Superior Court of Justice - Ontario

COURT FILE NO.: CV-21-658274

DATE: 20220210

RE: Brewers Retail Inc., Applicant

– AND –

William Campbell, Georgina Higgs, Diana Humphreys, Thomas Martin Krueger, and David Ramsay, Respondents

– AND –

Financial Services Regulatory Authority of Ontario, Intervenor

BEFORE: Justice E.M. Morgan

COUNSEL: Dana Peebles, Randy Bauslaugh, and Leah Ostler, for the Applicant Ari Kaplan, David Rosenfeld, and Caitlin Leach, for the Respondents Cleo Godkewitsch and Jody Brown, for the Intervenor

HEARD: November 29, 2021

certification and stay MOTIONS

[1] This matter is a class action in respect of a proposed class of employees and former employees of Brewers Retail Inc. (“Brewers”) who have challenged certain aspects of their pension plan. In the procedurally unusual circumstances that will be reviewed below, it arises as an Application by Brewers against a working committee of individuals representing the proposed class of Brewers’ pensioners (the “Committee”). Brewers and the Committee have reached a settlement of the pension dispute and, on consent, seek certification under the Class Proceedings Act, 1992, SO 1992, c. 6 (“CPA”) for settlement purposes.

[2] The Ontario pension regulator, the Financial Services Regulatory Authority of Ontario (“FSRA”), opposes the settlement and seeks to intervene in the matter and have the certification motion stayed. It is FSRA’s position that this matter has broad policy and regulatory implications for pension plans and should be dealt with by the Financial Services Tribunal (“FST”) rather than by this Court.

[3] In considering this Application, I have heard counsel for FSRA make fulsome submissions not only on their client’s request for leave to intervene but on the merits of its stay motion. I am therefore prepared to grant FSRA leave to intervene, and will consider the stay motion together with the application to certify the matter under section 5(1) of the CPA. All of the issues on both of those motions have now been argued in full by counsel for Brewers, the Committee, and FSRA.

I. The pension dispute

[4] Brewers administers the Brewers Retail Inc. Pension Plan for Salaried Employees, Registration No. 0336099 (the “Plan”). The Plan has been in existence for over 75 years as a defined benefit pension plan for salaried employees. Between 1974 and 1988, it was amended to provide annual CPI indexing to the pensions of defined classes of Brewers’ employees who retired and commenced immediate payment of their pensions.

[5] The indexing amendments were each filed by the Applicant with the pension standards regulator for Ontario, and were accepted for registration.

[6] In 2008, Brewers began to amend the Plan to discontinue indexing. As part of that process, in 2013 it filed an amendment with the regulator, then called the Financial Services Commission of Ontario (“FSCO”), to eliminate indexing for future retirees in respect of their service prior to 2009 (“Plan Amendment No.1”). In 2013, certain of BRI’s affected active employees – the Pension Stewardship Steering Committee (the “Committee”) – came together to dispute this amendment to the Plan. With support from FSCO, the Committee eventually expanded its membership to represent all beneficial interests affected by the indexing issues; it retained legal counsel and actuarial expertise to fully assess the impact of the indexing issues on the Plan members.

[7] The current (known) membership of the Plan is approximately 166 active members, 43 deferred vested members, 451 former employees and 124 surviving beneficiaries. Further, there are many other persons, dating back to 1974, who could potentially have been affected by the indexing issues, but who are unknown to the parties. As of the date of this motion, Brewers has no remaining records, to either identify those persons or to define their entitlements. Counsel for Brewers advises that the unknown members could comprise hundreds, or even thousands, of individuals.

[8] For five years, from 2013-2018, Brewers and the Committee worked with each other and with FSCO to identify and resolve all indexing issues in a manner acceptable to the parties and to the regulator. Early in 2014, FSCO met separately with each of Brewers and the Committee to canvass a possible resolution of the issues, including the issue of how to include the unknown Plan members in any settlement. Then, in 2015, Brewers and the Committee reached agreement on the main terms of a comprehensive settlement. This included an agreement to use a class action to request Court approval of a methodology to identify, compensate, and bind all persons potentially affected by the indexing issue relating to the Plan.

