Canada: Indalex Limited (Re)

Last Updated: April 26 2011
Article by Mandy L. Seidenberg

2001 ONCA 265 (Released 7 April, 2011)

Companies' Creditors Arrangement Act – Pensions – Priorities – Fiduciary Obligations – Funding Pension Plans

This decision considers the obligations of a company acting as both employer and pension administrator where the company becomes insolvent.  Indalex Limited ("Indalex") obtained protection from creditors under the Companies' Creditors Arrangements Act ("CCAA").  At the time, Indalex provided two pension plans, the "Executive Plan" and the "Salaried Plan", and was the sponsor and administrator of both.

During the CCAA proceedings, the court authorized Indalex to borrow funds pursuant to a DIP credit agreement and granted the DIP lenders a super-priority charge in Indalex's property.  A few months after obtaining CCAA protection, Indalex moved for approval of the sale of its assets on a going-concern basis, and for approval to distribute the sale proceeds to the DIP lenders.  The result was nothing would remain to fund the deficiencies in the Plans.  Representatives for the Plans' beneficiaries objected.  The court approved the sale, but ordered an amount be held by the Monitor pending a determination on the rights of the Plans' beneficiaries (the "Reserve Fund").  As the sale funds were insufficient to completely repay the DIP lenders, the guarantor paid the shortfall.

In their motions, the Plans' beneficiaries claimed the Reserve Fund was subject to deemed trusts in their favour pursuant to the Pension Benefits Act ("PBA"), and should be paid to them in priority to the guarantor.  They also claimed Indalex breached its fiduciary obligations to them during the CCAA proceedings.  The motion judge dismissed the beneficiaries' motions on the basis that, at the date of sale, no deemed trust under the PBA had arisen in respect of either plan, and did not deal with the fiduciary obligation argument. The appeal to the Court of Appeal was allowed. 

In respect of the Salaried Plan, the PBA Regulations permitted Indalex to make up the deficiency owed pursuant to s. 75 of the PBA over a period of years. The motion judge held that amount was not "due" and thus no deemed trust arose at the date of wind up. The Court of Appeal disagreed, holding the owed amounts were accrued to the date of wind up.  The fact that the employer was given time to make the required contributions did not change their status as liabilities as at the wind-up date.  The deemed trust under the PBA applied to all amounts payable under s. 75. 

In respect of the Executive Plan, the fact that it had not been wound up caused both levels of court to doubt that a deemed trust arose, as the wording in the PBA appeared to require wind up for a deemed trust to arise.  The Court of Appeal declined to decide whether a deemed trust applied, as it disposed of the matter on the basis that Indalex breached its fiduciary obligations.

The Court held that Indalex owed a fiduciary duty as administrator of the Plans, both pursuant to common law and s. 22 of the PBA.  Indalex wore "two hats" during these proceedings: its corporate hat, and its administrator's hat.  While it had the right to decide to commence CCAA proceedings as a corporate actor, Indalex could not ignore its obligations as the Plans' administrator and make all its decisions during the proceedings on a solely corporate basis.  Even were the pension beneficiaries not the beneficiaries of a deemed trust, they were unsecured creditors to whom a fiduciary duty is owed, which put them on different standing that other unsecured creditors. The Court could consider their equitable position in deciding how the Reserve Fund should be distributed.

 The Court considered the recent Supreme Court of Canada decision, Century Services, which it distinguished on several bases, including that nothing in the CCAA expressly excluded the provincial deemed trust for unpaid pension contributions from applying in CCAA proceedings.  The Court rejected the respondents' contention that Century Services stood for the unqualified proposition that the federal priorities under the Bankruptcy and Insolvency Act apply in CCAA proceedings.  Where the provincial obligation was alleged to conflict with a priority granted under the federal CCAA, the facts would have to be examined to determine if the CCAA purpose was frustrated, and the doctrine of federal paramountcy would have to be invoked and determined.  The Court held this would not lead to "strange asymmetry" between the CCAA and the BIA, as it would be open to the court to find the super-priority charge made under the CCAA order overrode the deemed trust, giving the CCAA court greater flexibility in considering various interests in the reorganization.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Mandy L. Seidenberg
Events from this Firm
7 Dec 2017, Webinar, Toronto, Canada

FEX Members Jeff Noble, BDO, and Caroline Abela, WeirFoulds LLP, invite you to a complimentary webinar series titled: All About Shareholders.

29 Oct 2018, Conference, Toronto, Canada

WeirFoulds Partner and co-chair, Technology and IP group will be speaking on the topic, "Artificial Intelligence (AI) and the Practice of Law. This session contains 1 hour and 30 minutes of Professionalism Content.

29 Oct 2018, Workshop, Toronto, Canada

WeirFoulds Partner Clare Burns is a Program Chair for the Conducting a Dependant Support Trial workshop hosted by The Advocates Society.

Similar Articles
Relevancy Powered by MondaqAI
Osler, Hoskin & Harcourt LLP
Blake, Cassels & Graydon LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Osler, Hoskin & Harcourt LLP
Blake, Cassels & Graydon LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions