EQUALITY RIGHTS
Fraser v. Canada, 2020 SCC 28
This is an appeal of the Federal Court of Appeal's decision
in Fraser v Canada, 2018 FCA 223, as discussed in our January 2019 Pensions, Benefits and Executive
Compensation Newsletter.
Ms. Fraser, Ms. Fox and Ms. Pilgrim (Claimants) were three retired
members of the Royal Canadian Mounted Police (RCMP) who took
maternity leave in the 1990s. Upon returning to full-time service,
they experienced difficulties balancing their work obligations with
childcare responsibilities. These difficulties caused Ms. Fox to
retire from the RCMP in 1994 and resulted in Ms. Fraser taking
unpaid leave in 1997. At the time, the RCMP did not permit regular
members to work part-time. In December 1997, the RCMP introduced a
job-sharing program in which multiple RCMP members could split the
responsibilities of one full-time position, allowing each member to
work fewer hours than a full-time employee. The Claimants enrolled
in the job-sharing program along with 137 other RCMP members
between 1997 and 2011. Most participants were women with children.
From 2010 to 2014, all RCMP members who job-shared were women, and
most of them cited childcare as their reason for joining the
program.
Pursuant to the Royal Canadian Mounted Police Superannuation
Act and the associated Royal Canadian Mounted Police
Superannuation Regulations (Pension Plan), RCMP members can
treat certain gaps in full-time service, such as leave without pay
or suspension without pay, as fully pensionable. Upon returning
from unpaid leave, a member can buy back the service they missed by
making the contributions that both the member and the RCMP would
have made had the member been actively employed, increasing the
member's years of full-time pensionable service and resulting
in a more valuable pension. However, no such buy-back option is
available to job-sharers who temporarily reduce their working
hours, as job-sharing is classified as part-time work under the
Pension Plan for which participants cannot obtain full-time pension
credit.
The Claimants argued that the Pension Plan violated section 15(1)
of the Canadian Charter of Rights and Freedoms (Charter)
on the basis of sex, because it prevents women with children -- the
majority of participants in the job-sharing program -- from
contributing to pensions in the same way as members who worked
full-time or took unpaid leave.
The Federal Court dismissed the application, holding that there was
insufficient evidence that job-sharing was disadvantageous compared
to unpaid leave and, even if it was, these outcomes were the result
of a participant's choice to job-share. The Federal Court of
Appeal upheld the Federal Court decision, holding that job-sharing
RCMP members did not receive inferior compensation to members on
leave without pay and that any adverse impact on job-sharing
participants flowed from their choice to work part-time, not from
the Pension Plan.
Writing for the majority, Justice Abella allowed the appeal and
held that the Pension Plan constituted adverse impact
discrimination on the basis of sex.
Justice Abella applied the two-step approach to section 15(1)
analysis: to prove a prima facie violation of section 15(1), a
claimant must demonstrate that the impugned law or state action (a)
on its face or in its impact, creates a distinction based on
enumerated or analogous grounds, and (b) imposes burdens or denies
a benefit in a manner that has the effect of reinforcing,
perpetuating, or exacerbating disadvantage.
With respect to the first stage of section 15(1) test, Justice
Abella found that the buy-back restriction met the first stage of
the section 15(1) test. The statistical evidence shows that RCMP
members who worked reduced hours in the job-sharing program were
predominantly women with young children. Moreover, Justice Abella
referred to evidence about the disadvantage women face as a group
in balancing professional and domestic work. These sources of
evidence show the clear association between gender and fewer or
less stable working hours, and they demonstrate that the RCMP's
use of a temporary reduction in working hours as a basis for
imposing less favourable pension consequences has an adverse impact
on women.
With respect to the second stage of the section 15(1) test, Justice
Abella found that the Pension Plan perpetuated a long-standing
source of disadvantage to women: gender biases within pension
plans, which have historically been designed for "middle and
upper-income full-time employees with long service, typically
male". Justice Abella noted that differential treatment can be
discriminatory even if job-sharers choose to job-share.
After finding a prima facie breach of section 15(1), Justice Abella
conducted section 1 analysis and found that the Pension Plan could
not be demonstrably justified in a free and democratic society.
Justice Abella found that the Attorney General identified no
pressing and substantial policy concern, purpose or principle that
explains why job-sharers should be denied full-time pension credit
for their service. Additionally, Justice Abella indicated that this
limitation is entirely detached from the purposes of both the
job-sharing scheme and the buy-back provisions. Job-sharing was
clearly intended as a substitute for leave without pay for those
members who could not take such leave due to personal or family
circumstances. It is unclear, then, what purpose is served by
treating the two forms of work reduction differently when extending
pension buy-back rights.
