McCann et al. v. Canada Mortgage and Housing Corp. et al., (2012) 290 O.A.C. 99 (CA)

• Judge: Doherty, Laskin and Simmons, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: July 13, 2011
• Jurisdiction: Ontario
• Citations: (2012), 290 O.A.C. 99 (CA);2012 ONCA 243

McCann v. CMHC (2012), 290 O.A.C. 99 (CA)

MLB headnote and full text

Temp. Cite: [2012] O.A.C. TBEd. AP.024

Nicole Lacroix and Rosie Ladouceur (plaintiffs/appellants) v. Canada Mortgage and Housing Corporation and Marc Rochon, Claude Poirier-Defoy, Jim Millar, Karen Kinsley, Gerald Norbraten, Jean-Guy Tanguay, David Metzak and Brian Knight being the Trustees of the Canada Mortgage and Housing Corporation Pension Fund (defendants/respondents)

Frank McCann and David Guffie (plaintiffs/appellants) v. Canada Mortgage and Housing Corporation and Marc Rochon, Claude Poirier-Defoy, Jim Millar, Karen Kinsley, Gerald Norbraten, Jean-Guy Tanguay, David Metzak and Brian Knight being the Trustees of the Canada Mortgage and Housing Corporation Pension Fund (defendants/respondents)

(C53012; C53034; 2012 ONCA 243)

Indexed As: McCann et al. v. Canada Mortgage and Housing Corp. et al.

Ontario Court of Appeal

Doherty, Laskin and Simmons, JJ.A.

April 18, 2012.

Summary:

Between 1995 and 2000, Canada Mortgage and Housing Corp. (CMHC) terminated approximately half of its workforce. During the downsizing period, there were significant surplus assets in the CMHC pension fund. CMHC made two "benefit enhancement decisions" on January 1, 1999, and January 1, 2001, respectively, that distributed surplus funds between CMHC and remaining pension plan members. A class action was certified on behalf of claimaints regarding the surplus funds, the "Lacroix plaintiffs" and the "McCann plaintiffs". The Lacroix plaintiffs were downsized prior to January 1, 1999, and did not receive any benefit from the benefit enhancement decisions. The McCann plaintiffs were downsized between January 1, 1999, and January 1, 2001, and had received their share of the first benefit enhancement decision, but not the second. In 2007, Charbonneau, J., granted an order severing the McCann plaintiffs from the Lacroix action with permission for the McCann plaintiffs to raise proposed common issues in their action and for the Lacroix plaintiffs to add new common issues. The Lacroix plaintiffs requested amendments to their statement of claim and the McCann plaintiffs sought to certify certain claims.

The Ontario Superior Court, in a decision reported at [2009] O.T.C. Uned. 262, denied the motions. The plaintiffs appealed.

The Ontario Divisional Court, in a decision reported at (2010), 263 O.A.C. 273, dismissed the appeals. The plaintiffs appealed.

The Ontario Court of Appeal dismissed the appeals.

Editor's Note: There are a number of reported decisions relating to these actions.

Courts - Topic 2282

Jurisdiction - Bars - Statutory bars - [See first, second and fourth Master and Servant - Topic 1949 ].

Courts - Topic 7402

Provincial courts - Ontario - General Division/Superior Court - Jurisdiction - General - [See first, second and fourth Master and Servant - Topic 1949 ].

Master and Servant - Topic 1948.1

Remuneration - Pension or retirement benefits - Regulation - Superintendent or tribunal - General - [See first and second Master and Servant - Topic 1949 ].

Master and Servant - Topic 1949

Remuneration - Pension or retirement benefits - Termination or revocation of plan - At issue on this appeal was whether the court had the jurisdiction to order a partial termination of an employer's pension plan or to order the employer to effect a partial termination - The Ontario Court of Appeal held that, when ss. 8 and 29 of the Pension Benefits Standards Act (PBSA) were examined in light of the scheme and object of the PBSA, it was evident that Parliament had not intended to give courts the authority to order employers to terminate their pension plans - In s. 29, Parliament had provided that only two persons might initiate the termination of a pension plan - First, under s. 29(2), the Superintendent had discretion to terminate a pension plan if the enumerated criteria were met - Second, under s. 29(5), an administrator might initiate the termination of a pension plan - That the statute recognized an employer's right to terminate a plan was to be expected - However, an administrator's right to terminate a plan was subject to the supervision of the Superintendent - This recognized that the termination of a plan, either in whole or in part, was a complex and highly technical matter that demanded the Superintendent's specialized expertise - Further, it was significant that the regime did not recognize a right of employees to ask for a termination - In light of that, it made little sense to say that Parliament intended courts to have jurisdiction to order the termination of a plan at the instance of disaffected employees - The scheme of the PBSA thus showed that impliedly, though not expressly, Parliament had excepted terminations from the remedies available to the court under s. 8(11) of the PBSA - See paragraphs 70 to 74.

