Robin Boys et al v. Shoppers Drug Mart Inc., 2013 ONSC 7026
CITATION: Robin Boys et al v. Shoppers Drug Mart Inc., 2013 ONSC 7026
COURT FILE NO.: CV-13-1009900CL
DATE: 20131115
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
BETWEEN:
ROBIN BOYS and GERALD GROSKOPF
Applicants
– and –
SHOPPERS DRUG MART INC.
Respondent
COUNSEL:
Clio Godkewitsch and Demetrios Yiokaris, for the applicants
Alan B. Merskey and John M. Picone, for the respondents
HEARD: November 12, 2013
Newbould J.
[1] The applicants move for declarations regarding their pension rights under a supplemental pension plan for executives of Shoppers and for payment of amounts said to be due to them.
[2] Shoppers contends that their action is barred by the Limitations Act 2002. To understand the argument requires an understanding of the history of the matter.
[3] The applicants were employees for a number of years of Shoppers Drug Mart Limited which was a division of Imasco Ltd. Shoppers was incorporated on February 4, 2000 to purchase the Shoppers Drug Mart business from Imasco. As a result of this purchase, the employment of some Imasco employees, including Mr. Boys and Mr. Groskopf, was terminated on February 3, 2000. Their employment was transferred to Shoppers on February 4, 2000, and they became participants in the Shoppers registered pension plan for executives (the “regular pension plan”) and a non-registered supplementary plan. They also continued to have the benefits of the registered Imasco pension plan.
[4] Mr. Boys was terminated without cause by Shoppers one week after being employed on February 11, 2013. Mr. Groskopf was terminated without cause by Shoppers on October 26, 2004. At some point after their termination, each received a termination statement and option form from Shoppers dealing with both their regular pension and the supplementary pension.
[5] As Mr. Boys had been employed by Shoppers for only 11 days, his entitlements under his regular pension were small, namely a monthly accrued benefit of $3.12 payable on May 31, 2019. He was not offered any option to take a deferred pension of that amount as it was deemed by Shoppers to be a “small pension” under the plan and he had to take it out in a commuted lump sum of $110.89. He took this out under protest. His entitlement under the supplementary plan was either a deferred pension of $868.90 payable from May 31, 2019 or a commuted payout of $30,685.13. He elected to take the deferred pension.
[6] Mr. Groskopf received a termination statement in October, 2004 which gave him the option of taking his regular pension either as monthly deferred pensions starting at age 65 or being paid the commuted value of each as a lump sum. On November 3, 2005 he elected to take it as a lump sum and was eventually paid this amount. Under the termination statement, as he had elected to take his regular pension as a lump sum, his entitlement under the Shoppers’ supplementary plan was to be paid a commuted lump sum as well, being $53,262 plus interest. He was not paid this amount due to regulatory issues involving Shoppers and the Financial Services Commission of Ontario.
[7] Because several members of the Shoppers regular pension plan were terminated between 2000 and 2004, the Superintendent of Financial Services of the Financial Services Commission of Ontario issued a Notice of Proposal on June 8, 2005 proposing to order a partial wind up of the Shoppers regular plan under paragraph 69(1)(d) of the PBA. Shoppers responded by requesting a hearing before the Financial Services Tribunal.
[8] Shoppers subsequently settled these proceedings with the Superintendent. Pursuant to the terms of the settlement, Shoppers declared a partial wind up of the Shoppers regular plan, effective as at April 22, 2005, for members who ceased to be employed by Shoppers between January 1, 2000 and October 26, 2004. This included Mr. Boys and Mr. Groskopf.
[9] As a result of the partial wind up, the benefits under the Shoppers’ supplementary plan for both Mr. Boys and Mr. Groskopf were affected. This is because under the formula for calculating benefits under the supplementary plan, there was to be a deduction for the total pension benefits received by each under the regular plan and those benefits under the regular plan increased because of the partial wind up and the resulting “grow-in” benefits.