Justices Brown and Rowe in their dissenting reasons found that the
Pension Plan does not represent a source of ongoing systemic
disadvantage as it does not contribute to women's systemic
disadvantage, nor does it reinforce, perpetuate or exacerbate the
pre-existing disadvantage of women in the workplace which arises in
part from unequal distribution of parental responsibilities.
In separate dissenting reasons, Justice Cote found that the Pension
Plan created a distinction not on the basis of sex, but on the
basis of caregiving responsibilities. Because the Court does not
recognize caregiving status as an analogous ground under section
15(1), the Claimants fail at stage one of the section 15(1)
analysis.
Supreme Court of Canada Decision
INTERPRETATION OF PENSION PLAN TERMS
United Steel v. Georgia-Pacific LP, 2020 ONSC 1560
Georgia-Pacific LP (Employer) placed its employees on indefinite
layoff with recall rights following the idling of the plant that
they worked in. Pursuant to an agreement between the Employer and
the United Steel, Paper and Forestry, Rubber, Manufacturing,
Energy, Allied Industrial and Service Workers International Union
(United Steel Workers), Local 14994 (Union), the employees who were
laid off could elect at any time to either take their severance pay
or to retain their recall rights. Six employees, who were the
subject of the grievances, elected to forgo their recall rights and
accept severance pay. As a result, the pension administrator, on
behalf of the Employer, calculated the employees' pensions
without including any grow-in benefits provided for under the
Ontario Pension Benefits Act (PBA). None of the employees
were advised that they would not be entitled to grow-in
benefits.
Under the PBA, grow-in benefits are only available if an employee
ceases to be a member of the pension plan as a result of an
"activating event" under section 74(1) of the PBA,
including an employer's termination of a plan member's
employment. The issue in this case is whether the employees had
voluntarily terminated their employment and, therefore, were not
entitled to grow-in benefits under the PBA.
The Ontario Divisional Court set aside the arbitrator's
decision that the employees had not been terminated within the
meaning of the PBA and remitted the case to a different arbitrator.
The Divisional Court found that the arbitrator failed to consider
section 4(2) of Regulation 288/01 made under the Employment
Standards Act (Regulation). Under section 4(2) of the
Regulation, if an employer lays off an employee for a period that
may exceed the period of temporary layoff, and doing so might be
considered a breach of the collective agreement, the employer may
give the employee a written notice of indefinite lay-off and the
employer shall be deemed to have provided the employee with a
notice of termination as of the date of notice. In the present
case, the employees were all provided with a written notice of
indefinite layoff by the Employer. Pursuant to the Regulation, the
Employer may be deemed to have terminated the employees as of the
notice date. If this is the case, the employees may be entitled to
grow-in benefits.
Ontario Divisional Court Decision
Aziz v. Calgary Firefighters Association., 2020 AHRC 66
Paul Aziz was a firefighter employed by the City of Calgary
(City) and a member of the Calgary Firefighters Association, Local
255, International Association of Firefighters (Union). Mr. Aziz
was forced to retire at age 60 pursuant to a mandatory retirement
provision in a Supplementary Pension Plan (FSPP), which formed part
of a collective agreement between the City and the Union, covering
the terms of his employment. Mr. Aziz alleged discrimination in
employment pursuant to section 7 of the Alberta Human Rights
Act (Act) and membership in a trade union pursuant to section
9 of the Act on the grounds of age.
The Human Rights Tribunal of Alberta (Tribunal) had previously
determined in Aziz v. Calgary Firefighters Association,
2020 AHRC 40 that the FSPP was a "bona fide" pension
plan within the meaning of section 7(2) of the Act, and dismissed
the complaint against the City. The Tribunal found that the FSPP
satisfied the indicia of a bona fide pension plan within the
meaning of section 7(2) of the Act as:
- The FSPP was first established and registered in 1974
- The main purpose of the FSPP is to supplement and bridge the pension plan benefits provided to other City employees under the Local Authorities Pension Plan
- The FSPP is a defined benefit plan registered with the provincial government of Alberta and subject to the Employment Pension Plans Act and the Income Tax Act
- The FSPP is supervised by the Alberta Superintendent of Pensions
- The FSPP is jointly administered by the City and the Union by an elected Board of Trustees
- As of 2018, the FSPP was valued at C$188 million and has approximately 2,000 members
This constituted a complete defence for the City to the claim of
age discrimination under section 7(2) of the Act.
