Smith v. Michelin North America (Canada) Inc., 2007 NSSC 317

• Judge: Hood, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: October 30, 2007
• Jurisdiction: Nova Scotia
• Citations: 2007 NSSC 317;(2007), 259 N.S.R.(2d) 109 (SC)

Smith v. Michelin North Am. (2007), 259 N.S.R.(2d) 109 (SC);

    828 A.P.R. 109

MLB headnote and full text

Temp. Cite: [2007] N.S.R.(2d) TBEd. OC.039

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

(SH 248992; 2007 NSSC 317)

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

Nova Scotia Supreme Court

Hood, J.

October 30, 2007.

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 interpreted the plan and determined that Michelin was entitled to the contribution holidays taken.

Editor's Note: For a related case on a procedural matter see (2006), 240 N.S.R.(2d) 170; 763 A.P.R. 170 (S.C.).

Master and Servant - Topic 1943.1

Remuneration - Pension or retirement benefits - Contribution by employer - Contribution holiday - The Nova Scotia Supreme Court, in determining whether a defined benefits pension plan allowed an employer to take a contribution holiday, stated the following general principles: "1) where the applicable legislation permits contribution holidays, the question is whether the wording of the specific plan does or does not permit them; 2) the permission to take contribution holidays may be explicit or implicit; 3) the prohibition may be explicit or implicit and may be in either the pension plan or the trust creating it; 4) there is a presumption that contribution holidays are permitted where the plan refers to actuarial calculations; 5) accepted actuarial practice includes consideration of actuarial surplus in determining the amount needed to fund plan benefits; 6) taking actuarial surplus into consideration in determining employer contributions is consistent with the nature of a DB plan; 7) it is also consistent with tax legislation respecting Registered Pension Plans; 8) a formula for calculating contributions precludes contribution holidays; 9) contribution holidays do not encroach upon the trust fund because they do not reduce the corpus of the fund or apply monies in the fund to purposes other than the employees' exclusive benefit; 10) no monies are withdrawn from the trust fund during a contribution holiday; the monies still in the employer's hands as a result are not impressed with the trust; 11) funds once contributed to the pension plan are "accrued benefits" of the employees; 12) the accrued benefits are of two types: a) employees are entitled to receive the defined benefits of the pension plan, and b) they may have entitlement to surplus on termination of the plan, but the right does not crystalize until plan termination." - See paragraph 60.

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 Nova Scotia Supreme 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.

Master and Servant - Topic 1959

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

Cases Noticed:

Aegon Canada Inc. et al. v. ING Canada Inc. et al., [2003] O.T.C. 48; 34 C.C.P.B. 1; 2003 CarswellOnt 268 (Sup. Ct.), refd to. [para. 22].

Chུteauneuf v. T.S.C.O. of Canada Ltd. et al. (1995), 124 D.L.R.(4th) 308 (Que. C.A.), leave to appeal denied (1995), 192 N.R. 240 (S.C.C.), refd to. [para. 23].

Stearns Catalytic Pension Plans, Re, [1994] 2 S.C.R. 611; 168 N.R. 81; 155 A.R. 81; 73 W.A.C. 81; 1994 CarswellAlta 138, appld. [para. 42].

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. 53].

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. 53].

Maurer v. McMaster University (1991), 4 O.R.(3d) 139 (Gen. Div.), refd to. [para. 53].

Trent University Faculty Association v. Trent University (1992), 60 O.A.C. 225; 99 D.L.R.(4th) 451 (Div. Ct.), refd to. [para. 53].

Reevie et al. v. Montreal Trust Co. of Canada and Hunt-Wesson Canada (1986), 13 O.A.C. 233; 53 O.R.(2d) 595 (C.A.), leave to appeal denied (1986), 72 N.R. 78; 56 O.R.(2d) 192 (S.C.C.), refd to. [para. 53].

Bathgate et al. v. National Hockey League Pension Society et al. (1992), 11 O.R.(3d) 449; 1992 CarswellOnt 960 (Gen. Div.), affd. (1994), 69 O.A.C. 269 (C.A.), refd to. [para. 70].