[9] In December 2015, the Committee held meetings with potentially affected Plan members to present the proposed settlement. Thereafter, Brewers and the Committee, working with FSCO, continued to refine the draft settlement. In the meantime, in each year from 2016 to 2021 Brewers made ad hoc amendments to the Plan, at a cost of over $1 million, as a good faith implementation of the benefits and benefit improvements contemplated by the draft Settlement Agreement.

[10] Finally, by letter dated December 3, 2018, FSCO agreed that the proposed settlement “resolves all [indexing] issues”. In addition, although FSCO indicated that it did not intend to participate in the Court action, it confirmed that if the Court approved the Settlement Agreement it would exercise its discretion to accept Brewer’s proposed Plan amendments for registration. It specifically stated that it would do so even if it were to conclude that the Plan amendments deviated from the specifications in the Pension Benefits Act, RSO 1990, c. P.8 (“PBA”).

[11] As of June 8, 2019, the Financial Services Regulatory Authority of Ontario (“FSRA”) was put in place as a new agency succeeding FSCO as the pension standards regulator. Counsel for Brewers and for the Committee submit that pursuant to a ministerial Transfer Order, FSRA was bound to uphold existing commitments made by FSCO. On June 13, 2019, FSRA advised, through its legal counsel, that it would confirm FSCO’s position of support for the settlement and its implementation through the class action process.

[12] To Brewer’s and the Committee’s surprise, on October 11, 2019 FSRA issued a letter which resiled from FSCO’s approval and from its own original position. FSRA stated that it would object to the proposed settlement. No rationale for the change was provided by FSRA. At the hearing before me, counsel for FSRA said that FSRA now objects to the contents of the proposed Plan amendments because it deviates from other plans that it regulates and, in its view, from the requirements of the PBA.

[13] Counsel for FSRA also submits that there is no requirement for FSRA to adhere to the commitment by FSCO to support the current settlement. In their view, the Transfer Order did not transfer to FSRA all rights and obligations of FSCO, but rather transferred only “certain rights and obligations” which does not include FSCO’s stated support for the settlement. FSRA’s counsel submits that FSCO’s support was stated as “advice” to Brewers and the Committee that it would not object to the settlement proposal, and that “advice” does not constitute a binding obligation. Counsel for FSRA further submits that the former Superintendent of FSCO who signed the December 3, 2018 letter of support to Brewers does not fetter the discretion of FSRA to change its mind.

[14] In July 2020, Brewers filed Plan Amendment No. 9 that reflects its agreement with the Committee to resolve all of the outstanding issues between them. This amended plan rescinded all of the indexing amendments that Brewers had implemented since 1974 and that FSRA had identified as non-compliant. It replaced those provisions with a series of retroactive amendments for each year, the effect of which was to grant indexing benefits to the Plan participants.

[15] Despite this development, on November 24, 2020 FSRA issued a Notice of Intended Decision (“NOID”) to reject Plan Amendment No. 9. FSRA’s object in issuing the NOID was to make increased payments, including to persons who received pension payments decades ago and for whom there are no current records either identifying them or authenticating their entitlement to payments. The issuance of the NOID in effect represents a rejection by FSRA of the negotiated settlement agreed to by Brewers and the Committee and approved by its predecessor, FSCO.

[16] In response, Brewers has challenged the NOID by requesting a hearing at the Financial Services Tribunal (“FST”), although at the same time it advised FSRA that it intended to proceed with the class action settlement approval as well. Accordingly, on March 5, 2021, Brewers, with the consent and cooperation of the Committee, issued the present Notice of Application seeking certification of the class action in preparation for approval of the settlement. Brewers and the Committee also advised FSRA that they would consent to FSRA’s participation in the Application so that the Court would be apprised of all relevant positions on the matter.