The Tribunal dismissed the complaint and found that section 7(2) of
the Act operates to act as a defence to a challenge to a mandatory
retirement provision contained in a collective agreement, whether
the challenge is brought against only the employer, or against the
employer and union jointly. The defence offered by section 7(2)
means that a mandatory retirement provision contained in a bona
fide pension, retirement or benefit plan is not considered to be
discrimination on the ground of age and, therefore, there is no
obligation for either the employer or union to justify the age
restriction. The duty to accommodate does not arise unless prima
facie discrimination is established, and by virtue of section 7(2),
the mandatory retirement requirement in a bona fide pension,
retirement or benefit plan is deemed not to constitute prima facie
discrimination.
Alberta Human Rights Tribunal Decision
PENSION PLAN ADMINISTRATION
Canada (Attorney General) v. Jost, 2020 FCA 212
After retiring from the Canadian Armed Forces (CAF) in 2015,
Douglas Jost did not receive his pension payment for 29 weeks,
despite his expectation that he would receive his lump sum pension
benefit within 8-12 weeks. He also did not receive interest on the
money that was owed to him. Mr. Jost alleged he was forced to go
into debt and incur interest to cover basic living expenses
following his release. Mr. Jost also alleged other retirees from
the CAF experienced similar delays and suffered similar losses. The
Federal Court certified the proceeding as a class action (the
Certification Order), finding that Mr. Jost's statement of
claim disclosed reasonable causes of action for breach of fiduciary
duty, breach of contract and negligence, and that the other
requirements of the class proceedings rules with respect to
certification had been met.
The Attorney General of Canada brought an appeal from the
Certification Order, alleging that the Federal Court made numerous
errors in its legal analysis in determining that the statement of
claim disclosed reasonable causes of action, amongst other
things.
The Federal Court of Appeal (FCA) indicated that the Supreme Court
of Canada (SCC) has held that a fiduciary duty does not attach to
the relationship between the government and members of a public
sector pension plan but noted that it may occur in some cases. The
FCA therefore noted that it could not be said that it was plain and
obvious, at that juncture, that Mr. Jost's fiduciary claim had
no reasonable prospect of success.
However, the FCA noted that there was a fatal flaw with Mr.
Jost's fiduciary claim as drafted. The SCC has held that for a
fiduciary duty to arise outside of previously established
categories of fiduciary relationships, the purported fiduciary must
clearly undertake to act in the best interests of the beneficiary
or beneficiaries, whether expressly or by necessary implication.
Though the Federal Court stated that the Federal government
undertook to act in the best interest of class members and that Mr.
Jost pleaded the presence of the essential elements for a claim
based on breach of a fiduciary duty, the FCA did not agree. The FCA
stated that there was no reference in Mr. Jost's statement of
claim to any express or implied undertaking having been given by
the Federal government to act in the best interests of proposed
class members, nor did Mr. Jost suggest that any such undertaking
arose from the relevant legislation. Based on this, the FCA
indicated that it was plain and obvious that the claim for breach
of fiduciary duty could not succeed as drafted.
With respect to Mr. Jost's claim that by unreasonably delaying
the calculation, processing and payment of class members'
pension entitlements, the government has breached its contractual
obligations to members of the pension plan. The FCA noted that,
while it appeared to be settled law that members of the CAF did not
enjoy a contractual employment relationship with the Federal
government, neither side had directed the FCA to any jurisprudence
holding that the relationship between members of the CAF and the
plan administrator could never be governed by contractual
principles. As such, the FCA noted that it was not plain and
obvious that Mr. Jost's claim in contract could not succeed.
Additionally, the FCA was not convinced that it was plain and
obvious that the Federal government did not owe a duty of care to
members of the pension plan and that any statutory remedies were
not a substitute for a claim in negligence.
Lastly, the FCA held that the Federal Court erred in its
Certification Order in failing to comply with the requirements. The
appeal was allowed, setting aside the Certification Order, but
allowing leave to Mr. Jost to file an amended statement of
claim.
Federal Court of Appeal Decision
Boreen v. Mosaic Esterhazy Holdings ULC, 2020 SKCA 132
Ms. Boreen was the common law wife of Lloyd Holmes, who died in
August of 2014. At the date of his death, Mr. Holmes was legally
married to Glenda Holmes from whom he had separated in 1993, but
Mr. Holmes and Ms. Holmes did not formalize their separation by
entering into a separation or matrimonial property agreement, nor
did they legally divorce. At the date of Mr. Holmes death, he was a
member of Mosaic Esterhazy Holdings ULC's (Mosaic) pension plan
(the Plan). In 2013, a few months after Mr. Holmes learned he was
terminally ill, he contacted the Mosaic Human Resources department
about the possibility of changing the designated beneficiary of his
pension to include Ms. Boreen. The administrator of the Plan (the
Administrator) provided a Declaration of Spousal Status form (the
Declaration). Mr. Holmes completed and signed the Declaration,
wherein he designated Ms. Boreen as his beneficiary and his
children as contingent beneficiaries under Saskatchewan's
The Pension Benefits Act (the SK PBA). Upon receipt of the
signed Declaration, the Administrator initially confirmed that it
would update its database to reflect Ms. Boreen as Mr. Holmes'
spouse, but later advised the Human Resources department that the
Declaration had not been properly filled out. The Human Resources
department advised Mr. Holmes that Ms. Holmes would receive his
pension unless he legally divorced her or had her sign a form
waiving her entitlement. Although advised to seek legal advice, Mr.
