MEMBER COMMUNICATIONS

NCR Canada Ltd. v. International Brotherhood of Electrical Workers, Local 213, 2014 CanLII 48802 (BC LRB)

This is an appeal of a decision by Arbitrator Marguerite Jackson, Q.C., summarized in the June 2014 Pensions Newsletter (the Award).

NCR Canada Ltd. (NCR) sponsors a pension plan (the NCR Plan). The NCR Plan was initially a defined benefit (DB) pension plan but was amended in 2001 to introduce a defined contribution (DC) component. Pursuant to the amendment, all employees hired on or after January 1, 2002, were eligible to enroll in the DC component and employees who became members of the NCR Plan prior to January 1, 2002, were given an opportunity to elect to stay in the DB component or move to the DC component. Nineteen members of the International Brotherhood of Electrical Workers, Local 213 (the Union) elected to stay in the DB component (the DB Members).

In 2012, NCR announced that the NCR Plan would be amended to provide that all DB Members would cease participating in the DB component and commence participation in the DC component. The Union filed a grievance on behalf of the DB Members, arguing that NCR was estopped from amending the NCR Plan because of representations made to the DB Members in 2001.

In the Award, Arbitrator Jackson reviewed communication materials provided to the DB Members and allowed the Union’s grievance, finding that NCR was estopped from amending the NCR Plan. NCR applied for a review of the Award to the British Columbia Labour Relations Board (the Board).

In dismissing NCR’s application, the Board found that it had a “long-established policy approach to reviewing arbitrators’ application of estoppel principles” such that the Board would not “second-guess” an arbitrator’s assessment of estoppel as long as the arbitrator applied the correct legal test and there was some evidentiary basis for the arbitrator’s findings on the required elements for estoppel. The Board found that Arbitrator Jackson’s conclusion was open to her and that her reasoning was consistent with an arbitrator’s broad mandate under the British Columbia Labour Relations Code.

Alternatively, the Board held that even if it were to review the arbitrator’s assessment, it would not have been persuaded by NCR’s arguments. The Board dismissed NCR’s argument that Arbitrator Jackson erred in finding that it had made an unequivocal representation to employees, a condition for estoppel, agreeing with Arbitrator Jackson’s reasoning that an unequivocal representation was made in communication materials provided to the DB Members. NCR also argued that Arbitrator Jackson erred in finding detrimental reliance by the DB Members. The Board dismissed this argument finding that there was detrimental reliance on NCR’s representation as the “evidence was that the employees had organized their financial affairs and retirement plans on the basis of the representation that they would remain in the DB plan until retirement.”

British Columbia Labour Relations Board Decision

RETIREE BENEFITS

O’Neill v. General Motors of Canada, 2014 ONSC 4742

As noted in the September 2014 Pensions Newsletter, the Ontario Superior Court of Justice approved a settlement in a class action lawsuit between General Motors of Canada Limited (GMCL) and a group of retired employees (the Class) on August 7, 2014 (the Settlement). This decision provides Justice Belobaba’s reasons for finding that the Settlement reflected well on GMCL and was also in the best interests of the Class.

In July 2013, the Ontario Superior Court of Justice found that GMCL was permitted to reduce the retiree benefits for 67 executive employees but was not permitted to reduce the retirement health-care and life insurance benefits for 3,297 salaried employees and surviving spouses who retired after January 1, 1995, but before October 20, 2011. Prior to the settlement, both GMCL and the Class had appealed certain aspects of the lower court decision.

The Settlement establishes a C$9-million fund for claims to cover the period up to August 31, 2014, and restores most of the health-care and life insurance benefits for the Class effective September 1, 2014. In approving the Settlement, Justice Belobaba noted that it provided “substantial recovery” for the Class in a timely and efficient manner while eliminating the litigation risk that would be associated with further proceedings.

Ontario Superior Court of Justice Decision

Lacasse v. Comité de retraite Beaulieu Canada, 2014 QCCQ 2753

Mr. Lacasse was terminated after having worked for Beaulieu Canada (Beaulieu) for nearly 20 years. He was terminated in October 2008 following an administrative restructuring and entered into a transaction and release agreement with Beaulieu. In 2012, Mr. Lacasse brought a motion claiming that he was entitled to receive an additional retirement indemnity under the pension plan pursuant to the transaction and release agreement, which mentioned that he would not “lose any accrued benefit.”

