Welcome to the 31st issue of the Blakes Pensions Newsletter. This newsletter provides a summary of recent jurisprudential developments that affect pensions and is not intended to be legal advice.
For additional information or to discuss how any aspect of these developments may affect you, please contact a member of the Blakes Pensions, Benefits & Executive Compensation group.
IN THIS ISSUE
FAMILY LAW
BENEFICIARY DESIGNATIONS
PENSION PLAN ADMINISTRATION
BANKRUPTCY
PRESERVATION ORDERS
FAMILY LAW
Greenwood v Greenwood, 2021 SKQB 161
Doris Greenwood (Applicant) was married to Stanley Greenwood until they divorced in 1980. In 1981, the Applicant obtained a Court Order entitling her to a portion of Mr. Greenwood’s pension benefits from his employer, Canadian National Railways (Employer), which she would not receive until he retired. Mr. Greenwood remarried Colette Greenwood in 1982. Mr. Greenwood retired in 1987. The Court Order was amended in 1990 to entitle the Applicant to 25.56 per cent of the gross pension benefits Mr. Greenwood received. Upon Mr. Greenwood’s death, Colette Greenwood began to receive a monthly survivor benefit payment from Mr. Greenwood’s pension. The Applicant applied to the Court for an order declaring that she is entitled to 45 per cent of the survivor benefit being paid to Colette Greenwood. The Applicant argued that a proper interpretation of “pension benefits” in the 1981 Court Order includes all possible future and contingent interests that the pension might provide, including death and survivor benefits. If accepted, she sought an Order to enforce her interest as against Colette Greenwood and/or the Employer directly.
The Queen’s Bench for Saskatchewan (Court) disagreed with the Applicant for two reasons. First, the 1981 Order was amended in 1990 to entitle her to a portion of the pension benefits received by Mr. Greenwood. Once Mr. Greenwood died, all pension benefits payable to him ceased. Second, the Applicant’s argument was grounded on current legislation and family property principles, rather than focusing on what would have been intended when the Order was made in 1981. The Court explained that an Order speaks from the time it is pronounced. In 1981, “pension benefits” would not have included survivor benefits in Saskatchewan. The Court further elaborated that even today, it is not a commonplace or obvious principle that pension entitlement includes survivor benefits for family property distribution purposes.
Greenwood v Greenwood, 2021 SKQB 161
Havaris v Canada (Attorney General), 2021 FCA 124
Ms. Havaris (Applicant) sought to set aside the decision of the Social Security Tribunal – Appeal Division (SST-AD) dismissing an appeal from a first level determination by the General Division of the Social Security Tribunal (SST-GD). In that decision, the SST-GD dismissed the Applicant’s application for a survivor’s pension under the Canada Pension Plan (CPP), determining that the Applicant was not in a conjugal relationship with a deceased contributor at the relevant time.
The Applicant had been determined to be in a conjugal relationship with the deceased contributor in a prior proceeding before the Ontario Superior Court of Justice. That proceeding was in the context of a claim for support under the Ontario Succession Law Reform Act (SLRA). The Applicant argued that the doctrine of issue estoppel should apply to prevent the SST-GD from redetermining whether the Applicant was in a conjugal relationship with the deceased contributor.
The Federal Court of Appeal held that the doctrine of issue estoppel did not apply, and that the SST-AD and the SST-GD were not bound to reach the same conclusion as the Ontario Superior Court of Justice. The doctrine of issue estoppel applies to prevent re-litigation of the same issues. It has three necessary conditions: the same question was decided in the previous proceeding; that proceeding involved the same parties or their privies; and the previous decision was a final one.
The Federal Court of Appeal dismissed the Applicant’s appeal, finding that the first condition was not met because the definition of “spouse” is different under the SLRA and the CPP and that the second condition was also not met because the Minister of Employment and Social Development was not a party to the case before the Ontario Superior Court of Justice, nor could he be considered a “privy” to the deceased’s married spouse.
