Canada: Pensions Newsletter – January 2019

Welcome to the 23rd issue of the Blakes Pensions Newsletter. This newsletter provides a summary of recent jurisprudential developments that affect pensions and benefits and is not intended to be legal advice.

For additional information or to discuss how any aspect of these developments may affect you, please contact a member of the Blakes Pensions, Benefits & Executive Compensation group.

IN THIS ISSUE

FAMILY LAW

CALCULATION OF YEARS OF SERVICE

JURISDICTION OF PENSION PLAN

DISABILITY PENSION ENTITLEMENT

EQUALITY RIGHTS

SHARE VALUATION

FAMILY LAW

Gaudet v. Gaudet, 2018 NSSC 231

Following the breakdown of their marriage, Mr. and Ms Gaudet signed a separation agreement in May 2016. The separation agreement included a provision under which each party would retain sole undivided ownership of any pension accrued during the marriage. During the divorce trial, this provision (and others) became one of contention. Ms Gaudet had a significantly larger income and accrued pension than Mr. Gaudet, and argued that the agreement should be enforced in accordance with its terms Mr. Gaudet, however, took the contrary position on the basis that the division of pensions was not discussed during the drafting of the separation agreement and that he did not receive a copy of the agreement at any point during the drafting or after the agreement was signed. Furthermore, Mr. Gaudet did not receive independent legal advice.

The court held that section 29 of the Matrimonial Property Act permits the court to intervene where it is satisfied that "any term of the contract or agreement" is unconscionable or unduly harsh on one party. The court stated that the circumstances under which the agreement was drafted and signed were far from ideal, as both parties were under extreme emotional distress, and there was confusion as to whether counsel was acting for both parties and whether the agreement was permanent or temporary. Furthermore, given Mr. Gaudet's earning capacity was significantly lower than Ms Gaudet's, the potential stream of retirement income Ms Gaudet's pension would offer him was considered to be significant by the court. The court ultimately held that while the separation agreement should not be set aside as a whole, it should be amended to provide for an equal division of pension benefits accrued during marriage at source.

Nova Scotia Supreme Court Decision

CALCULATION OF YEARS OF SERVICE

Gervais c. Association internationale des débardeurs (ILA Chekers – Local 1657), 2018 QCCS 4138

The plaintiffs were hired in 1969 as spare checkers for the Port of Montreal. Although a job security program was established at the port in 1972, the plaintiffs did not enter it until 1985. Between 1972 and 1985, the plaintiffs were on the "first priority list" (the employees called to work after those on the job security program).

In order for the year to be credited for the purposes of years of service, the pension plan at issue required 550 hours of work during the year. The plaintiffs argued that they should be credited additional years of service for the period before 1985. In addition, one of the plaintiffs, Mr. Joyce, argued that he should also be credited with a 30th year of service that he worked in 2010. The defendants disputed this argument, stating that this 30th year of service should not be counted for pension purposes because Mr. Joyce was past the mandatory retirement age at the time. Furthermore, the defendants argued that Mr. Joyce should be barred from asking for a correction for the 30th year or service due to a transaction he signed in 2011. The transaction settled a complaint to the Canadian Industrial Labor Board regarding the credit for this year of service. Upon signing the transaction, Mr. Joyce released his rights related to his pension benefits or any other issue regarding his employment.

The court held that the plaintiffs failed to demonstrate conclusively that they were eligible for additional pension credits in the years before 1985, as there were no available records proving that the Plaintiffs had worked the requisite 550 hours per year.

With respect to Mr. Joyce's claim regarding his 30th year of service, the court found that he should be credited for this year of service. There was nothing in the plan that precluded Mr. Joyce from having that year credited, as the plan specifically stated that the pension be based on the years of credited service up to the actual retirement date of the employee. Given that Mr. Joyce had worked the requisite 550 hours in 2010, the court concluded that he was entitled to a credit for that year of service.

The court disagreed with the defendants' assertion that the transaction Mr. Joyce signed in 2011 precluded him from being credited with an additional year of service, stating that Mr. Joyce would not have accepted the transaction had he known that it was possible to receive credit for the 30th year of service. The facts indicated that Mr. Joyce had only accepted this transaction after the president of the union convinced Mr. Joyce that it was impossible to have his 30th year of service credited. The court concluded that this error related to an essential element that determined Mr. Joyce's consent and therefore, vitiated Mr. Joyce's consent. As a result, Mr. Joyce had the right to apply for the annulment of the transaction.

