BETWEEN:
DANA P. COUSINS, DONNA M. KEITH
and CHARLES M. MCNALLY
and
ATTORNEY GENERAL OF CANADA and
MARINE ATLANTIC INC.
Docket: T-1519-05
AND BETWEEN:
CHARLES M. MCNALLY
Applicant
and
ATTORNEY GENERAL OF CANADA and
MARINE ATLANTIC INC.
Respondents
Docket: T-1520-05
AND BETWEEN:
DANA P. COUSINS
Applicant
and
ATTORNEY GENERAL OF CANADA and
MARINE ATLANTIC INC.
Respondents
APPLICATIONS UNDER s. 18(1) of the Federal Courts Act. 2002, c. 8, s. 14
REASONS FOR JUDGMENT
[1] These three Applications for judicial review seek to raise, as a principal issue, whether section 29(12) of the Pension Benefits Standards Act, 1982 R.S.C. 1985, c. 32 (2d supp) as amended (PBSA), requires that the proportional amount of surplus in a federally regulated pension fund existing at the time of a partial termination of the plan, be paid out. Because of the close relationship of these three Applications, they were argued together upon common materials. One set of reasons is provided, and, for the reasons as provided, I find that two of the Applications will be dismissed as being out of time, Application T-1519-05 and T-1520-05. The other Application
T-1518-05 will be allowed in part as I find that section 29(12) of the PBSA requires the payment out of the surplus attributable to the partial termination of the pension plan.
The Parties
[2] The Applicants Cousins, Keith and McNally were all at various times, employees of the Respondent Marine Atlantic Inc. Marine Atlantic runs ferry services between various of the Atlantic Provinces some of which services were terminated, thus terminating the employment of the Applicants with consequent pension plan effects. The Respondent Attorney General of Canada, has been joined as a Respondent in these proceedings by the Applicant. The Attorney General says that he does not appear on behalf of any government department or crown corporation nor does he represent the interests of the Superintendent of Financial Institutions, who is a person appointed under the provisions of section 5(1) of the Office of the Superintendent of Financial Institutions Act (OSFI) R.S. 1985, c. 18 3rd Supp, and, is assigned certain duties under PBSA relevant to the issues here. The Attorney General disclaims any interest in the existence, quantum or direction of payment of the surplus if any, of the pension plan.
[3] None of the Applications are taken as class or representative actions. They affect only the individual Applicants unless the Court is persuaded to grant Judgment that approval of particular Reports be dealt with in a way that will encompass all affected members.
The Issues
[4] The Applicants raise but one issue, namely, whether section 29(12) of the PBSA requires the payment out of the surplus attributable to the terminated portion of a defined-benefit pension plan. The Respondents raise other issues including whether some of the Applications were brought in a timely way, whether the Superintendent has power to re-consider an earlier decision, the standard of review to be applied by the Court in this review and what remedies are appropriate.
[5] To state the issues in a more formal way, these are the issues which this Court has been asked to consider:
· Timeliness: Have the issues raised in Applications T-1519-05 and T-1520-05 been raised in a timely manner having regard to the provisions of section 18.1(2) of the Federal Courts Act, R.S.C. 1989, c. F-7 which require an Application for judicial review to be brought within 30 days from the time that the decision was first communicated unless an extension of time is granted by the Court?
· Reconsideration: Does the Superintendent have the power to re-consider decisions made several years earlier as to approving a plan of partial termination that did not provide for payment out at the time of surplus in the fund?
· Standard of Review: What is the standard to be applied by the Court in judicially reviewing the decisions of the Superintendent, at issue?
· Section 29(12): Does section 29(12) of the PBSA require the distribution of a proportional share of actuarial surplus when a federally regulated defined-benefit pension plan is partially terminated or wound up?
Factual History
[6] Marine Atlantic is a federal Crown corporation and the successor to ferry services operated in Atlantic Canada previously by CN Marine. Among these ferry services were that operated in the Bay of Fundy between New Brunswick and Nova Scotia (Fundy), that between New Brunswick and Prince Edward Island (PEI) and that connecting Nova Scotia and Newfoundland and Labrador (Labrador). Certain head office activities were conducted in Moncton.
[7] Marine Atlantic had a pension plan in place at all material times and, for purposes of the PBSA, is described as the administrator. The administration of much of the plan was conducted in consultation with a private consulting actuarial organization, Wm Mercer, which was retained to advise in particular as to “downsizing” aspects. The plan is what is described as a contributory defined-benefit pension plan and is a successor to a plan originally instituted by CN Marine. Employees of Marine Atlantic pay a percentage of their earnings into the plan, their employer pays the balance of the costs of the benefits as actuarially determined. Upon reaching the age of retirement the employee receives a pension calculated upon a certain formula. The fund is presently held by an arm’s-length trustee, the Guarantee Trust Company of Canada.