Havaris v Canada (Attorney General), 2021 FCA 124
Roubinchtein v Ontario (CEO of FSRA), 2021 ONFST 10
Louiza Roubinchtein (Applicant) appealed the decision of the Superintendent of Financial Service for Ontario (Superintendent) to issue a Notice of Intended Decision to Refuse to Make an Order (NOID). The Applicant applied for spousal death benefits under Jeffrey Thomas’ (Deceased) pension plan after he passed away. The plan administrator determined that the Applicant was not eligible for spousal death benefits, so the Applicant requested that the Superintendent order the plan administrator to pay such benefits. The Superintendent subsequently issued the NOID.
The Financial Services Tribunal (Tribunal) denied the Applicant’s claim to spousal death benefits. Section 48 of the Ontario Pension Benefits Act (PBA) provides pre-retirement death benefits to a “surviving spouse” who was not living separate and apart from a deceased member on the date of the member’s death. Section 1(1) of the PBA defines “surviving spouse” as a person who was the spouse of a member immediately before the member’s death. Further, section 1(1) defines “spouse” as two persons who are either: (a) married to each other; or (b) are not married to each other and are living together in a conjugal relationship, (i) continuously for a period of not less than three years, or (ii) in a relationship of some permanence, if they are the parents of a child as set out in section 4 of the Children’s Law Reform Act. The Applicant and the Deceased were not legally married, nor did they have any children. The Applicant therefore needed to show that she and the Deceased lived together in a conjugal relationship continuously for a period of not less than three years. She failed to do so. The Applicant and the Deceased had separate apartments. Although they spent time at each other’s apartments, there was no objective evidence that they lived together, even intermittently. She also failed to provide objective evidence that she and the Deceased were in a conjugal relationship prior to his death.
Roubinchtein v Ontario (CEO of FSRA), 2021 ONFST 10
Meloche v Meloche, 2021 ONCA 640
Mr. Meloche (Appellant) was appealing a decision by a motions judge who had found that where a retired member spouse’s pension payments are divided at source for family law purposes, the parties cannot agree, the court cannot order, and an arbitrator cannot award that payment sharing continue to the non-member spouse’s estate for the balance of the retired member spouse’s life. The Ontario Court of Appeal (ONCA) disagreed with the motions judge’s interpretation of the legislation in answering this question. The ONCA found that there was nothing in the Ontario PBA, the Family Law Act (FLA), or the Family Law Matters, O. Reg. 287/11 that precluded the parties from agreeing to, a court from ordering, or an arbitrator from awarding, a continuation of shared pension payments to the deceased non-member’s estate for the balance of the member spouse’s life.
Meloche v Meloche, 2021 ONCA 640
Lecompte v. Paroyan, 2021 ONSC 6333
Ms. Lecompte (Applicant) filed a motion in April 2020 pursuant to Rule 25(19) of the Family Law Rules to increase the equalization payment owed to her by Mr. Paroyan (Respondent) as a result of a final order dated April 17, 2009. The Applicant argued that the equalization payment had been improperly calculated as a result of an incorrect figure provided by the plan administrator to the pension valuator which caused the pension valuator to overestimate the value of the Applicant’s pension plan.
The Ontario Superior Court of Justice (Court) noted that it has jurisdiction under Rule 25(19) of the Family Law Rules to amend the order if there are technical errors in the final document caused by inadvertence or oversight of counsel or the parties, or if there has been a mistake made that has negated the common intention of the parties. The Court found that there was no evidence that there were technical errors made by inadvertence or oversight in the preparation of the final order. The Court also found that the evidence did not support the Applicant’s claim that the plan administrator had provided incorrect information to the pension valuator and that in fact the pension valuator had only ever received documentation directly from the Applicant’s counsel. The parties negotiated an agreement based on the actuarial value of their respective pensions and agreed that the Applicant would purchase the Respondent’s interest in the matrimonial home, and that payment owed to the Respondent would be reduced by approximately C$40,000 to take into account the value of the equalization payment – this was the common intention of the parties. The Court found that the Respondent had no role in calculating the Applicant’s pension and that he may not have agreed to these terms had he been aware that his equalization payment was C$51,000 more. The Court dismissed the Applicant’s motion.
