COURT FILE AND PARTIES

COURT FILE NO.: 09-CV-383073
DATE: 20120705

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: John Goodwin, James McMahon and James Spray, Plaintiffs

AND:

The Elementary Teachers’ Federation of Ontario, The Ontario Secondary School Teachers’ Federation District 17, The Executive of Local 1310 of the Canadian Union of Public Employees, The Ontario Public Service Employees’ Union and Simcoe County District School Board, Defendants

BEFORE: Penny J.

COUNSEL:
Markus Kremer , for the Simcoe County District School Board

Susan Ursel and Karen Ensslen , for the Ontario Secondary School Teachers’ Federation District 17

Aislinn Reid , for John Goodwin, James McMahon and James Spray

Jonathan Foreman and Genevieve Meisenheimer for the objector, Mary Hay

HEARD: May 8, 2012

ENDORSEMENT

The Issue

[ 1 ] This is a motion by the Simcoe County District School Board for an order approving the Board’s proposed distribution methodology for approximately $1.7 million received by the Board as a result of the windup of an Insurance Trust in which the Board and the other defendants participated.

[ 2 ] The objector, Mary Hay, on her own behalf and on behalf of non-union former Board employees who ceased to be enrolled in the Trust’s group insurance plan before June 30, 2006, (the “former employees”) opposed the proposed distribution methodology.

[ 3 ] At issue is whether, by excluding the former employees, who unquestionably paid premiums for and were beneficiaries of the Trust’s group insurance policies before June 30, 2006, the proposed distribution methodology is an unreasonable exercise of the Board’s discretion.

Background

[ 4 ] Between the years 1969 to 2007, teachers and other employees of the Board received group insurance benefits organized under the Trust. The terms of the Trust, the number of employees covered, the types of insurance benefits provided, the number of trustees and the parties to the trust agreements varied over time. The Board was a party to the relevant trust agreements from 1983 onward. The other parties were the various defendant unions representing the organized employees of the Board.

[ 5 ] In 1999, the mutual insurance company that had issued the group insurance policies held by the Trust converted to a corporation with share capital and issued shares to the insurance trustees. The shares were sold for cash. The resulting money (the “demutualization funds”) has been segregated from the remaining assets of the Trust. These demutualization funds were not dealt with in this action and are not relevant to the current motion. They will be the subject of a separate distribution proposal at some future time.

[ 6 ] In 2006 the Board and the unions decided to wind up the Trust and to distribute its assets. The Board and the unions entered into an amending agreement (the “Amendment”) as of June 30 2006, which provided for administrative trustees appointed by the Board and the unions to wind up the Trust. Alternate insurance coverage was arranged for all of the employees and former employees who were covered under the group insurance policies, paid for out of the assets of the Trust. Under the Amendment, the assets of the trust remaining after the Trust windup, excluding the demutualization funds, (the “surplus funds”) were to be distributed to the Board and the unions “for distribution to the beneficiaries or for the purpose of providing continuing benefits to the beneficiary groups.”

[ 7 ] In 2009, the administrative trustees commenced this action, seeking the advice and direction of the Court on the issue of winding up the Trust and distributing its assets. Notice was given to the beneficiaries and creditors of the Trust in accordance with the provisions of a prior order of this Court.

[ 8 ] On January 27, 2010, this Court granted Judgment with respect to the action. No one in attendance at hearing of the action objected to the relief sought. The Judgment directed the administrative trustees to:

(a) windup the Trust in part;

(b) distribute the majority of the surplus assets of the Trust remaining after the wind up; and

(c) distribute the remainder of the surplus funds (the “holdback”), once the Trust’s remaining liabilities had been discharged, amongst the Board and the unions in the same proportion as the surplus funds in (b) above.