Holmes said he had no interest in Ms. Holmes signing a waiver and
took no steps to obtain a divorce.
In January of 2014, Mr. Holmes received a pension statement dated
December 31, 2013 (the Pension Statement) indicating that Ms.
Boreen was the beneficiary of his pension under the Plan. On August
3, 2014, Mr. Holmes passed away and Ms. Holmes, as the legal
surviving spouse under the SK PBA, requested the pension benefits
be paid to her. In 2015, Ms. Holmes received a declaration that she
was the surviving spouse for the purpose of the SK PBA and an order
directing Mosaic to pay Mr. Holmes' pension benefits under the
Plan to her.
Ms. Boreen commenced an action against Mosaic seeking, amongst
other things, damages against Mosaic for breach of contract and
negligent misrepresentation, and damages against Ms. Holmes for
inducing Mosaic's breach of contract. The Chambers judge
granted summary judgment in favour of Mosaic as he concluded the
claim was without merit and could not possibly succeed. The
Chambers judge made certain factual findings with respect to Ms.
Boreen's claim for negligent misrepresentation, including that
Mr. Holmes had access to all pertinent information surrounding his
pension benefits and he was specifically advised, and he
understood, that in order for Ms. Boreen to receive any portion of
his pension, he would be required to either divorce Ms. Holmes or
arrange for her to sign a waiver of her interest in his pension. He
did neither. With respect to the five essential elements of the
tort of negligent misrepresentation, the Chambers judge found
that:
- There was no special relationship between Mosaic and Ms. Boreen
- That the information Mosaic provided to Mr. Holmes was true and accurate
- There was no basis in the evidence to assert that Mosaic had acted negligently in communicating the spousal benefit information to Mr. Holmes
- There was no reasonable reliance on a representation by Ms. Boreen
- No damages were caused by a misrepresentation by Mosaic because no misrepresentation was made
One of the issues on appeal was whether the Chambers judge made
an overriding and palpable error of fact relating to the discussion
and correspondence between Mr. Holmes and Mosaic in the course of
his analysis of negligent misrepresentation. Ms. Boreen submitted
that in determining that the elements of negligent
misrepresentation had not been proven, the Chambers judge failed to
consider that the Pension Statement provided to Mr. Holmes
indicating that Ms. Boreen was the beneficiary of his pension was
inaccurate, untrue or misleading. The SKCA noted that Ms. Boreen
focused entirely on the Pension Statement and submitted the
Chambers judge ignored that it represented her as the designated
beneficiary. The SKCA found that it was open to the Chambers judge
to make the finding that Ms. Boreen did not reasonably rely on any
representation that she was the beneficiary of the pension, and
that there was no palpable and overriding error in doing so.
The SKCA also agreed with the Chambers judge that the element of
damages had not been proven. The SKCA noted that Ms. Boreen's
failure to receive the pension was due, in the circumstances, to
the fact she was disentitled by law to receive it pursuant to the
terms of the SK PBA. Any damages that she may have suffered were
not caused by Mosaic but rather by the failure of Mr. Holmes to do
what was required to eliminate Ms. Holmes from entitlement to his
pension and clear the way for Ms. Boreen to become the legal
beneficiary.
The SKCA dismissed Ms. Boreen's appeal.
Saskatchewan Court of Appeal Decision
Burley v. The Queen, 2020 TCC 68
This decision was rendered following Mr. Burley's appeal of
an assessment under the Income Tax Act which disallowed the
deduction of certain professional fees incurred in relation to the
wind-up of his individual pension plan (IPP) as business
expenses.
At all material times, Mr. Burley operated a management consulting
service as a sole proprietorship. In August 1992, a numbered
company operating as "Business Allies" was incorporated.
Mr. Burley was the sole owner and officer of this company. In 2003,
Business Allies established the IPP for Mr. Burley. The IPP was a
registered pension plan of which Mr. Burley was the sole
beneficiary. Mr. Burley's marital relationship later broke
down. A family court order provided that the amounts payable to Mr.
Burley's spouse as a result of their separation were secured by
all of Mr. Burley's savings and investments, as well as the
savings and investments of the numbered company. As a result of the
family court order, Mr. Burley made an assignment in bankruptcy.