Lecompte v. Paroyan, 2021 ONSC 6333
F (SL) v F (JT), 2021 NWTSC 32
JT (Applicant) and SL (Respondent) were married for 18 years. Following a trial in 2019, the Respondent was awarded an amount for spousal support each month for an indefinite duration. In 2020, the Applicant applied to vary spousal support under the Divorce Act based on a material change in circumstances as he was laid off from his position at a large financial institution a year after the 2019 trial.
The Supreme Court of the Northwest Territories (Court) dismissed the application. The Court determined that on a balance of probabilities the Applicant did not discharge the onus of proving that there had been a material change in circumstances. Although the Applicant did not anticipate he would be laid off, the dramatic and fairly immediate drop in his income was due to his choice of selecting the Retirement Payment Option rather than the Income Protection Option, which were the two choices given to him by his employer at the time he was laid off. The Retirement Payment Option gave the Respondent an immediate payout and a reduced pension while the Income Protection Option would have protected his base salary for a year and bonus income for two years. The Applicant had an opportunity to choose a compensation package that would have protected the lion’s share of his income, and which would have improved his chances of finding other work through “reskilling”. Instead, he chose an option that narrowed these opportunities, reduced his income, and ultimately allowed him to retire at age 55. His efforts to find work had been minimal. The Court found that his situation was not a permanent situation that had arisen out of circumstances beyond his control but rather was a situation he created himself through deliberate choices.
F (SL) v F (JT), 2021 NWTSC 32
Ghent v. Busse, 2021 ONSC 3278
Ms. Ghent (Applicant) and Mr. Busse (Respondent) were married on December 27, 1986, and separated on or about August 26, 2009. The parties entered into a Separation Agreement in 2011 (Agreement), which settled the matter of equalization. As part of that equalization calculation, the parties had relied on a value for the Respondent’s pension calculated with a retirement date of age 60. Since the Respondent was 55 years of age at the time of his retirement, the Applicant sought an order entitling her to the difference between the equalization payment that she had received and the equalization payment that she would have received had the Agreement correctly presumed a retirement date of age 55.
The Ontario Superior Court of Justice (Court) dismissed the Applicant’s claim for a further equalization amount. In doing so, the Court relied on section 7(3) of the Ontario Family Law Act, which prohibits an application to equalize net family property from being brought two years after the day the marriage is terminated by divorce or six years after the day the spouses separate. The Applicant’s claim was brought forward in 2020, and since the parties had separated in 2009 and had executed the Agreement in 2011, the Court held that the Applicant’s claim was statute barred.
The Respondent also sought an order terminating or reducing his obligation to pay the Applicant ongoing spousal support on the basis that it had become difficult for him to meet these financial obligations post-retirement. The Court dismissed the Respondent’s claim and ordered that his spousal support continue. In arriving at its decision, the Court emphasized that it was under no obligation to accept the Respondent’s voluntary retirement as giving rise to an automatic right to vary his existing support order to an amount commensurate with his pension income. Since the Respondent was aware of his financial obligations, including a debt to his father in excess of C$150,000, when he had decided to retire, the Court found that the Respondent’s decision to retire was neither reasonable nor responsible in the circumstances. Moreover, the Court stressed that its consideration of the Respondent’s ability to pay the support was not restricted to an examination of his pension income alone, but that it could include an assessment of his capacity to earn income from the job he had chosen to leave or from other employment following retirement. Given that the Respondent still possessed teaching and artistic skills that would enable him to find other income and correct his premature retirement error, the Court found that the Respondent’s ability to pay the spousal support had not been compromised.
Ghent v. Busse, 2021 ONSC 3278
Want v. Gauthier, 2021 ONSC 7595
Ms. Want (Applicant) and Mr. Gauthier (Respondent) were married on February 28, 1997, and separated on April 1, 2014. Prior to commencing trial, the parties had agreed that the equalization payment owed by the Respondent to the Applicant would be satisfied by way of a pension rollover from the Respondent’s Government of Canada pension. At trial, the Applicant, who had been in receipt of long-term disability since 2008 with an annual income of C$30,000, sought an additional order entitling her to spousal support based on the Respondent’s pension income divided at source. The Respondent, who had an annual income of over C$250,000 derived from various sources including approximately C$70,000 per year in pension income, took the position that his pension should not be considered in the determination of spousal support since it had already been included in the division of net family properties.
