Smith v. Michelin North America (Canada) Inc., 2008 NSCA 107

• Judge: MacDonald, C.J.N.S., Cromwell and Fichaud, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: Thursday November 20, 2008
• Jurisdiction: Nova Scotia
• Citations: 2008 NSCA 107;(2008), 271 N.S.R.(2d) 274 (CA)

Smith v. Michelin North Am. Inc. (2008), 271 N.S.R.(2d) 274 (CA);

    867 A.P.R. 274

MLB headnote and full text

Temp. Cite: [2008] N.S.R.(2d) TBEd. NO.048

Everett Smith (appellant) v. Michelin North America (Canada) Inc. (respondent)

(CA 290297; 2008 NSCA 107)

Indexed As: Smith v. Michelin North America (Canada) Inc.

Nova Scotia Court of Appeal

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

November 20, 2008.

Summary:

At issue was whether Michelin's defined benefits pension plan entitled it to take over $268 Million in contribution holidays in recognition of actuarial surpluses in the plan.

The Nova Scotia Supreme Court, in a judgment reported (2007), 259 N.S.R.(2d) 109; 828 A.P.R. 109, interpreted the plan and determined that Michelin was entitled to the contribution holidays taken. The issue of costs was deferred.

The Nova Scotia Supreme Court, in a judgment reported (2008), 262 N.S.R.(2d) 337; 839 A.P.R. 337, held that only Michelin, as the successful party, was entitled to costs. The court awarded $500,000 in costs plus disbursements, 50% of which was payable out of the pension fund and 50% payable personally by Smith. The order for costs and disbursements against Smith was $299,688.97. Smith appealed both the trial decision and the costs order and applied to stay execution of the costs order pending the appeal. Michelin applied for Smith to post security for costs of the appeal.

The Nova Scotia Court of Appeal, per Cromwell, J.A., in a judgment reported (2008), 265 N.S.R.(2d) 358; 848 A.P.R. 358, declined to stay the costs order. Michelin undertook not to enforce the costs order against Smith's home or horses. Smith would suffer no irreparable harm and there were no exceptional circumstances warranting a stay. The court ordered that Smith provide $50,000 security for costs of the appeal. Smith represented 600 people interested in the litigation, who would each be required to contribute less than $100.

The Nova Scotia Court of Appeal dismissed the appeal. Michelin was entitled to the contribution holidays as a result of the surpluses in the defined benefit plan. The judge did not err in awarding costs to the successful party (Michelin) against the unsuccessful party (Smith).

Master and Servant - Topic 1943.1

Remuneration - Pension or retirement benefits - Contribution by employer - Contribution holiday - In 1972, Michelin established a defined benefits pension plan for manufacturing employees - The plan was in French, with an unofficial English translation - The 1972 plan was silent on contribution holidays, but permitted amendments as long as they did not affect employees' "vested rights" - The plan was amended in 1982, 1987 and 1990 - At issue was whether the 1972 plan permitted contribution holidays and, if not, whether the subsequent amendments (which provided for contribution holidays) were valid - The trial court held that contribution holidays, which were permitted by Nova Scotia legislation, were permitted under the 1972 plan and the amendments, which were valid - The amendments allowing for contribution holidays did not affect an employee's "vested rights", as employees had no vested right to the actuarial surplus in the plan - A contribution holiday did not encroach on the trust or reduce an employee's accrued benefits - In any event, the 1972 plan (French original version) implicitly permitted contribution holidays by reference to the actuary determining the contribution to be made - The actuary was entitled to apply standard actuarial principles, one of which was consideration of any actuarial surplus - The intent of the plan was to have the plan fully funded to meet the defined benefits - There was no intent to accumulate a surplus, which accumulated solely because of conservative assumptions by an actuary about fund performance - Employees would have a right to any actual surplus upon termination of the plan, but had no right to any actuarial surplus before that time - The Nova Scotia Court of Appeal affirmed the decision - See paragraph 1 to 57.

Master and Servant - Topic 1953

Remuneration - Pension or retirement benefits - Costs or expenses payable from plan - [See Practice - Topic 7020].

Master and Servant - Topic 1959

Remuneration - Pension or retirement benefits - Distribution of surplus funds - [See Master and Servant - Topic 1943.1].

Practice - Topic 7020

Costs - Party and party costs - Entitlement to party and party costs - Successful party - General principles - At issue on Smith's application was whether Michelin's defined benefits pension plan entitled it to take over $268 Million in contribution holidays in recognition of actuarial surpluses in the plan - Smith was acting as representative for all persons having an interest in the plan - The court interpreted the plan and determined that Michelin was entitled to the contribution holidays taken - Smith sought to have the solicitor-client costs of both parties paid out of the pension fund - The trial court held that only Michelin, as the successful party, was entitled to costs - This was an adversarial proceeding, not one where the real issue was the interpretation or administration of the pension fund - A successful result by Smith would have been severely adverse to Michelin - Accordingly, costs should be awarded in the usual fashion - The court awarded $500,000 in costs under Tariff A, since this was a complex and lengthy matter - Such amount was a substantial contribution to Michelin's legal costs - The court ordered 50% payable out of the pension fund and 50% payable personally by Smith - The Nova Scotia Court of Appeal dismissed Smith's appeal from the costs award, as the trial court did not err in exercising its discretion to award costs - See paragraphs 58 to 77.