Business Allies was later forced into bankruptcy and the company
was dissolved. The insolvency coordinator with the Financial
Services Commission of Ontario appointed Mercer (Canada) Limited
(Mercer) as the administrator of Mr. Burley's IPP for the
purpose of winding up the IPP. Shortly after Mr. Burley was
discharged from bankruptcy, the Ontario Superior Court of Justice
ordered, amongst other things, that one-half of the amount accrued
in Mr. Burley's IPP was to be transferred to Mr. Burley's
spouse and that the amount accrued in the IPP was to be calculated
after deducting the payment authorized to be paid by the
Superintendent of Financial Services for the Province of Ontario
for the fees and disbursements of the service providers to Mercer.
Mr. Burley paid C$33,653 in legal, accounting and other
professional fees to Mercer for the IPP wind-up process.
The issue before the Tax Court of Canada (TCC) was whether the
Minister of National Revenue rightfully concluded that those legal,
accounting and professional expenses incurred in connection with
the wind-up of the IPP did not qualify as business expenses. The
TCC indicated that legal, accounting and professional fees can
ordinarily be deducted as business expenses when they are incurred
in the normal course of a company's revenue-generating
activities or incurred to defend those activities. However, the TCC
found that the fees involved in the winding up of an IPP
established by a corporation on behalf of a shareholder are not
incurred in the normal course of income earning operations. In this
case, the legal, accounting and other professional fees were
incurred specifically in order to comply with the terms of a family
court order. These fees were not paid for the purpose of earning
income for the company, the IPP or the taxpayer, nor were they paid
to defend their income earning activities. The TCC found that the
legal, accounting, and other professional fees incurred by Mr.
Burley were simply too remote and unrelated to the company's
and the IPP's income-earning activities in order to qualify as
valid tax deductions.
Tax Court of Canada Decision
Martin v. Barrett, 2020 ONSC 2272
Two beneficiaries of the Participating Co-Operatives of Ontario
Trusteed Revised Pension Plan (Plan) and the plan administrator
(Administrator) brought a motion seeking orders that class counsel
pay monies from its trust account to the Administrator and to
approve a proposal to locate missing members of the Plan, which had
been winding down since 2003. The proceeding arose as a consequence
of a serious under-funding of the Plan. There was a
multi-million-dollar settlement reached with most of the
defendants. In the class proceedings, the defendants not part of
the settlement were noted in default and a default judgment was
ordered. Through enforcement proceedings, the class eventually
obtained C$97,933.20 which was held in trust by class
counsel.
A total of 106 unlocated members remained in the Plan at January
31, 2020, with a total of C$454,207 in benefits owing. There was
approximately C$39,000 in Plan funds, beyond the value of benefits
owing, which remained available to complete the winding up of the
Plan. Of the 106 unlocated members, only 51 had individual
entitlements valued at C$2,000 or more. The Administrator had
attempted to use various methods to locate the unlocated members,
and the only remaining method was the use of a private
investigation agency.
The Administrator sought an order directing payment of C$97,933.20
from class counsel's trust account to the Administrator for the
purposes of paying for the search for unlocated members of the
Plan. The Administrator would then apply for an order directing the
Administrator to use the C$97,933.20 to pay for the expenses of the
search. The Administrator proposed to structure the search in such
a manner as not to use the Plan's fund before exhausting the
other funds available to conduct the search. The Administrator
indicated that using the C$97,933.20 from class counsel's trust
account would provide the necessary funding to carry out the search
and continue the necessary administration of the Plan until the
Administrator was discharged, without touching those funds
necessary to pay the entitlements of the unlocated members.
With respect to the search itself, the Administrator proposed to
first search for those unlocated members with individual
entitlements valued at C$2,000 and then those with the next
greatest entitlements, to the extent that funds remain in the Plan.
Thereafter, the Administrator would apply for an order directing
the Administrator to pay into court any remaining monies
representing Plan participant entitlements to the credit of the
persons identified by the Administrator, as soon as practicable
after any necessary approval by the Financial Services Regulatory
Authority of Ontario (FSRA). The Administrator would then apply for
an order releasing the Administrator in respect of the entitlement
that any Plan participant may have to such monies once the monies
are paid into court, and apply to FSRA to be discharged of its
duties and to FSRA and the Canada Revenue Agency for the Plan to be
deregistered.
The Ontario Superior Court of Justice found that the plan to
complete the winding up of the Plan and to complete the
administration of the class action was eminently sensible and fair,
and granted the motion.
Ontario Superior Court Decision
FAMILY LAW
Langeman v. Langeman, 2020 ONSC 5751
In 2019, Mr. Langeman was temporarily ordered to pay to Ms.