Master and Servant - Topic 1949

Remuneration - Pension or retirement benefits - Termination or revocation of plan - At issue on this appeal was whether the court had the jurisdiction to order a partial termination of an employer's pension plan or to order the employer to effect a partial termination - The Ontario Court of Appeal held that, when ss. 8 and 29 of the Pension Benefits Standards Act (PBSA) were examined in light of the scheme and object of the PBSA, it was evident that Parliament had not intended to give courts the authority to order employers to terminate their pension plans - A main object of pensions was to provide long-term financial security to workers after their withdrawal from active employment - Pension legislation, such as the PBSA, established expert regulatory supervision over and minimum standards for pension plans - The overall aim of the legislation was to protect and safeguard the pension rights and benefits of current and former plan members - Giving the court jurisdiction to order an employer to partially terminate its pension plan on the application of a group of former employees undermined these important objects of the statute - Doing so would disregard the regulatory expertise of the Superintendent - It would threaten the balance between employers and employees - And ultimately, it could put the long term survival of pension plans at risk - Therefore, as a matter of statutory interpretation, courts had no jurisdiction under s. 8(11) of the PBSA to order an employer to effect a partial termination of its pension plan - See paragraphs 75 to 78.

Master and Servant - Topic 1949

Remuneration - Pension or retirement benefits - Termination or revocation of plan - At issue on this appeal was whether the court had the jurisdiction to order a partial termination of an employer's pension plan or to order the employer to effect a partial termination - If the court lacked that jurisdiction, then the plaintiffs' claim relating to their former employer's failure to declare a partial termination of the plan under s. 29(5) of the Pension Benefits Standards Act (PBSA) failed to disclose a cause of action and the common issues related to that claim could not be certified in the plaintiffs' class action - The Ontario Court of Appeal, having held that, as a matter of statutory interpretation, courts had no jurisdiction under s. 8(11) of the PBSA to order an employer to effect a partial termination of its pension plan, also rejected the plaintiffs' assertion that the court's decision in Lomas v. Rio Algom Ltd. et al. (2008) should be reconsidered in light of the Supreme Court of Canada's decisions in Burke et al. v. Hudson's Bay Co. et al. (2008) and Monsanto Canada Inc. v. Superintendent of Financial Services (Ont.) et al. (2004) - The Divisional Court had correctly applied Rio Algom to reject the plaintiffs' claims relating to partial termination - Rio Algom was not open to reconsideration - Burke did not assist the plaintiffs because in Burke, unlike here, the statutory scheme did not yield a complete answer - In Monsanto, a partial termination had already taken place - The court then decided a different question from the one here - The policy considerations at play in Monsanto did not apply when a partial termination had yet to take place - See paragraphs 79 to 103.

Master and Servant - Topic 1949

Remuneration - Pension or retirement benefits - Termination or revocation of plan - At issue on this appeal was whether the court had the jurisdiction to order a partial termination of an employer's pension plan or to order the employer to effect a partial termination - If the court lacked that jurisdiction, then the plaintiffs' claim relating to their former employer's failure to declare a partial termination of the plan under s. 29(5) of the Pension Benefits Standards Act (PBSA) failed to disclose a cause of action and the common issues related to that claim could not be certified in the plaintiffs' class action - The Ontario Court of Appeal, having held that, as a matter of statutory interpretation, courts had no jurisdiction under s. 8(11) of the PBSA to order an employer to effect a partial termination of its pension plan, also rejected the plaintiffs' alternative position that the court had jurisdiction under s. 8(11) to award damages equivalent to a pro rata share of the distribution of a pension surplus on a partial termination - As the court had no jurisdiction to order a partial termination, it had no jurisdiction to award damages premised on a partial termination - See paragraphs 104 to 106.

