The Canadian Source Of Employee Pension Fund Investment And Benefits Plan Management


Legal: Overview Of Key Legal Actions In 2015

Key Legal Decisions

The pensions and benefits industry went without any landmark legal decisions in 2015. However, there was still plenty of interesting cases, as the below list illustrates. 
Grant Forest Products v TD Bank 2015 ONCA 570

Grant Forest Products Inc. (GFPI) sought protection under the Companies’ Creditors Arrangement Act (CCAA). The Ontario’s Superintendent of Financial Services (Superintendent) ordered GFPI’s two DB plans be wound up. The wind-up order gave rise to significant wind-up payment obligations. GFPI sought an order that it not be required to make contributions towards those obligations.

The CCAA judge ordered that the deemed trust provisions under subsections 57(3) and (4) of the PBA did not provide the pension beneficiaries with priority over the Second Lien Lenders. The judge found that a wind-up deemed trust will prevail in an insolvency where the wind-up occurs before insolvency, but not when the wind-up occurs after the initial order is granted as it did in this case. GFPI was ordered to stop making payments to the plans.

On appeal to the Ontario Court of Appeal (Court of Appeal), the Superintendent argued that the CCAA judge had erred in finding that no statutory deemed trust arose under the PBA in respect of the wind-up deficiency during the CCAA proceeding. The Court of Appeal dismissed the appeal and held that the decision by the CCAA judge to terminate the CCAA proceeding and allow the bankruptcy to proceed was a discretionary one and that discretion was exercised reasonably.

ATCO Gas and Pipelines Ltd. v. Alberta (Utilities Commission), 2015 SCC 45
ATCO (a utility company) requested rate increases to recover costs related to a cost of living adjustment (COLA) for its plan’s members. The Alberta Utilities Commission (Commission) only approved half of the requested COLA. The Commission found that the COLA was not a committed cost because it was set annually by ATCO’s parent company. The Commission also found that the COLA was overly generous when compared to industry standards.

The Commission’s decision was reviewed on a standard of reasonableness. All courts of appeal, including the Supreme Court, decided that the findings of the Commission were reasonable. The Commission’s reasoning was based on a finding that it was unreasonable to permit a utility rate hike to fund a large COLA for the utility’s pension while that pension carried a large unfunded liability, where comparator companies were not granting similar increases and were not necessary to ensure that ATCO could continue to attract and retain employees.

Pension Coalition NB v. New Brunswick (Attorney General), 2014 NBQB 248
Members of New Brunswick’s public service pensions challenged the constitutionality of provincial legislation that converted automatic COLA provisions to discretionary COLA provisions. In this 2014 decision, the judge converted the proceeding from an application to an action. This litigation is ongoing and the substance of the complaint has not been adjudicated.

Navistar Canada Inc. v. Superintendent of Financial Services, 2015 ONSC 2797
Plan members were terminated or quit while Navistar attempted to reorganize certain operations. After the reorganization failed, the company closed some operations, triggering a plan wind-up. Members who had been laid off or quit in the years leading up to the wind-up wanted to share in the wind-up benefits. The Financial Services Tribunal found that all employees who had ceased employment after the beginning of the reorganization (including those who left voluntarily) were to be included in the wind up. The Superior Court dismissed the Navistar appeal of the Tribunal decision.

Nortel Networks Corporation (Re), 2015 ONSC 2987
The Ontario Superior Court of Justice and U.S. Bankruptcy Court delivered an unprecedented joint ruling in the multi-jurisdictional dispute over the allocation of the funds raised in the Nortel bankruptcy. In their simultaneous opinions, the judges found that a pro rata division was the most fair and satisfactory division of the funds. Among the successful creditors were pensioner groups representing 33,000 pensioners in the UK and approximately 20,000 pensioners of Nortel Canada whose benefits were at risk as the dispute continued.

Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10
In this landmark case on constructive dismissal, the Supreme Court also considered the question of whether pension payments should be deducted from damages for wrongful termination. The Court reaffirmed established jurisprudence by holding that pension payments should not be deducted at common law. They also found that pension payments should not be deducted under New Brunswick’s Public Service Superannuation Act.

Via Rail v Unifor, 2014 Canlii 77080 (ONLA)
In this labour arbitration case, Via Rail attempted to negotiate a hybrid DC/DB pension plan for new employees. The company’s current DB plan was completely unsustainable. The arbitrator found that the proposed hybrid plan was acceptable and that requiring new employees to participate in the dysfunctional DB plan would expose the company to unacceptable levels of liability and risk. The arbitrator imposed benefit indexation on the DB portion of the hybrid plan to protect it from inflation.

McCann et al v. CMHC,2015 ONSC 496; Lacroix et al v. CMHC,2015 ONSC 387
These are class action proceedings related to workforce downsizing at CMHC and a pension surplus distribution that followed shortly thereafter. Many employees chose to receive the commuted value of their pensions when they were terminated. They were not able to share in benefit enhancements later provided by CMHC to its plan’s members. Procedural motions were heard in 2015, where the common issues were amended.

Blakes Pensions, Benefits & Executive Compensation Group (

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