His motion was dismissed as the pension plan clearly provided that Mr. Lacasse was deemed to have retired when he was terminated. As Mr. Lacasse was not 60 years old at the time of his termination, he was not yet entitled to the additional retirement indemnity. The court held that the transaction and release agreement only protected existing benefits as of the termination date and did not have the effect of maintaining beyond the termination date an eventual future right to additional benefits.

Quebec Court Decision

CCAA

Re: White Birch Paper Holding Company, 2014 QCCS 4709

This decision rendered on October 3, 2014, falls within the White Birch restructuring process under theCompanies’ Creditors Arrangement Act (the CCAA). On April 20, 2012, Justice Mongeon rendered a decision declaring that Section 49 of the Quebec Supplemental Pension Plans Act (the SPPA) did not create a real or deemed trust that would render unpaid special payments to a pension plan payable in priority over other secured claims and that the reasoning of the Ontario Court of Appeal in Indalex (later confirmed by the Supreme Court of Canada) did not apply under Quebec law. This Superior Court judgment was not appealed.

In January 2014, Justice Mongeon rendered another decision in an unrelated matter, Timminco, in which he revisited his conclusions made in the White Birch decision and held that, as between two creditors subject to Quebec law and in the absence of super-priorities affecting the assets, unpaid special payments are indeed subject to a deemed trust under Section 49 of the SPPA and are also unassignable and unseizable under Section 264 of the SPPA. Timminco thus allowed the pension plan to recover special payments that the employer had failed to pay despite a secured creditor having a prior secured claim over the employer’s assets. The Timminco decision was also not appealed.

BD White Birch Investment LLC (BDWBI), as purchaser of the debtors’ assets, was concerned about the possible effect of the Timminco judgment on the continuation of the White Birch CCAA process, as it may reopen the debate as to whether the debtors had the obligation to pay into the pension plans the special payments unpaid since 2010. BDWBI thus filed a motion asking that certain conclusions of the White Birch decision be confirmed in order to set aside the possible effect of the Timminco judgment on the initial order.

The provisional administrator of the pension plans opposed the motion filed by BDWBI and also filed a motion asking that the initial order be modified in light of the Timminco decision with respect to a group of 356 non-unionized retirees. The provisional administrator, however, did not take a position with respect to the other active members and retirees participating in the other pension plans that were sponsored by the debtors, as they have entered into letters of understanding with BDWBI and will eventually receive benefits equivalent to what theTimminco judgment would award them. The Group of White Birch Stadacona Retirees supported the provisional administrator, whereas the other parties and interveners (the controller, the debtors, Unifor Union, and Crédit Suisse) all opposed the provisional administrator’s motion, supported BDWBI and sought an order declaring that the White Birch decision is res judicata and that the stability of the restructuring process required that the deemed trust debate not be reopened.

Justice Mongeon ruled that the White Birch decision is final and executory, and reminded the parties that it was not appealed and that it has acquired the authority of a final judgment (res judicata) between the parties and interveners pursuant to Section 2848 of the Civil Code of Quebec. He added that it is irrelevant to decide which judgment between White Birch and Timminco is well founded in law, because the res judicata principle applies to any final judgment, even if it was ill founded in law. Justice Mongeon conducted a comprehensive jurisprudential review of the res judicata principle to support his decision and stressed that res judicata is an irrebuttable presumption whose purpose is to ensure legal stability and avoid risks of contradictory judgments. Having found an identity of parties, object and cause in the present matter, Justice Mongeon ruled that the provisional administrator’s motion seeking a review of the White Birch ruling with respect to Section 49 of the SPPA could not be granted.

However, Justice Mongeon noted that BDWBI had promised to put in place new pension plans following theWhite Birch decision and that the Unifor Union and the Group of White Birch Stadacona Retirees had precisely agreed not to appeal the White Birch decision in light of this promise, which was made more than two years ago. Justice Mongeon reminded BDWBI that it has the obligation to negotiate and act in good faith and that it must now take action without delay to realize its promise. Justice Mongeon thus ordered the parties who signed letters of understanding to comply therewith. With respect to the non-unionized employees and retirees who do not have a letter of understanding with BDWBI, Justice Mongeon ordered the parties to undertake good faith negotiations in order to give effect to the commitments made by BDWBI in 2012, more specifically in order to determine and fix the terms and conditions of the amount that BDWBI is to pay to the non-unionized employees and retirees.