The Ontario Superior Court of Justice (Court) agreed with the Applicant and found that a portion of the Respondent’s pension was available for spousal support, with the exact amount to be determined following the pension rollover. The Court stated that “double dipping” – allowing a payee spouse to reap the benefit of a pension both as an asset and then again as a source of income – is generally unfair, particularly where the payee spouse retains the asset and does not make a reasonable attempt to convert it into income. As such, the Court reasoned that it is generally more appropriate to focus on the assets of the payor spouse that were not subject to division when assessing that spouse’s ability to pay support. However, the Court emphasized that double dipping cannot always be avoided and may be reasonable in certain circumstances, particularly where the payor spouse has the ability to pay, the payee spouse has made a reasonable effort to use the equalized assets in an income-producing way and, despite this, an economic hardship from the marriage or its breakdown persists. Given the Applicant’s poor health and her dire need for spousal support, as well as the Respondent’s considerable level of income, the Court found that an exception to the general rule of avoiding double dipping was warranted.
Want v. Gauthier, 2021 ONSC 7595
BENEFICIARY DESIGNATIONS
Ray-Ellis v Goodtrack et al, 2021 ONSC 3102
Ms. Ellis (Applicant) sought a declaration that the proceeds of the Locked in Retirement Account (the LIRA) held by Kirk Goodtrack (the Deceased) and registered with the Deceased’s bank be paid to her forthwith. The Applicant relied on a beneficiary designation for the LIRA, signed by the Deceased in 1997, in which she is the designated beneficiary (the 1997 Designation). The application was opposed by the Deceased’s parents William and Edith Goodtrack (the Parents) who were the beneficiaries of the Deceased’s estate. The Parents’ position was that the Deceased signed a new beneficiary designation form on September 29, 2001 (the 2001 Designation) following his divorce from the Applicant which revoked the 1997 Designation. The Deceased’s bank had the original 1997 Designation but only a photocopy of the 2001 Designation.
The Applicant argued that the 2001 Designation was invalid because it was never sent to the Deceased’s bank, it was not in the bank’s records and the Deceased’s actions subsequent to the 1997 Designation confirm that he had no intention to change the 1997 Designation. The Applicant, however, did not challenge the authenticity of the signatures on the 2001 Designation or allege any fraud in relation to it.
The Ontario Superior Court of Justice (Court) found that the Applicant gave insufficient importance to the 2001 Designation and its effect under the Succession Law Reform Act (SLRA). The 2001 Designation was an “instrument” pursuant to section 51(1)(a) of the SLRA which the Deceased had signed. The authenticity of the 2001 Designation had not been challenged by the Applicant. The SLRA does not require that the beneficiary designation be “registered” or even sent to the banking institution. Further, in RBC Life Insurance Company v. Monaco et al., 2010 ONSC 75, the Court accepted a photocopy of the changed designation with the wrong policy numbers as valid.
The Court found that the 2001 Designation revoked the 1997 Designation. The Court ordered the proceeds of the LIRA to be paid out to the Parents as the designated beneficiaries.
Ray-Ellis v Goodtrack et al, 2021 ONSC 3102
Mak (Estate) v Mak, 2021 ONSC 4415
The Mak family consisted of two parents, Yiu-Loi Mak (Father) and Tai-Kiu Mak (Mother), and their four sons, Raymond, Eddie, Steve (Plaintiffs) and Kenny (Defendant). After the Father passed away in 2002, the Defendant lived with the Mother in the family home. The Mother became dependent on the Defendant to drive her to appointments and to assist with her banking. By July 2007, the Mother had listed the Defendant as a beneficiary on her RRIF account. The Mother’s will provided for an equal division of the estate amongst the four brothers. In March 2012, the Mother was diagnosed with dementia and passed away in November 2015. The Plaintiffs challenged a number of actions taken during the Mother’s life that were beneficial to the Defendant, including the beneficiary designation under her RRIF account. The Plaintiffs argued that the assignment of the Defendant as a designated beneficiary was subject to a resulting trust.