[ 9 ] The Judgment also required that the surplus funds only be used by the Board and the unions for one or more of the following five “Permitted Uses”:

(1) enhancement of existing benefits and establishment of new benefits or individual spending accounts for plan members;

(2) payment of benefit premiums, including premium increases for improved benefits or for maintenance of existing benefits;

(3) payment of premium deficits incurred in order to preserve the benefit levels and premium rates in place prior to the implementation of replacement coverage, or to establish or enhance reserves;

(4) distribution to employees who were enrolled in group insurance policies administered by the Trust (the “covered employees”) including payment of reasonable administrative, legal and financial costs incurred in such distribution; and

(5) payment of reasonable legal fees incurred in winding up and distributing the trust assets to the Board and the unions, to be paid by each party from its share.

[ 10 ] The concept of “covered employees” is important to the main issue on this motion. Paragraph 14 of the Amendment provided:

The Trust Assets shall be distributed as follows:

(a) Ten percent (10%) to OPSEU;

(b) Ten percent (10%) to CUPE;

(c) the balance to be allocated as between ETFO, OSSTF and the School Board on the basis of each group’s proportional share of the total number of employees enrolled in the life insurance policies held through the Trust as of June 30, 2006 :

(i) in the case of the School Board, number of Board administrative, non-union employees enrolled in life insurance

(ii) the ETFO and OSSTF shares shall be in proportion to the number of employees each represents who are enrolled in life insurance . [emphasis added]

[ 11 ] In accordance with paragraph 14 of the Amendment, the Board's share of surplus (the “Board share”) as of June 30, 2006 was calculated to be $1,659,845.99. This amount was in evidence on the original application and was referred to in the Judgment as Exhibit Q to the affidavit of Mr. Goodwin.

[ 12 ] In accordance with the Judgment, in February of 2010 the Board received its portion of the surplus that was fixed by the Judgment at $1,659,845.99. The Board share and the corresponding shares paid to the unions, were determined by taking the total assets available for distribution, allocating 10% of those funds to each of the OPSEU and CUPE and allocating the balance between the Board and the remaining unions in proportion to the number of active employees that each of them had who were enrolled in life insurance policies held through the Trust as of June 30, 2006. As a result, the Board share was based upon the number of Board non-union employees who were enrolled in life insurance policies of the Trust on June 30, 2006. The Board has been holding the Board share separate from all other Board funds pending the disposition of this motion.

[ 13 ] The Judgment does not provide any guidance as to how the surplus funds, once paid to the Board and the unions, should be allocated among the various Permitted Uses. As a result, the Board was faced with a difficult decision. The Board formed a project team in the spring of 2010 to review the appropriate uses for the Board share and to make a recommendation to the Board’s administrative council. This team consisted of superintendents, none of whom had participated in the Trust. As a result, no member of the team had a direct pecuniary interest in the Board share. Over the course of 2010, the team explored a number of different options for allocating the Board share among the various Permitted Uses. There was an ongoing dialogue between the team and the Board’s administrative council.

[ 14 ] On January 31, 2011, a special meeting of the Board was held. By resolution, the approved a distribution methodology that provided first for payment of the Board’s reasonable legal fees incurred with respect this application and the Board’s reasonable legal, administrative and financial costs incurred in distributing the trust assets, including the legal costs of this motion. Of the money remaining after payment of the fees, 25% was allocated toward the payment of the Board’s future benefit premium obligations with respect to the group insurance policies that the Board purchased for the non-union groups to replace the insurance coverage previously provided under the Trust (the “premium reserve”), and the remaining 75% of the Board share was to be distributed to those non-union Board employees who were enrolled in life insurance policies under the Trust as of June 30, 2006. The Board also proposed a simplified allocation methodology for determining the specific amounts to be paid to individual employees, relying on three bands based on length of participation in the Trust policies.