[8] The pension is administered in accordance with a Plan which, under the provision of the PBSA must be approved by the Superintendent. The Superintendent also must approve amendments to the Plan including those amendments that occur when part of the Plan is terminated such as is the case when part of the Marine Atlantic operations are terminated and the employees with respect to that part are terminated. Those amendments are approved by way of approval by the Superintendent of a report submitted by the administrator.
a) PEI – Application T-1520-05
[9] In 1997 Marine Atlantic decided that the Fundy part of its operations would be terminated. One of the consequences was that several hundred employees were terminated and the associated part of the pension plan respecting those employees was terminated. This partial termination of the pension plan required approval from the Office of the Superintendent (OSFI) by way of approval of a Partial Termination Report dated October 1997. To that end, the Wm Mercer organization entered into discussions with OSFI who, by letter dated December 8, 1997, addressed to Wm Mercer, advised that the Partial Termination Report was approved. That Report did not provide for proportional payment out of surplus and states that it did not allocate surplus assets to members affected by the partial Plan wind-up. Those communications also included discussions respecting certain Labrador operations thus the letter addressed those operations as well, stating that partial plan termination was not necessary for Labrador. In fact subsequently Marine Atlantic voluntarily entered into a partial plan termination for Labrador. Part of the December 8, 1997 letter from OSFI to Wm Mercer states:
The third reason for declaring a partial termination concerns the ownership of surplus. Although there is no requirement to distribute surplus on partial termination, future rights to surplus can be established at the time a plan is partially terminated. In the case of members of the Labrador service who opt for portability, the administrator has a responsibility to make them aware that they are giving up any and all rights to a possible share of surplus on total plan termination.
[10] At no time did OSFI communicate directly with any of the terminated employees who were members of the Plan.
[11] Marine Atlantic’s evidence is that in January 1998 it sent a letter to Cousins, the Applicant in proceeding T-1520-05 stating that OSFI had approved the partial termination report, and that Marine Atlantic was proceeding with the payment of pension benefits in accordance with his election. Cousins had elected to receive a cash payout which would be placed in a private locked-in retirement financial vehicle. At no time in providing the forms for selection or on the forms themselves is there any mention of a surplus in the pension fund or what might become of it.
[12] Apparently at some stage Cousins went to the trouble of visiting Marine Atlantic’s offices and looking at the Report. There is no evidence as to what understanding, if any, he gained by this exercise.
b) PEI – Application T-1519-05
[13] In a situation similar to that of Fundy, Marine Atlantic terminated its service between New Brunswick and Prince Edward Island, that service being replaced by the Confederation Bridge.
[14] Again, Wm Mercer on behalf of Marine Atlantic provided to OSFI a Partial Termination Report. This one was dated February 1998. Again, the Report did not provide for payment out of funds in surplus as a result of the partial termination nor did it endeavour to allocate assets to members affected by the partial Plan wind-up.
[15] On April 8, 1998 OSFI wrote a brief letter to Wm Mercer advising that the Partial Termination Report dated February, 1998 was approved. Again, OSFI did not communicate directly to any employees.
[16] In this case one of the affected employees was McNally, the Applicant in T-1519-05. Just as in the case of the Fundy termination, McNally was offered several options by Marine Atlantic and chose to receive a lump sum for re-investment in a locked-in retirement vehicle. At no time during those communications was McNally advised that there was a surplus or what was to become of it.
Subsequent Events
[17] The Plan provides for an entity called a Pension Board having some duties to regulate in respect of the Plan, comprising representatives of Marine Atlantic and current and former employees who are members of the pension plan. The minutes of a meeting of the Board held on September 24, 1998, indicate that Mr. Murphy, an employee representative, was advised that an actuarial surplus existed in the fund. There appears to have been no discussion as to payment out of surplus upon the partial termination of Fundy or PEI.
[18] There is evidence, by way of newsletters to professionals involved in the pension business in Canada, that a live issue in the 1990s and 2000s was how actuarial surpluses existing at the time of partial wind-up or termination of a plan were to be treated. There is no evidence however that the Applicants in these three proceedings were aware of such issues.
[19] In Ontario, the issue as to disposition of surplus funds at the time of partial wind-up was raised in proceedings respecting a Monsanto Canada Inc. pension plan. The background facts are set out in the decision of the Financial Services Tribunal which is an Appendix to the decision of the Ontario Superior Court, Divisional Court, reported as Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services (2001), 198 D.L.R. (4th) 105 commencing at page 113. Essentially, under the provisions of Ontario legislation respecting pensions, the Ontario Superintendent had refused to approve a plan respecting partial wind-up without provision being made for proportional pay-out from actuarial surplus. The matter came before the Financial Services Tribunal which overturned the Superintendent’s refusal. The Divisional Court allowed an appeal from the Tribunal.
[20] The matter proceeded to the Ontario Court of Appeal which, in a decision reported at (2002), 62 OR (3d) 305, dismissed the appeal.
[21] The Supreme Court of Canada gave leave to appeal and heard the matter, giving a decision reported at [2004] 3 S.C.R. 152 unanimously dismissing the appeal, holding, inter alia, that section 70(6) of the Ontario Pension Benefits Act RSO 1980, c. P. 8 required the distribution of a proportional share of actuarial surplus when a defined-benefit pension plan is partially wound up.
[22] Apparently, the Monsanto proceedings at some stage became known to some former employees of Marine Atlantic since the evidence shows that by about January 2003 a Philip Mountain, one such former employee, was contacting former employees and inviting them to join an informal Committee for the purpose of promoting their interests in actuarial surplus existing at the time of their termination. The Applicants Cousins, McNally and Keith became aware of Mountain’s efforts and this Committee some time in 2003-2005 time period.
