acting) of the Tribunal

Jeffrey Richardson Member of the Panel and the Tribunal

Jill Wagman Member of the Panel and the Tribunal

For the Applicant – Chris Hiscocks (self-represented)

For the Superintendent of Financial Services – Deborah McPhail

For DRS Technologies Canada Ltd. (“DRS”) – Jennifer McAleer and Rick Johnston

DATE HEARD: January 26, 2016

1The Applicant filed a Request for Hearing asking this Tribunal to direct the Superintendent of Financial Services (the “Superintendent”) to order DRS Technologies Canada Ltd. (“DRS”) to permit him to purchase pensionable service retroactively, from the DRS Technologies Canada Company Employees Pension Plan (the “Plan”), from October 29, 1997 to December 31, 2003.

2The Notice of Intended Decision (the “NOID”) that gave rise to this Request for Hearing states that the Superintendent intends to refuse to exercise his discretion to order that DRS allow the Applicant to purchase past pensionable service, retroactive to October 29, 1997.

3The Tribunal denies the Applicant’s request for the reasons given herein, namely that there was no contravention of the Act by DRS as alleged, and the Applicant has no right to purchase past pensionable service under the Plan. Our reasons follow.

II. ISSUES

4At the pre-hearing conference, the issues were framed as follows:

a) Did DRS contravene or is it in contravention of section 25 of the Act?

b) If the answer to issue (a) is yes, what order, if any, should the Tribunal direct the Superintendent to make?

III. FACTS

5Having reviewed all of the evidence before us, including an Agreed Statement of Facts, and the testimony of the Applicant and William Michie, a senior Human Resources advisor to DRS, we have made the following findings of fact:

a. The Applicant commenced employment with Spar Aerospace Limited (“Spar”, formerly called Spar Aerospace Products Ltd.) in 1979.

b. Throughout the time the Applicant was employed by Spar, Spar had a voluntary, contributory, defined benefit pension plan called the Spar Aerospace Limited Pension Plan for Ontario Non-Represented Employees which was registered in Ontario as No. 011246 (the “Spar Plan”).

c. The Applicant was eligible to join the Spar Plan at any time after completion of twelve months of employment with Spar but admits that he did not to do so at any time while employed by Spar. In fact, we find and Mr. Hiscocks agrees that he waived participation in the Spar Plan in writing on at least two occasions: when first eligible in 1980 and thereafter in 1983. We accept his evidence that he intentionally did not join the Spar Plan so that he could pursue alternative investment strategies. He has conceded in his correspondence with DRS that he is not making any claim under the Spar Plan or for service prior to October 29, 1997.

d. Further, we find that Mr. Hiscocks believed at all times while employed by Spar that he was eligible to join the Spar Plan. Specifically we reject his testimony that he was of the belief that he was ineligible to join the Spar Plan based on a January 30, 1985 letter from T. W. Pierce of Spar, which letter suggests that the Spar Plan was closed to new members during certain periods in the 1980’s. The Applicant only became aware of this letter, by his own admission, during discovery for these proceedings, so cannot have been aware of nor relied on that letter for any belief of ineligibility in the Spar Plan while employed by Spar. Further his testimony contradicts the Agreed Statement of Facts, in paragraph 9, which confirms his eligibility to join the Spar Plan at any time after his first year of employment with Spar. There is no evidence before us to suggest that the Applicant thought during the period from 1983 to 1997 that he was not eligible to join the Spar Plan. Certainly he did not communicate that to DRS at any time before these proceedings. As well, the 1992 Spar Plan text, provided to us, indicates that the Spar Plan was open to enrolment as at January 1, 1992.

e. Certain assets of Spar were purchased by DRS on October 29, 1997. In connection with that purchase, Spar represented to DRS that the Applicant was:

i. a salaried employee of Spar who was employed in its Applied Systems Division immediately prior to closing of the purchase; and

ii. not a member of the Spar Plan.

