The FST conducted a hearing that arose from a Notice of Proposal in which the Superintendent proposed to order Kerry (Canada) Inc. to reimburse certain expenses paid from the pension fund and to amend its Pension Plan so that only expenses for the exclusive benefit of the members could be paid from the fund.
The FST released its decision on March 4, 2004. The FST held that certain expenses were to be reimbursed to the fund, while certain other expenses did not have to be reimbursed as they were incurred for the exclusive benefit of the members. The FST also held that there was no jurisdiction under the Pension Benefits Act, R.S.O. 1990, c. P.8 (PBA) for the Superintendent to order a plan amended.
A group of former members comprising the DCA Employees Pension Committee for the Pension Plan for the Employees of Kerry (Canada) Inc. has appealed the FST's decision to the Divisional Court.
In a separate decision on the refusal issue, the panel held that contribution holidays were permitted and authorized by the trust, and that there were no grounds for a partial windup or for an order compelling the Superintendent to monitor the plan. The panel held that the conversion breached the trust insofar as the revised plan text allowed surplus from the defined benefit portion of the plan to be used to fund liabilities for the defined contribution portion, as this diverted funds to the insurance contract with Standard Life. The panel directed the employer to either amend the plan text or transfer the defined contribution funds to the trustee; if this is not done within 90 days, the Superintendent is to refuse registration of the revised plan text.
Finally, the panel issued a separate decision concerning the members' committee's request that the legal costs incurred by the committee be paid out of the fund for the Plan. The majority of the panel determined that the FST did not have the jurisdiction to make such an order and also rejected the committee's request that costs be awarded against the employer.
In a separate Notice of Appeal, the members' committee has also appealed the panel's decision on the refusal and costs issues to the Divisional Court.
The appeal on the expenses issue was heard by the Divisional Court on March 31, 2005 and April 1, 2005. The appeal on the refusal and costs issues was heard on April 18 and 19, 2005. The panel reserved its decision on both appeals.
On March 15, 2006, the Divisional Court released its decision, holding:
- the terms of the trust did not allow Kerry to amend the Plan to authorize the payment of expenses from the fund, as this was not for the exclusive benefit of the members;
- the Superintendent does not have jurisdiction to order a plan or trust agreement amended;
- the contribution holidays were authorized by the terms of the Plan;
- the restated 2000 Plan text which implemented the conversion was a partial revocation of trust, in that it allowed the employer to take contribution holidays from the defined benefit component of the Plan (which was a trust fund) to fund its obligations for the defined contribution component of the Plan (which was funded through an insurance company); this was cross-subsidization; Kerry would have to go back to the drawing board to draft the new Plan;
- the notice provided to the members of the conversion was defective, and would have to be redone once the new Plan was drafted;
- there is no jurisdiction under the Financial Services Commission of Ontario Act to order costs paid from a pension fund;
- the standard of review that applies to the Financial Services Tribunal on questions of law, which include the interpretation of plan and trust documents, is the standard of correctness.
Kerry has filed a motion for leave to appeal this decision to the Court of Appeal.
Updated on May 26, 2006
Appeal scheduled for January 11 and 12, 2007.
Updated on November 30, 2006
On January 10-11, 2007, the Court of Appeal heard the appeal and cross appeal from the Divisional Court's decision respecting the Pension Plan for Employees of Kerry (Canada) Inc. The Court of Appeal reserved its decision.
Updated on January 31, 2007
On June 5, 2007, the Court of Appeal released its decision, allowing the appeal and dismissing the cross appeal. The two Tribunal decisions respecting expenses and contribution holidays were ordered restored.
On August 31, 2007, the members' committee served an Application for Leave to Appeal to the Supreme Court of Canada seeking leave to appeal the decision of the Court of Appeal.
Updated on September 5, 2007
On September 7, 2007, the Court of Appeal released its decision on costs, ordering the members’ committee to pay costs of $45,000 to Kerry in respect of the Divisional Court appeals, and to pay costs of $40,000 to Kerry in respect of the appeal and cross appeal to the Court of Appeal.
On September 28, 2007, the members’ committee served a Motion to file an Amended Notice of Application for Leave to Appeal to the Supreme Court of Canada and to file a Supplementary Memorandum of Argument on the costs issue, and for an extension of time to do so.
Updated on October 9, 2007
On January 31, 2008, the Supreme Court of Canada granted leave to appeal.
Updated on February 8, 2008
In February 2008, the Supreme Court of Canada tentatively scheduled the appeal to be heard on November 18, 2008.
Updated March 18, 2008
The parties have requested that the appeal date be adjourned due to the unavailability of Kerry's counsel on November 18, 2008.
Updated September 10, 2008
The appeal is scheduled to be heard on November 18, 2008. Intervener status has been granted to the Association of Canadian Pension Management and to the Canadian Labour Congress, for each to file a Factum no longer than 10 pages and to present oral submissions no longer than 10 minutes.
Updated November 4, 2008
The appeal was argued at the Supreme Court on November 18, 2008. The court reserved its decision.
Updated on January 13, 2009
On August 7, 2009, the Supreme Court released its decision, dismissing the appeal on all issues. Two of the seven justices dissented, holding that the contribution holidays with respect to the defined contribution component of the Plan constituted a partial revocation of trust.
Updated on September 14, 2009