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; 1995 CarswellBC 45 (C.A.), refd to. [para. 81].

Buschau et al. v. Rogers Cablesystems Inc. et al., [2001] 3 W.W.R. 56; 148 B.C.A.C. 263; 243 W.A.C. 263 (C.A.), leave to appeal denied (2001), 275 N.R. 389 (S.C.C.), refd to. [para. 81].

Association provincale des retraités d'Hydro Québec v. Hydro-Québec, [2005] Q.J. No. 1644 (C.A.), refd to. [para. 81].

Nolan et al. v. Superintendent of Financial Services (Ont.) et al. (2006), 209 O.A.C. 21; 52 C.C.P.C. 1 (Div. Ct.), refd to. [para. 81].

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

Aegon Canada Inc. et al. v. ING Canada Inc. et al. (2003), 179 O.A.C. 196; 2003 CarswellOnt 4879 (C.A.), refd to. [para. 123].

Sutherland v. Hudson's Bay Co. (2005), 74 O.R. (3d) 608; 2005 CarswellOnt 2564 (Sup. Ct.), refd to. [para. 124].

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. 138].

Potter et al. v. Bank of Canada et al., [2006] O.T.C. 174; 2006 CarswellOnt 1077 (Sup. Ct.), refd to. [para. 155].

Burke et al. v. Governor and Co. of Adventurers of England Trading et al., [2005] O.T.C. 1076; 2005 CarswellOnt 7334 (Sup. Ct.), refd to. [para. 155].

British Columbia Nurses' Union et al. v. Municipal Pension Board of Trustees et al., [2006] B.C.T.C. 132; 50 C.C.P.B. 77; 2006 CarswellBC 172; [2006] B.C.W.L.D. 2178; 2006 BCSC 132, refd to. [para. 156].

Markle et al. v. Toronto (City) et al. (2003), 168 O.A.C. 19; 63 O.R.(3d) 321; 223 D.L.R.(4th) 459; 2003 CarswellOnt 253 (C.A.), dist. [para. 157].

Martin & Stewart Inc. v. Superintendent of Pensions (N.S.) et al. (1993), 122 N.S.R.(2d) 428; 338 A.P.R. 428; 104 D.L.R.(4th) 468; 1993 CarswellNS 87 (C.A.), refd to. [para. 160].

LaHave Equipment Ltd. v. Superintendent of Pensions (N.S.) et al. (1994), 132 N.S.R.(2d) 270; 376 A.P.R. 270; 121 D.L.R.(4th) 67; 1994 CarswellNS 87 (S.C.), refd to. [para. 160].

Sulpetro Ltd. Retirement Plan Fund, Re (1990), 104 A.R. 215; 66 D.L.R.(4th) 271; 1990 CarswellAlta 37 (C.A.), refd to. [para. 160].

Chatenay v. Brazilian Submarine Telegraph Co., [1890] 1 Q.B. 79 (C.A.), refd to. [para. 199].

R. v. Obed, [2000] N.S.J. No. 18 (Prov. Ct.), refd to. [para. 201].

Wald v. Greater York Developments Ltd. (1978), 20 O.R.(2d) 756 (Master), affd. (1978), 24 O.R.(2d) 308 (S.C.), refd to. [para. 201].

White et al. v. Halifax (Regional Municipality) Pension Committee (2007), 252 N.S.R.(2d) 39; 804 A.P.R. 39 (C.A.), refd to. [para. 204].

Authors and Works Noticed:

Simes, Lewis M., Future Interests (2nd Ed. 1966), p. 2 [para. 143].

Ziff, Bruce H., Principles of Property Law (4th Ed. 2006), p. 225 [para. 134].

Counsel:

Paul G. Vogel, Iain D. Sneddon and Ronald A. Pink, Q.C., for the applicant;

Brett Ledger and Peter McLellan, Q.C., for the respondent.

This application was heard on May 1-3, 2007, at Halifax, N.S., before Hood, J., of the Nova Scotia Supreme Court, who delivered the following judgment on October 30, 2007.