Supreme Court Of Canada Denies Leave In Marine Atlantic Case

BL
Borden Ladner Gervais LLP

Contributor

BLG is a leading, national, full-service Canadian law firm focusing on business law, commercial litigation, and intellectual property solutions for our clients. BLG is one of the country’s largest law firms with more than 750 lawyers, intellectual property agents and other professionals in five cities across Canada.
On March 5, 2009, the Supreme Court of Canada denied with costs the plan members’ application for leave to appeal from the decision of the Federal Court of Appeal in "Dana P. Cousins et al. v. Attorney General of Canada et al., more commonly known as the “Marine Atlantic”" case.
Canada Employment and HR

On March 5, 2009, the Supreme Court of Canada denied with costs the plan members' application for leave to appeal from the decision of the Federal Court of Appeal in Dana P. Cousins et al. v. Attorney General of Canada et al., more commonly known as the "Marine Atlantic" case.

This is a positive development for sponsors of federally-regulated pension plans, as it means that the Federal Court of Appeal's decision remains the law. The Federal Court of Appeal had held that the Pension Benefits Standards Act, 1985 (Canada) (the "PBSA") does not require a portion of the actuarial surplus in a defined benefit pension plan to be distributed at the time of a partial termination.

In reaching its decision, the Federal Court of Appeal distinguished the decision of the Supreme Court of Canada in Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services) on the basis of the difference in wording between the Ontario Pension Benefits Act (the "PBA") and the federal legislation. Specifically, the Court held that:

  • Pursuant to section 70(6) of the Ontario PBA, plan beneficiaries affected by a partial wind up are entitled to "rights and benefits that are not less than the rights and benefits they would have on a full wind up of the pension plan on the effective date of the partial wind up". "Wind up" is defined in section 1 of the PBA to mean not only the termination of the pension plan but also the "distribution of the assets of the pension fund". Correspondingly, "partial wind up" is defined to include distribution of the assets of the pension fund related to the part of the pension plan that is terminated.
  • While the federal PBSA provides that on a "partial termination" of a pension plan the rights of affected members "shall not be less than what they would have been if the whole of the plan had been terminated on the same date as the partial termination", a "termination" is not defined to include or require the distribution of pension assets. The federal PBSA defines "termination" and "winding-up" separately, with only the latter including the distribution of assets. Under the federal legislation, therefore, "termination" and "winding-up" occur at different times.
  • Accordingly, Monsanto was distinguishable, since it was based upon differently-worded legislation that requires the distribution of surplus on a full wind up of a pension plan and therefore grants beneficiaries affected by a partial wind up an equivalent right to share in a portion of any actuarial surplus existing at the time. By contrast, members affected by a partial termination under the federal PBSA are entitled only to rights equivalent to those they would have on a full termination of the plan, not on a full winding-up.
  • Surplus distribution on winding-up will be governed by the terms of the relevant plan documents.

About BLG

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.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More