Dinney v. Great-West Life Assurance Co. et al., (2009) 236 Man.R.(2d) 299 (CA)

• Judge: Scott, C.J.M., Steel and MacInnes, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: April 21, 2009
• Jurisdiction: Manitoba
• Citations: (2009), 236 Man.R.(2d) 299 (CA);2009 MBCA 29

Dinney v. Great-West Life (2009), 236 Man.R.(2d) 299 (CA);

      448 W.A.C. 299

MLB headnote and full text

Temp. Cite: [2009] Man.R.(2d) TBEd. AP.030

George R. Dinney, On His Own Behalf and On Behalf Of Certain Former Employees of The Great-West Life Assurance Company (plaintiff/respondent) v. The Great-West Life Assurance Company and The Trustees, From Time to Time, of The Pension Fund Established Under Part A Of The Great-West Life Assurance Company System of Insurance and Pensions For Certain Employees and Agents (defendants/appellants)

(AI 07-30-06764; 2009 MBCA 29)

Indexed As: Dinney v. Great-West Life Assurance Co. et al.

Manitoba Court of Appeal

Scott, C.J.M., Steel and MacInnes, JJ.A.

April 21, 2009.

Summary:

Great-West Life Assurance Co. amended its pension plan to allow it more discretion in deciding on incremental payments to pensioners. A provision that payments were to be related to profits remained in effect. Dinney and other pensioners did not receive incremental payments based on fund performance. Dinney sued Great-West. The court was asked to determine, inter alia, whether Dinney and other pensioners had a vested interest in the indexing provisions of the plan despite the amendments.

The Manitoba Court of Queen's Bench, in a decision reported at 152 Man.R.(2d) 88, answered in the affirmative (the November 30, 2000 decision). The court also held that the limitation period on claims was six years. Discussions ensued relating to the specific classes of pensioners entitled to benefit under the judgment. Great-West pointed out that s. 21(8) of the Manitoba Pension Benefits Act was the basis of the affirmative answer and that pensioners who had been employed in provinces which did not have legislation to the same effect would not necessarily have the same vested rights as those employed in Manitoba.

The Manitoba Court of Queen's Bench, in a decision reported at 169 Man.R.(2d) 317, held that the proper law of the plan was Manitoba and extra-provincial employees were included in the class. Great-West appealed the decision of November 30, 2000, and the pensioners cross-appealed.

The Manitoba Court of Appeal, in a decision reported at 192 Man.R.(2d) 229; 340 W.A.C. 229, dismissed the appeal and cross-appeals. The trial judge was required to determine how damages which flowed from Great-West's breach should be assessed.

The Manitoba Court of Queen's Bench, in a decision reported at 210 Man.R.(2d) 61, determined the damages accordingly. Four supplemental issues arose.

The Manitoba Court of Queen's Bench, in a decision reported at 217 Man.R.(2d) 46, determined the four issues accordingly. The defendants appealed. The plaintiffs cross-appealed.

The Manitoba Court of Appeal allowed the defendants' appeal in part and dismissed the plaintiffs' cross-appeal.

Damages - Topic 912

Aggravation - In contract - For breach - Great-West Life Assurance Co. amended its deferred benefit pension plan to allow it more discretion in deciding on incremental payments to pensioners - It was determined, inter alia, that the indexing provision in the plan created a vested right in favour of former employees, that the indexing was to be related to the investment performance of the plan fund, and that Great-West and the fund trustees breached their obligations under the provision in that increments were not related to the investment performance - The trial judge declined to award punitive, aggravated or exemplary damages to the plaintiff (former employee) as the court concluded that Great-West and the pension fund trustees had acted in good faith - They did not embark on a scheme to deliberately defeat a clear entitlement (the provision in question was open to interpretation) - The litigation was an honest dispute about how the provision should be interpreted - The Manitoba Court of Appeal held that the trial judge made no palpable and overriding error in his conclusion that there would be no award for aggravated, punitive or exemplary damages - Though he did not specifically deny the plaintiff's claim for a disgorgement of profits, such a denial would follow in light of his findings and conclusions not to award aggravated, punitive or exemplary damages - See paragraphs 120 to 129.

Damages - Topic 1305

Exemplary or punitive damages - Breach of contract - [See Damages - Topic 912 ].

