Imperial Oil Ltd. et al. v. Atlantic Oil Workers Union, Local No. 1 et al., 2004 NSSC 201

• Judge: Murphy, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: November 06, 2003
• Jurisdiction: Nova Scotia
• Citations: 2004 NSSC 201;(2004), 227 N.S.R.(2d) 1 (SC)

Imperial Oil v. AOWU (2004), 227 N.S.R.(2d) 1 (SC);

 720 A.P.R. 1

MLB headnote and full text

Temp. Cite: [2004] N.S.R.(2d) TBEd. OC.010

Imperial Oil Limited and McColl- Frontenac Incorporated (plaintiffs) v. Atlantic Oil Workers Union, Local No. 1 and the Individuals listed in Schedule "A" (defendants)

(SH 131911; 2004 NSSC 201)

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

Nova Scotia Supreme Court

Murphy, J.

May 3, 2004.

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 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.

Administrative Law - Topic 574

The hearing and decision - Decisions of the tribunal - Collateral attack - [See Estoppel - Topic 386 ].

Contracts - Topic 6504

Illegal contracts - General - Enforcement of illegal contracts - The Nova Scotia Supreme Court stated that "unjust enrichment principles may be applied in the face of an 'illegal contract'" - See paragraph 137.

Contracts - Topic 7433

Interpretation - Ambiguity - Contra proferentem rule - [See Releases - Topic 4021 ].

Estoppel - Topic 386

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Issues decided in prior proceedings - The Superintendent of Pensions allowed a partial wind-up of a pension by former employees - Court appeals were dismissed - The employer brought an action involving the relationship between benefits obtained under the partial wind-up and what the employees received under a severance package, which they elected to receive in exchange for signing releases - The employees submitted that the employer's claim, based in contract, restitution, constructive trust and unjust enrichment, was res judicata - The Nova Scotia Supreme Court held that the action was not res judicata - The same facts or cause of action was not previously in issue - The Superintendent was concerned only with whether to order a partial wind-up - The present action involved the rights and obligations arising in the context of the severance package and releases - They were different matters - The present action involved issues the Superintendent had no jurisdiction to determine and did not constitute a collateral attack on the Superintendent's wind-up order or offend the principle of finality, because the employer was not seeking to invalidate or render inoperable the order, but merely questioning the employees' entitlement to benefits under the partial wind-up and while getting full benefits under the severance agreement - See paragraphs 53 to 71.

Labour Law - Topic 6906

Industrial relations - Collective agreement - Civil action - Jurisdiction - The defendants, unionized and non-unionized employees, elected to receive a severance package and enhanced pension benefits upon the sale of their employer's business - The employees also sought and obtained a partial wind-up of the employer's pension plan - The employer brought an action claiming the employees committed a breach of contract (severance agreement) in seeking a partial wind-up - The employer sought relief in contract and, alternatively, sought relief based on restitution, constructive trust and unjust enrichment - The employees challenged the court's jurisdiction - The Nova Scotia Supreme Court held that the court had jurisdiction - Neither the collective agreement ("may" seek arbitration) nor the Trade Union Act (disputes resolved by "arbitration or otherwise") gave an arbitrator exclusive jurisdiction - The essential character of the dispute related to the interpretation of contracts and releases with their genesis outside the collective agreement - The "essential character" of the dispute did not arise from the "interpretation, application, administration or violation of the collective agreement" - The dispute involved common law issues of contract that were contemplated by, or intended to be regulated by, the Act - Further, the dispute also involved non-unionized employees over whom the arbitrator had no jurisdiction - The court, by exercising jurisdiction, would avoid a multiplicity of proceedings and possible inconsistent decisions - Further, an arbitrator had no jurisdiction to grant relief for unjust enrichment - See paragraphs 37 to 52.

Master and Servant - Topic 1948

Remuneration - Pension or retirement benefits - Regulation - General - A severance agreement provided for benefits that were "inclusive of, and not in addition to, any benefits or allowances prescribed by employment statutes ..." - The Nova Scotia Supreme Court held that the Pension Benefits Act, being legislation applicable to "pension plans for persons employed in the province", was an "employment statute" as contemplated by the agreement - See paragraphs 72 to 81.

Practice - Topic 5374

Dismissal of action - Grounds - General and want of prosecution - Collateral attack on administrative decision - [See Estoppel - Topic 386 ].

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 Nova Scotia Supreme Court 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 - Alternatively, the releases were at best ambiguous, and would be interpreted strictly against the employer on the basis of the contra proferentem principle - See paragraphs 82 to 92.