Superior Court of Quebec Decision

REDUCTION OF INDEXING BENEFITS

General Motors of Canada Limited v. Ontario (Superintendent Financial Services), 2014 ONFST 11

In 2011, General Motors of Canada Limited (GM) amended the CAMI Automotive Inc. Pension Plan for Salaried Employees (the CAMI Plan), of which it was the sponsor and administrator, to remove the indexation provision except in respect of active employees who had already become eligible to retire as of the effective date of the amendment. The amendment was challenged on the grounds that it reduced accrued benefits contrary to subsection 14(1)(a) of the Pension Benefits Act (Ontario) (the PBA), and the Superintendent of Financial Services agreed. GM requested a hearing before the Financial Services Tribunal (FST).

Under subsection 14(1) of the PBA, an amendment is void if it purports to reduce (1) the amount or commuted value of a pension benefit accrued under the plan with respect to employment before the effective date of the amendment; (2) the amount or commuted value of a pension or deferred pension accrued under the pension plan; or (3) the amount or commuted value of an ancillary benefit for which a member, former member or retired member has met all the eligibility requirements. In addition, subsection 14.1(1) of the PBA requires that a pension plan “provide for the accrual of pension benefits in a gradual and uniform manner.”

“Pension benefit” is a defined term under the PBA whereas “ancillary benefit” is defined in the PBA Regulations and provides that “ancillary benefits” means the benefits referred to in subsection 40(1) of the PBA. Subsection 40(1) sets out a list of ancillary benefits that pension plans may provide, but this list does not include indexing benefits.

At the hearing, the FST considered (1) whether the indexation benefit provided by section 6.4 of the CAMI Plan is a pension benefit under the PBA; and (2) who is entitled to the indexation benefit and, in particular, whether members who terminate employment for reasons other than retirement are entitled to the benefit. Section 6.4 of the CAMI Plan provided annual inflation indexing for pensioners “who retired from active employment with the Company.”

On the first issue, the FST found that the indexation benefit was a pension benefit. As conceded by the parties, a benefit provided by a registered pension plan must be either a pension benefit or an ancillary benefit. According to the FST, if it is not an ancillary benefit, it is a pension benefit, which is subject to the more restrictive provisions in subsection 14(1)(a) of the PBA and the gradual and uniform accrual rule. The FST rejected GM’s argument that “ancillary benefit” is an “open-ended term” and found that subsection 40(1) of the PBA provides an “exhaustive list of ancillary benefits.” Among other reasons for its decision, the FST found that the “grammar and structure of s. 40(1) best sustain that interpretation.” It also held that the “fundamental scheme of the Act” is to provide pension benefits, as such it is “logical” that there would be limits on non-pension benefits (i.e., ancillary benefits).

With respect to the issue of who is entitled to the indexation benefit, the FST reviewed the CAMI Plan in its entirety and found that “as a matter of construction,” the indexation benefit is available to all vested members who terminate whether or not they retire from active employment. The FST rejected GM’s extrinsic evidence of the drafting history of the CAMI Plan on the grounds that the evidence was ambiguous and “unilateral.”

Financial Services Tribunal Decision

PENSION PLAN SURPLUS

Manitoba Telecom Services Implementation Plan Agreement Receives Court Approval

In the March 2014 Pensions Newsletter, we summarized the Supreme Court of Canada decision inTelecommunications Employees Association of Manitoba Inc. v. Manitoba Telecom Services Inc., 2014 SCC 11. On September 24, 2014, Manitoba Telecom Services Inc. announced that it had reached an agreement with its unions and retirees in respect of the implementation of the ruling. On November 3, 2014, Justice Bryk of the Court of Queen’s Bench of Manitoba approved the implementation agreement.

EMPLOYER CONTRIBUTIONS

Arbitration of the Grievances pursuant to the Collective Bargaining Agreement between Northwest Regional College, Great Plains College, Cumberland Regional College, Carlton Trail Regional College, Parkland Regional College and the Saskatchewan Government and General Employees’ Union, 2014 CanLII63147 (SK LA)

The Saskatchewan Government and General Employees’ Union (the Union) alleged that five Saskatchewan Regional Colleges (the Colleges) were in violation of the applicable collective agreement. At issue was whether teachers in receipt of pensions who had returned to work were entitled to contribute to a pension plan and to have matching contributions by the Colleges made on their behalf.