[ 15 ] Thus the proposed distribution methodology that the Board seeks approval of is:

(a) reimbursement of the fees incurred by the Board (approximately $160,000);

(b) 25% of the remaining Board share to be retained by the Board as a premium reserve against the Board’s future benefit premium obligations (the “premium reserve”);

(c) the remaining 75% of the net Board share to be distributed to proposed recipients who were enrolled in Trust policies as of June 30, 2006;

(d) there are 315 proposed recipients who will receive a portion of the Board share of the surplus funds:

(i) each of 83 proposed recipients have less than five years experience and will receive one share each;

(ii) each of 54 proposed recipients have more than five but less than 10 years of experience and will receive two shares; and

(iii) each of 178 proposed recipients with 10 or more years of experience will receive three shares.

(e) any payments intended for proposed recipients whom the Board cannot locate (or who are deceased or for whom the Board cannot locate an estate able to receive payments) will be added to the premium reserve.

(f) if in future the Board receives any portion of the holdback, such amounts will be added to the premium reserve. It is anticipated that any such further payment (which is quite apart from the demutualization funds) will be less than $60,000.

[ 16 ] After deciding upon a proposed distribution methodology, the Board developed a comprehensive notice program to provide notice of this proposal, and this motion for those likely to be affected by it. This notice program include publication in the Globe and Mail and local Simcoe County newspapers, publication in trade magazines for retired teachers and Ontario’s principals and vice principals, a first-class letter mailed to the last known address of each proposed recipient, publication on the Board external and staff websites, establishment of a toll-free hotline and website containing further information and conducting a public information session.

[ 17 ] To date, a number of employees have expressed opposition to the proposed distribution methodology. One group of employees, represented by the objector, Mary Hay, retained counsel to represent them on this motion. Essentially, the opposition is to one or more of the following three aspects of the methodology:

(1) the exclusion from among proposed recipients under the proposed distribution methodology of former non-union employees of the Board whose enrollment in Trust policies ceased prior to June 30, 2006;

(2) the use of a banding method as opposed to individual calculations based upon the length of participation in the Trust’s group insurance policies; and

(3) the inclusion of time spent in a unionized position when determining into which band each of the proposed recipients would fall.

At the return of the motion, the focus of the Objector’s argument was on the first of these three objections.

The Court’s Authority to Give Advice and Directions

[ 18 ] Under Rule 14 of the Rules of Civil Procedure , this Court may, on an application such as this one, provide its advice or direction on a question affecting the rights of a person in respect of the execution of a trust or relating to the determination of rights that depend upon a written instrument. The 2010 Judgment was rendered pursuant to this authority and under section 60 of the Trustee Act . Moreover, the Court has inherent jurisdiction under section 11 of the Courts of Justice Act to give advice and direction to the Board on a motion such as this.

The Board’s Position

[ 19 ] It is not in dispute that the proposed distribution methodology complies with the Permitted Uses. As a result, the Board argues that there is only a very limited scope for the court to review the appropriateness of the proposed distribution methodology. The Board argues that its obligation in developing and implementing the proposed distribution methodology can be no higher than that of a trustee who is given the discretion to make payments from a trust. The Board cites Professor Waters Law of Trusts (3 rd ed.) at p. 933:

[T]he court will not intervene simply because the beneficiaries or any other complainants do not agree with the decision of the trustee’s in the exercise of their discretion. Nor will it intervene merely because it would not have come to the same decision itself. The court will intervene however, if (1) the decision is so unreasonable that no honest or fair-dealing trustee could have come to that decision; (2) the trustees have taken into account considerations which are irrelevant to the discretionary decision they had to make; or (3) the trustees, in having done nothing, cannot show that they gave proper consideration to whether they ought to exercise the discretion.

