Imperial Oil Ltd. et al. v. Atlantic Oil Workers Union, Local No. 1 et al., (2006) 246 N.S.R.(2d) 330 (CA)

• Judge: MacDonald, C.J.N.S., Cromwell and Saunders, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: August 18, 2006
• Jurisdiction: Nova Scotia
• Citations: (2006), 246 N.S.R.(2d) 330 (CA);2006 NSCA 100

Imperial Oil Ltd. v. AOWU (2006), 246 N.S.R.(2d) 330 (CA);

    780 A.P.R. 330

MLB headnote and full text

Temp. Cite: [2006] N.S.R.(2d) TBEd. AU.022

Atlantic Oil Workers Union, Local No. 1, and the Individuals Listed in Schedule "A" (appellants) v. Imperial Oil Limited and McColl-Frontenac Inc. (respondents)

(CA 234716; 2006 NSCA 100)

Indexed As: Imperial Oil Ltd. et al. v. Atlantic Oil Workers Union, Local No. 1 et al.

Nova Scotia Court of Appeal

MacDonald, C.J.N.S., Cromwell and Saunders, JJ.A.

August 18, 2006.

Summary:

Texaco operated a Dartmouth oil refinery where the defendant employees worked. The employees had a pension plan and, in 1988 Texaco, anticipating a sale of its shares to Imperial, offered a severance package giving all dismissed Texaco employees the right to elect to take a lump sum cash severance and enhanced pension benefits during the 24 month period after the change in control. A release had to be executed to denote that acceptance was in full satisfaction of any other rights employees might have. The sale occurred in 1989, but because of a Competition Act investigation, Imperial was required to keep the Texaco operations separate. In 1990, when Imperial sold the refinery to Ultramar, the employees were terminated and opted to take the severance and enhanced pension benefits package. The employees signed the required releases. The employees also sought, and obtained, a partial wind-up of the pension plan. Imperial unsuccessfully appealed. Seventy-nine employees under the age of 50 received a benefit under the partial wind-up in addition to their severance and enhanced benefits package. Imperial brought an action claiming that the employees improperly pursued the partial wind-up, resulting in them receiving enhanced pension benefits to which they were not entitled. Imperial sought a return of benefits on the basis of breach of contract (severance agreement). Alternatively, Imperial sought relief based on restitution, constructive trust and unjust enrichment. Imperial then applied under rule 25.01(1)(a) for determination of questions of law, including (1) whether the court had jurisdiction where the employees were subject to a collective agreement; (2) whether res judicata precluded the claim; (3) whether the claim constituted a collateral attack or offended the principle of finality; (4) whether the employees breached their releases and (5) whether the employees were unjustly enriched.

The Nova Scotia Supreme Court, in a judgment reported (2004), 227 N.S.R.(2d) 1; 720 A.P.R. 1, held that the court had jurisdiction over the claim, the claim was not res judicata, the claim did not constitute a collateral attack or offend the principle of finality and the employees did not breach their releases. However, the court held that the employees under age 50 who received "grow-in" benefits under the partial wind-up, in addition to their severance and enhanced pension benefits, were unjustly enriched and Imperial was entitled to relief. Employees who did not receive "grow-in" benefits were not unjustly enriched. The employees appealed the findings respecting jurisdiction and unjust enrichment. Imperial cross-appealed the dismissal of its claim for breach of contract.

The Nova Scotia Court of Appeal dismissed the cross-appeal. The application to partially wind-up the pension plan was not barred by the release and did not constitute a breach of contract. The court allowed the appeal respecting unjust enrichment, finding that the elements of unjust enrichment were not met where there existed a juristic reason for the enrichment. It was unnecessary to decide the jurisdiction issue.

Releases - Topic 4021

Operation - Scope of matters released - General - Dismissed employees elected benefits under a severance agreement and executed releases that released named parties "from all claims, demands, damages, actions or causes of action arising out of my separation from employment" - The employees subsequently sought, and obtained from the Superintendent of Pensions, a partial pension wind-up, which gave certain employees further benefits - The trial judge rejected the employer's submission that the releases were breached by seeking the partial wind-up - The employer interpreted the releases too broadly - The releases did not prohibit an application to the Superintendent for a statutory benefit, which was not a prohibited claim against a protected party - The Nova Scotia Court of Appeal agreed that the plain meaning of the releases did not prevent the employees from pursuing a partial wind-up of the pension plan, as such an application was not a claim "against the employer" under the releases - See paragraphs 52 to 69.

Restitution - Topic 62

Unjust enrichment - General - What constitutes - Dismissed employees elected to take a cash severance and enhanced pension benefits under a severance agreement - The employees released all other claims against the employer - However, the employees sought and obtained a partial pension wind-up - As a result, employees under age 50 also received benefits under the partial wind-up under the Pension Benefits Act - The trial judge agreed with the employer that the under age 50 employees were unjustly enriched by double recovery of benefits and that the employer was entitled to relief - Although the releases did not preclude the application for a statutory benefit, the severance agreement clearly addressed the employees' claims to both severance and pension benefits - By receiving further benefits related to the pension, the employees were enriched and the employer suffered a corresponding deprivation - There was no juristic reason for the enrichment - Employees under age 50 obtained a "windfall" they were not entitled to - The Nova Scotia Court of Appeal held that the trial judge erred in finding unjust enrichment - There was no "windfall" or "double recovery" - The judge erred in finding that employees were not intended to receive pension benefits beyond what the severance package provided - There existed juristic reasons for the retention of both severance payments and the "grow-in" benefits to which the employees were entitled under the Pension Benefits Act - See paragraphs 70 to 90.

Restitution - Topic 64

Unjust enrichment - General - Juristic reason for enrichment - [See Restitution - Topic 62 ].

Cases Noticed:

Rathwell v. Rathwell, [1978] 2 S.C.R. 436; 19 N.R. 91, refd to. [para. 72].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384, refd to. [para. 72].

Garland v. Consumers' Gas Co., [2004] 1 S.C.R. 629; 319 N.R. 38; 186 O.A.C. 128, refd to. [para. 72].

Taggart v. Canada Life Assurance Co., [2006] O.J. No. 301 (C.A.), refd to. [para. 88].

Authors and Works Noticed:

Kaplan, Ari N., Pension Law (2006), pp. 510, 511 [para. 8].

Maddaugh, Peter D., and McCamus, John D., The Law of Restitution (2005 Looseleaf Update), para. 3.200.30 [para. 73].

Counsel:

Ronald P. Pink, Q.C., Raymond F. Larkin, Q.C., and Bettina Quistgaard, for the appellants;

George MacDonald, Q.C., Hugh Wright and Daniel Watt, for the respondents.

This appeal and cross-appeal were heard on May 18, 2006, at Halifax, N.S., before MacDonald, C.J.N.S., Cromwell and Saunders, JJ.A., of the Nova Scotia Court of Appeal.

On August 18, 2006, Cromwell, J.A., delivered the following judgment for the Court of Appeal.