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 Nova Scotia Supreme Court 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 - See paragraphs 99 to 126.

Restitution - Topic 64

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

Cases Noticed:

Imperial Oil Ltd. v. Superintendent of Pensions (N.S.) et al. (1994), 131 N.S.R.(2d) 321; 371 A.P.R. 321 (S.C.), affd. (1995), 142 N.S.R.(2d) 26; 407 A.P.R. 26 (C.A.), leave to appeal denied (1995), 201 N.R. 400; 151 N.S.R.(2d) 320; 440 A.P.R. 320 (S.C.C.), refd to. [para. 34].

Weber v. Ontario Hydro, [1995] 2 S.C.R. 929; 183 N.R. 241; 82 O.A.C. 321; 125 D.L.R.(4th) 583; 95 C.L.L.C. 210-027; 12 C.C.E.L.(2d) 1; 24 C.C.L.T.(2d) 217, refd to. [para. 40].

Pleau v. Canada (Attorney General) et al. (1999), 181 N.S.R.(2d) 356; 560 A.P.R. 356; 1999 CarswellNS 406 (C.A.), refd to. [para. 41].

Regina Police Association Inc. and Shotton v. Board of Police Commissioners of Regina, [2000] 1 S.C.R. 360; 251 N.R. 16; 189 Sask.R. 23; 216 W.A.C. 23; 183 D.L.R.(4th) 14, refd to. [para. 42].

Goudie et al. v. Ottawa (City) (2003), 301 N.R. 201; 170 O.A.C. 201, refd to. [para. 44].

Armour Group Ltd. v. United Brotherhood of Carpenters and Joiners of America, Local 83 (2000), 186 N.S.R.(2d) 315; 581 A.P.R. 315; 2000 CarswellNS 249 (S.C.), refd to. [para. 46].

Bohemier et al. v. Centra Gas Manitoba Inc. et al. (2000), 155 Man.R.(2d) 256; 2000 CarswellMan 228 (Q.B.), refd to. [para. 47].

Danyluk v. Ainsworth Technologies Inc. et al., [2001] 2 S.C.R. 460; 272 N.R. 1; 149 O.A.C. 1, refd to. [para. 54].

Angle v. Minister of National Revenue, [1975] 2 S.C.R. 248; 2 N.R. 397; 47 D.L.R.(3d) 544, refd to. [paras. 54, 64].

Fenerty v. Halifax (City) (1920), 50 D.L.R. 435 (N.S.C.A.), refd to. [para. 54].

Braithwaite v. Nova Scotia Public Service Long Term Disability Plan Trust Fund (1999), 176 N.S.R.(2d) 173; 538 A.P.R. 173; 1999 CarswellNS 136 (C.A.), refd to. [para. 62].

Lloyd v. Imperial Oil Ltd., 1999 CarswellAlta 1269, leave to appeal refused, 2000 CarswellAlta 1229 (S.C.C.), refd to. [para. 62].

Hoque v. Montreal Trust Co. et al. (1997), 162 N.S.R.(2d) 321; 485 A.P.R. 321 (C.A.), refd to. [para. 63].

Garland v. Consumers' Gas Co. (2004), 319 N.R. 38; 186 O.A.C. 128; 237 D.L.R.(4th) 385 (S.C.C.), refd to. [paras. 67, 98].

Social Services Administration Board (Parry Sound District) v. Ontario Public Service Employees Union, Local 324 et al. (2003), 308 N.R. 271; 177 O.A.C. 235; 230 D.L.R.(4th) 257 (S.C.C.), refd to. [para. 78].

Arnoldin Construction & Forms Ltd. v. Alta Surety Co. et al. (1995), 137 N.S.R.(2d) 281; 391 A.P.R. 281 (C.A.), refd to. [para. 91].

Hillis Oil & Sales Ltd. v. Wynn's Canada Ltd., [1986] 1 S.C.R. 57; 65 N.R. 23; 71 N.S.R.(2d) 353; 171 A.P.R. 353; 25 D.L.R.(4th) 649, refd to. [para. 91].

Deglman v. Guaranty Trust Co. of Canada, [1954] S.C.R. 725, refd to. [para. 96].

Deglman v. Brunet Estate - see Deglman v. Guaranty Trust Co. of Canada.

Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd., [1943] A.C. 32 (H.L.), refd to. [para. 96].

Kiss v. Palachik et al., [1983] 1 S.C.R. 623; 47 N.R. 148, refd to. [para. 96].