[ 20 ] The Board submits that the proposed distribution methodology is not unreasonable and did not take into account irrelevant considerations. To the contrary, the Board submits that the proposed distribution methodology was the product of careful consideration of relevant factors by individuals with no personal interest in the outcome. Among other things, the Board says that:

(1) in formulating the proposed distribution methodology, the Board was conscious of the fact that there is no one objectively correct method for the Board to exercise its discretion in allocating the Board share as between the Permitted Uses. Accordingly, it considered a variety of possible approaches;

(2) the Board’s decision to use 25% of the Board share as a premium reserve was made in recognition of its fiscal responsibility to retain a portion of the Board share to offset a portion of the Board’s ongoing costs of providing benefits to its employees, which would otherwise be funded out of public money and ultimately be borne by taxpayers;

(3) the decision to use a banding method to allocate funds as between the proposed recipients was governed largely by the practical reality that the Board lacks reliable records concerning enrollment dates and past premium payments made by the proposed recipients over the period of more than 25 years during which the Board was a party to the Trust; and

(4) the decision to limit the proposed recipients to those non-unionized employees who were enrolled in life insurance policies under the Trust as of June 30, 2006 was motivated by the Board’s desire to have its distribution methodology be consistent with the fact that, under the Court-approved terms and conditions of the windup of the Trust, the Board share was determined by reference to the total number of non-unionized employees enrolled in such policies at that date. Put simply, the Board says that it received the amount of money that it did because of the number of non-union employees enrolled in the Trust’s group onsurance policy as of June 30, 2006. It was logical that the distribution of funds be used to benefit the same group that gave rise to the Board share in the first place.

[ 21 ] The principal argument of the Objector, and those non-union employees who ceased to be enrolled in Trust policies before June 30, 2006 who are represented by her, is that employees who ceased to be enrolled in Trust policies before June 30, 2006 nevertheless paid premiums that arguably contributed to the surplus. In response to that argument, the Board submits that:

(a) the Board share was not calculated by reference to the premiums paid by different participants in the Trust but only by the number of non-union employees of the Board enrolled in Trust policies on June 30, 2006;

(b) there was no evidence before the court on the original application as to when the surplus in the trust first arose or the extent to which different premium payments may have contributed to the surplus. The Board does not even have accurate historical records with respect to the length of employees’ participation in the trust, let alone with respect to past premium payments and claims histories of individual participants; and

(c) the notion that entitlements to a surplus in insurance trust should be tied to premium payments was rejected by the Ontario Court of Appeal in Dolansky v. L’Association des Chirurgiens-dentistes du Quebec (1994), 17 O.R. (3d) 817.

[ 22 ] Dolansky involved a national insurance program for dentists, of which the Canadian Dental Association was the trustee. A surplus arose in the trust and one of the participating associations argued that the surplus had to be paid out or used, pro rata, to benefit those who had paid the premiums which led to the surplus. The Association took the position that its obligation was to use the money for the benefit of the participants of the plan generally. While the case is different in that it involved an ongoing trust, the following passage from the Court of Appeal’s decision is apposite:

The expectations of a participant would have been that he or she paid a premium and for that premium received a one-year policy of term life or disability insurance, or both. In addition, the participating dentists would know that the premiums for the next two years would be the same. It was non-participating insurance; no dividends were payable. It is not probable that participating dentists expected anything more than they received, that is, protection against the insured risk.

While in the aggregate, large surplus sums were involved, in the case of an individual a relatively small amount was involved. That amount would be further reduced by the cost of calculating who got what, and by the cost of distribution.

The participating agreements provided that the surpluses should be used: “for the benefit of such Plan and the Participants therein through the reduction of payments, improvement or addition of benefits, the payment of dividends or otherwise.”

The participation agreements speak of bestowing benefits through premium reductions, the improvement or addition of benefits and the paying dividends. The use of the word “reduction” rather than “rebates,” looks toward the future rather than the past. So to would benefit improvements or additions. Neither of these approaches is consistent with there being an obligation to prorate surpluses among those dentists whose premiums, paid in the preceding year, created the surpluses. Nor is there anything in the language of the specific suggestions of s. 6 of the participating agreements to limit clearly the beneficiaries to those whose premiums “generated” the surpluses. In my view, therefore, “the Participants” means the participants from time to time and not the participants at any given moment.