The Plaintiffs relied on Calmusky v Calmusky, 2020 ONSC 1506 (Calmusky Decision), to argue that the presumption of resulting trust applies to a beneficiary designation. The Calmusky Decision relied on an obiter comment from McConomy-Wood v McConomy, [2009] OJ No 741, where the Ontario Superior Court of Justice (Court) found that there was no doubt that a designated beneficiary under a RIF was intended to hold the RIF proceeds in trust for the beneficiaries of an estate.
The Court disagreed with the Plaintiffs’ assertion that the doctrine of resulting trust applies to a beneficiary designation. The Court cited Pecore v Pecore, 2007 SCC 17, the leading case on resulting trusts, which states that the presumption of resulting trust applies to inter vivos gifts. The Court noted that a beneficiary designation is not an inter vivos gift. The Court also highlighted commentary that was critical of the Calmusky Decision, which noted that there is usually no need to determine the true intent behind a beneficiary designation. The Court held that the presumption of resulting trust therefore does not apply to a beneficiary designation on a RRIF and that similar to the presumption of undue influence, the onus is on the party challenging the beneficiary designation to establish that the deceased’s intention was to benefit their estate with the designation.
Mak (Estate) v Mak, 2021 ONSC 4415
PENSION PLAN ADMINISTRATION
Brousseau v La Cité Collégiale et al, 2021 ONSC 2676
Serge Brousseau (Plaintiff) was the Vice President of Human Resources at La Cité Collégiale (Defendant). All of the Defendant’s employees were required to contribute to its pension plans. The first is the Base Pension Plan for the majority of the Defendant’s employees, and the second is a Supplementary Pension Plan for high earning senior management employees. The Supplementary Pension Plan had more favourable terms than the Base Pension Plan. The Plaintiff claimed that the Defendant breached a verbal agreement from 2004 whereby it allegedly agreed to pay for all costs to transfer his pensions with previous employers to both the Base Pension Plan and the Supplementary Pension Plan. The Plaintiff further alleged that the Defendant agreed that if his pension benefits with previous employers could not be transferred to the Supplementary Pension Plan, then the Defendant would establish a fund for him to ensure he received the same retirement pension as if that transfer was permitted. The Defendant admitted that it had agreed to pay for the costs to transfer the Plaintiff’s years of pensionable service with past employers to the Base Pension Plan, but not to the Supplementary Pension Plan. Finally, the Plaintiff also alleged that an employee of the Defendant negligently misrepresented the amount of his monthly pension in retirement, which led him to retire early and caused financial damage.
The Ontario Superior Court of Justice (Court) found that the Plaintiff did not establish on a balance of probabilities that the Defendant agreed to pay the costs to transfer his years of pensionable service with previous employers to the Supplementary Pension Plan, or that it would set up a fund to ensure the same monthly retirement pension if such a transfer were not possible. The evidence showed that the Supplementary Pension Plan prohibited the transfer of years of service earned with previous employers, and that the Plaintiff was aware of that restriction. The Plaintiff therefore did not have a reasonable expectation that his pensions with previous employers would be transferred to the Supplementary Pension Plan. The Court also found it highly unlikely that the Defendant would verbally agree to set up a fund for an unspecified amount to supplement the Plaintiff’s retirement pension without first determining the costs involved. Finally, the Court found that the Defendant had entirely fulfilled its obligation to transfer the Plaintiff’s pension benefits from previous employers to the Base Pension Plan when it paid him a sum of C$170,000.00 in 2010.
The Court also found that the Plaintiff failed to prove the Defendant negligently misrepresented the amount of pension income the Plaintiff would receive after his retirement. The Plaintiff failed to prove that he relied, in a reasonable manner, on an employee of the Defendant’s negligent misrepresentation. The Plaintiff was more knowledgeable about the Supplementary Pension Plan than the employee of the Defendant and he had planned to retire even before the employee gave the inaccurate estimate.
