ONTARIO
SUPERIOR COURT OF JUSTICE
COMERCIAL LIST
COURT FILE NO.: CV-11-9469-00CL
DATE: 20120823
BETWEEN:
GREGORY SHAW
Applicant
- and -
HEALTHCARE OF ONTARIO PENSION PLAN(“HOOPP”), HELEN FETTERLY, DAN ANDERSON, ADRIAN FOSTER, R. WAYNE GLADSTONE, MARLENE PUFFER, PATTY ROUT, DEEPAK SHUKLA, JOYCE BAILEY, RONALD MEREDITH-JONES, LESLEY BELL, JON CLARK, JULIE GIRALDI, MARTIN PARKER, LOUIS RODRIGUES, JAMES SANDERS, BRYCE WALKER, KEVIN SMITH, MARLENE IZZARD in their capacity as Trustees of the Healthcare of Ontario Pension Plan, and ONTARIO HOSPITAL ASSOCIATION
Respondents
Andrew J. Hatnay and Demetrios Yiokaris, for the Applicant
Peter H. Griffin and Emily Graham, for the Respondents
Newbould J.
E N D O R S E M E N T
[ 1 ] On July 2, 2012, I dismissed an application by Mr. Shaw for a declaration that certain bonuses under his employment agreement with Ontario Hospital Association (OHA) which are described as “retention bonus” constitute pensionable earnings under the Healthcare of Ontario Pension Plan (HOOPP) for the purpose of calculating his pension benefits under the Plan.
[ 2 ] Both Mr. Shaw and HOOPP seek costs. I will deal first with Mr. Shaw’s claim that his costs be paid from the pension fund of HOOPP.
[ 3 ] The issue of costs being paid from a pension fund has been dealt with in several cases in the last few years. In Nolan v. Ontario (Superintendent of Financial Services) 2007 ONCA 605 (C.A.) Gillese J.A. reviewed the authorities, including a statement of Cullity J. in Sutherland v. Hudson's Bay Co. Limited, [2006] O.J. No. 2009 from which she said guidance could be taken, and Re Buckton , [1907] 2 Ch. 406 . Gillese J.A. favoured the approach articulated by Cullity J. She stated:
- In determining whether to order the Committee's costs from the Fund, guidance can be taken from the approach followed in trusts litigation. That approach was well-summarised by Cullity J. in Sutherland v. Hudson's Bay Co. Ltd., [2006] O.J. No. 2009 (S.C.J.) at para. 11 :
Orders for the payment of costs out of trust funds are most commonly made in either of two cases. One is where the rights of the unsuccessful parties to funds held in trust are not clearly and unambiguously dealt with in the terms of the trust instrument. In such cases, the order is sometimes justified by describing the problem as one created by the testator or settler who transferred the funds to the trust. The other case is where the claim of the unsuccessful party may reasonably be considered to have been advanced for the benefit of all of the persons beneficially interested in the trust fund.
8 For a number of reasons, I favour the approach articulated by Cullity J. (which I will refer to as the "pension trust approach"). I do not find the categories set out in Buckton to be particularly helpful in the pension trust context. There is significant overlap in the first two categories in Buckton . Both categories are based on the same public policy consideration, namely, that it is desirable that parties have access to the courts to ensure that trusts are properly administered. The only difference between the first two Buckton categories is in who brings the matter to court. In category one, the proceedings are brought by the trustee whereas in category two, they are brought by the beneficiaries.
9 Furthermore, the third category in Buckton is problematic when dealing with pension trusts. To determine whether a matter falls within the third Buckton category, the court must decide whether the claims that have been advanced are adverse to other beneficiaries. While that determination is usefully made when considering traditional trusts, it is often irrelevant in pension trusts where there are numerous categories of beneficiaries, many with conflicting interests. For example, in a merged plan, one group of beneficiaries may claim full surplus entitlement based on historical plan language. Their claim is adverse to those of other classes of beneficiaries, such as those made by new employees or by employees who have been "imported" from the merging plan. But, if an issue arises as to the proper distribution of surplus, costs are properly payable from the trust fund as public policy dictates that the issue of entitlement be resolved before the trust fund is distributed. The fact that the interests of one group of beneficiaries is adverse to those of other groups is irrelevant.
[ 4 ] In the Supreme Court of Canada, in Nolan v. Kerry (Canada) Inc., 2009 SCC 39 , [2009] 2 S.C.R. 678, Rothstein J. reviewed the analysis by Gillese J.A. and her reference to the two lines of authority. He then stated:
I think these cases helpfully define the circumstances in which costs should be awarded from a pension trust fund. The rules in both Buckton and Sutherland (2006) would allow a court to award its costs out of the fund where there is a legitimate uncertainty as to how to properly administer the trust and where the dispute is not adversarial.