Langeman C$8,000 per month in spousal support under the federal
Divorce Act (the 2019 Order). Pursuant to the 2019 Order,
the trial judge directed the relevant financial institution to
satisfy the spousal support obligation by making payments out of
Mr. Langeman's registered retirement savings plan account (the
RRSP Account). The RRSP Account was exhausted in or about August
2020. Ms. Langeman brought an urgent motion, on the basis of
financial hardship, requesting an order "assigning" or
"transferring" C$59,953 from Mr. Langeman's locked-in
retirement account (LIRA) to meet Mr. Langeman's spousal
support obligation to her for the period of September 1, 2020, to
September 15, 2021. The LIRA was not 'in pay' and was
subject to the Pension Benefits Act (Ontario) (PBA) which
contains statutory restrictions in connection with locked-in
retirement accounts.
Section 65(2) of the PBA provides that every transaction that
purports to assign, charge, anticipate or give as security money
transferred from a pension fund in accordance with certain
provisions of the PBA is void. There are exceptions to the general
prohibitions, including section 65(3) of the PBA which sets out
that section 65(2) does not apply to prevent the assignment, by an
order under the Family Law Act, a family arbitration award
or a domestic contract, of an interest in any money payable under a
pension plan or an interest in money payable as a result of a
purchase or transfer under a number of provisions, including
section 67.3 of the PBA relating to a transfer of a lump sum for
certain family law purposes. The motion judge indicated that it was
noteworthy that the 2019 Order is a temporary and periodic order
for support, and not an order for lump sum payment of support.
Accordingly, Ms. Langeman also requested an order converting the
periodic support payments to a lump sum order.
Applying the reasoning of the Ontario Court of Appeal (the ONCA) in
Trick v. Trick, [2006] O.J. No. 2737
(Trick), the motion judge dismissed Ms. Langeman's motion. The
ONCA in Trick noted that section 65(3) of the PBA cannot provide
relief from the general prohibition against pension assignment for
orders made under the Divorce Act (as opposed to the
Family Law Act). In addition, the ONCA stated that section
65(3) of the PBA exempts only the assignment of pensions, but that
the PBA continues to void all other transactions such as those that
purport to charge, anticipate or give as security money payable
under a pension plan. The ONCA also indicated that rather than
seeking an assignment of a pension for equalization purposes, or
for the purpose of lump sum support, the respondent in Trick was
seeking to execute, seize, or garnish 100 per cent of the
appellant's pension to enforce the appellant's outstanding
obligation, which she was precluded from doing at law by section
66(4) of the PBA.
The motion judge refused to convert the period support payments to
a lump sum order. In addition, the motion judge found that there
was no statutory authority that permits the court to make an order
transferring any portion of Mr. Langeman's LIRA to Ms. Langeman
for the purpose of satisfying a temporary and periodic support
order made pursuant to the Divorce Act.
Ontario Superior Court of Justice
Decision
BREACH OF TRUST OBLIGATION OVER UNPAID CONTRIBUTIONS
South Bruce Grey Health Centre v. Ontario Public Service Employees Union, 2020 ON LA 73641
Ms. Netzke was a laboratory technician with South Bruce Grey
Health Centre (Employer). She began thinking about retirement
planning in 2019 and, upon receipt of certain information, became
concerned that her contributory years of service did not match her
eligibility years of service. After Ms. Netzke spoke with another
two laboratory technicians (Employees), they concluded that they
must not have been given appropriate credit for pension entitlement
accrued during their respective maternity leaves (the latest of
which occurred in 2004) and that an unusual scheduling arrangement
(which practice ended in 2005) had also produced an improper
shortfall. The Union, on behalf of the Employees, brought a motion
alleging that the Employer failed to make appropriate pension
contributions for the Employees due to scheduling irregularities,
pregnancy and parental leaves, and any other events which may have
occurred.
Arbitrator James Hayes (Arbitrator) dismissed the grievance. The
collective agreement contained mandatory time limits, which
required action by grievers within 14 days after the circumstances
giving rise to the grievance occurred. In this respect, the
Employer submitted that the delays in filing the grievance were
extreme and the delay was the fault of the Employees. The Union
argued that the grievance was not out of time because it was a
continuing grievance and Ms. Netzke only became aware that she had
a claim when she started retirement planning in 2019.
Alternatively, the Union argued that the Arbitrator should relieve
against time limits as pension entitlements were important to the
Employees, a substantial number of records had been retained and
the Employees acted in good faith.