Brousseau v La Cité Collégiale et al, 2021 ONSC 2676
Ontario Public Service Employees Union (Gallina) v Ontario (Children, Community and Social Services), 2021 CanLII 58426 (ON GSB)
Louie Gallina (Grievor) filed a grievance before the Grievance Settlement Board (Board) on September 19, 2015, pursuant to Article 22.16 of a collective agreement. The Grievor’s employer (Employer) had withheld 18 months’ worth of funds for a period in 1993 and 1994 to contribute to his pension, but such amounts were not remitted and credited to his account. Article 22.1 of the collective agreement stated that grievances should be resolved “as quickly as possible”, and Article 22.2 provided that the Grievor had 30 days after the circumstances giving rise to the complaint have occurred or have come or ought reasonably to have come to the attention of the Grievor. The Grievor argued that since he was aware that the amount of his pension contributions had been withheld by the Employer, it was reasonable for him to have assumed that the amounts withheld had been remitted by the Employer in the normal course. The Employer argued that the administrator of the pension plan issued annual statements to all members, and the Grievor therefore should have discovered much earlier than 2015 that there had been no pension contributions to his account for 18 months in 1993 and 1994.
The Board agreed with the Grievor and held that the grievance was filed within the time limit in Article 22.2 of the collective agreement. The Grievor did not have actual knowledge that he had grounds to file his grievance until 2015. The annual statements he received did not set out periods of time for which pension contributions were not received. The problem could have been discovered only by a detailed analysis of the information in the statements. The Grievor only learned in 2015 that the period without pension contributions resulted from the Employer’s failure to remit funds it had withheld, and he filed his grievance within 30 days of learning that information. The Board also held that it is the obligation of the Employer to ensure the proper amounts are remitted and credited appropriately as holding otherwise would put an unfair burden on the Grievor.
Ontario Public Service Employees Union (Gallina) v Ontario (Children, Community and Social Services), 2021 CanLII 58426 (ON GSB)
Lauzier v. Ontario (CEO of FSRA), 2021 ONFST 17
In a Notice of Intended Decision dated September 3, 2020, the CEO of the Financial Services Regulatory Authority of Ontario (Respondent) informed Mr. Lauzier (Applicant) that it was refusing to issue an order in respect of the Accor Hotels Pension Plan (Plan). The Respondent took the position that the Applicant’s allegation that his pension benefit had been incorrectly calculated was unsupported and that the conditions for an order under section 87 of the Ontario PBA had not been established. On July 6, 2021, the Applicant provided the Respondent and the administrator of the Plan (Administrator) with four interrogatories. The Respondent and the Administrator responded to the four interrogatories, and the Applicant subsequently filed a Notice of Motion on September 1, 2021, pursuant to Rule 19.03 of the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal, seeking an order requiring the Respondent and the Administrator to provide full and adequate responses to various interrogatories.
The Ontario Financial Services Tribunal (Tribunal) granted the Applicant’s motion in part. The Administrator was ordered to furnish the Applicant and the Respondent with an explanation of its calculation of the Applicant’s benefits under the Plan, in such detail as would permit the Applicant to understand the basis on which the calculation was made. While the Tribunal concluded that it was appropriate for the Applicant to request the details of the calculation of his pension entitlement, the Tribunal found that the remaining interrogatories, which related to the Administrator’s analysis of its plan based on different assumptions and legal arguments, were not the proper subject of an interrogatory.
Lauzier v. Ontario (CEO of FSRA), 2021 ONFST 18
International Association of Machinists and Aerospace Workers; International Association of Machinists and Aerospace Workers Local Lodge 1542 v. Arnprior Aerospace Inc., 2021 CanLII 115298 (ON LRB)
The International Association of Machinists and Aerospace Workers (Applicant) brought an application for an interim order under section 98 of the Labour Relations Act (Act) to prevent Arnprior Aerospace Inc. (Respondent) from unilaterally changing its defined benefits pension plan (DB Plan) to a defined contribution pension plan (DC Plan), pending the outcome of a section 96 unfair labour practice complaint. In that complaint, the Applicant contended that the Respondent had violated the Act by interfering with its capacity to represent its members and by dealing directly with the bargaining unit employees.