Rathwell v. Rathwell, [1978] 2 S.C.R. 436; 19 N.R. 91; 83 D.L.R.(3d) 289; [1978] 2 W.W.R. 101; 1 E.T.R. 307; 1 R.F.L.(2d) 1, refd to. [para. 97].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384; 19 R.F.L.(2d) 165; 117 D.L.R.(3d) 257; 8 E.T.R. 143, refd to. [para. 97].

Peel (Regional Municipality) v. Ontario, [1992] 3 S.C.R. 762; 144 N.R. 1; 59 O.A.C. 81; 98 D.L.R.(4th) 140, refd to. [para. 98].

Whitsitt v. Ontario, [1998] O.J. No. 6211 (Gen. Div.), refd to. [para. 105].

Goodwin v. Benefit Plan Administrators (Atlantic) Ltd. et al. (2000), 195 Nfld. & P.E.I.R. 159; 586 A.P.R. 159 (P.E.I.T.D.), refd to. [para. 106].

Canada (Attorney General) v. Confederation Life Insurance Co. (1995), 24 O.R.(3d) 717 (Gen. Div.), refd to. [para. 106].

Imperial Oil v. Superintendent of Pensions (Ont.) (1996), 15 C.C.P.B. 31 (Ont. Pension Comm.), refd to. [para. 110].

Girling v. Crown Cork & Seal Canada Inc. et al. (1995), 63 B.C.A.C. 176; 104 W.A.C. 176; 127 D.L.R.(4th) 448 (C.A.), refd to. [para. 111].

Boarelli v. Flannigan (1973), 36 D.L.R.(3d) 4 (Ont. C.A.), refd to. [para. 113].

Emery v. Royal Oak Mines Inc. (1995), 24 O.R.(3d) 302 (Gen. Div.), refd to. [para. 115].

Huus et al. v. Superintendent of Pensions (Ont.) et al. (2000), 133 O.A.C. 375, additional reasons (2002), 58 O.R.(3d) 380 (C.A.), refd to. [para. 117].

Hawker Siddeley Canada Inc. v. Superintendent of Pensions (N.S.) et al. (1994), 129 N.S.R.(2d) 194; 362 A.P.R. 194 (C.A.), refd to. [para. 118].

Still v. Minister of National Revenue (1997), 221 N.R. 127; 154 D.L.R.(4th) 229 (F.C.A.), refd to. [para. 134].

Nova Scotia Union of Public Employees v. Halifax Regional School Board (2001), 195 N.S.R.(2d) 97; 609 A.P.R. 97 (C.A.), refd to. [para. 135].

Safeway Shouldering Ltd. v. Nackawic (Town) (2001), 234 N.B.R.(2d) 356; 604 A.P.R. 356; 196 D.L.R.(4th) 659 (C.A.), refd to. [para. 136].

Berne Development Ltd. v. Haviland et al. (1983), 40 O.R.(2d) 238 (Ont. H.C.), refd to. [para. 136].

Ontario New Home Warranty Program v. Grant et al. (2002), 167 O.A.C. 386; 4 R.P.R.(4th) 56 (C.A.), refd to. [para. 136].

First City Development Corp. v. Durham (Regional Municipality) (1989), 67 O.R.(2d) 665 (H.C.), refd to. [para. 136].

Gateway Hotel (1985) Ltd. v. Schur et al. (1990), 66 Man.R.(2d) 305 (Q.B.), refd to. [para. 136].

Authors and Works Noticed:

England, Geoffrey, Christie, Innis, and Christie, Merran, Employment Law in Canada (3rd Ed. 1988) (Looseleaf), p. f1.21 [para. 77].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (4th Ed. 1999), pp. 445, 446 [para. 134].

Sopinka, John, Lederman, Sidney N., and Bryant, Alan W., The Law of Evidence in Canada (2nd Ed. 1999), pp. 1068 [para. 55]; 1070 [para. 56].

Counsel:

George MacDonald, Q.C., and Hugh Wright, for the plaintiffs;

Ronald A. Pink, Q.C., and Bettina Quistgaard, for the defendants;

J. Brian Church, Q.C., for the defendants, A. Campbell, G. Doggett, J. Mahon and J. McDonald;

R. Bucknam, E. Frizzell, E. Zwaan, R. Edward G. Mathie, J. Flemming and P. Winters, defendants, on their own behalf.

This matter was heard on September 30, October 1-2, and November 6, 2003, at Halifax, N.S., before Murphy, J., of the Nova Scotia Supreme Court, whose following oral decision of May 3, 2004, was released in writing on October 8, 2004.