[23] There is little evidence as to the early efforts of this Committee however it seems to be confined to the contacting of former employees and the writing of sporadic letters to politicians. It was not until early 2005 that the Committee contacted OSFI for the first time. In what is apparently an e-mail from Keith to OSFI, an inquiry was made as to the surplus and whether OSFI intended to “revisit” cases similar to Monsanto. Keith said that her Committee was “looking for directions” and “names of individuals or firms that may assist” including a “roster of counsel”. A responding e-mail was sent by OSFI on January 19, 2005 stating, inter alia:
The Office of the Superintendent of Financial Institutions (OSFI) is currently reviewing our position on partial terminations in light of the Monsanto decision. All federally registered pension plans have been advised that any recent partial terminations are still subject to our comments on the surplus issues raised by the Monsanto decision, and how it affects federally regulated plans.
With respect to your request for direction from our office, please be aware that you would need to seek your own legal advice on this matter. Our office cannot provide you with a roster of counsel.
[24] It is to be noted that, in this response, OSFI advised that only recent partial terminations which were still subject to its comments were under consideration. By March of 2005 the Committee of ex-employees had retained legal counsel and letter writing began in earnest.
Labrador/Moncton/Re-Visitation – T-1518-05
[25] On May 5, 2004, Wm Mercer on behalf of Marine Atlantic sent a Report to OSFI respecting the termination of the Labrador service and the Moncton Head Office (Labrador/Moncton). That Report provided for the return of surplus to Marine Atlantic upon the total wind-up of the Plan and total discharge of plan liabilities. This report was not, as of the date of institution of these proceedings, approved or disapproved by OSFI. I was advised at the hearing of these Court proceedings that the matter is still pending.
[26] On March 8, 2005, the newly retained counsel for the ex-employee Committee wrote a letter to OSFI stating:
We are counsel to a committee of former employees of Marine Atlantic Inc. whose employment were (sic) terminated in conjunction with the privatization of the Bay of Fundy service, the closure of the PEI service and the closure of the company’s offices in Moncton, NB in and around the year 1997. The discontinuance of these parts of the business resulted in a partial termination of the above Plan within the meaning of Section 29 of the PBSA.
[27] There followed, in that letter, a request for certain information and counsel’s views as to the recent decision of the Supreme Court of Canada in Monsanto. The letter ended with the following request.
As a result, we request the Superintendent immediate (sic) issue an order for an accounting of the surplus in the Plan at the time of the partial termination in and around 1997 and a distribution of that surplus among our clients and the other employees affected by the termination.
[28] Much correspondence followed including that from counsel for Marine Atlantic. A definitive reply to Applicants’ counsel’s letter of March 8, 2005 was provided by OSFI on August 8, 2005 which begins:
Your letter of March 8, 2005 to Ms. Krista Johnson indicates that you are counsel to a committee of former employees of Marine Atlantic Inc., and requests that OSFI take certain actions in relation to the Pension Plan for Employees of Marine Atlantic Inc. I will first address the points related to the request by your client, Ms. Donna Keith, for information from the administrator for the Marine Atlantic plan pension and then the issues concerning the Supreme Court of Canada’s decision in the “Monsanto” case and your submissions contained in your letter to Ms. Carol Taraschuk, Legal Counsel to OSFI, dated May 11, 2005.
[29] With respect to the specific plan in place at the Marine Atlantic OSFI said:
Your letter of May 11, 2005 to Ms. Taraschuk argues that, apart from any rights that plan members may have under the PBSA, the terms of the Marine Atlantic pension plan entitle plan members affected by a partial plan termination to a distribution of surplus. In particular, your letter refers to a provision dealing with the return of assets to the Company once all liabilities have been discharged upon the termination of the plan, and notes that “a determination concerning the proper legal recipient of the surplus has yet to be adjudicated by a Court of competent authority”. Based on the information presented, and our reading of the plan documents, there does not appear to be a clear obligation on the part of the plan administrator, or right on the part of plan members, regarding the distribution of plan assets on either a full or partial termination of the plan.
[30] As to the request to re-visit earlier decisions as to Fundy and PEI, OSFI stated that it had no authority to re-open or reconsider the matter unless new information was presented. Monsanto did not constitute such new information. It said:
With regard to past partial terminations for which the partial termination report has been approved by OSFI, OSFI does not have the legal authority to re-open or reconsider an approval once it has been granted, unless new information is presented that is material to the case. Further, the Supreme Court of Canada’s decision in the Monsanto case does not constitute new information in this context. In addition, there is no legislative authority to re-open or reconsider a past approval. As such, regardless of whether or not surplus currently exists, we are not in a position to re-open the approvals of the partial termination reports in respect of the Bay of Fundy service and the PEI service.
[31] As to consideration to be given to situations, such as Labrador/Moncton, currently under consideration by OSFI, it was pointed out that there was recently released a public consultation paper and thus it would be inappropriate to take action at this time. The letter concluded:
It would, therefore, be inappropriate at this time for OSFI to require that pension plans registered under the PBSA distribute all or a portion of excess assets on the partial termination of the plan.
In view of the considerations set out above – regarding pension plans registered under the PBSA generally and the partial terminations of the Pension Plan for Employees of Marine Atlantic Inc. in particular – OSFI does not intend to order an accounting of the surplus in the Pension Plan for Employees of Marine Atlantic Inc. at the time of the partial termination referred to in your letter or to order a distribution of assets from that plan.
[32] Thus, one of the Applications for judicial review before the court, T-1518-05, seeks to challenge two decisions of OSFI. One is the decision not to revisit the earlier Fundy and PEI decisions. The other deals with the pending Labrador/Moncton situation asking for mandamus to require that OSFI only approve a report that provides for immediate distribution of surplus.
