One of the general rules of statutory interpretation is that a statute or regulations only apply on a go-forward basis from the date of coming into force. An exception to that rule is where a statutory provision is clearly drafted to apply retrospectively. As the Supreme Court of Canada recently confirmed, legislatures are even able to enact declaratory legislation that applies to ongoing disputes before a court.

In Régie des rentes du Québec v. Canada Bread Company Ltd., two divisions of  Multi-Marques Inc. joined the Bakery and Confectionery Union and Industry Canadian Pension Fund. Multi-Marques was to make payments over 15 years to make up for the pension credits the employees were deemed to have accrued prior to  Multi-Marques joining the Fund. Before those 15 years elapsed, though, Multi-Marques closed the two divisions in questions.

As a result, the Régie des rentes du Québec (which administers the Quebec Pension Plan and acts and private pension plans governed by Quebec’s Supplemental Pension Plans Act, R.S.Q., c. R-15.1 (“SPPA”)) required a partial termination of the Fund and for Multi-Marques to rectify the solvency deficiency created by the closure of the two divisions. Multi-Marques did not protest the partial termination, but argued that under the Fund’s Rules, Multi-Marque’s liability was limited to the contributions already made.

A review committee of the Régie  agreed with Multi-Marques interpretation of the Plan Rules, but held that they were incompatible with the SPPA, and therefore, that Multi-Marques would have to remedy the deficiency. The Régie’s decision was affirmed by the Administrative Tribunal of Quebec and by the Superior Court of Quebec. However, the Quebec Court of Appeal overturned the lower decisions, holding that the Fund Rules are not incompatible with the SPPA and remitting the decision back to the Régie to redecide accordingly. The Régie applied for leave to appeal to the Supreme Court of Canada, and at the same time, the Government of Quebec amended the SPPA with the express purpose of countering the effects of the Court of Appeal’s decision.

Before the Supreme Court of Canada even had the chance to deny leave, the amendments to the SPPA came into force.  This meant that the decision fell back to the Régie, which, rather than following the direction of the Court of Appeal, applied the new legislation and reiterated its earlier decision. The parties litigated the matter back up to the Supreme Court of Canada, arguing whether the amendments to the SPPA could apply in these circumstances.

The majority of the Supreme Court described declaratory legislation as a legislature performing the role of a court by dictating a specific interpretation of its own legislation, with immediate effect on pending cases. However, declaratory legislation cannot re-open cases that have already been decided. Therefore, the issue was whether the dispute between Régie and Muli-Marques remained pending. The majority determined that although the Court of Appeal had issued a final judgment on the statutory interpretation issue, its judgment did not dispose of the entire case – the case was still “pending” because it had been remitted to the Régie for final determination. While the Régie was obliged to follow the Court of Appeal’s direction, it had to do so in light of the amendments made to the SPPA in the meantime.

Two dissenting judges agreed with the majority’s description on the impacts of declaratory legislation, but disagreed that the amendments to the SPPA could apply to the case that had been remitted to the Régie. The dissent held that once the Supreme Court denied leave from the Court of Appeal’s decision, it became final and not subject to redetermination by another court or by statutory amendment.

What this means to you

Thankfully, declaratory legislation is not particularly common, and governments tend not to legislate on specific matters before the court. Further, the vast majority of amendments to pension legislation tend to be made methodically and with input from various stakeholders. Still, this case highlights the importance of ensuring that pension plans, rules, and administrative policies comply with the applicable legislation. If they don’t, it could lead to unexpected liabilities or lengthy  litigation.