The employees were former members of either the Saskatchewan Teachers’ Retirement Plan or the Saskatchewan Teachers’ Superannuation Plan (collectively, the STP). The STP provided that employees in receipt of pensions could continue to work without reducing their pensions but were not allowed to make further contributions to the STP or to have the Colleges make contributions on their behalf.

The Union argued that the applicable collective agreement required the Colleges to contribute to the STP on behalf of all teachers, notwithstanding the terms of the STP. Article 16.2 of the collective agreement provided as follows: “The employer and employees shall make contributions to a mutually agreed upon pension plan according to the provisions of the plan.” The Colleges argued that Article 16.2 “incorporates the ‘mutually agreed upon pension plan’ and its more specific provisions.”

Arbitrator Hood agreed with the Colleges and dismissed the grievance. In so doing, he held that Article 16.2 of the collective agreement was a general provision that was intended “to require the parties to agree upon a pension plan under which the [Colleges] and employees would be governed.” He further held that had the parties intended Article 16.2 to override the provisions of the STP, they could have included express language to that effect. According to the arbitrator, as a result of the restrictions in the STP, adopting the Union’s position would place an onerous burden on the Colleges.

Arbitration Decision

DISCLOSURE OF RETIREE INFORMATION

The Canadian Union of Public Employees, Local 27, and The Greater Essex County District School Board, 119 CLAS 337

The union alleged that the Greater Essex County District School Board (the Board) breached its obligations under the applicable collective agreement to pay certain retiree benefits. In this decision, Arbitrator Kuttner considered the preliminary issue of whether the Board should be directed to disclose to the union the home contact information of affected retired employees and surviving spouses.

The union argued that the information should be released because, in order to fulfill its representational obligations to the retired employees under the Labour Relations Act and the collective agreement, it must be able to communicate with its retirees about matters that affect them. In response, the Board argued that the request was premature and should wait until the grievance was allowed; as former members of the bargaining unit, there was no evidence that the retirees were even aware of the grievance.

Arbitrator Kuttner granted the union’s request. In so doing, he relied on the disclosure exceptions in theMunicipal Freedom of Information and Protection of Privacy Act in respect of personal information “collected, prepared, maintained or used by or on behalf of an institution” in relation to labour relations proceedings, and broader principles from recent case law. For example, he noted that in PIPSC v. Canada (Revenue Agency), the Supreme Court of Canada found “the discretion to direct the disclosure of such personal contact information as that sought here to be rooted in the nature of the relationship between a trade union and those whom it represents.” In rejecting the Board’s arguments that the information should not be disclosed because the retirees are not active members of the bargaining unit, the arbitrator noted that “labour boards and arbitrators have … leaped over the remedial roadblocks to ensure access by retirees to benefits conferred upon them by the provisions of a collective agreement.”

The arbitrator ordered the Board to transmit the requested information to the union in order to allow the union to use the information to communicate with retirees and surviving spouses with respect to these arbitration proceedings, and any further proceedings that affect them under the collective agreement. The union was ordered to keep the information secure, to restrict access to named union officials and to not further distribute the information.

EMPLOYMENT RIGHTS

Telus Communications Company and Telecommunications Workers Union Re: Jasbir Gill Termination Grievance, [2014] B.C.W.L.D. 6896

In 2013, Jasbir Gill was terminated for non-culpable absenteeism. Prior to her termination, as was permitted under the applicable pension plan, the plan administrator had exercised its discretion to deem a “Purchased Day of Pay for each Day of Pay” during which Ms. Gill had been absent because of a medical condition. As a result of the exercise of this discretion, Ms. Gill continued to accrue credited service under the pension plan during her absence, when in fact, with her termination, she was no longer eligible to accrue credited service.

The union claimed that the employer, Telus Communications Company, was prohibited from terminating Ms. Gill under the terms of the collective agreement. It argued that her pension plan benefit (i.e., the deemed day of pay) was a benefit under the collective agreement that was “grounded in the reasons for her absence” and, as such, could not be terminated.

Relying on prior arbitral decisions, Arbitrator Brown found that “an employer may terminate an employee for innocent absenteeism when it is unlikely that the employee will be capable of regular attendance in the foreseeable future” provided that the termination of employment does not deprive the employee of a benefit that is “grounded in the illness” or “triggered by an inability to work.” In order to determine whether Ms. Gill was so deprived, the arbitrator reviewed the applicable terms of the pension plan. The plan provided that a member would continue to accumulate pension credits while the member was in receipt of long-term disability benefits but contemplated the cessation of such credits following termination of long-term disability benefits. Further, the plan included the following provision:

Neither the establishment of the Plan, the granting of a Retirement Benefit or other benefit, nor any action of the Company, the Union or the Trustees shall be held or construed to confer upon any person any right to be entitled to be continued as an Employee, nor upon termination of employment to any right or interest in the Trust Fund other than as herein provided.