The Ontario Labour Relations Board (Board) granted the application. The Board found that the Applicant had an arguable position in the pending section 96 application on the interpretation of the collective agreement and the bargaining history between the parties. Moreover, the Board noted that a case could be made that the Respondent had refused to bargain a matter of fundamental importance, constituting a rejection of their statutory status as a trade union, and amounting to an interference with the representation of employees. While the Board had little doubt that the Respondent’s strategy was a prudent one in all the circumstances, it found that granting the interim relief would better serve the interests of protecting the Applicant’s status as the exclusive bargaining agent than it would cause harm to the Respondent if it was forced to delay implementation of the DC Plan. As such, the Respondent was ordered to immediately cease taking steps to carry out the amendment to the DB Plan, pending the Board’s determination of the unfair labour practice complaint.
International Association of Machinists and Aerospace Workers; International Association of Machinists and Aerospace Workers Local Lodge 1542 v. Arnprior Aerospace Inc., 2021 CanLII 115298 (ON LRB)
Monteiro v. Ontario (CEO of FSRA), 2021 ONFST 20
From September 1980 to June 1989 (Alleged Service), Mr. Monteiro (Applicant) was employed as a part-time teacher by the Toronto Board of Education, part of the Metropolitan Toronto School Board, which, through several consolidations, became the Toronto District School Board (TDSB) in 1999. Prior to the period of Alleged Service, the Applicant was briefly a member of the Ontario Teachers’ Pension Plan (Plan) and accrued pensionable service of 16.5 days. Following a change in employer, however, this brief membership went inactive, and the Applicant’s records were not updated to reflect his current address. As a result, the Ontario Teachers’ Pension Plan Board (Administrator) treated the Applicant as an inactive member until September 2003, at which time he received a certificate of qualification from the Ontario College of Teachers and became an active member of the Plan.
The Applicant testified that from 1980 to 2003, he had been under the impression that he was a member of the Plan, or, in the alternative, that he was confused about such membership. However, prior to 2006, the Applicant did not seek clarification from either the Administrator or his employers in this regard. Moreover, other than for the brief 16.5-day period in 1978, prior to 2003 the Applicant made no required employee contributions to the Plan, nor were employer contributions submitted to the Plan by the Applicant’s employers on his behalf. As a result, the Administrator took the position that the Applicant was not an active member of the Plan in respect of the period of Alleged Service, or even eligible for such membership.
In response to a Notice of Intended Decision dated March 29, 2021, wherein the CEO of the Financial Services Regulatory Authority of Ontario (Respondent) informed the Applicant that it was refusing to issue an order under section 87 of the Ontario PBA in respect of the Plan, the Applicant filed a Request for Hearing with the Ontario Financial Services Tribunal (Tribunal). Specifically, the Applicant sought an order that the Administrator had contravened the Plan terms and/or the Ontario PBA by refusing to recognize his employment during the period of Alleged Service as qualifying for Plan membership and pensionable service and by failing to contact him from 1980 to 2003.
The Tribunal dismissed the application and ordered the Respondent to carry out the Notice of Intended Decision. After reviewing the applicable Plan terms in the Teachers’ Superannuation Act, the Tribunal found that the Administrator was required and permitted to credit service only in circumstances of eligibility where proof of being “qualified as a teacher” was properly filed with the Administrator. During the period of Alleged Service, the Plan clearly provided that to be a “qualified teacher” a person must have been granted a certificate of qualification or letter of standing by the Minister of Education or must have been a person in respect of whom the Minister had granted a letter of permission to a school board. Since the Applicant did not receive his certificate of qualification until 2003 and given that the evidence did not support a finding that letters of permission were granted in respect of the Alleged Service, the Tribunal found that the Applicant had not demonstrated on a balance of probabilities that he had an entitlement under the Plan.