[10] Under section 74 of the Pension Benefits Act, members included in the partial wind up of a registered pension plan, such as the Shoppers regular plan, are entitled to receive grow-in benefits if they satisfy certain criteria for eligibility.
[11] Grow-in benefits serve to increase basic pension entitlements earned up to the date of wind up because certain employees affected by a wind up would not otherwise become eligible for any benefit enhancements that depend upon age or length of service.
[12] For instance, when a member of a registered pension plan is terminated and his or her age plus years of service is equal to at least fifty-five, grow-in benefits require his or her pension or deferred pension entitlement to be calculated as at the date on which the member would have been entitled to an enhanced or unreduced pension under the terms of the registered pension plan, as if his or her employment had continued to that date. That was the case for both Mr. Boys and Mr. Groskopf.
[13] On November 6, 2009 Shoppers sent to each of Mr. Boys and Mr. Groskopf an option statement which set out the amounts said by Shoppers to have resulted from the partial wind up and grow-in benefits. These indicated that there was no payment owing under the supplementary plan to either of them. Both challenge this conclusion in this application. For the purposes of the limitations argument, however, Shoppers takes the position that these option statements made clear that Shoppers was not going to pay any supplemental benefits and that Mr. Boys and Mr. Groskopf had only two years from that date to commence this application, which they failed to do. The application was only commenced on November 14, 2012.
[14] It will be necessary to review what each of Mr. Boys and Mr. Groskopf did following the receipt of these option statements because of the argument made on their behalf. In a nutshell, they contend that the payments of supplementary benefits under the supplementary plan were to be paid contemporaneously with the payment of benefits under the regular plan, either monthly if that was the elected method under the regular plan or in a lump sum if that was elected under the regular plan. They contend that the payments were not to be made until long after the option notices, by which time it was less than two years before this application was commenced, and that until then there were no damages and thus no cause of action. They contend that the option notices constituted an anticipatory breach that did not start the running of a limitation period.
Analysis
[15] The general limitation period for actions in Ontario is set out in section 4 of the Limitations Act:
- Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
[16] The “day on which the claim was discovered” is further set out by section 5:
- (1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. [emphasis added]
[17] The applicants say that the damage did not occur until the supplemental payments were to be made, which depended on when the regular pension payments were to be made, which was governed by section 3.1 of the supplementary plan, as follows:
3.1 Payment. An Employer shall ensure payment of its Participant’s full Supplemental Pension Benefits to the Participant in lawful currency of Canada as follows, provided the Participant is vested in accordance with section 3.5:
(a) (i) if the Participant receives periodic payments under the Registered Plan, then the payment of his or her Supplemental Pension Benefit shall commence on the date upon which periodic payment to the Participant commence under the Registered Plan and shall thereafter be made concurrently with the subsequent periodic payments under the Registered Plan; or
(ii) if the Participant’s pension benefit under the Executive Registered Plan is paid in a lump sum or is transferred rather than being paid in periodic payments, then the payment of his or her Supplemental Pension Benefit shall be in a lump sum payment equal to the Commuted Value of the Supplemental Pension Benefit, and such lump sum payment, which must be made within 60 days following the Participant’s termination of employment, shall be a total discharge of the Supplemental Pension Benefit.
[18] Regarding Mr. Boys, the option statement he received from Shoppers dated November 6, 2009 stated that under the regular pension plan, his entitlement as a result of the partial wind up increased from $131 to $47,682 and his entitlement under the supplementary plan decreased from $36,637 to $0. He was not provided with an option under the regular plan of choosing a deferred monthly pension or receiving a commuted cash payout. The option statement stated that he was entitled only to a commuted value for the increased value of his regular pension which with interest totaled $89,087, to be taken in cash or transferred to an RRSP.
[19] Mr. Boys took the position that he should be entitled to defer this increased regular pension entitlement and take it as a monthly pension. Shoppers disagreed. Mr. Boys fought this at the Financial Services Tribunal and succeeded. By decision of December 7, 2011, it was decided that he was entitled to receive his increased pension under the regular pension plan as an annuity and was not forced to take it as a commuted lump sum. He began to receive this monthly pension on July 1, 2012, retroactive to June 2009.
