The Ontario Court of Appeal has released its decision in MacKinnon v. Ontario Municipal Employees Retirement Board. While ultimately the decision means only that the issues are headed to trial, the Court of Appeal made some comments regarding the scope of duties of service providers to a pension plan which make this proceeding one to watch. Among other things, the Court of Appeal found that it is not “plain and obvious” that a real estate management corporation was not an agent of a pension plan.
The plaintiffs have brought an action on behalf of the members of the Ontario Municipal Employees Retirement System (“OMERS”) alleging that the OMERS Board (the administrator of the OMERS Plans), Borealis Capital Corporation (“Borealis”) and Borealis Real Estate Management Inc. (“BREMI”) and certain named individuals performed certain acts and entered into certain agreements which amounted to breaches of trust and breaches of fiduciary duty.
It is important to note that the decision of the Court of Appeal is not determinative of the merits of any of the claims. This was a motion for summary judgement, under which the Court must assume all the facts as stated by the plaintiffs are true; a claim must proceed unless it is “…plain, obvious and beyond doubt that the claim will not succeed.” The plaintiffs claim that the actions of the defendants were a breach of fiduciary duty and breach of trust on the part of all the defendants, or that certain defendants assisted in a breach of trust, and that the defendants other than the OMERS Board were unjustly enriched as a result.
The decision appealed from had dismissed many of the claims. The Court of Appeal reinstated many of the claims. Many of the court’s findings are dependent on the unique facts of this case, but the court did make some comments that will be of interest to plans generally.
- It is possible for a party to be subject to fiduciary standards under section 22(5) of the Ontario Pensions Benefit Act (the “PBA”), but not under the common law or the related party provisions of the Federal Investment Regulations.
- Section 22(8) of the PBA, which subjects the agents of the administrator to the same standard of care as the administrator, may apply to investment corporations and others who carry out investment functions.
- Where an administrator is in breach of trust, others may be liable for assisting them in that breach of trust, even where they are not agents of the administrator.
- “Unreasonable” fees charged to a pension plan may lead to claims of unjust enrichment.
- Following the costs decision in Nolan v. Ontario (the “Kerry” case), the costs of the plaintiff may be paid from the pension fund where it was unsuccessful as the proceeding was brought on behalf of the plan beneficiaries, and was also brought in order to ensure the proper administration of the fund.