Master and Servant - Topic 1949

Remuneration - Pension or retirement benefits - Termination or revocation of plan - At issue on this appeal was whether the court had the jurisdiction to order a partial termination of an employer's pension plan or to order the employer to effect a partial termination - If the court lacked that jurisdiction, then the plaintiffs' claim relating to their former employer's failure to declare a partial termination of the plan under s. 29(5) of the Pension Benefits Standards Act (PBSA) failed to disclose a cause of action and the common issues related to that claim could not be certified in the plaintiffs' class action - The Ontario Court of Appeal, having held that, as a matter of statutory interpretation, courts had no jurisdiction under s. 8(11) of the PBSA to order an employer to effect a partial termination of its pension plan, also rejected the plaintiffs' assertion that the employer had effected a "backdoor" partial termination or "crystallization" of the surplus of its pension plan by using a portion of the surplus for its own benefit and the benefits of the remaining plan members - An employer's decision to use actuarial surplus to fund benefit enhancements for plan members did not result in a partial termination, or convert an actuarial surplus into a "crystallized" surplus - Put differently, an employer's use of surplus in an ongoing plan did not by itself impose an obligation to declare a partial termination or change the rights of plan members - To say that it did would have the perverse effect of discouraging employers from implementing benefit enhancements - The plaintiffs' arguments on backdoor partial termination or crystallization could not succeed - See paragraphs 107 to 110.

Master and Servant - Topic 1953

Remuneration - Pension or retirement benefits - Costs or expenses payable from plan - Between 1995 and 2000, Canada Mortgage and Housing Corp. (CMHC) terminated approximately half of its workforce - During the downsizing period, there were significant surplus assets in the CMHC pension fund - CMHC made two "benefit enhancement decisions" on January 1, 1999, and January 1, 2001, respectively, that distributed surplus funds between CMHC and remaining pension plan members - A class action was certified on behalf of claimaints regarding the surplus funds, the "Lacroix plaintiffs" and the "McCann plaintiffs" - The Lacroix plaintiffs were downsized prior to January 1, 1999, and did not receive any benefit from the benefit enhancement decisions - The McCann plaintiffs were downsized between January 1, 1999, and January 1, 2001, and had received their share of the first benefit enhancement decision, but not the second - In 2007, Charbonneau, J., granted an order severing the McCann plaintiffs from the Lacroix action with permission for the McCann plaintiffs to raise proposed common issues and for the Lacroix plaintiffs to add new common issues - In 2009, Charbonneau, J., dismissed the plaintiffs' subsequent certification motion and their request for costs - The plaintiffs appealed from the costs decision, asserting that the certification motion involved the question of surplus ownership and fund administration and that the answer would benefit all employees, including ongoing employees, such that the costs of the certification motion, this appeal and all other interim proceedings reasonably taken should be paid out of the pension fund on a full indemnity basis - The Divisional Court dismissed the appeal - The Ontario Court of Appeal affirmed that decision - Public policy permitted costs to be payable out of a pension fund where proceedings were brought to ensure the due administration of the fund or where they would benefit all of the beneficiaries - This litigation did not meet either of those criteria - Further, it was highly adversarial - See paragraphs 127 to 133.

Master and Servant - Topic 1959

Remuneration - Pension or retirement benefits - Distribution or use of surplus funds - [See fifth Master and Servant - Topic 1949 ].

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - At issue on this appeal was whether the court had the jurisdiction to order a partial termination of an employer's pension plan or to order the employer to effect a partial termination - If the court lacked that jurisdiction, then the plaintiffs' claim relating to their former employer's failure to declare a partial termination of the plan under s. 29(5) of the Pension Benefits Standards Act (PBSA) failed to disclose a cause of action and the common issues related to that claim could not be certified in the plaintiffs' class action - The Ontario Court of Appeal, having held that, as a matter of statutory interpretation, courts had no jurisdiction under s. 8(11) of the PBSA to order an employer to effect a partial termination of its pension plan, also rejected the plaintiffs' alternative argument that the court's choice of a remedy for a breach of s. 8(10) of the PBSA should be certified as a common issue - If the appellants proved a breach of s. 8(10), then the court would have to decide the appropriate remedy - However, that remedy could not include an order for partial termination or an award of damages premised on partial termination - Therefore, there was no merit in leaving to the trial judge as a common issue the choice of an appropriate remedy - The question of remedial jurisdiction should be resolved at the certification stage - See paragraphs 111 to 113.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - Between 1995 and 2000, Canada Mortgage and Housing Corp. (CMHC) terminated approximately half of its workforce - During the downsizing period, there were significant surplus assets in the CMHC pension fund - CMHC made two "benefit enhancement decisions" on January 1, 1999, and January 1, 2001, respectively, that distributed surplus funds between CMHC and remaining pension plan members - A class action was certified on behalf of claimaints regarding the surplus funds, the "Lacroix plaintiffs" and the "McCann plaintiffs" - The Lacroix plaintiffs were downsized prior to January 1, 1999, and did not receive any benefit from the benefit enhancement decisions - The McCann plaintiffs were downsized between January 1, 1999, and January 1, 2001, and had received their share of the first benefit enhancement decision, but not the second - In 2007, Charbonneau, J., granted an order severing the McCann plaintiffs from the Lacroix action with permission for the McCann plaintiffs to raise proposed common issues - One of the issues that the McCann plaintiffs sought to raise alleged that CMHC had misrepresented to the class that there would only be one package of benefit enhancements - The motion judge refused to certify the issues relating to that claim because he found no evidence of a common misrepresentation and no evidence from which reliance could be inferred on a class wide basis - The Ontario Court of Appeal affirmed the motion judge's decision - See paragraphs 121 to 126.