Terminology
[33] Like other arcane fields of law with which this Court must deal, the field of pension law has its own terminology some defined by statute, some by case law or usage in the field. The following terms are used in discussions as to circumstances in these proceedings:
· “Actuarial surplus” sometimes just referred to as “surplus” was explained by Cory J. in the Supreme Court of Canada decision of Schmidt v. Air Products of Canada Ltd., (1994), 115 D.L.R. (4th) 631 at page 665 and by Deschamps J. in Monsanto at paragraphs 21 and 22. This is an amount of money that is never certain during the continuation of the plan. It exists only on paper. It results from actuarial calculations and is a result of assumptions used by the actuary. At any given time, such as at valuation for funding purposes, a calculation can be made, using those assumptions so as to provide a “snapshot” as to what actuarial surplus there is at that time.
· “assets” is used in the common sense as the sum of that which is within the plan that has value.
· “benefits” as defined in Schmidt at page 665, benefits are of two types, one is the benefit to which an employee is entitled under the provisions of the plan. That is an amount fixed by a formula. Other benefits are those to which employees may be entitled upon termination of the plan.
· “contribution holiday” is a term referred to in Schmidt at pages 664-665 and Monsanto at paragraphs 45 and 46. It means that while an employer and/or employee are usually expected to pay contributions into a plan according to a formula, if the plan has “surpluses”, the contributors (usually the employer) may take a “holiday” from contributing for a period of time while the surplus is reduced. As stated in Schmidt at page 665, subject to the terms of the plan the taking of a contribution holiday represents neither an encroachment upon the trust nor a reduction of accrued benefits.
· “defined-benefit plan” and “defined-contribution plan” are both defined terms in the PBSA section 2. Each are mutually exclusive: a defined-benefit plan includes provisions clearly stating certain benefits for the employees, a defined-contribution plan clearly states what contributions are to be made. As stated in Monsanto, at paragraph 21, surplus can only arise in defined-benefit plans because, in contrast to defined-contribution plans, benefits or plan liabilities are not contingent upon the level of nor the return on contributions.
· “pension plan’ is defined in section 4(2) of the PBSA. Without repeating that section in full, it includes a plan to provide pension benefits to employees to which the employer is required to contribute. As stated by the Ontario Court of Appeal in Huus v. Ontario (Superintendent of Pensions) (2002), 58 OR (3d) 380 at paragraph 30, quoting in part from Schmidt, supra, pensions are not a gift from the employer, they are earned by the employee, they are a trade-off of wages and benefits on the one hand, and a pension fund on the other.
· “termination” is a defined term in the PBSA section 2. It means the cessation of crediting benefits to plan members and includes not only a voluntary termination but also, as set out in sections 29(1) and (2) of that Act, a revocation of the plan and termination declared by the Superintendent.
· “winding-up” is a defined term in the PBSA section 2. It means the distribution of the assets of a pension plan that has been terminated. Thus the PBSA contemplates that winding-up is a step which follows termination.
This definition must be contrasted with the provisions of the Ontario Pension
Benefits Act, supra, which was considered by the Supreme Court in Monsanto. The Ontario Act, section 1(c) defines “wind-up” as “the termination of a pension plan and the distribution of the assets of the pension fund”. Thus, Ontario views wind-up as including termination.
Role of the Superintendent
[34] The Superintendent and Office of the Superintendent of Financial Institutions (OSFI) are entities established by the federal Office of the Superintendent of Financial Institutions Act, supra. The Superintendent and OSFI are charged with supervisory roles over a number of federally regulated financial institutions as set out in the Schedule to Part 1 (Section 6) of that Act. They include banks, credit unions, Green Shield, insurance companies, pension funds and trust and loan companies.
[35] As stated by the Ontario Court of Appeal in Huus, supra the Superintendent owes a high duty to employees with pension plans, similar to a fiduciary duty imposed on trustees. While that Court was speaking of the Ontario Superintendent, that case was considered with approval by the Supreme Court of Canada in Buschau v. Rogers Communications Inc., 2006 SCC 28 at paragraphs 55 and 56 in considering the role of the federal Superintendent. In Buschau the Supreme Court at paragraph 56 said that the federal Superintendent’s power under section 29(2)(a) of the PBSA becomes almost a duty when employees ask him to act.
[36] It is appropriate now to turn to the issues raised in these proceedings.
Issue No. 1 - Timeliness
[37] The first issue is:
Have the issues raised in applications T-1519-05 and T-1520-05 been raised in a timely manner having regard to the provisions of section 18.1(2) of the Federal Courts Act, R.S.C. 1989, c. F-7 which require an application for judicial review to be brought within 30 days from the time that the decision was first communicated unless an extension of time is granted by the Court?
[38] This issue pertains only to the decisions of the Superintendent as to the partial termination of the Marine Atlantic pension plans relating to Fundy and PEI, Applications, T-1519-05 and T-1520-05. The request to re-consider those decisions is dealt with in the next issue, Issue No. 2 in the context of Application T-1518-05.
[39] Section 18.1(2) of the Federal Courts Act, supra, provides that an Application for judicial review of a decision of a federal board or tribunal must be brought within 30 days from the time that such decision was first communicated by the board or tribunal to the party affected, unless the Court permits otherwise.