[17] It is the position of both Brewers and the Committee that although the Court and the FST have concurrent jurisdiction over the issue of indexing, only the Court has jurisdiction to deal with all of the issues at play. These include the proposed revision of the Plan and the methodology for identifying and compensating the unknown members of the Plan. Their proposal is that the Court consider the settlement in its totality, and once a judicial decision is made they will return to the FST to seek its approval as well.

[18] It is FSRA’s position, which it argued before me as well as at the FST, that the Court does not have jurisdiction to determine the validity of the Plan amendments. It argued at the FST that the regulatory hearing should proceed first, but the FST instead adjourned its proceeding in order to allow the Court to make the first ruling on the proposed settlement.

II. The criteria for certification

[19] Section 5(1) of the CPA sets out five criteria that must be satisfied to certify the action as a class proceeding. There must be an evidentiary basis for each of these criteria except for the cause of action requirement in section 5(1)(a), which is determined on the basis of the Statement of Claim alone: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 SCR 158, at para 15. Counsel for Brewers points out that when certification is sought on consent, compliance with the section 5(1) criteria is still required by with considerably less strictness than when certification is contested: Loewenthal v. Sirius XM Holdings, Inc., 2021 ONSC 2318, at para 8.

[20] Turning first to the requirement in section 5(1)(a) that there be a cause of action, this is to be determined on the basis of the pleadings alone. The question therefore is similar to that in a pleadings motion under Rule 21 of the Rules of Civil Procedure: here, whether the Notice of Application demonstrates a viable cause of action or whether it is “plain and obvious” that the Applicant, Brewers, cannot succeed because the Notice exhibits a defect in law: Potis Holdings Ltd. v. Law Society of Upper Canada, 2019 ONCA 618, at para 8; Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 SCR 959.

[21] The Notice sets out that there is a dispute over the proper interpretation of the applicable pension legislation in force since 1974. Disputes over statutory interpretation, including in the pension context, are recognized causes of action and are certainly justiciable in the courts: see, e.g. Austin v. Bell Canada, 2020 ONCA 142.

[22] Given that there is a recognizable cause of action in resolving a disputed interpretation of a statute, I have no hesitation in concluding that the certification criterion in section 5(1)(a) of the CPA is satisfied. That said, I come to this conclusion with the understanding that the disputed interpretation will not, in fact, be adjudicated since the parties have reached a compromise settlement and it is the appropriateness of the settlement, and not the underlying issue of interpretation, that will be considered at the next stage of the class proceeding.

[23] Turning to section 5(1)(b), the question is whether there is a class of two or more persons. Under the circumstances, the parties are able to identify the class members who will be bound by the settlement and judgment unless they opt out. The applicable test asks whether the te proposed class is defined by objectively discernable criteria without reference to the merits of the action. It also asks whether the class is defined sufficiently narrowly and is rationally linked to the causes of action and the common issues: Hollick, supra, at para 17.

[24] The parties seek to certify the following class:

All persons who were eligible to receive indexed pensions in respect of membership in the Plan at any time between January 1, 1974 and December 31, 2009 inclusive, or persons claiming through them.

[25] The class definition encompasses all the known and currently unknown persons impacted by the indexing issues addressed in the settlement agreement. As such, it meets the section 5(1)(b) criteria for certification.

[26] Turning to section 5(1)(c), counsel for Brewers, with the consent of the Committee and the individual Respondents, proposes the following common issue:

Is the settlement agreement executed by the parties fair, reasonable, and in the best interests of the Class?

[27] The resolution of this question is common to all members of the Class. It will, at least in some sense, advance each of their interests: Hollick, at para 18.

[28] Having said that, the framing of the single common issue gives rise to a concern. In Sunnybrook Health Sciences Centre v. Lorenz, 2009 40551 (SCJ), the Court was presented with a pension rights claim with a similarly phrased common issue premised on the parties having reached a potential settlement. Justice Cullity indicated that certification, which is what is at issue in the present motion, is necessarily prior to settlement approval. As such, “it is essential that the issues relating to certification – and, in particular, those relating to the disclosure of a cause of action, the definition of the class and the identification of common issues – can be resolved from the contents of the record before the court”: Ibid., at para 19.