Accordingly, looking at the major purpose of the organization, I would interpret the participation agreement as requiring the use of any surplus to be confined to the Plan in which it was generated. I would also confine it to the participants in the Plan generally, not just to those whose premiums generated the particular surplus, and I see no reason why the benefit need be “pro-rated” as long as it is for the benefit, directly or indirectly, of the participants of the individual Plan which generated the surplus.

[ 23 ] The Board, in any event, submits that in light of the discretion it was granted pursuant to the Judgment, the test on this motion is not whether the employees could come up with another distribution methodology, or even whether the court might prefer that alternative methodology. Instead, the Board relies on the proposition that the proposed distribution methodology should be approved by the court unless the court concludes that it was developed in bad faith or was completely unreasonable. Neither circumstance, the Board submits, is present in this case.

The Objector’s Position

[ 24 ] The objector argues that the proposal made by the Board ought not to be accepted by the court because:

(1) the decision to exclude the former nonunion board employees is unreasonable as they are a known category of contributing beneficiaries to the Trust;

(2) irrelevant considerations have influenced the decision to exclude the former non-union Board employees, namely, the allocation methodology wet out in the Amendment and a data deficiency, which can be remedied; and

(3) a prior decision by the Board (its agreement to the Amendment and the 2010 Judgment) respecting the original allocation of surplus proceeds predated any decision by the Board to exclude the former employees such that they ought not to be bound or prejudiced by it.

[ 25 ] The objections are advanced principally on the basis that the proposed distribution methodology completely excludes former non-union employees of the Board who left its employ, and therefore enrollment in Trust policies, prior to June 30, 2006, even though such employees made contributions to and were the beneficiaries of the Trust’s group insurance policies at one time.

[ 26 ] The excluded group consists of more than 300 former employees of the Board, all of whom were beneficiaries of the Trust having made contributions to the Trust throughout their working lives.

[ 27 ] The objector focused most of her argument on the aspect of the decision of the Board to exclude former employees which related to deficiencies in employee record-keeping.

[ 28 ] She argues that the nature of the alleged deficiency in human resource records has not been sufficiently explained or justified. Insufficient effort was made, she says, to contact employee organizations and administrators of the applicable employee pension plans in order to ascertain whether supplementary employee data could be obtained from those sources.

[ 29 ] The objector, in concert with other former members, has presented a means by which a deficiency in employee record-keeping could be remedied to a significant degree. She says that members of the excluded group have commenced efforts to compile a list of former employees and their contact information in order to facilitate better information about their participation in and contributions to the Trust policies.

[ 30 ] In addition, the objector has raised a concern about the possible precedential value of this proposed distribution methodology for any future distribution of the demutualization funds. She argues as well that there is an overlap between the excluded beneficiary group for the purposes of this motion and those non-unionized employees who are eligible to participate in the distribution of the demutualization funds. She argues that both distribution processes would benefit from the identification of as many of the former employees as possible.

[ 31 ] Further, the objector argues that the Board coordinated the original division of surplus proceeds without contemplating the interests of the former employees. In her factum, however, she admits that: “While the excluded beneficiaries could be critical of that process, the time has passed for any such criticism and the funds have already been divided and distributions made to other stakeholder groups.”

[ 32 ] Nevertheless, the objector argues that the former employees did not have any real opportunity to understand and/or object to the original division of the surplus funds. There was, she says, no indication in the record before the court on the original hearing to approve the terms and conditions of the Trust wind up that the division of surplus between the Board and the unions would be adverse to the interests of the former employees.

[ 33 ] She argues that the former employees could not have been required to object to the original surplus division before the Board had engaged in its decision-making with respect to the allocation of the Board share between the Permitted Uses. It therefore follows, she says, that there could not have been any notice to the former employees indicating that they would be excluded from the ultimate distribution.

[ 34 ] The objector submits that the Board’s discretion cannot be exercised on the basis of unreasonable or irrelevant considerations. Under the circumstances, she argues, the original division of surplus proceeds must be regarded as irrelevant to the decision to exclude the former employees from participation in the proposed distribution. Further, she says, it would be unreasonable to exclude the former non-union employees on that basis.