The Arbitrator found that the delay relied upon by the Employer was
so lengthy that there was no need to settle upon the appropriate
trigger date(s). The Arbitrator indicated that if the circumstances
giving rise to the grievance arose at the time of the leaves of
absence or the unusual scheduling arrangement, the delay may have
been measured in decades. If employee receipt of annual statements
is preferred, the delay still amounted to years. The Arbitrator
held that Ms. Netzke knew or ought reasonably to have known about
the occurrence that gave rise to the grievance long before 2019. In
addition, the grievance was not of a continuing nature. The alleged
breaches related to either improper allocation of pensionable
service to leaves of absence or scheduling arrangements, the latest
of which occurred 14 years prior to the filing of the
grievance.
Ontario Labour Arbitration Decision
Trustees of the IWA-Forest Industry Pension Plan v. Log Smart Contracting Ltd., 2020 BCCRT 730
The Trustees of the IWA-Forest Industry Pension Plan (Pension
Trustees) and Trustees of the IWA-Forest Industry Long Term
Disability (LTD) Plan (the LTD Trustees, collectively the Trustees)
oversee a pension plan and LTD plan for B.C. Forestry workers. The
Trustees claimed that Log Smart Contracting Ltd. (Log Smart)
breached its trust obligations because it did not pay contributions
to the pension trust and LTD trust, as required. Sky Gibb and
Trisha Gibb are Log Smart's sole directors and owners. The
Trustees claimed the Gibbs were personally responsible for the
unpaid contributions because they knowingly assisted in Log
Smart's breach of trust. The Pension Trustees and LTD Trustees
claimed C$2,579.32 and C$621.60, respectively, in unpaid
contributions, plus contractual interest.
Log Smart was a participating employer in both the pension plan and
LTD plan based on the participation agreements. The pension plan
trust agreement and the LTD plan trust agreement clearly stated
that the pension plan and LTD contributions were trust funds.
Therefore, Log Smart was required to hold the employer and employee
contributions for both the pension plan and LTD plan in trust for
the Trustees. Further, section 58(2) of the B.C. Pension
Benefits Standards Act required Log Smart to hold the pension
plan contributions in trust for the Trustees. The Tribunal held
that Log Smart breached the trust agreements by not holding the
pension plan and LTD contributions in trust for the Trustees and
by, instead, using the funds to pay its general operating
expenses.
Although Mr. Gibb signed the participation agreements and
undertakings on Log Smart's behalf, the Tribunal found that he
was not personally bound by the terms of the trust agreement. Ms.
Gibb was also not found to be personally bound.
The Tribunal then turned to the issue of personal liability for Mr.
and Ms. Gibb. In accordance with Air Canada v M. & L Travel
Ltd, one may be held personally responsible for
the company's breach of trust if they knew that the trust
existed and that the company's breach was "dishonest and
fraudulent". Where a trust is imposed by statute, someone
outside the trust is deemed to know that the trust exists. Where a
trust is imposed by contract, someone outside of the trust's
knowledge will depend on their involvement with the contract. The
Tribunal found that the Gibbs knew of the trust obligations over
the pension plan contributions, as the trust was created by
statute. The Tribunal found that Mr. Gibb knew of the trust
obligations over the LTD plan contributions, as he signed the
participation agreements. However, Ms. Gibb did not know of the
contractual trust over LTD plan contributions so the claim for LTD
plan contributions and contractual interest against Ms. Gibb was
dismissed.
The Tribunal then considered whether the Gibbs knew that Log
Smart's breach of trust was dishonest and fraudulent. A
dishonest and fraudulent breach occurs when the trustee takes a
risk it had no right to take, to the prejudice of the rights of
others. The Trustees claimed that Log Smart created an unnecessary
risk that the contribution funds would be used for general
operating expenses, rather than paid to the Trustees, by not
keeping the contributions separate. The Tribunal held that Log
Smart's breach of trust was dishonest and fraudulent. Further,
the Tribunal found that Mr. Gibb had full knowledge of the nature
of Log Smart's breach, as the owner-operator and sole employee
of Log Smart. There was no indication that Ms. Gibb directed the
comingling of funds, directed the payment of general expenses, or
in any other way assisted with Log Smart's breach of trust.
Therefore, the Tribunal dismissed the Trustees' claim for the
pension plan contributions against Ms. Gibb personally.
The Tribunal found Log Smart and Mr. Gibb equally responsible for
the breach of trust and found them jointly and severally liable for
the unpaid contributions and contractual interest was
ordered.
Civil Resolution Tribunal of British Columbia
Decision
HEALTH AND WELFARE BENEFITS
Megan Singeris v. Elementary Teachers' Federation of Ontario, 2020 CanLII 67197 (ON LRB)
Megan Singeris was a teacher employed by the Thames Valley
District School (School Board). Pursuant to collective agreements
entered into between the School Board and the Elementary
Teachers' Federation of Ontario (ETFO) and its predecessor
bargaining agent, Ms. Singeris was entitled under the terms of the
School Board's benefits program to receive private duty nursing
care for her son 24 hours a day, seven days a week. For Ms.