Practice - Topic 210.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Costs - [See Master and Servant - Topic 1953 ].

Statutes - Topic 501

Interpretation - General principles - Purpose of legislation - Duty to promote object of statute - [See first and second Master and Servant - Topic 1949 ].

Statutes - Topic 502

Interpretation - General principles - Intention of Parliament or legislature - [See first and second Master and Servant - Topic 1949 ].

Cases Noticed:

Lomas v. Rio Algom Ltd. et al. (2010), 259 O.A.C. 333; 99 O.R.(3d) 161; 2010 ONCA 175, appld. [para. 25].

Hembruff et al. v. Municipal Employees Retirement Board (Ont.) (2005), 203 O.A.C. 234; 78 O.R.(3d) 561 (C.A.), refd to. [para. 55].

Schmidt v. Air Products Canada Ltd. - see Stearns Catalytic Pension Plans, Re.

Stearns Catalytic Pension Plans, Re, [1994] 2 S.C.R. 611; 168 N.R. 81; 155 A.R. 81; 73 W.A.C. 81, refd to. [para. 55].

Monsanto Canada Inc. v. Superintendent of Financial Services (Ont.) et al., [2004] 3 S.C.R. 152; 324 N.R. 259; 189 O.A.C. 201; 2004 SCC 54, dist. [para. 58].

Cloud et al. v. Canada (Attorney General) et al. (2004), 192 O.A.C. 239; 73 O.R.(3d) 401 (C.A.), refd to. [para. 63].

Burke et al. v. Hudson's Bay Co. et al. (2008), 241 O.A.C. 245 (C.A.), dist. [para. 64].

Buschau et al. v. Rogers Communications Inc. et al., [2006] 1 S.C.R. 973; 349 N.R. 324; 226 B.C.A.C. 25; 373 W.A.C. 25; 2006 SCC 28, consd. [para. 64].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 68].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1; 2002 SCC 42, refd to. [para. 68].

Saunders v. Vautier (1841), 41 E.R. 482 (Ch. D.), refd to. [para. 99, footnote 12].

Lacroix et al. v. Canada Mortgage and Housing Corp. et al., [2009] O.T.C. Uned. 262; 68 C.P.C.(6th) 111 (Sup. Ct.), refd to. [para. 116].

Ontario (Attorney General) v. Bear Island Foundation et al., [1991] 2 S.C.R. 570; 127 N.R. 147; 46 O.A.C. 396, refd to. [para. 119].

Ontario Public Service Employees Union et al. v. Ontario, [2005] O.T.C. 357; 13 C.P.C.(6th) 178 (Sup. Ct.), refd to. [para. 124].

CC&L Dedicated Enterprise Fund (Trustee of) v. Fisherman - see Royal Trust Corp. of Canada et al. v. Fisherman et al.

Royal Trust Corp. of Canada et al. v. Fisherman et al., [2001] O.T.C. Uned. C01; 18 B.L.R.(3d) 260 (Sup. Ct.), refd to. [para. 124].

Plaza Fiberglass Manufacturing Ltd. v. Cardinal Insurance Co. et al. (1994), 72 O.A.C. 66; 18 O.R.(3d) 663 (C.A.), refd to. [para. 125].

Nolan v. Kerry (Canada) Inc. - see Nolan et al. v. Superintendent of Financial Services (Ont.) et al.

Nolan et al. v. Superintendent of Financial Services (Ont.) et al., [2009] 2 S.C.R. 678; 391 N.R. 234; 253 O.A.C. 256; 2009 SCC 39, refd to. [para. 130].

Statutes Noticed:

Pension Benefits Standards Act, R.S.C. 1985 (2nd Supp.), c. 32, sect. 8(10), sect. 8(11), sect. 29(2), sect. 29(5) [para. 65].

Counsel:

William J. Sammon and James B. Barnes, for the appellants, Nicole Lacroix and Rosie Ladouceur;

Paull N. Leamen and Tara M. Sweeney, for the appellants, Frank McCann and David Guffie;

J. Brett Ledger, Andrea Laing and Lauren Tomasich, for the respondents.

These appeals were heard on July 13, 2011, by Doherty, Laskin and Simmons, JJ.A., of the Ontario Court of Appeal. On April 18, 2012, Laskin, J.A., delivered the following reasons for judgment for the court.