The Tribunal also found that the Administrator’s failure to contact the Applicant as an inactive member with 16.5 days of service between 1980 and 2003 was not unreasonable in the context of a pension plan with over 60,000 members. The Tribunal stated that the Applicant knew (or should have known) from his employment, his interaction with other teachers, and from his brief experience as a Plan member in 1978, that Plan participation was accompanied by mandatory employee contributions, which were not being deducted from his pay at any time between 1980 and 2003. Since it was the Tribunal’s position that the Applicant bore a significant portion of the responsibility for not proactively inquiring of his employers and the Administrator to determine his pension status, the Tribunal found that there were no reasonable and probable grounds indicating that the Administrator had breached the Plan or the Ontario PBA by failing to contact him over the 23-year span.
Monteiro v. Ontario (CEO of FSRA), 2021 ONFST 20
BANKRUPTCY
Anthony Capital Corporation (Re), 2021 NLSC 91
Trustees of a pension plan for executive employees of Anthony Capital Corporation (Applicants) sought an order directing the bank to release funds held in trust by its solicitors. Those funds came from the mortgage sales by the bank of two properties formerly owned by Anthony Capital Corporation (ACC). On January 14, 2019, ACC went into bankruptcy pursuant to the Bankruptcy and Insolvency Act (BIA). As of the date of bankruptcy, approximately C$571,900 was owed to the pension plan by ACC.
The Applicants submitted that the funds submitted to the pension plan were protected by a common law trust and therefore fell outside the property of ACC pursuant to section 67(1)(a) of the BIA. This claim failed; the Applicants did not establish certainty of subject matter because the monies that were the subject of the trust could not be traced to the mortgaged properties.
Alternatively, the Applicants submitted that amounts owing to the pension plan for the normal cost and special payments had super-priority status pursuant to section 81.5 of the BIA. This claim was partially successful as the Supreme Court of Newfoundland and Labrador held that the super-priority granted by section 81.5 of the BIA is for the normal cost only, to the exclusion of special payments.
Finally, the Applicants claimed that any amounts owing to the pension plan that fell outside the scope of section 81.5 of the BIA constituted a valid, secured claim over the assets of ACC pursuant to the Newfoundland PBA. This claim failed; the pension plan administrator was not a secured creditor for the purposes of the BIA. The secured interest granted by section 32(4) of the PBA did not survive a bankruptcy.
Anthony Capital Corporation (Re), 2021 NLSC 91
PRESERVATION ORDERS
Pasquill v. British Columbia (Securities Commission), 2021 BCCA 424
On March 16, 2015, the British Columbia Securities Commission (Commission) issued a decision against Mr. Pasquill (Appellant), banning him from participating in capital markets and ordering him to pay the Commission a total of C$36.7-million. As part of a subsequent package of amendments to the Securities Act (Act) in March of 2020, the Court Order Enforcement Act (COEA) was amended to state that an exemption from an “enforcement process” for property in a registered plan no longer applied to an enforcement process arising from an order made under the Act. Accordingly, the Commission issued a preservation order on March 27, 2020, in respect of the Appellant’s Life Income Fund (LIF), which was comprised entirely of pension benefits. The Appellant appealed the preservation order, relying on provisions of the Pension Benefits Standards Act and the Pension Benefits Standards Regulation (collectively, BC PBS Legislation), which exempted pension fund benefits from execution, seizure, or attachment. On November 7, 2020, the Commission dismissed the Appellant’s application to have the preservation order revoked, which the Appellant subsequently appealed to the Court of Appeal for British Columbia (Court).
The Court allowed the appeal and set aside the preservation order as falling outside the Commission’s statutory authority. The Court found that the funds in the Appellant’s LIF had been frozen for the purpose of execution and that the preservation order was part of an “enforcement process”. Moreover, construing the statutes in accordance with modern interpretive principles, the Court found that the BC PBS Legislation prevailed over the amended COEA. Since the BC PBS Legislation was not similarly amended in 2020 to reflect the amendments to the Act, the Court held that the legislation must be interpreted as meaning that the Commission did not have the authority to enforce judgments against plans derived from pension funds.
Pasquill v. British Columbia (Securities Commission), 2021 BCCA 424
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