[29] It makes no sense to ensure, for example, that the claim raises a cause of action by the Plaintiffs against the Defendants if the common issue makes no reference to that cause of action and the legal issues attendant thereto. Consequently, Justice Cullity reasoned, “The question whether a settlement of a class proceeding is to be approved cannot be a ‘common issue’ within the meaning of section 5 (1) (c) of the CPA”: Ibid., at para 18. That is for the subsequent settlement approval motion once it is determined that the claim itself embodies a genuine lis between the parties and a justiciable claim.

[30] What would save the request for certification is if the underlying issues encompassed by the claim and its cause or causes of action are clearly set out in the Notice of Application. In Sunnybrook Health, as here, the question of interpretation on which the claim was based and on which the parties joined issue (before negotiating their compromise resolution) was whether certain pension plan amendments were valid and enforceable under the contemporaneous governing legislation and otherwise: Ibid., at para 23. In an effort to correct the common issues defect, Justice Cullity granted leave to the applicants to amend their notice of application to reflect the cause of action as he described it.

[31] In the case at bar, the Notice of Application does contain the kind of description of the legal controversy that was lacking in the Sunnybrook Health case. In it, Brewers seeks orders declaring the statutory legitimacy of, and interpreting the scope and effect of, the 1974, 1983, and 2013 amendments to the Plan. The Notice also seeks finality in respect of the longstanding dispute in the form of an Order releasing Brewers from all claims arising out of its interpretation, administration and amendment of the Plan’s Indexing provisions since 1974.

[32] I would therefore add the following issues, which are taken from the Notice of Application, to the one common issue already posed by the parties:

Are the 1974 and 1983 Amendments to the Plan implemented by Brewers granting indexing only to eligible Plan members who retired from active service thereafter with an immediate pension valid?

Did the 2013 Amendment to the Plan by Brewers, which restricted the scope of indexing, comply with the PBA?

Is Brewers released from all claims of any nature arising out of its interpretation, administration and amendment of the Plan’s indexing provisions since 1974, as made to date or which could have been made, personally or on behalf of a class of persons, by any member of the Class who does not opt-out of this proceeding in a valid and timely manner?

[33] Turning to section 5(1)(d), a class action must be the preferable procedure for resolving this matter. As already noted, the parties have reached a tentative settlement. In order to implement that settlement, they have chosen to pursue this Application which is, in effect, a reverse class action. The Federal Court of Appeal has described this type of procedure as a means of providing plaintiffs with an enforceable remedy where it was otherwise impractical to secure the attendance of all potential defendants, while at the same time ensuring that those affected by the outcome of a lawsuit, although absent, were sufficiently protected”: Salna v Voltage Pictures, LLC, 2021 FCA 176, at para 67.

[34] Generally speaking, “a class proceeding is the preferable procedure…[where] certification would serve the primary purposes of the Class Proceedings Act, 1992; namely, access to justice, behavioural modification, and judicial economy”: Waheed v. Pfizer Canada Inc., 2011 ONSC 5057, at para 27. More specifically, under the still relatively new section 5(1.1) of the CPA, a class proceeding is preferable if, “at a minimum”: (a) issues common to the class “predominate” over issues relevant only to individuals; and (b) “it is superior to all reasonably available means” of attaining relief or addressing misconduct. Counsel for Brewers submits that there can be no doubt that a class proceeding is preferable in accomplishing these ends, as it is only the Court in its class proceeding jurisdiction that has the authority to make the Order sought and to benefit both Brewers and all Class members.

[35] The preferable procedure analysis raises in a direct way the issues on the accompanying motion by FSRA for a stay of proceedings. It is counsel for FSRA’s view that certification under the CPA as a prelude to a settlement approval motion is not the preferable procedure, but rather that the regulatory hearing before the FST is preferable for resolving the current dispute. For that reason, FSRA not only objects to certification but seeks a stay of these proceedings.