Singeris and her son, this had a value of over C$200,000 per year.
The details of the benefits plan - including the variety and level
of benefits covered - were not set out in the collective agreement
but were described in the policies of insurance.
With the passage of the School Boards Collective Bargaining
Act (SBCBA) in April 2014, the bargaining process between ETFO
and the school boards of Ontario changed. Employee benefits became
a centrally bargained issue. ETFO participated in the new
bargaining process by gathering information about existing benefit
plans, costing benefits, advising its members of tentative
agreement terms and negotiating the categories of benefits to be
provided. However, ETFO was not involved in designing a new benefit
plan or negotiating the details of new plan coverage. In February
2015, ETFO and the Ontario Public School Boards' Association -
the designated employer bargaining agency for every
English-language public school board for all bargaining units -
entered into a Memorandum of Settlement of all outstanding matters
forming part of the agreement on central terms under the SBCBA.
ETFO members, including Ms. Singeris, voted in the ratification
process with respect to the Memorandum of Settlement. The majority
voted in favour of the Memorandum of Settlement for the period of
2014 to 2017.
Prior to the ratification vote, ETFO distributed to its members a
four-page document (Highlights). One item read that
"[s]uperior entitlements in local collective agreements are
preserved". With respect to benefits, the Highlights indicated
that the ETFO was to create a provincial benefits trust, and that
the School Board and local-owned benefits plans would transition to
the ETFO Provincial Benefit Trust from September 2016 to September
2017. The Highlights also indicated that funding would be
negotiated at a level that allowed ETFO to develop a benefits plan
that protected members' existing benefits entitlements and that
the school boards would continue to provide benefits in accordance
with existing collective agreement terms until board and
local-owned plans were transferred into the ETFO Provincial
Benefits Trust. Ms. Singeris was adamant that she interpreted the
Highlights to mean that the level (in her case, the unlimited
level) of the private duty nursing care benefit under the School
Board's benefit plan would be protected.
Among the negotiated changes agreed to in the central terms of the
2014-2019 Collective Agreement (Central Agreement) was the
establishment of an Employee Life and Health Trust (ELHT), which
established a single, province-wide employee benefit plan for
eligible ETFO members. Under the new plan, Ms. Singeris's
private duty nursing care coverage was capped at C$50,000 per year.
The ELHT established a transitional benefit appeal process to
address claims by ETFO members who were faced with a reduced
benefit under the benefits plan as compared to their prior
coverage. Ms. Singeris submitted an appeal in 2017 and was granted
the maximum benefit available upon appeal: C$25,000. Ms. Singeris
was granted an additional C$25,000 in 2019.
Ms. Singeris contended that the ETFO acted in a manner that was
arbitrary, discriminatory and in bad faith, contrary to its duty
pursuant to section 74 of the Labour Relations Act, when
it entered into a collective agreement which did not protect the
level of health benefits available to Ms. Singeris. Specifically,
Ms. Singeris argued that:
- ETFO should have provided details of the new benefit plan prior to the ratification vote and that it failed to warn her of the likelihood of significant benefit reduction
- ETFO's actions were arbitrary in that ETFO failed to investigate whether or not its members would suffer a significant reduction in their benefits
- ETFO acted in bad faith by deliberately misleading its members, prior to the ratification vote, to believe that the existing level of benefits would be maintained by ELHT, when it knew or ought to have known that some benefits for some members would be significantly reduced
The Arbitrator dismissed these arguments. The Arbitrator found
that there was no evidence that established ETFO intentionally made
a misrepresentation about benefits in the lead up to the
ratification vote, and that the ETFO did not commit or promise to
replicate or carry over all the same benefits then in existence,
including benefit caps, deductibles and other items. No one in ETFO
knew, or could have known with certainty, what the benefit levels
in the benefits plan to be developed within the next year or so
would be; that remained to be determined by the ELHT. In addition,
the Arbitrator found that the ELHT considered the needs of members
like Ms. Singeris, whose benefits may have been reduced due to the
centralization of benefits, and in particular created a transition
claims and appeal process.
Ontario Labour Relations Board Decision
VESTING DURING THE REASONABLE NOTICE PERIOD
Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26
The Supreme Court of Canada awarded damages in respect of a
bonus payment which would have been earned had an employee worked
to the end of his common law reasonable notice period. For the case
summary and key employer takeaways, please see our October 2020 Blakes Bulletin: SCC Finds Employee
Entitled to Damages for Bonus Triggered During Notice
Period.
Supreme Court of Canada Decision
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