Practice - Topic 7115

Costs - Party and party costs - Special orders - Increase in scale of costs - Difficulty and complexity of proceedings - [See Practice - Topic 7020].

Practice - Topic 7845

Costs - Costs out of a fund (incl. public funding) - When appropriate - [See Practice - Topic 7020].

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1, refd to. [para. 29].

H.L. v. Canada (Attorney General) et al., [2005] 1 S.C.R. 401; 333 N.R. 1; 262 Sask.R. 1; 347 W.A.C. 1, refd to. [para. 29].

Fraser et al. v. Westminer Canada Ltd. et al. (2005), 233 N.S.R.(2d) 201; 739 A.P.R. 201 (C.A.), refd to. [para. 30].

Binder v. Royal Bank of Canada et al. (2005), 234 N.S.R.(2d) 109; 745 A.P.R. 109 (C.A.), refd to. [para. 30].

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. 32].

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

Canadian Union of Public Employees - C.L.C., Ontario Hydro Employees Union, Local 1000 v. Ontario Hydro (1989), 33 O.A.C. 63; 68 O.R.(2d) 620 (C.A.), refd to. [para. 34].

Askin et al. v. Ontario Hospital Association et al. (1991), 46 O.A.C. 278; 2 O.R.(3d) 641 (C.A.), refd to. [para. 34].

Maurer v. McMaster University (1991), 4 O.R.(3d) 139 (Gen. Div.), revd. in part (1995), 80 O.A.C. 392 (C.A.), refd to. [para. 34].

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, refd to. [para. 36].

Châteauneuf v. TSCO of Canada Ltd. et autres (1995), 68 Q.A.C. 1; 124 D.L.R.(4th) 308 (C.A.), refd to. [para. 36].

Hockin et al. v. Bank of British Columbia et al. (1995), 57 B.C.A.C. 255; 94 W.A.C. 255; 123 D.L.R.(4th) 538 (C.A.), refd to. [para. 36].

Buschau et al. v. Rogers Cablesystems Inc. et al. (2001), 148 B.C.A.C. 263; 243 W.A.C. 263; 195 D.L.R.(4th) 257 (C.A.), leave to appeal denied (2001), 275 N.R. 389; 160 B.C.A.C. 320; 261 W.A.C. 320 (S.C.C.), refd to. [para. 36].

Association provincale des retraités d'Hydro Québec v. Hydro-Québec, 2005 QCCA 304, refd to. [para. 36].

Nolan et al. v. Superintendent of Financial Services (Ont.) et al. (2007), 225 O.A.C. 163; 2007 ONCA 416, leave to appeal granted (2008) 385 N.R. 380 (S.C.C.), refd to. [para. 36].

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

Bent v. Farm Loan Board (N.S.), Horsnell and Horsnell (1978), 30 N.S.R.(2d) 552; 49 A.P.R. 552 (C.A.), refd to. [para. 63].

Kelly v. Wawanesa Mutual Insurance Co. and Cochrane Brothers Insurance Consultants Ltd. (1979), 30 N.S.R.(2d) 294; 49 A.P.R. 294 (C.A.), refd to. [para. 63].

Griffin v. Corcoran (2001), 193 N.S.R.(2d) 279; 602 A.P.R. 279; 2001 NSCA 73, refd to. [para. 63].

McPhee et al. v. Canadian Union of Public Employees et al. (2008), 270 N.S.R.(2d) 265; 865 A.P.R. 265; 2008 NSCA 104, refd to. [para. 63].

Buckton, Re, [1907] 2 Ch. 406, refd to. [para. 64].

White et al. v. Halifax (Regional Municipality) Pension Committee (2007), 252 N.S.R.(2d) 39; 804 A.P.R. 39; 2007 NSCA 22, refd to. [para. 65].

Nolan et al. v. Superintendent of Financial Services (Ont.) et al. (2007), 229 O.A.C. 82; 2007 ONCA 605, refd to. [para. 65].

Counsel:

Paul G. Vogel, Ronald Pink, Q.C., Iain D.D. Sneddon and John D. Goudy, for the appellant;

J. Brett Ledger, Peter MacLellan, Q.C., and George Sutherland, for the respondent.

This appeal was heard on October 6-7, 2008, at Halifax, N.S., before MacDonald, C.J.N.S., Cromwell and Fichaud, JJ.A., of the Nova Scotia Court of Appeal.

On November 20, 2008, Fichaud, J.A., delivered the following judgment for the Court of Appeal.