[36] In pursuing this argument, FSRA’s counsel raise three distinct points: a) the class procedure and proposed settlement will entail contracting out of statutory minimum standards applied to pensions and compromises pension benefits; b) having the Court rather than the FST decide this matter will impact on the process for resolving future pension disputes; and c) the FST process was launched prior to the Notice of Application herein and so it is only proper that the FST be given first opportunity to adjudicate the issues.

[37] Each of these points was heard, and dismissed, by the FST itself. As already explained, the parties hereto appeared before the FST to explain their proposed procedure, at which time FSRA had an opportunity to explain its opposition to this procedure. Brewers and the Committee submitted that the Court should first “rule on the Class Action or on the FSRA jurisdiction motion”, after which the parties would return to the FST with the Court’s decision for its consideration: Brewers Retail Inc. v. Ontario (CEO of FSRA), 2021 ONFST 1, at paras 32-33. In its reasons for granting the adjournment sought by Brewers and the Committee, the FST responded to FSRA’s opposition to this procedure, at paras 59-60, 68:

[59] …Firstly, it is by no means settled that the Settlement is a contracting out of minimum standards nor that it compromises accrued pension benefits…

[60] Secondly, the decision to grant an adjournment in this case is based on a unique set of facts which are unlikely to be repeated in the future. Most importantly, the Settlement reached between BRI [Brewers] and the Committee had been approved, subject to conditions, by the Regulator at the time, FSCO…

[68]…[w]e…believe that the Court should be given the opportunity to decide jurisdiction, at which time the matter can be brought back to this Tribunal to decide next steps.

[38] It is evident from the FST’s ruling that it did not consider the within Application to represent a threat or a collateral attack on its regulatory jurisdiction. Further, and notwithstanding FSRA’s argument to the contrary, this Court has jurisdiction over the current Application under both as a matter of its inherent jurisdiction unless it has clearly and unequivocally been legislatively deprived of that jurisdiction: Skof v. Bordeleau, 2020 ONCA 729, at para 8; 26 TeleZone Inc. v. Canada (Attorney General), 2008 ONCA 892, at para. 92, aff’d 2010 SCC 62.

[39] In making its submissions for a stay of proceedings, FSRA identifies no provision of the PBA or any other statute which excludes the Court’s authority to adjudicate pension disputes or to engage in statutory and contractual interpretation with respect to those disputes. Indeed, there is ample precedent for this Court engaging in such pension decisions: Caponi v. Canada Life Assurance Co., 2009 592, at paras 1-2, 47 (SCJ); Austin v. Bell Canada, 2019 ONSC 4757, rev’d on other grounds 2020 ONCA 142; McGee v. London Life Insurance, 2008 20985, at paras. 3, 18, 41-42 (SCJ).

[40] This Court has previously determined that it has jurisdiction to decide pension-related disputes in the face of direct opposition by the pension regulator: Anova Inc. Employee Retirement Pension Plan v. Manufacturers Life Insurance Co., 1994 (SCJ). In Vivendi Universal Canada Inc. v. Ontario (Superintendent of Financial Services), 2005 1828 (SCJ), the Applicant sought a declaration with respect to the application of the PBA to its pension plan. The regulator opposed the application, arguing that the PBA “establishes a framework for determination of pension issues by the [FST] and ousts this court's jurisdiction to hear questions of law”; but Justice Hoy disagreed, employing language that leaves little room for interpretation or debate:

I further conclude that the framework of the PBA, outlined above, does not oust the jurisdiction of this court to grant declaratory relief in the circumstances.

[41] In approaching any class action motion, it is incumbent on me to carefully consider the best interests of the class and “the benefits the class action offers in the circumstances of the case”: Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 SCR 534, at para 44. The benefits of a class proceeding under the present circumstances has been carefully thought out by counsel for Brewers and counsel for the Committee. They have determined, accurately, that it is this procedure alone that can provide the all-encompassing finality that they seek. A regulatory proceeding will not put an end to all of the issues about past and present indexing that impact on the entirety of Brewers’ pensioners, known and unknown.