[ 5 ] In Burke v. Governor and Co. of Adventurers of England Trading into Hudson’s Bay 2008 ONCA 690 , Gillese J.A. referred to her prior decision in Kerry and stated:
10 In Kerry (Canada) Inc. v. Ontario (Superintendent of Financial Services) (2007), 2007 ONCA 605 , 282 D.L.R. (4th) 625, at paras. 10-12 , this court explained that public policy dictates that costs are to be made payable from a pension fund in two categories of cases. Those two categories are where the proceedings are brought: (1) to ensure the due administration of the pension trust fund; or (2) for the benefit of all of the beneficiaries. Apart from those two categories of cases, the usual costs rules of civil litigation should apply.
[ 6 ] I do not read the statement of Rothstein J. in Nolan v. Kerry (Canada) Inc . as limiting the statement of Cullity J. in Sutherland that there are two kinds of cases in which costs can be ordered to be paid from a trust fund. Those two types of cases were also referred to by Gillese J.A. in Burke , being cases in which proceedings are brought (i) to ensure the due administration of a pension trust fund or (ii) for the benefit of all of the beneficiaries. In particular, I do not read the authorities as requiring that an application must have been brought to benefit all beneficiaries in order for costs to be paid from the trust fund. Otherwise, the statement of Cullity J. in Sutherland that there are two kinds of cases would no longer be applicable, and I do not read Rothstein J. as purporting to so limit the statement of Cullity J. Rather, after quoting the statement of Cullity J., Rothstein J. stated that it helpfully defined the circumstances in which costs should be awarded from a pension trust fund.
[ 7 ] In the circumstances, I do not think that just because the application by Mr. Shaw was not brought for the benefit of all of the beneficiaries of the HOOPP trust fund, that in itself prevents his costs from being paid from the trust fund. However, if what is sought is adverse to other beneficiaries, that would appear to make a difference.
[ 8 ] In Nolan v. Ontario (Superintendent of Financial Services) , the application was brought by a committee on behalf of certain pension members to require the employer to make payments into the pension fund for their benefit as a result of the employer paying expenses from the fund and taking contribution holidays. Gillese J.A. held that while the interpretation of the pension and trust documents was essential to resolving the case, the litigation was not directed to having the courts determine the rights of beneficiaries but rather was adversarial in nature. She stated:
This litigation was not about beneficiaries' rights; it was about the propriety of actions taken by those responsible for the administration of the Fund and its aim was to force the employer to make payments into the Fund to the benefit of a limited group. In my view, the claims advanced were adversarial in nature; they were not directed at the interpretation of documents to ascertain beneficiaries' rights.
[ 9 ] While the statement of Cullity J. in Sutherland v. Hudson's Bay Co. Limited made no mention of refusing costs if the proceedings were adversarial in nature, a concept from Buckton, Gillese J. adopted that notion in concluding that the first kind of case referred to by Cullity J. as authorizing costs was not applicable. This notion of adversity was adopted by Rothstein J. in Nolan v. Kerry (Canada) Inc .
[ 10 ] What exactly is meant by adversity in the case law is not easily discerned. I do not think that it simply means that there was hotly contested litigation. Does it mean that the claim asserted is adverse to other plan beneficiaries? That would appear to be the direction of Nolan . In Nolan v. Ontario (Superintendent of Financial Services) , Gillese J.A. stated at the beginning of paragraph 9 of her reasons that that was the issue, and included in her reasons for determining that the claim was adverse that it was brought to force payment to a limited group.
[ 11 ] I do not think that the claim of Mr. Shaw can be said to be a claim concerned with the proper ongoing administration of the trust. Rather it was a claim by him to be paid a pension amount for himself adverse to the other beneficiaries of the fund. In that respect it was similar to Nolan. It is also similar to another recent case of McCann v. Canada Mortgage and Housing Corp. 2012 ONCA 243 .
[ 12 ] In the circumstances, I am not prepared to make an order that Mr. Shaw's costs be paid from the HOOPP trust.
[ 13 ] Thus, the usual cost rules in litigation apply to the claims for costs. As Mr. Shaw was unsuccessful, the normal rule is that he should not be entitled to costs and HOOPP should be entitled to its costs. However, there are exceptions, and a successful party can in appropriate circumstances be denied its costs.
[ 14 ] In this case, I would exercise my discretion and order that no costs be paid by Mr. Shaw to HOOPP. While I held that the retention bonuses did not constitute pensionable earnings under the plan, it is fair to say that the plan terms were not clear, and the manual used by HOOPP did not make things clear either. The matter for decision was to a large extent a matter of first impression, which has been held to be a reason not to award costs against an unsuccessful party. See Metropolitan Toronto Civic Employees' Union v. Metropolitan Toronto (Municipality) (1998), 1988 4692 (ON SC) , 65 O.R. (2d) 47 (Div. Ct.). Also Mr. Shaw acted in good faith in bringing the application. While I have held that the communications between the OHA and HOOPP did not bear on the issue, Mr. Shaw was not a party to those communications and had some basis in relying on them in making his application.
[ 15 ] In the circumstances, I order that there be no costs paid by either party.
Newbould J.
DATE: August 23, 2012