[40] There is no dispute between the parties that the Superintendent and OSFI come within the definition of a federal board or tribunal within the meaning of section 18.1(2) of the Federal Courts Act, supra.
[41] Applicants’ counsel argues that neither the Superintendent nor OSFI actually communicated to the affected member of the pension plan, the decisions respecting the termination of the Fundy or PEI plans. What did happen, counsel argues, is that OSFI sent a letter stating its decisions only to Wm Mercer, acting as an actuarial consultant to Marine Atlantic. Counsel argues that the Superintendent had a higher duty, citing Huus, supra, to communicate directly with the affected members. A copy of the relevant letters was only provided by the OSFI to the affected members, through their counsel, on August 8, 2005 and these proceedings were launched within 30 days of that time. Therefore, relying on Atlantic Coast Scallop Fisherman v. Canada (Minister of Fisheries and Oceans) [1995] F.C.J. No. 1347 (FCA) (QL) at paras 6 and 7, counsel argues, the proceedings were commenced in a timely fashion.
[42] Respondents’ counsel argue that while there was no direct communication from OSFI to the affected members in 1997 or 1998, the plan administrator, Marine Atlantic, communicated extensively with the affected members advising them that OSFI had approved the termination report and making that report available for viewing upon request. Even if they didn’t see the report, or if they saw it, didn’t understand it, the effect of the report was known to the members as they were given several options as to remaining in the plan or cashing out. It was clear that no provision was made for payment out at that time from actuarial surplus. Relying on Peace Hills Trust Co. v. Saulteaux First Nation, 2005 FC 1364 particularly at paragraphs 43 and 44 Respondents’ counsel argue that the notification received by the affected members was sufficient.
[43] I am satisfied that the communications between the affected members and Marine Atlantic were sufficient to inform those members that a decision had been made by OSFI, which decision had the effect, by its silence, that actuarial surplus existing at the time of termination was not going to be the subject of a proportionate payment out at that time. In Atlantic Coast Scallop, supra, the Federal Court of Appeal, at paragraph 7, found that while a decision had apparently been made “at some point in time”, the information received by the affected persons was ambiguous. In Peace Hills, supra, it was determined, at paragraphs 43 and 44, that the persons affected were advised of the substance of the decision and its effect and that this was sufficient to constitute a communication. The situation in the Fundy and PEI Applications is similar to that of Peace Hills, the affected members were in the 1997 and 1998 period clearly aware as to what benefits they would be receiving and, therefore, what they would not be receiving. That included no pay-out, at that time, from actuarial surplus. The two Applications at issue here, commenced in 2005, Fundy and PEI, were years out of time.
[44] Applicants’ counsel made a second argument and asked for leave to do so orally, namely that the Court should exercise its discretion under section 18.1(2) and permit the Applications to proceed notwithstanding the 30-day time limit. In the originating Applications filed with the Court, the Applicants did not ask for relief of this kind. The issue as to timeliness was first raised by the Respondents in their memoranda of argument filed prior to the hearing. Applicants filed no responding material. No motion was brought by any party prior to the hearing, on the timeliness issue. I allowed oral argument on this point to be made by all parties at the hearing.
[45] The factors to be considered by the Court as to whether leave beyond the 30-day period ought to be granted have been clearly established in Grewal v. Canada (Minister of Employment and Immigration), [1985] 2 C.F. 263 (FCA) a decision frequently cited by this Court in these circumstances. These factors are:
1. Does an arguable case exist;
2. Did the Applicants show a continuing intention to commence proceedings in a timely fashion;
3. Is there a satisfactory reason for the delay; and
4. What prejudice exists in respect of the other parties.
There is one overriding consideration expressed at page 282 of Grewal that only if the ultimate search for justice outweighs the necessity of setting the parties’ rights at rest will leave be granted.
[46] The first factor requires no further consideration at this stage, the matter will be considered substantively later in the Reasons.
[47] The second factor requires a consideration of the actions of the Applicants Cousins and McNally. There is no evidence that either of them in the 1997 or 1998 period or at any time up until at least 2003 took any steps that might lead to a challenge to OSFI’s decision as to actuarial surplus, nor is there any evidence that they had any intention of doing so. Nothing seems to have happened at least until 2003 when Keith, Cousins’ wife and McNally became involved in a Committee concerned with the disposition of actuarial surplus. That Committee however seems to have done little until after the decision of the Supreme Court of Canada in Monsanto, reversing the lower Courts, was made public in 2004. That decision was favourable to the interests of the affected members. It is a clear inference that the Committee was waiting for that decision and, if it was unfavourable, the Committee would have done nothing more. Once the favourable decision was released at the end of July 2004, that Committee may have been spurred into further action. It was not, however, until January 2005 that the Committee contacted OSFI including a peculiar request that OSFI correctly rejected, that OSFI advise as to what steps should be taken and for information as to suitable legal counsel. This is the first time that the evidence shows any intention to take legal action to protect or determine the interests of the Committee which included McNally, Keith and Cousins’ wife.
[48] I find that there was no continuing intention of either Cousins or McNally to bring legal action but only a belated intention arising in 2003 or 2004, several years after the relevant events, to take action if the outcome of Monsanto was seen as favourable.
[49] The third factor requires consideration as to whether a satisfactory reason for delay has been shown in the evidence. No such reason has been shown. As discussed in respect of the second factor above, nothing was done for several years. No evidence from the Applicants addresses the delay in a way that provides any satisfactory explanation.