Limitation of Actions - Topic 2423

Actions in contract - Pension plans - When time begins to run - Great-West Life Assurance Co. (Great-West) amended its deferred benefit pension plan to allow it more discretion in deciding on incremental payments to pensioners - It was determined that Great-West and the fund trustees (defendants) breached s. 30 of the plan by failing to determine the amount of the annual pension increments in a manner that was related to the investment performance of the pension fund - It was also determined that the claim of the plaintiff (on behalf of certain former employees), which was commenced on September 12, 1996, was subject to a six year limitation period under the Limitation of Actions Act - The defendants argued that the plaintiff's claim to the annual increment granted to pensioners on April 1, 1990, was statute-barred, since the claim only extended retroactively to September 12, 1990 - Therefore, the commencement date for the calculation and payment of the additional pension increments was the next annual increment date (April 1, 1991) - The trial judge held that the plaintiff had successive monthly potential causes of action from April 1990 to April 1991 respecting the pension increments - Therefore, the time limit commenced to run on September 12, 1990 - The Manitoba Court of Appeal held that the trial judge was correct - There was a separate cause of action permitting the plaintiff to sue for the breach of contract in failing to pay monthly one-twelfth of the pension, which would include, both the base pension and the annual increment - Thus, the plaintiff was entitled to sue as of September 12, 1990, for breach of contract in failing to make the monthly pension payment due on a prorated basis for the month of September 1990 and for each month thereafter - See paragraphs 106 to 118.

Master and Servant - Topic 1941.1

Remuneration - Pension or retirement benefits - Interpretation - The Manitoba Court of Appeal stated that "Pension rights are in the nature of contractual rights. Hence, the use of contractual principles and the rules of interpretation of contractual documents are resorted to for the purpose of determining what rights exist under a pension plan. In this case, as in many, a trust deed is involved. Nevertheless, the pension plan document is the paramount or dominant legal document and the trust deed is secondary." - See paragraph 55.

Master and Servant - Topic 1941.1

Remuneration - Pension or retirement benefits - Interpretation - The Manitoba Court of Appeal stated that "In addition to the ordinary rules of contractual interpretation there is indeed judicial authority for the proposition that certain principles of interpretation should also be applied when interpreting pension plans. These include that: (1) the provisions of a pension plan should wherever possible be construed to give reasonable and practical effect to the scheme, mindful that it will operate over a lengthy period of time and against a constantly changing commercial background; (2) the approach to construction should be practical and purposive, not detached and literal; (3) the plan is to be construed in light of the surrounding circumstances when it was created or when an amendment was adopted; (4) if there is a choice of possible constructions, they must be tested against the consequences they produce in practice; and (5) a pension scheme should be interpreted as a whole. The meaning of a particular clause should be considered in conjunction with other relevant clauses ...  In addition, a court, in interpreting the language of a pension plan, must be mindful that the plan is being operated for the benefit of all retired employees and that an interpretation which would provide a windfall for some might affect the financial interests of others. The law is clear that the sponsor of a pension plan does not stand in a fiduciary relationship to the beneficiaries thereunder and is entitled to consider its own interests in the decision which it makes concerning the management and administration of the plan and pension fund. The sponsor does, however, owe a duty of good faith to the beneficiaries in its management and administration of the plan." - See paragraphs 61 to 63.

Master and Servant - Topic 1941.4

Remuneration - Pension or retirement benefits - Plan administrator - Duties - [See second Master and Servant - Topic 1941.1 ].

Master and Servant - Topic 1945

Remuneration - Pension or retirement benefits - Entitlement - Vesting - Great-West Life Assurance Co. (Great-West) amended its deferred benefit pension plan to allow it more discretion in deciding on incremental payments to pensioners - It was determined, inter alia, that the indexing provision in the plan created a vested right in favour of former employees, that the indexing was to be related to the investment performance of the plan fund, and that Great-West and the fund trustees breached their obligations under the provision in that increments were not related to the investment performance - At issue was how the damages which flowed from Great-West's breach should be assessed - The trial judge determined, inter alia, that Great-West was given a very broad discretion to determine the annual increment, though it was not wholly unfettered - He determined that a proposed new formula developed by Great-West to calculate the pension increments was consistent with s. 30 of the amended pension plan dealing with pension indexing - The Manitoba Court of Appeal held that the trial judge did not commit a palpable and overriding error in his conclusion that Great-West had a discretion respecting the determination of the amount of the annual pension increment - While the plaintiff clearly was the beneficiary of vested rights under the plan, which vested rights could not be amended as regards the plaintiff after retirement without the plaintiff's consent, such rights were only those as defined by the plan which created them - Thus, the vested right here was the right to payment of an annual increment to be determined by Great-West pursuant to s. 30 - When one read s. 30 in the context of the entire contractual document, it was clear that the trial judge was correct in concluding that s. 30 gave Great-West a considerable discretion as to the method it would use to determine the amount of the increment so long as that method was related to the investment performance of the fund - Further, Great-West was not restricted to any one method or formula, but was at liberty to adopt any other method or formula so long as it maintained some reasonable relationship to the investment performance of the fund - See paragraphs 25 to 72.