[20] Under section 3.1 of the supplementary plan, any entitlement to a supplementary pension is to be made contemporaneously with the payments under the regular pension plan. Thus, if Mr. Boys is correct in his interpretation of the supplementary plan, his supplemental payments were to start on July 1, 2012, approximately 5 months prior to this application being commenced in November 2012. Mr. Boys’ contention is that until that date of July 1, 2012, there were no damages caused by the failure of Shoppers to pay a supplemental pension because that is the date the supplemental payments were to start.
[21] Regarding Mr. Groskopf, he had elected when he was terminated to take his regular pension entitlement as a lump sum rather than as a deferred annuity. After the partial wind up, when he realized he was entitled to a larger regular pension because of the grow-in benefits, he requested that the increase in his regular pension be paid to him as a deferred pension rather than being paid to him in a commuted lump sum. He went to the Financial Services Tribunal which held that he could take the increase as a deferred pension but only if CRA approved it. CRA at first approved it but then changed its mind and on April 19, 2010 CRA advised Shoppers’ legal representative that a deferred pension for the increased amount of Mr. Boys’ regular pension was not permissible.
[22] The option statement of November 6, 2009 given by Shoppers to Mr. Groskopf was during the time that the issue of whether he was entitled to take the increased benefits of his regular pension was before the Tribunal and then the CRA. The option statement therefor was couched. While it stated that the supplementary benefit to Mr. Groskopf was $0, it stated:
Until regulatory guidance is received, we will not settle your benefits. Therefore, the forms provided herein are for your information purposes only and do not need to be returned to us at this time.
Shoppers Drug Mart Inc. has written to Canada Revenue Agency to request permission to provide you with the monthly pension option with respect to your grow-in benefits. When a response from the regulator has been received, you will be notified by us and details regarding alternative options (if any) and your final option forms will be provided to you.
[23] Although CRA advised Shoppers’ legal representative on April 19, 2009 of its decision, there is no record of any notification being given to Mr. Groskopf and no record of any final option forms being given to him as to how he wanted the payment to be made, such as in cash or to an RRSP. Thus on the record, there was no final option notice given to Mr. Groskopf and no date set for the commuted lump sum of his regular pension to be paid to him resulting from the partial wind up, and Mr. Groskopf has not received payment of it. It follows from section 3.1 of the supplementary plan that if Mr. Groskopf is entitled to a supplemental payment following the partial wind up, as he claims, the time for payment of that amount has not yet been set.
[24] A claim in law for damages requires that damage has occurred. Section 5 of the Limitations Act, 2002 as set out above provides that a claim is first discovered when the person claiming first knew the loss or damage had occurred. The damage would occur when the supplementary pension payment, assuming one was to be paid, was not paid. Because of section 3.1 of the supplementary plan, that was when the increased amount of the regular pension due to the partial wind up began to be paid. For Mr. Boys, that was within two years of the commencement of this action. For Mr. Groskopf, that date has not arrived. However, I see no reason why Mr. Groskopf cannot sue for declaratory relief and claim the payment should be made.
[25] Section 5(2) provides that a person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. I do not see that this provision helps Shoppers. The act or omission on which the claim is based is the failure to pay the supplementary pension benefits. The act or omission is not the option notice given by Shoppers to Mr. Boys and Mr. Groskopf in which Shoppers said it was not going to pay anything for those benefits. At that time the payments were not due. The effect of the notices was that Shoppers was saying that when any such claimed payment becomes due, we do not intend to pay it.
[26] Both sides refer to cases dealing with anticipatory breach of contract and the effect on limitations legislation. I do not think it necessary to deal with them in light of my analysis of the time when damage occurred. However, I see a fundamental flaw in the argument of Shoppers.