As a result, Arbitrator Brown found that the plan did not give a plan member a right to continued employment. The arbitrator further noted that the deemed day of pay provision in the plan covered a member who is in “receipt of Workers Compensation benefits or sick leave benefits or is on a leave of absence as a result of sickness, ill-health, strike, lock-out or work stoppage.” The provisions did not cover members like Ms. Gill who were totally disabled but no longer in receipt of long-term disability benefits. According to the arbitrator, such a provision could have been included had that been the intention. Arbitrator Brown dismissed the grievance.

MATRIMONIAL PROPERTY DIVISION

McMorran v. Alberta Pension Services Corporation, 2014 ABCA 387

This is an appeal of a decision summarized in the December 2013 Pensions Newsletter.

In that decision, the Alberta Court of Queen’s Bench found that a pensioner who had married more than once could have more than one “pension partner” under the Special Forces Pension Plan (Special Forces Plan). The court found that, based on a purposive interpretation of the regulations governing the Special Forces Plan in effect at the time of the matrimonial property order between Mr. McMorran and his first wife, there was nothing that prevented the recognition of two pension partners. It noted that it has become quite common for people to have multiple marriages and that recognizing multiple pension partners “protects the interests of both spouses and leaves neither dependent on the other to survive so that their expected benefits will continue to be paid.” The court rejected the argument by the administrator of the Special Forces Plan that such an order had the effect of creating a new pension asset. It also rejected the administrator’s argument that the recognition of two pension partners under the pension scheme was an impermissible modification of a statutory scheme. The Alberta Pensions Services Corporation, the plan administrator, appealed.

The Alberta Court of Appeal (the ABCA), in concurring judgments, allowed the appeal. It found, based on a review of applicable legislation and the regulations governing the Special Forces Plan, that only one pension partner was permitted under the Special Forces Plan. Further, the ABCA stated that allowing for two pension partners would result in an “injustice” or “mischief” to the Special Forces Plan as the plan was funded on the assumption that there would only be one pension partner. The ABCA rejected the argument that their decision was unfair to Mr. McMorran’s second wife as “she ought to have known, when she married Mr. McMorran, that his first wife had property rights in the pension.”

Alberta Court of Appeal Decision

Dundas v. Schafer, 2014 MCBA 92

The fundamental issue in this case is whether the waiver of pension entitlements in a prenuptial agreement can deprive a former spouse of equal sharing of a member’s pension under The Pension Benefits Act (Manitoba) (MBPBA).

Jennifer Dundas and Arthur Schafer entered into a prenuptial agreement (the Agreement) prior to marrying in 1997. The Agreement provided, among other things, that Ms. Dundas released any rights or claims with respect to Mr. Schafer’s pension, and a covenant that if Ms. Dundas were to receive a portion of pension benefit credits, she would reimburse Mr. Schafer and be responsible for costs to recover these benefits. The parties divorced in 2011.

At trial, Ms. Dundas argued that the Agreement infringed subsection 31(2) of the MBPBA, which requires an equal division of pension benefits unless the parties opt out in accordance with subsection 31(6) of the MBPBA. The parties did not opt out in accordance with subsection 31(6) of the MBPBA.

The trial judge rejected this argument, in part, because the effect of the Agreement was that Ms. Dundas had no entitlement to Mr. Schafer’s pension, subsection 31(2) of the MBPBA was not triggered.

On appeal, Ms. Dundas argued that the MBPBA requires a “fresh agreement after separation,” meaning that any agreements executed prior to separation would be non-compliant and unenforceable. In rejecting her argument, the Manitoba Court of Appeal (MBCA) found that a prenuptial agreement creates a situation where spouses have “no entitlement” under the primary marital property regime and that “by substituting a separate regime, no entitlement ever arose and, as found by the trial judge, that which never vested cannot be divided.”

In obiter, the MBCA noted that the amendment to the MBPBA to prohibit contracting out of the MBPBA came into effect after the date of the Agreement and, as such, did not have to be considered by the court.

Manitoba Court of Appeal Decision