Superior Court of Quebec Decision

JURISDICTION OF PENSION PLAN

Northern Inter-Tribal Health Authority Inc. v. Canada (Attorney General), 2018 FC 1180

The Peter Ballantyne Cree Nation Health Services Incorporated (PBCNHS) and the Northern Inter-Tribal Health Authority Inc. (NITHA) sought judicial review of two decisions communicated by the Office of the Superintendent of Financial Institutions (OSFI), where OSFI reaffirmed its previously held position that the pension plans of PBCNHS and NITHA do not fall under federal jurisdiction and must be registered provincially. PBCNHS and NITHA disagreed with this position. PBCNHS and NITHA stated that they took on delivery of the federal government's long-standing obligation to provide health services to First Nation members. Given that these health services would revert to federal government delivery should PBCNHS and NITHA cease to provide the services, PBCNHS and NITHA argued that their pension plans fell under federal jurisdiction.

In reviewing the treaty relationship between the First Nations and the federal government, the court gave particular consideration to the federal nature of delivery of health services to treaty First Nations. The court concluded that the federal Crown undertook to provide health services to First Nations and PBCNHS and NITHA were enabled to take over delivery of these federal health services by way of agreements entered into between the federal Crown and PBCNHS and NITHA. As a result, the court held that OSFI had erred in its decision. It quashed the OSFI decisions concerning the PBCHNS and NITHA pensions and granted a declaration that the health services are federal undertakings within federal jurisdiction.

Federal Court Decision

DISABILITY PENSION ENTITLEMENT

Greene-Kelly v. Canada (Attorney General), 2018 FC 1188

Ms Greene-Kelly served as a civilian dispatcher with the Royal Canadian Mounted Police from July 1982 to August 1996. In the spring of 1992, the RCMP required her to attend a three-month long French language training course. On May 20, 1992, while travelling to the course, she was in a motor vehicle accident. At the time of the accident, Ms Greene-Kelly's supervisor was a passenger in her vehicle, as they were attending the course together and carpooled together to the course.

Ms Greene-Kelly suffered chronic myofascial pain syndrome because of the accident and applied to Veterans Affairs Canada for a disability pension a few months before she was medically discharged from the RCMP on the basis that this disability arose out of, or was directly connected with, her RCMP service. A disability adjudicator at Veterans Affairs denied her application for a disability pension, finding that the chronic myofascial pain syndrome did not arise out of, and was not directly connected with, her RCMP service. The adjudicator ruled that Ms Greene-Kelly was not entitled to a disability pension pursuant to section 32 of the Royal Canadian Mounted Police Superannuation Act, in accordance with the Pension Act, as she had not provided documentary evidence connecting her condition to her RCMP service.

Ms Greene-Kelly appealed the adjudicator's ruling to an Entitlement Review Panel of the Veterans Review and Appeal Board, which upheld the adjudicator's decision. Ms Greene-Kelly then appealed to an Entitlement Appeal Panel of the Board (Appeal Panel), which confirmed the denial of the pension entitlement. Ms Greene-Kelly then sought judicial review of the decision.

The court held that the Appeal Panel correctly interpreted and applied the test to establish entitlement to a disability pension under the Pension Act. The court went on to state that in this case, Ms Greene-Kelly was "not under the control or direction of the RCMP" when she was rear ended, as she was not on duty or performing any work associated with the RCMP at the time of the accident, and she had not been directed by the RCMP to travel a specified route to the French language training center. As a result, the Appeal Panel had reasonably ruled to deny pension entitlement to Ms Greene-Kelly. Ms Greene-Kelly's application for judicial review was therefore denied.

Federal Court Decision

EQUALITY RIGHTS

Fraser v. Canada (Attorney General), 2018 FCA 223

The appellants were former regular members of the Royal Canadian Mounted Police force who, when mothers of young children, took advantage of the RCMP's job sharing policy to work reduced hours by sharing a full-time job with another RCMP officer. The appellant's pension benefits for the job-sharing periods were based on the hours the appellants regularly worked under their job-sharing arrangements. Such benefits were calculated in the same manner as pension benefits were calculated for other RCMP members who work part-time hours.