[50] The fourth factor requires consideration of prejudice to the other parties. In this regard the statements of the Federal Court of Appeal in Canada v. Berhad 2005 FCA 267 as repeated with approval in Canada (Attorney General) v. Trust Business Systems, 2007 FCA 89 at paragraph 28 are important:
In Canada v. Berhad, [2005] F.C.J. No. 1302, 2005 FCA 267, Létourneau J.A. wrote that the thirty-day limit for commencing judicial review applications is in the best interest of the public because it brings finality to administrative decisions and security to those who comply with the decision or who enforce compliance with it. At paragraph 60 he stated:
The importance of that public interest is reflected in the relatively short time limits for the commencement of challenges to administrative decisions – within 30 days from the date on which the decision is communicated, or such further time as the Court may allow on a motion for an extension of time. That time limit is not whimsical. It exists in the public interest, in order to bring finality to administrative decisions so as to ensure their effective implementation without delay and to provide security to those who comply with the decision or enforce compliance with it, often at considerable expense. [Emphasis added]
[51] Applicants’ counsel relies on Grewal, supra, at page 282 as well as Huard v. Canada (Procureur general) 2007 CF 195 at paragraphs 91 to 96 to argue that even a delay of several years should not dissuade the Court from granting an extension of time where a great injustice might otherwise occur. That injustice, counsel argues, is that those affected by the Labrador termination might have an opportunity to obtain funds from actuarial surplus whereas those affected by the Fundy and PEI terminations will not. That could be the result, but I do not view this as an injustice. Those affected by the Fundy and PEI terminations had several years in which to take any dispute they perceived to the Courts. The Court should not condone an exercise whereby a party can be permitted to seek redress well after an event because the law, in a subsequent decision, has been clarified or changed. This would invite opportunistic litigation. A party who is truly concerned about a decision affecting their situation should be expected to take steps at the time, even if the law is unclear, rather than wait for several years until a favourable judicial interpretation materializes.
[52] Therefore, I deny the oral Application to extend the time for filing Applications T-1519-05 and T-1520-05. As a result, those Applications are dismissed. I will, however, in deciding Issue No. 4, later in these Reasons, consider the issue raised in those Applications as to the interpretation of section 29(12) of the PBSA.
Issue No. 2 - Reconsideration
[53] The second issue is:
Does the Superintendent have the power to re-consider decisions made several years earlier as to approving a plan of partial termination that did not provide for payment out at the time of surplus in the fund?
[54] Applicants’ counsel wrote to OSFI on March 8, 2005 asking, among other things, that OSFI reconsider its decisions respecting Fundy and PEI, made in 1997 and 1998, which decisions had the effect of not providing for payment out of actuarial surplus at that time. The reply by OSFI on August 8, 2005 was that the PBSA did not provide for such reconsideration and, absent a material change in circumstances, (Monsanto was not one) no such reconsideration would be made.
[55] It was quite correct for OSFI to state, and no counsel for any party disputes, that the PBSA makes no provision for reconsideration of such decisions. The intent of Parliament not to make such provision is clear in that section 32(2) of the PBSA does make provision for reconsideration of certain other decisions such as refusal to register a plan or to revoke or cancel such registration.
[56] Just as final decisions of a Court are not to be revisited except under very limited circumstances, decisions of a tribunal are not open for reconsideration just because there has been a change in circumstances, such as a change in the jurisprudence. Justice Sopinka in Chandler v. Alberta Association of Architects [1989] 2 S.C.R. 848 at page 861 said:
Apart from the English practice which is based on a reluctance to amend or reopen formal judgments, there is a sound policy reason for recognizing the finality of proceedings before administrative tribunals. As a general rule, once such a tribunal has reached a final decision in respect to the matter that is before it in accordance with its enabling statute, that decision cannot be revisited because the tribunal has changed its mind, made an error within jurisdiction or because there has been a change of circumstances. It can only do so if authorized by statute or if there has been a slip or error within the exceptions enunciated in Paper Machinery Ltd. V.J. O. Ross Engineering Corp., supra.
[57] I find, therefore, that OSFI made no reviewable error in refusing to reconsider its decisions in the Fundy and PEI cases.
Issue No. 3 – Standard of Review
[58] The third issue is:
What is the standard to be applied by the Court in judicially reviewing the decisions of the Superintendent, at issue?
[59] The Supreme Court of Canada in Monsanto, supra, at paragraphs 6 through 16 of its Reasons conducted a thorough pragmatic and functional review of the situation respecting the decision of the Financial Services Tribunal on an issue virtually identical to the one under consideration here.
[60] I find that there is little difference in the situation in this case and that considered in Monsanto. Neither the Ontario nor federal statutes provide for a privative clause. The nature of the problem is identical. The relative expertise is the same: the federal Superintendent is a general body having duties in respect of several financial institutions just as the Ontario Superintendent does. As earlier discussed, that Court in Buschau equated the functions performed by the Ontario Superintendent with those of the federal Superintendent. The fact that in Ontario a Tribunal reviewed the decision of the Superintendent before it was considered by the Court, is not material. The purpose of the legislation is the same. For the purposes of the issue of section 29(12) before the Court, that is an issue of law.