[27] Under normal contract law, if there has been an anticipatory breach or repudiation of contract, the wronged party can elect to accept the breach, terminate the contract and sue for damages. Alternatively, the wronged party can elect to continue with the contract, press for performance and bring the action only when the promised performance fails to materialize. See S.M. Waddams, The Law of Contracts, 6th ed (Canada Law Book) at ¶ 621. If Shoppers were right in its contention that the plaintiffs had to sue when the option notices were given in November, 2009, it would run contrary to this settled contract law.
[28] Shoppers relies on the case of Huang v. Telus Corp. Pension Plan (Trustees of ) (2005), 2005 ABQB 40, 41 Alta. L.R. (4th) 107 a decision of Moreau J. In that case, prior to their termination, employees had been told that certain bonuses would not be included in their pensionable earnings. On their termination, they were given estimates of their pensions that did not include these bonuses. It was held that their cause of action crystallized on the date of their termination and that their action was statute barred for failure to commence it within two years of their termination. The Alberta legislation is essentially the same as the Ontario legislation on this point. What is not clear from the case is whether the pension payments were to commence on the date of termination. I assume they were not because on that day, they were given estimates of their pensions. If the payments were not yet due, then I respectfully disagree with the decision. I do not see how the cause of action crystallized before the pension payments were due and not made, as there was no injury that had yet occurred.
[29] I agree with the decision of Jewers J. in Dinney v. Great-West Life et al 2007 MBQB 120; aff’d 2009 MBCA 29; leave to appeal to SCC refused Dec. 17, 2009 relied on by the plaintiffs. That case involved a claim for failure of the defendant to pay appropriately indexed pensions to the plaintiffs. It was claimed by the defendant that the breach occurred more than six years before the action was commenced, in breach of the Manitoba limitations legislation, when the decision was made by the defendant to calculate the pensions in the way challenged by the plaintiffs. It was claimed by the defendant that the alleged breach was the date of the decision, not the later date when the pensions were to be paid. In holding that the action was not statute barred, Jewers J. stated :
15…. I appreciate that disability benefits are not pension benefits but in my view the principle is the same, namely that the payments are periodical and no cause of action for the enforcement of the payments can arise until they fall due and are wrongfully refused. That goes back to what was said by Osler J. (supra) that the date upon which a cause of action arises is the date upon which every element of that cause first exists and that there must be in existence entitlement to the benefit and refusal or failure by the defendant to pay it. In the case of the pension benefits, there is certainly an eligibility for the pension which arises upon retirement and continues for life but there is no entitlement to the actual receipt of the pension benefits until the appointed due dates have come and gone and they have been wrongfully withheld by the company.
[30] The reference to Osler J. was to the case of Zigouras v. Royal Insurance Co. of Canada (1987), 1987 4147 (ON SC), 46 D.L.R. (4th) 365 in which Osler J. stated:
It is a proposition which, I think, requires no authority that the date upon which a cause of action arises is the date upon which every element of that cause first exists. With respect to any given week, therefore, there must be in existence entitlement to the benefit and refusal or failure by the defendant to pay it.
[31] See also La Prairie v. Royal Trust Corp. of Canada, 2005 CarswellOnt 3281 in which it was held that notice of a change in plan was an anticipatory breach and the actual breach giving rise to the cause of action was a later date when the payment in question for dental work was due and refused.
Conclusion
[32] In my opinion, the claims of the plaintiffs are not statute barred by reason of the Limitations Act, 2002. The remainder of the application is to be scheduled for argument.
Newbould J.
Released: November 15, 2013
CITATION: Robin Boys et al v. Shoppers Drug Mart Inc., 2013 ONSC 7026
COURT FILE NO.: CV-13-1009900CL
DATE: 20131115
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
BETWEEN:
ROBIN BOYS and GERALD GROSKOPF
Applicants
– and –
SHOPPERS DRUG MART INC.
Respondent
REASONS FOR JUDGMENT
Newbould J.
Released: November 15, 2013