The appellants alleged that this pro-rated calculation infringed their equality rights guaranteed by section 15 of the Canadian Charter of Rights and Freedoms (Charter), as they were treated less favourably that those who were absent from work on leave without pay of more than three months' duration. RCMP members who take such leaves are afforded the option of treating the period of leave without pay as fully pensionable, with pension for the leave period being calculated based on the hours regularly worked immediately prior to the leave, provided the member makes the necessary additional contributions for the leave period. The appellants could have opted to take unpaid care and nurturing leave instead of opting to job share. Had they done so, they could have opted to buy back their pensions for the period of the leave and not had their pension benefits reduced.

The Federal Court concluded that the appellants had failed to establish that they had been adversely impacted by the impugned provisions. The court further concluded that any such impact, if it existed, was not because of their sex and/or family or parental status, but rather because they had worked part-time hours, which was not a ground enumerated in section 15 of the Charter. The Federal Court of Appeal agreed with this conclusion and ultimately dismissed the appeal, stating that while working mothers face real and significant challenges, this social reality did not give rise to a constitutional right to increased pension benefits in the absence of discrimination.

Federal Court of Appeal Decision

SHARE VALUATION

Mikelsteins v. Morrison, 2018 ONSC 6952

Mr. Mikelsteins was terminated without cause and without notice from Morrison Hershfield Ltd. (Morrison Hershfield), an employee-owned engineering firm that provides engineering and construction and consulting services throughout Canada and the United States. Mr. Mikelsteins's annual compensation package included: a base salary, employment benefits, company contribution to his RSSP equal to four per cent of base salary, and a pay-for-performance plan. In addition, Mr. Mikelsteins was eligible to purchase shares of his company as an employee of Morrison Hershfield. This was done under a shareholders' agreement, which set out the terms and conditions regarding the shares held by the various shareholders. Mr. Mikelsteins received an annual payment called a "share bonus", paid in accordance with this agreement.

Several issues were brought before the court, including whether Mr. Mikelsteins was entitled to any increase in the valuation of his shares in Morrison Hershfield during the reasonable notice period of 26 months he was owed, any gross-up on the value, and the share bonus pursuant to the shareholder's agreement.

On the termination of Mr. Mikelsteins's employment, Morrison Hershfield took the position that according to the "transfer notice" provision of the shareholders' agreement, Mr. Mikelsteins was deemed to have given his transfer notice on November 25, 2017 (30 days following the date of the written notice of dismissal on October 26, 2017). In other words, Mr. Mikelsteins was deemed to have sold his shares at that time. As a result, Morrison Hershfield submitted that Mr. Mikelsteins was not entitled to the increase in the value of his shares and the share bonus during the 26-month notice period he was owed. Mr. Mikelsteins disagreed, submitting that he was not only entitled to the increase in value, he was also entitled to a gross-up to address the fact that if he was awarded the increase it would be taxed differently than if he had held the shares in his RRSP.

The Ontario Superior Court of Justice examined the language used in the shareholders' agreement and determined that it did not oust Mr. Mikelsteins's entitlements during the reasonable notice period, as it lacked clear language required to do so. As a result, the court held that Mr. Mikelsteins was entitled to damages for his loss of his share bonus pursuant to the shareholders' agreement during the reasonable notice period. In addition, in the court's view, Mr. Mikelsteins had also provided sufficient evidence to show that he was entitled to a gross-up.

Ontario Superior Court of Justice Decision

For permission to reprint articles, please contact the Blakes Marketing Department.

© 2018 Blake, Cassels & Graydon LLP.

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 Mondaq.com.

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

Authors
Events from this Firm
23 Jan 2019, Other, Toronto, Canada

We invite you to join members of our National Restructuring & Insolvency Group as they review key restructuring and insolvency developments and trends across Canada in 2018.

26 Feb 2019, Seminar, Toronto, Canada

Since our last seminar, the first phase of amendments that focused on the modernization of liens and holdback rules came into force in Ontario.

27 Feb 2019, Webinar, Toronto, Canada

Join us for a live webcast with partners from our drones team as they discuss updates to drone regulations in Canada and what lies ahead.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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