[61] Therefore, I conclude, following the Supreme Court of Canada in Monsanto at paragraph 16, that there should be a lower degree of deference, and that a standard of review of correctness should be adopted in this case. There are no persuasive grounds for the Court to grant the Superintendent any deference on the pure question of law before the Court in this case.
Issue No. 4 – Section 29(12)
[62] The fourth issue is:
Does section 29(12) of the PBSA require the distribution of a proportional share of actuarial surplus when a federally regulated defined-benefit pension plan is partially terminated or wound up?
[63] Section 29(12) of the PBSA reads as follows:
Where a plan is terminated in part, the rights of members affected shall not be less than what they would have been if the whole of the plan had been terminated on the same date as the partial termination.
[64] Applicants’ counsel argues that, just as the Supreme Court found in Monsanto, where there is a partial termination and wind-up of a pension plan, there must be a proportional payment out of actuarial surplus at that time.
[65] Respondents’ counsel argue first that the provisions of the PBSA when read as a whole provide for payment out only upon the final termination and wind-up of the whole of the plan. Alternatively, they argue that section 29(12) gives to the Superintendent an unfettered discretion to approve a Report which provides, or one that does not provide, for proportional payout upon partial termination. It is clear, however, that such discretion would not exist if a proper interpretation of section 29(12) in law, required a payment out upon partial termination and wind-up.
[66] All parties are agreed that a further, unresolved issue remains, namely, who is the proper person entitled to receive the payment out, if any. The parties are all agreed that this issue should not be resolved at the present time on the present record but should be left to a later time, if required.
[67] Consideration of section 29(12) of the PBSA must begin with the decision of the Supreme Court in Monsanto and the interpretation that it gave to the section 70(6) of the Ontario Pension Benefits Act, supra. Section 70(6) reads as follows:
On the partial wind up of a pension plan, members, former members and other persons entitled to benefits under the pension plan shall have rights and benefits that are not less than the rights and benefits they would have on a full wind up of the pension plan on the effective date of the partial wind up.
[68] The Supreme Court in Monsanto began its analysis by stating what is now the cardinal principle of statutory interpretation in Canada quoting from Bell ExpressVu Limited Partnership v. Rex [2002] 2 S.C.R. 559 at para 26 which in turn cited Dreidger, Construction of Statutes (2nd ed. 1983) at p. 87:
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.219
[69] The Historical Context and Object of the Act discussion by the Supreme Court in Monsanto with respect to the Ontario legislation would be the same, in any material respect, if the discussion were to be about the federal legislation, the PBSA. The conclusion reached as to the Historical Context by the Supreme Court at paragraph 24 is similarly appropriate here:
The historical context, though not determinative, may provide some insight into the legislature’s intention regarding the effect of s. 70(6). Through its statutory interventions, the legislature has sought to clarify some aspects of the relationship between employers and employees in pension matters. Steps have been taken to improve many employee rights but the importance of maintaining a fair and delicate balance between employer and employee interests, in a way which promotes private pensions, has also been a consistent theme. It is in light of this background that the legal meaning of the provision must be interpreted in accordance with the accepted approach to statutory interpretation.
[70] Similarly, the conclusion at paragraph 47 of Monsanto, as to the Object of the Act respecting section 70(6) of the Ontario statute is equally applicable to section 29(12) of the federal statute:
Section 70(6) was enacted to ensure that Affected Members on partial wind-up are not in a worse position than a future full wind-up group. This requirement of equity provided by s. 70(6) is in relation to other rights provided for under the Act. As far as the distribution of surplus is concerned, the object of the Act and s. 70(6) strongly promote an interpretation that requires this distribution to occur at the time of the partial wind-up rather than later.
[71] An examination of the Grammatical and Ordinary Sense of section 29(12) and the Scheme of the PBSA requires a more detailed analysis.
Grammatical and Ordinary Sense
[72] Section 29(12) of the PBSA reads:
(12) Where a plan is terminated in part, the rights of members affected shall not be less than what they would have been if the whole of the plan had been terminated on the same date as the partial termination.
[73] This provides that on “termination” of part of the plan, the “rights” of the members affected “shall not be less” than what they would have been if the whole of the plan had been “terminated” “on the same date”. Thus the ordinary and grammatical sense of section 29(12) is that members affected by a partial termination are to be put in the same position in respect of distribution of surplus as those affected by a final termination, but as of the date of the partial termination
Scheme of the Act
[74] In considering the scheme of the PBSA, the word “terminated” is defined in section 2 of the PBSA as a “cessation of crediting benefits” and, unlike the Ontario statute, does not include “winding-up which is defined in section 2 of the PBSA as the “distribution of assets” of a plan that “has been terminated”. There is no doubt that termination and wind-up under the PBSA are two different concepts and that termination must precede wind-up. However, one must consider what the “rights” of a member are in respect of a terminated plan when considering section 29(12).
[75] In considering the “rights” of a member, section 28(1)(d) of the PBSA provides that upon termination of the whole or part of a plan, the administrator is required to provide to the affected member a written statement of the member’s pension benefits and other benefits payable under the plan.
28(1) A pension plan shall provide
…
(d) that, where a member of the plan retires, ceases to be a member of the plan or dies, or where the whole or part of the plan is terminated, the administrator shall give to that member (or, in the case of termination, each member) and to the member’s spouse or common-law partner (and, in the case of the member’s death, the member’s legal representative) a written statement, in prescribed form, of the member’s pension benefits and other benefits payable under the plan, within thirty days, or such longer period as the Superintendent may allow, after the date of the retirement, cessation of membership, death or termination, as the case may be.