f. We accept the undisputed evidence that DRS agreed to offer certain employees of Spar, including the Applicant, employment on terms and conditions no less favourable in the aggregate to the employees than the terms and conditions which were then applicable to such employee at time of sale. Mr. Hiscocks testified that this was his belief at time of sale and he signed a memo confirming that he had read and understood the terms of the transition of his employment from Spar to DRS on October 28, 1997.

g. We accept the undisputed evidence of Mr. Michie that DRS agreed to adopt, as of October 29, 1997, a new defined benefit pension plan covering transferred employees from Spar who, as of October 29, 1997, participated in, or who met or were in the process of satisfying eligibility requirements for participation in the Spar Plan. The new plan and the benefits provided thereunder were to be substantially similar to and to provide benefits no less favourable than those provided under the Spar Plan and in Mr. Michie’s words to “mirror” the Spar Plan. A memorandum dated October 30, 1997 from Spar to its permanent employees, including Mr. Hiscocks who confirmed receipt, confirmed the intended transfer of the Spar Plan and its assets to DRS and to the registration of a new successor plan. Mr. Hiscocks testified that he was aware that Spar Plan members remained in a pension plan and that the eligibility for membership was unchanged in the Plan.

h. Mr. Hiscocks testified at around the time of the sale he approached a former Spar human resources employee about the new DRS pension plan, but conceded in evidence that there was no suggestion that he would not be eligible for Plan membership. In fact in his own submissions he conceded that he became eligible to join the Plan upon the transfer of his employment to DRS. We find that there is no evidence that he approached DRS regarding membership in the Plan prior to 2004.

i. DRS, formerly called DRS Technologies Canada Company, is the administrator and an employer for purposes of the Plan established effective October 29, 1997 and registered in Ontario as No. 1040112. DRS does not dispute that Mr. Hiscocks was immediately eligible to join the Plan as at October 29, 1997 and continued to be eligible to join on an optional basis while an eligible full-time employee, as he had already met the 12 months of service requirement under the Spar Plan. Further Mr. Hiscocks conceded on cross-examination that he was aware of the existence of the Plan in 1997 and he acknowledged that the eligibility provisions would be unchanged. We accept that he did not receive a copy of the Plan text or summary booklet prior to enrollment in 2004 but find nothing turns on this fact.

j. From the date the Plan was established until 2008, the Plan was a voluntary, contributory, defined benefit pension plan. The Plan is now a combination defined benefit/defined contribution single employer pension plan.

k. We accept Mr. Michie’s undisputed evidence that at least two former Spar transferred employees joined the Plan when first eligible in 1997-8.

l. On February 1, 2001 and on February 4 and 6, 2003, DRS provided member information sessions conducted by a third party with respect to the Plan. Attendance was voluntary. Mr. Hiscocks did not attend.

m. In 2004, the Applicant asked to be enrolled in the DRS Plan. He signed an application dated April 30, 2004, a copy of which is at Tab 10 of the Agreed Book of Documents, and was enrolled effective January 1, 2004. In fact we find no evidence that Mr. Hiscocks communicated with anyone in DRS from 1997 to 2004 with respect to enrolment in the Plan. DRS appears to have no record of any such request and we accept Mr. Michie’s evidence that Mr. Hiscocks did not directly ask about past service until 2012.

n. In 2008, when a defined contribution provision was added to the Plan, the Applicant attended meetings regarding the Plan and elected to remain in the defined benefit portion of the Plan.

o. We find that the Applicant did not communicate with DRS regarding his desire to buy back service under the DRS Plan during the period after enrolment in 2004 until late 2012. We do not accept the Applicant’s submissions that he avoided discussion on the buy-back issue for fear of impediments to career advancement or termination of employment. There is simply no evidence before us for such a belief or threat and Mr. Hiscocks conceded that no such threats were ever made.

p. On February 20, 2013, the Applicant emailed DRS, requesting that he be allowed to buy back service under the Plan. DRS denied him that request as did the Plan’s Corporate Pension Committee.

q. No provision exists in the current July 1, 2008 amended and restated Plan text to permit a buy-back of past service of the sort requested by the Applicant.

r. DRS concedes in the Agreed Statement of Facts that the Plan once contained a provision in s. 6.04 that would have allowed DRS to waive any or all conditions for membership to enable a permanent employee to become a member at a date earlier than that, as follows:

“6.04 Notwithstanding Subsections 6.02 and 6.03, the Administrator may at its discretion, with the consent of the Permanent Employee, waive any or all of the conditions for membership in this Plan to enable the Permanent Employee to become a Member of this Plan at a date earlier than that on which the Permanent Employee would otherwise become a Member.”

