Case information

None.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Pensions - Pension surplus - Plan expenses - Administrative law - Boards and tribunals - Standard of review from decisions of the Financial Services Tribunal involving application of common law and trust principles to the interpretation of pension plan and trust documentation - Whether Court of Appeal erred in finding the employer could use pension plan surplus to fund its contribution obligations and in finding the employer could pay plan expenses from the pension fund - Whether Tribunal may award costs to the Committee from the pension fund - Whether Court of Appeal erred in interfering with the divisional court costs order to the Appellants out of the pension fund.

The Appellants are former employees of Kerry (Canada) Inc. (“Kerry”) or its predecessor company for whom a defined benefit pension plan was established in 1954. Beginning in 1958 the trust agreement and plan documents were amended from time to time. The pension fund has been in a surplus position for many years. Kerry paid the plan administrative expenses until 1985, when it began paying them from the plan fund. Further, starting in 1985, Kerry took contribution holidays in respect of its funding obligations. In 2000, the plan text was amended again in order to introduce a defined contribution (“DC”) component, to close the defined benefit (“DB”) plan to new employees after January 1, 2000, and to convert the plan on a going-forward basis to a DC plan. Current employees were given notice of a one-time opportunity to switch to the DC plan. As a result of these amendments, employees were divided into Part 1 Members, who participated in the plan’s DB provisions and Part 2 Members who, after January 1, 2000, participated in the DC part of the plan. Kerry expressed its intention to take contribution holidays in respect of Part 2 Members, by using the surplus from the Part 1 trust fund to satisfy the premiums owing on the DC plan. The Committee brought the plan expense and contribution holiday issues before the Superintendent of Financial Services, who determined that Kerry should reimburse the fund for most expenses paid from the fund after 1985, but that Kerry should not have to reimburse the fund for amounts taken by way of contribution holidays. Kerry brought the matter for hearing before the Financial Services Tribunal where it was held that all but approximately $6,000 of plan expenses could be paid from the trust fund and that Kerry was entitled to take contribution holidays while the fund was in a surplus position. Further, it held that Kerry could retroactively amend the plan provisions to designate the Part 2 Members as beneficiaries of the trust, thereby allowing Kerry to fund its DC plan contributions from the DB plan surplus. The Committee appealed both decisions.

The appeals from decisions of the Tribunal were allowed in part; the Employer was ordered to pay most of the plan expenses; the Employer was entitled to take contribution holidays but was not entitled to fund defined contribution plan contributions from the defined benefit plan surplus. Costs were awarded to the Appellants, partially payable from the pension plan. On appeal, the Respondent Kerry’s appeals were allowed and the cross-appeals dismissed. The Tribunal decisions were restored and the costs award in favour of Appellants overturned.