[ 35 ] The objector argues that Dolansky is inapplicable to this matter because the outcome of that case was largely determined on the basis of the interpretation of specific contractual language governing the treatment of surplus in the insurance plan while it was ongoing and because the underlying policy of insurance was non-participating in nature. It was these factors which led the court to conclude that the beneficiaries of that policy “could expect little more than insurance coverage in exchange for their insurance premiums.”

[ 36 ] In contrast, the objector submits this matter is distinguishable because the Trust has been wound up, the Permitted Uses have already been defined by the court and are consistent with the request of the former employees, and the insurance policies in issue here were participating in the sense that they were offered by a mutual company and the beneficiaries are entitled to demutualization benefits.

Analysis

[ 37 ] I accept the proposition that the Board was not obliged, in the exercise of its permitted discretion under the Permitted Uses, to propose any distribution to members at all.

[ 38 ] I also accept the proposition, however, that having chosen to allocate some portion of the Board share to members, the allocation methodology must be reasonable and not based on irrelevant considerations.

[ 39 ] In the extreme, for example, a requirement that to qualify, a member had to pass a complex mathematical skill testing question, would be unreasonable and constitute an exercise of discretion based on an irrelevant consideration.

The Exclusion of Former Employees as at June 30, 2006

[ 40 ] While the issue of information deficiency was clearly a factor in the Board’s proposed distribution methodology, I do not agree with the objector that it was the primary basis for developing the methodology based on enrollment as of June 30, 2006.

[ 41 ] In my view, the primary basis for the Board's decision to restrict the distribution to employees enrolled in policies as of June 30, 2006 was that this threshold constituted the very basis upon which the Board received its $1,659,845.99 share on the windup of the Trust.

[ 42 ] The objector argues that this was an irrelevant consideration. The objector also argues that it is unfair to the former employees to use the June 30, 2006 cut off because they could not have known, in 2009, prior to the original hearing, that the distribution of the Board’s share would be done in a matter potentially adverse to them.

[ 43 ] The basis for the claim that using June 30, 2006 cut off is irrelevant is somewhat obscure. As I understand it, the Objector argues that it is arbitrary and unfair because the retirees were contributors and ought to share in the distribution of surplus and because they could not have known that they would be excluded at the time of the original application in January 2010.

[ 44 ] In my view, the use of the June 30, 2006 cut off is not irrelevant, arbitrary or unfair.

[ 45 ] As pointed out by the Board in its oral argument, the basis for the allocation was laid down in the Amendment, paragraph 14, and approved by the court in the 2010 Judgment. If there had been no current enrollments of non-union staff on June 30, 2006, the allocation to the Board of Trust surplus would have been zero. The only reason the Board was allocated any surplus is because of the number of current enrollments it had on June 30, 2006.

[ 46 ] Notice of that issue was widely circulated in the original notice program for the first hearing. The Amendment itself was available on the Board’s website. The objector concedes that the former employee group could have objected to that process, but that the time has passed for any such criticism because the funds have already been divided and distributions already made to other stakeholder groups.

[ 47 ] I do not think it is correct to say that the former employees could not have known that they might be excluded from any ultimate distribution of the Board share. First, it takes no leap in logic to conclude that, if the Board only received surplus in proportion to the level of current enrollments, the distribution of the funds might also reflect the same principle. Secondly, the Judgment allows the Board to use the funds for any one of a combination of five Permitted Uses. Only one of those Permitted Uses involves distribution to individual members. The objector concedes that the Board had the discretion, for example, to allocate all of the Board share to the payment of benefit premiums and to make no distribution to employees, former or otherwise, at all.

