Canada: FMC Team Scores Pension Rectification Win

Last Updated: April 5 2009

Article by Peter J. Cavanagh, Kate Broer, Reena Goyal and Mary Picard

On February 27, 2009, the Ontario Superior Court of Justice released its decision in Kraft Canada Inc. v. Karen Pitsadiotis, the first decision in Canada which has applied the doctrine of rectification to correct an error in the text of a pension plan. In addition to the importance of the decision as the first where rectification has been applied to relieve against a mistaken plan text, the decision is also an important judicial consideration of the scope of the notice requirements for amendments under the Ontario Pension Benefits Act.

With the reforms to Ontario pension benefits legislation in 1987, Kraft's predecessor, Nabisco Brands Ltd., introduced a two year waiting period before employees would become eligible to join the pension plan. Appropriate amendments were made to the pension plan text in 1989 to reflect the change. Prior to 1989, employees were eligible to join the plan immediately upon hire. The pension benefits of all plan members, whether they were hired before or after 1989, was calculated based on the member's years of service while a member of the plan with the result that those members who joined the plan following the amendments in 1989 did not receive pension credit for the two year waiting period. The existing plan members were unaffected by the change.

Effective January 1, 1992, further amendments were made to the plan. These amendments were not intended to alter the changes made in 1989, which introduced the waiting period, or the manner in which pension benefit entitlements were calculated based on years of service while a member of the plan. However, in the course of revising the plan text to incorporate the unrelated amendments, the words "during which he participates in the Plan" were mistakenly deleted from the plan provisions which governed how pension benefits entitlement were to be determined, such that the plan could be read in a manner which gave credit for service for the waiting period.

Following the 1992 amendments, the plan continued to be administered on the same basis as it had since 1989, to give credit for the purposes of pension benefits entitlement for only those years during which a member participated in the plan. This was also continuously communicated to employees and plan members.

The mistake went unnoticed for many years. In 2003, one of the unions representing certain members of the plan requested that the Superintendent of Financial Services make an order requiring credit for service to be given for the two year waiting period. Kraft brought an application for rectification of the mistakenly drafted text. The application was opposed by a representative respondent appointed by the court to represent certain members of the same union that had applied to the Superintendent.


Rectification is an equitable remedy that operates to relieve against the consequences of a mistake in a document in circumstances where the document, as written, does not truly reflect the intentions of the party or parties. This remedy is usually applied to relieve against a mistake in a bilateral written contract. In this case, however, the applicable provision in the pension plan had not been the subject of negotiation with plan members or their representatives.

The Court determined that the remedy of rectification is available for a pension plan, which is more akin to a unilateral instrument than a bilateral agreement, resulting from a negotiation between separate parties. In the case of a mistake in a unilateral instrument, the Court held that only the intention of the maker of the document is in issue, and concluded that the prerequisites for rectification established by the decision of the Supreme Court of Canada in Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., [2002] 1 S.C.R. 678 do not apply.

The Court noted the following factors as indicative of the fact that the pension plan was a unilateral document:

  • The plan provisions at issue were not negotiated terms
  • The plan was not incorporated by reference into the collective agreement with the union
  • The company reserved the right in the plan text to amend or discontinue the plan, in whole or in part, subject to statutory requirements
  • The plan expressly provided that neither its terms nor the benefits provided by it constitute a contract between the company and any employee, or shall be deemed to be consideration for employment

In addition to considering the intention of the employer at the time the plan text was drafted, in arriving at its decision, the Court also noted the consistent administration of the plan in accordance with that intention. The Court concluded that it would create an injustice to deny rectification and require the employer to fund additional benefits that were never intended and that plan members could not reasonably expected to have received.

Notice Under the Act

The representative respondent also opposed the application on the basis that notice of the 1989 changes introducing the two year 1992 waiting period had not been given to all existing and former plan members at the time of the amendment.

The Court concluded that the notice provisions under the Act relied upon were not triggered by the 1989 amendment. Specifically, the Court found that there was no obligation to give notice to existing and former plan members of the 1989 changes under then section 26(1) (now section 27(1)) of the Act, as there was no change with the amendment that "would result in a reduction of pension benefits accruing subsequent to the effective date...or that would otherwise adversely affect the rights or obligations of a member or former member or any other person entitled to payment from the pension fund", as the pension benefit of existing and former members of the plan continued to be calculated in the same manner as it had prior to the amendment.

The Court also found that no notice was required to be given following the registration of the amendment as contemplated by section 26(3) of the Act (now section 27(3)), as notice of an adverse amendment need only be given to those who are affected by the amendment made. As it was only individuals who were hired after 1989 who were affected by the amendments, the Court found that it was not necessary for the administrator to give notice to those hired prior to the date of the change.

Although not advanced as an argument by the representative respondent, the Court also commented on the notice requirements under the Act applicable to unions (section 27(5)), noting that advance notice of a plan amendment to a trade union need only be given in circumstances where "the proposed amendment affects members or former members represented by a trade union that is a party to a collective agreement filed with the Superintendent of Pensions as a document that creates or supports a pension plan". As no such filing was made, and it could not be said that the collective agreement created or supported the pension plan, the Court concluded that notice was not required to be given under that section.

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.

In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.