The 2008 Plan text no longer contained this provision.

s. While the parties agree that DRS did not waive any conditions for membership with respect to the Applicant, DRS did appear to back-date his application signed April 30, 2004 to be effective January 1, 2004. There is limited evidence that DRS had never waived membership conditions under the Plan to permit the purchase of past service benefits for any employee.

t. Christopher Hiscocks was employed by DRS from October 29, 1997 until he retired under the Plan as of July 1, 2015 at age 62. He is currently in receipt of a pension from the Plan.

u. Following correspondence with FSCO, the Superintendent issued the NOID which forms the basis for the related Request for Hearing by the Applicant.

IV. STATUTORY FRAMEWORK AND ANALYSIS

6As the Tribunal has noted in many prior decisions, the Tribunal is a statutory body which only has the jurisdiction conferred on it by the prevailing statute. In this particular matter, the Tribunal is limited to considering the issues addressed in the NOID by the Superintendent and the applicable provisions of the Act.

7At the pre-hearing conference, the issues were framed as follows:

a) Did DRS contravene or is it in contravention of section 25 of the Act?

b) If the answer to issue (a) is yes, what order, if any, should the Tribunal direct the Superintendent to make?

8 Section 25 of the Act provides in part as follows:

“25(1) The administrator of a pension plan shall provide in writing to each person who will be eligible or is required to become a member of the pension plan,

(a) an explanation of the provisions of the plan that apply to the person;

(b) an explanation of the person’s rights and obligations in respect of the pension plan; and

(2) The administrator shall provide the information mentioned in subsection (1),

(a) to each person who becomes a member within the prescribed period of time after the date on which the pension plan is established;

(b) to a person who is likely to become eligible to become a member of the pension plan, within the prescribed period of time before the date on which the person is likely to become eligible;

(c) to each person who becomes eligible to become a member of the pension plan upon becoming employed by the employer, within the prescribed period of time after the date on which the person becomes so employed.”

9Section 38(c) of Ontario Regulation 909 (the “Regulation”) should be read together with section 25 of the Act. It states:

“38. The information referred to in subsection 25(1) of the Act shall be provided,

(a) to a person who becomes a member of a pension plan on the date the plan is established, within sixty days after the date the plan is established;

(b) to an employee who will become eligible to become a member of the pension plan, within sixty days prior to the date on which the person will become eligible; and

(c) to a person who is eligible to become a member of a pension plan upon commencing employment, within sixty days after the person commences employment.”

10 Section 33 of the Act states:

“(1) Where there is a dispute as to whether or not an employee is a member of a class of employees for whom a pension plan is established or maintained, the Superintendent, subject to section 89, by order may require the administrator to accept the employee as a member.

(2) The Superintendent may make the order if the Superintendent is of the opinion that, on the basis of the nature of the employment or the terms of employment of the employee, the employee is a member of the class.”

We now consider issue a) Did DRS contravene or is it in contravention of section 25 of the Act?

11A sale of certain assets of Spar to DRS and a related transfer of assets and liabilities from the Spar Plan to the Plan is not unusual. In this scenario, we find that DRS is a “successor employer” and the Plan is a “successor pension plan” as those terms are defined under section 80(1) of the Act. For those former Spar employees who were members of the Spar Plan, the DRS Plan is deemed to be a continuation of the original pension plan, the Spar Plan, with respect to any benefits or assets transferred under section 80(5) of the Act. Although Mr. Hiscocks was not a member of the Spar Plan, we have already found as a fact that having satisfied the service requirements for eligibility under the Spar Plan, he was already eligible to join the Plan upon transfer of his employment. We have no evidence that there was a change to the eligibility provisions under the Plan for full-time permanent employees on sale.