[42] Whether the settlement on its merits is legal, enforceable, appropriate to the circumstances, and in the best interests of all concerned, is for the settlement approval motion and not for the certification stage. That motion will be scheduled after the certification Order is issued, with appropriate notice given to all who are impacted by it. But there is little doubt that only a proceeding under the CPA can take into account and appropriately balance the interests of the Class members and Brewers alike in assessing the issues giving rise to the settlement. A hearing at the FST does not have that focus, but rather examines broader issues of regulatory policy.

[43] I say this with some confidence since I clarified this very point with counsel for FSRA at the hearing of the within motion. That is, I asked why FSRA objects to the settlement if the Committee, in its representative capacity for Brewers’ pensioners, has endorsed it. In response, FSRA’s counsel was clear that the objection was not due to any concern for the Class members; rather, he expressed concern for the implications of this settlement for pensioners of other companies.

[44] It comes as little surprise that FSRA’s intervention in this proceeding is not supportive of the Class members’ interests. After all, it is FSRA’s view that the express support of its predecessor, FSCO, for the proposed settlement, which was years in the making with FSCO’s approval, created no obligation by the regulator and reciprocal rights in the parties. In taking the position that FSCO’s approval and the parties’ reliance thereon amounted to nothing more than discretionary advice that can be changed at will, is itself a disregard of the Class members’ interests. It is evident from FSRA’s position that the Class members are only a small cog, and not the driving hub, in the wheel on which it focuses its regulatory gaze.

[45] In other words, FSRA’s stay of procedure request and its opposition to certification is not based on a view that a class action is not the preferable procedure for the company and the Class. It is instead based on a view that a class action is not the preferable procedure for the regulator and other pensioners across the province. That, however, is not a perspective which I am empowered to adopt on this motion under the CPA.

[46] A court’s focus is necessarily on the parties before it and the concerns of justice as between them. And while courts do, of course, have a responsibility under the system of stare decisis to ensure that their decisions conform with precedent and set appropriate precedent, the considerations of a particular and distinct settlement of a particular and distinct dispute with a particular and distinct set of facts is not that kind of exercise.

[47] As stated above, whether the merits of the settlement are appropriate and the settlement further the aims of justice are questions for the settlement approval motion in the next phase of this action. But generally speaking, a court is not in a position to decline jurisdiction on the basis that FSRA suggests – i.e. that it should subordinate the interests of the parties before it to that of parties other than those before it.

[48] Under the circumstances, a class action is the preferable procedure for this action.

[49] Turning to section 5(1)(e) of the CPA, the representatives of the Class must be up to the task of instructing counsel and making necessary decisions on behalf of the Class members. They also must not have any conflict of interest with the Class. Having negotiated diligently for years on behalf of Brewers’ pensioners, I have no reason to doubt about the appropriateness of the Committee members playing the role of representatives of the Class. Counsel for the Committee and for Brewers have worked out a viable litigation plan to carry the action through to its conclusion.

III. Disposition

[50] The action is hereby certified under section 5(1) of the CPA. The Class is as defined in paragraph 24 above. The Committee members are the representatives of the Class. Counsel for the Committee are appointed as Class counsel. The common issues are as set out in paragraphs 26 and 32 above.

[51] FSRA is granted leave to intervene. Assuming it wishes to continue its intervention, FSRA will remain an intervenor through the upcoming settlement approval motion. FSRA’s motion for a stay of proceedings is dismissed.

[52] The parties may make written submissions on costs. I would ask counsel for Brewers and for the Committee to email their brief submissions to my assistant within 3 weeks of today’s date, and counsel for FSRA to email their equally brief submissions to my assistant within 3 weeks thereof.

Date: February 10, 2022 Morgan J.