Master and Servant - Topic 1947

Remuneration - Pension or retirement benefits - Calculation of (incl. indexing) - Great-West Life Assurance Co. (Great-West) amended its deferred benefit pension plan to allow it more discretion in deciding on incremental payments to pensioners - It was determined, inter alia, that the indexing provision in the plan created a vested right in favour of former employees, that the indexing was to be related to the investment performance of the plan fund, and that Great-West and the fund trustees breached their obligations under the provision in that increments were not related to the investment performance - At issue was how the damages which flowed from Great-West's breach should be assessed - The trial judge determined, inter alia, that Great-West was given a very broad discretion to determine the annual increment - He held that a proposed new formula developed by Great-West to calculate the pension increments could be used commencing April 1, 2006, but that the plaintiff was entitled to be reimbursed in accordance with the original formula for the applicable period before then - The Manitoba Court of Appeal held that the trial judge erred by substituting his own decision for Great-West's discretionary decision to use the new formula to calculate the increments for the plaintiff for all years - The trial judge had fulfilled his supervisory role and should have referred the matter back to Great-West to allow it to exercise the discretion given to it under s. 30 of the plan to calculate the annual increment - There was no evidence of any circumstances which would disqualify Great-West from the fulfilment of its discretion - See paragraphs 73 to 104.

Master and Servant - Topic 1947

Remuneration - Pension or retirement benefits - Calculation of (incl. indexing) - [See Master and Servant - Topic 1945 ].

Cases Noticed:

MacDougall v. MacDougall (2005), 205 O.A.C. 216; 262 D.L.R.(4th) 120 (C.A.), refd to. [para. 25].

Bell Mobility Inc. v. MTS Allstream Inc. (2009), 236 Man.R.(2d) 167; 448 W.A.C. 167; 2009 MBCA 28, refd to. [para. 27].

Prairie Petroleum Products Ltd. v. Husky Oil Ltd. et al. (2008), 231 Man.R.(2d) 1; 437 W.A.C. 1; 2008 MBCA 87, refd to. [para. 27].

Hurd v. Illinois Bell Telephone Co. (1955), 136 F. Supp. 125 (N.D. Ill.), refd to. [para. 60].

Courage Group's Pension Schemes, Re, [1987] 1 All E.R. 528 (Ch. D.), refd to. [para. 61].

Stevens et al. v. Bell et al., [2002] EWCA Civ. 672, refd to. [para. 61].

Bank of New Zealand v. Board of Management of the Bank of New Zealand Officers' Provident Association, [2003] N.R. Uned. 196; [2003] UKPC 58, refd to. [para. 61].

Armitage v. Staveley Industries plc, [2005] EWCA Civ. 792, refd to. [para. 61].

National Grid Co. plc v. Mayes, [2001] 2 All E.R. 417; [2001] UKHL 20, refd to. [para. 63].

Edge v. Pensions Ombudsman, [1998] 2 All E.R. 547 (Ch. D.), affd. [1999] 4 All E.R. 546 (C.A.), refd to. [para. 90].

Neville v. Wynne et al. (2006), 231 B.C.A.C. 121; 381 W.A.C. 121; 55 C.C.P.B. 157; 2006 BCCA 460, affing. [2005] B.C.T.C. 483; 46 C.C.P.B. 80; 2005 BCSC 483, refd to. [para. 91].

Neville v. Plumbing & Pipefitting Workers Local 170 Pension Plan (Trustees of) - see Neville v. Wynne et al.

Huang et al. v. Drinkwater et al. (2005), 372 A.R. 336; 44 C.C.P.B. 100; 2005 ABQB 40, refd to. [para. 92].

Huang v. Telus Corp. Pension Plan (Trustees of) - see Huang et al. v. Drinkwater et al.

Firestone Tire and Rubber Co. v. Bruch (1989), 489 U.S. 101 (Sup. Ct.), refd to. [para. 93].

Locker's Settlement Trusts, Re, [1978] 1 All E.R. 216 (Ch. D.), refd to. [para. 94].

Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R. 3; 350 N.R. 40; 227 B.C.A.C. 39; 374 W.A.C. 39; 2006 SCC 30, refd to. [para. 124].

Authors and Works Noticed:

Chitty on Contracts (30th Ed. 2008), vol. 1, para. 28-032 [para. 112].

Hall, Geoff R., Canadian Contractual Interpretation Law (1st Ed. 2007), pp. 106, 107 [para. 28].

Waters, Donovan W.M., The Law of Trusts in Canada (2nd Ed. 1984), pp. 758, 759 [para. 92].

Counsel:

C.M. Fien, E.B. Eva and D.A. Simpson, for the appellants;

R.L. Tapper, Q.C., and R.M. Swystun, for the respondent.

This appeal and cross-appeal were heard on April 23 and 24, 2008, by Scott, C.J.M., Steel and MacInnes, JJ.A., of the Manitoba Court of Appeal. MacInnes, J.A., delivered the following judgment for the court on April 21, 2009.