12However, we also note that on an asset sale, unlike a sale of ownership or shares, the successor employer is required to make new offers of employment to non-union employees such as the Applicant. Mr. Hiscocks accepted a continuation of employment on terms and conditions no less favourable in the aggregate to his employment with Spar. On the evidence we have found that Mr. Hiscocks knew he was eligible for immediate membership in the Plan prior to the time of sale and on his acceptance of the offer of employment from DRS on October 28, 1997. It is not clear to us that he can now claim to have only “become eligible” for membership in the Plan at the date of sale.

13Upon the plain reading of section 25(1), DRS as the administrator of the voluntary Plan, was required to provide the prescribed information to persons “who will be eligible. . .to become a member of the (Plan)” or under s. 25(2) such as to (a) new members, (b) to those newly eligible to become a member, or under (c) for new hires who become eligible on hire after the sale. Had the Plan required immediate Plan membership on sale, then s. 25(1) would have applied to the Applicant. However, Mr. Hiscocks did not fall within any of these employee groups and therefore neither section 25 of the Act or section 38(c) of the Regulations applies to him.

14As a practical matter, the Tribunal is being asked whether DRS had an obligation as a successor employer under the Act to remind employees at the date of sale who were not Spar Plan members but were eligible to immediately join the Plan that they remained eligible thereafter. The legislation does not appear to address this point. While the best practice would be for successor employers to confirm continuing eligibility on the date of sale, we find that there is no explicit obligation under the Act to do so. Certainly Mr. Hiscocks was aware of the DRS Plan, knew that Spar Plan members continued in the Plan, and we have the testimony of Mr. Michie that at least two transferred employees joined the Plan after sale in 1997-8. As both the Spar Plan and Plan was voluntary, it was reasonable for a successor employer such as DRS to accept the continuing waiver of membership by Mr. Hiscocks until such time as he applied for membership.

15Even if we are wrong in our interpretation of Section 25, the requested remedy of retroactive service is not available to the Applicant. This point is discussed further below.

16Further we agree with the Superintendent that section 33 of the Act has no application as these facts do not involve a dispute as to whether the Applicant is or is not a member of a class of employees for whom a pension plan is established or maintained.

17On issue (a) therefore, we find DRS did not contravene section 25 in 1997, nor is it in current or continuing contravention of section 25 of the Act with respect to the Applicant.

Under issue b) if the answer to issue (a) is yes, what order, if any, should the Tribunal direct the Superintendent to make?

18As we have found issue a) to be no, we could end our decision at this point. However we think it useful to offer some additional comments to the Applicant.

19The Act does not specify a remedy for a contravention of section 25. The Plan further does not permit a buy-back of retroactive membership as requested by the Applicant. Even if section 25 had been breached, the requested remedy would not exist under the Plan.

20Even if we had made a finding that the section had been contravened, there is no evidence before us that Mr. Hiscocks would have joined the Plan in 1997 given his stated preference to pursue alternative investment strategies for his retirement and his lack of action until 2012. Given the lengthy passage of time, section 110(6) of the Act limits prosecution of an offence under the Act after five years from the date on which the offence occurred or is alleged to have occurred.

21While DRS has raised a jurisdictional issue with respect to the Superintendent’s ability to make a discretionary order under section 87, which argument we do not necessarily accept, we do not think the facts of this case warrant an exercise of discretion in the Applicant’s favour. In any event the requested remedy is not possible under the Plan.

22Any alternative civil claim for damages for an alleged misrepresentation does not exist as a remedy under the Act. Mr. Hiscocks’ reliance on the case of Spinks. v. Canada (1996) 2 F. C. 583 has no application to the facts of this case and is not binding in any event.

V. ORDER

23Consequently the Applicant’s claim fails and the Superintendent is ordered to carry out the NOID.

Dated at Toronto, this 15th day of March, 2016.

“Florence A. Holden” Florence A. Holden

“Jeffrey Richardson” Jeffrey Richardson

“Jill Wagman” Jill Wagman