[ 48 ] In the circumstances, it cannot be said that the proposed scheme of distribution defeats any reasonable expectations of the former employee group. The fact that the objector group contributed to the plans, while not an irrelevant consideration, cannot give rise to a claim so superior that it renders the Board’s proposed distribution methodology unreasonable. In this case, the plans themselves always contemplated the possibility of surplus. The Board and the unions were the beneficial owners of any surplus. The plans always provided for the distribution of surplus to the Board and the unions, not to individual members.

[ 49 ] Further, calculation of entitlements based on actual contributory experience would also present vast calculation and informational problems. Many complex factual questions would arise. How much, for example, did a given employee contribute? What was their claims experience? Did their individual claims exceed their contributions, resulting in a net deficit? Or did their contributions exceed their claims, resulting in a net surplus? Or, during the years of their particular participation, was the Trust in a deficit position or in surplus? Answering such questions would inevitably be a complex, time-consuming and costly process.

[ 50 ] Dolansky stands for the proposition that the payment of premiums does not give rise to a personal right to the return of surplus in proportion to contributions, absent clear language to the contrary. In Dolansky , the Court also recognized the very significant cost of trying to calculate precise allocations based on actual contributions and claims experience.

[ 51 ] The objector sought to distinguish Dolansky on the basis that the underlying policy of insurance was non-participating whereas here, at least until 1999, the group insurance policy was participating.

[ 52 ] I do not think that is a material ground of distinction. In effect, since 1999, the group policies under the Trust have been non-participating. Whatever value pre-1999 contributions may have added to the mutual company would have been reflected in the share price, and this was realized when the insurance trustees sold the shares and segregated the demutualization funds for future distribution. How those funds will be distributed is not before me.

[ 53 ] Any rights to “participation” were, therefore, crystallized on the demutualization and are embedded in the demutualization funds. These funds are being held separate and apart by the trustees pending future distribution.

[ 54 ] I see no basis for distinguishing Dolansky from this case in relation to the surplus. There has already been a finding, not appealed, that the policies always contemplated return of surplus to the Board and unions, not to individual members. Beneficiaries in Trust group policies as such, therefore, as in Dolansky , could expect little more than the insurance coverage in exchange for their premiums, other than the quite separate demutualization issue.

[ 55 ] For all these reasons the Board, in my view, was entitled in the exercise of its discretion to decline to adopt employee contributions as the basis for its proposed distribution methodology and to approach the allocation problem on essentially the same basis as was used to determine the Board share upon the Trust wind up on June 30, 2006. i.e., those members who were enrolled as of June 30, 2010

[ 56 ] There is no unfairness in this approach. Funds were not allocated to the Board on the wind up on the basis of former employees, only enrolled employees. No challenge was ever taken to the original, court-approved allocation methodology.

[ 57 ] Since no funds were allocated to the Board on the basis of former employees, it is neither unreasonable, nor unfair that no funds be allocated to former employees in the proposed distributions methodology.

Information Deficiencies

[ 58 ] To the extent information deficiencies did form part of the considerations that led to the Board’s proposed distribution methodology, in my view it was not irrelevant or improper for the Board to consider them. I say this primarily because of cost/benefit considerations. The evidence before me was that the legal and accounting costs to date of developing the Board’s proposed distribution methodology already exceed $160,000 or 10% of the Board share.

[ 59 ] The objector’s approach would clearly result in more delay and more cost to the distribution process.

[ 60 ] In Dolansky , the Court of Appeal observed that while the global numbers are material, on an individual by individual basis, only small amounts are involved. As in this case, the amount of the Board share of surplus “would be further reduced by the cost of calculating who got what, and by the cost of distribution.”

[ 61 ] In my view, it was entirely appropriate for the Board to weigh, as one consideration, the costs and delays associated with more precise and possibly difficult formulae for the proposed distribution methodology. The Board’s approach does not need to be perfect, merely reasonable. I find the Board’s approach is reasonable.

[ 62 ] For these reasons, the motion is allowed. Order to issue in the form attached.

Penny J.

Date: July 5, 2012