[76] Further, in considering the “rights” of a member, section 29(6) of the PBSA requires that, on termination of the whole of a pension plan, the employer shall top-up any shortfall in the assets of the plan:
(6) On the termination of the whole of a pension plan, the employer shall pay into the plan all amounts that would otherwise have been required to be paid to meet the prescribed tests and standards for solvency referred to in subsection 9(1) and, without limiting the generality of the foregoing …
[77] Sections 29(7) and (8) of the PBSA preserve the assets of the plan for the benefit of the members:
(7) On the termination or winding-up of the whole of a pension plan, no part of the assets of the plan shall revert to the benefit of the employer until the Superintendent’s consent has been obtained and provision has been made for the payment to members and former members and their spouses, common-law partners, beneficiaries, estates or successions of all accrued or payable benefits in respect of membership up to the date of the termination or winding-up and, for that purpose, those benefits shall be treated as vested without regard to conditions as to age, period of membership in the plan or period of employment.
(8) On the termination of the whole of a pension plan, all assets of the plan that are to be used for the purpose of providing pension benefits or other benefits continue to be subject to this Act.
[78] Section 29(11) of the PBSA provides that where a plan has been terminated, the Superintendent “may” step in and require action by the administrator if insufficient activity has been undertaken to wind-up the plan:
(11) Where the whole of a pension plan has been terminated and the Superintendent is of the opinion that no action or insufficient action has been taken to wind up the plan, the Superintendent may direct the administrator to distribute the assets of the plan in accordance with the regulations made under paragraph 39(j), and may direct that any expenses incurred in connection with that distribution be paid out of the pension fund of the plan, and the administrator shall forthwith comply with any such direction.
Partial termination of the plan
[79] The Respondents’ counsel argue that the word “may” in this sub-section means that there is a discretion in the Superintendent to direct a winding-up or not and some examples were given, all of which illustrate not that winding-up would never happen, but that it would be delayed. Those counsel also argue that this provision applies only to a final termination thus a winding-up can only occur, if directed by the Superintendent on final termination.
[80] I disagree. First, as to the use of the word “may”, the Act does not contemplate a situation where the assets will remain in a plan forever. At some point there must be a winding-up. The Superintendent’s discretion is limited to that of ascertaining when it is reasonable to delay the winding up for a reasonable period of time.
[81] Second, subsection 29(11) cannot be limited to final termination only in view of subsection 29(12) which provides that a member’s rights on partial termination are the same as those on final termination. Thus, on partial termination the Superintendent, if it is perceived that the administrator has not taken reasonable steps to wind-up the relevant part of the plan, must step in and see that such steps are taken in a reasonable fashion.
[82] Thus, the scheme of the Act is consistent with requiring that there be a proportional distribution of surplus on or shortly after partial termination.
Conclusion as to Section 29(12)
[83] Having regard to all the relevant considerations, I find that section 29(12) of the federal Pension Benefits Standards Act, supra, requires proportional distribution of the surplus attributable to the wound up part of the plan. Wind-up must occur within a reasonable time from termination and, if winding-up does not occur within a reasonable time after termination, the Superintendent shall step in and require that it be done.
Remedies
[84] Having regard to the Reasons provided , I find that:
1. Applications T-1519-05 and T-1520-05 are dismissed as being instituted too late;
2. That part of the application T-1518-05 dealing with the Superintendent’s refusal to reconsider the Fundy and PEI decisions is dismissed as there is no provision in the PBSA or otherwise for such reconsideration.
3. That part of application T-1518-05 dealing with the Labrador/Moncton situation is allowed to the extent that a mandamus will issue directing that the Superintendent not approve a report that does not provide for wind-up of the affected part of the plan and the proportional distribution of actuarial surplus within a reasonable time.
[85] As to costs, the success was divided and no costs will be awarded to any parties.
May 1, 2007
Toronto, Ontario
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKETS: T-1518-05; T-1519-05; and T-1520-05
STYLE OF CAUSE: DANA P. COUSINS, DONNA M. KEITH
and CHARLES M. MCNALLY v.
ATTORNEY GENERAL OF CANADA and
MARINE ATLANTIC INC.
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: April 23, 24 & 25, 2007
REASONS FOR JUDGMENT: Hughes, J
DATED: May 1, 2007
APPEARANCES BY:
Mr. Ari N. Kaplan
Ms. Clio M. Godkewitsch FOR THE APPLICANTS
Mr. Richard A. Kramer FOR THE RESPONDENT -
Mr. Michael H. Morris ATTORNEY GENERAL OF CANADA
Mr. David G. Stamp FOR THE RESPONDENT -
Mr. Jean-Marc Leclerc MARINE ATLANTIC INC.
SOLICITORS OF RECORD:
Ari N. Kaplan / Clio M. Godkewitsch
Koskie Minsky LLP
Barristers & Solicitors
Toronto, Ontario FOR THE APPLICANTS
John H. Sims, Q.C FOR THE RESPONDENT -
Deputy Attorney General of Canada ATTORNEY GENERAL OF CANADA
Toronto, Ontario
David A. Stamp / Jean-Marc Leclerc
Osler Hoskin & Harcourt LLP
Barristers & Solicitors FOR THE RESPONDENT –
Toronto, Ontario MARINE ATLANTIC INC.