Benjamin Moore & Co., Limited - June 28, 2007

IN THE MATTER OF the Pension Benefits Act, R.S.O. 1990, c. P.8, as amended (the Act),

                      

AND IN THE MATTER OF a Proposal of the Superintendent of Financial Services to Make an Order for a Partial Wind Up of The Benjamin Moore & Co., Limited Pension Plan, Registration Number 278952 (the Plan), under section 69(1)(d) of the Act.

 

 

 

TO:                

Benjamin Moore & Co., Limited
139 Mulock Avenue
Toronto ON   M6N 1G9

                       

Attention:      

Ms. Lina DiGiovanni
Compensation and Benefit Analyst

 

 

NOTICE OF PROPOSAL

 

 

I PROPOSE TO MAKE AN ORDER:

 

(a)        that The Benjamin Moore & Co., Limited Pension Plan, Registration Number 278952 (the Plan), be wound up in part in relation to those members and former members of the Plan who ceased employment with Benjamin Moore & Co., Limited (Benjamin Moore) (including Technical Coatings Co. Limited (TCCL) members) over the period February 15, 2000, to December 31, 2000, as a result of the reorganization of BenjaminMoore’s business; and

 

(b)        that, in the alternative to the order proposed in paragraph (a) (if it is determined by the Financial Service Tribunal (the Tribunal) that a partial wind up including both TCCL and Benjamin Moore members should not be ordered), the Plan be wound up in part in relation to those TCCL members and former TCCL members of the Plan who ceased employment with TCCL over the period February 15, 2000, to December 31, 2000, as a result of the reorganization of the TCCL business.

 

 

REASONS:

 

  1. Benjamin Moore is the employer and administrator of the Plan (formerly known as the Retirement Income Plan (1959) for Employees of Benjamin Moore & Co.). The Plan covers employees of Benjamin Moore and any affiliated company which may be designated as a participating employer by Benjamin Moore.  TCCL is an affiliated or associated company of Benjamin Moore and is an employer participating in the Plan.

  2. On February 15, 2000, Benjamin Moore announced a reorganization of its North American operations affecting both Benjamin Moore and TCCL, including a Voluntary Early Retirement Window Program (the VERWP) offered to all eligible members of the Plan including TCCL members.

  3. The reorganization affected Benjamin Moore’s operations in Canada as follows:


    (a) Twelve Plan members were terminated from the Aldergrove, British Columbia plant due to a cessation of production activities at the site although distribution and warehouse activities continued;

     

    (b) Production ceased at the Weston, Ontario facility.  Eighteen members were transferred to the Burlington, Ontario facility and continue to participate in the Plan.  Twenty-three Plan members employed at the Weston facility were terminated as a result;

    (c) The Burlington location originally made industrial products under the TCCL subsidiary.  A new plant was added to the Burlington location and production of the commercial products previously done at the Weston facility was taken over by the new Burlington plant.  Eight members were terminated from the Burlington facility (including six TCCL members referenced below) as a result of the reorganization;

     

    (d) Six members lost their production jobs at the Montreal, Quebec facility as a result of the reorganization.  However, all operations including production continued at the Montreal facility;

     

    (e) Thirty-eight members took advantage of VERWP (including eight TCCL members).  The purpose of the VERWP was to assist in achieving reductions in the employment levels at Benjamin Moore (including TCCL), to reduce costs and to provide an early retirement incentive to members who were approaching retirement eligibility; and

     


    (f) The TCCL plant operations at the Burlington site were rationalized to eliminate functional duplication between Canada and the United States.  A total of 14 TCCL members ceased employment as a result, comprised of eight TCCL members who ceased employment under the terms of the VERWP and six TCCL members who otherwise ceased employment.



  4. By resolution of the Directors of Benjamin Moore dated March 23, 2005, the Plan was amended effective December 31, 2000, to partially wind up the Plan but in respect of the Weston plant closure only.  The Report on the Partial Plan Wind Up as at December 31, 2000, (the Weston Wind Up Report) prepared by the actuary for the Plan and dated August 2005 states that a partial wind up excess exists in respect of the Weston partial wind up as of December 31, 2004.  Such a wind up excess would give rise to surplus which would be subject to distribution by virtue of section 70(6) of the Act.   Subject to the treatment of identified surplus assets, the proposals set out in the Weston Wind Up Report for the distribution of pension benefits were approved by the Superintendent on July 5, 2006.


  5. Section 69(1)(d) of the Act states that the Superintendent may require the wind up of a pension plan in whole or in part where “a significant number of members of the pension plan cease to be employed by the employer as a result of the discontinuance of all or part of the business of the employer or as a result of a reorganization of the business of the employer.


  6. Both Benjamin Moore members who ceased employment and TCCL members who ceased employment should be counted together for the purposes of determining whether a significant number of members ceased employment as a result of a discontinuance and/or reorganization under section 69(1)(d) for the following reasons:

     

    (a) The definition of “employee” in the Plan text as it read in 2000 is “a person employed by the Company on a full-time or part-time basis in Canada”.  The term “Company” is defined as:

     

    Company means Benjamin Moore & Co. Limited and any affiliated or associated company which may be  designated as a participating employer by the Company and which has agreed to participate in the Plan.  Where any reference in the Plan is made to any action to be taken, consent, approval or opinion to be given, discretion or decision to be exercised by the Company, “Company” means the Benjamin Moore Co. Limited acting through the board of directors of Benjamin Moore Co. Limited or any person authorized by that board of directors for purposes of the Plan. 

     

    The definition of employer in the Plan text contemplates multiple corporate entities, but the Plan text makes it clear that any actions, consents, approvals, opinions, exercise of discretion or decision under the Plan are to be exercised by Benjamin Moore even for TCCL members;


    (b) The reorganization which gives rise to grounds to order a partial wind up  (including the VERWP) affects both the TCCL and Benjamin Moore corporate entities and was implemented without regard to the corporate distinction between the two entities; and

               

    (c) The definition of the term “employer” should receive a broad and purposive interpretation consistent with the purpose of section 69.  One of the purposes of section 69 and 70 is to give employees affected by partial plan wind ups the same benefits as those affected by full wind ups, and the Act evinces a special solicitude for employees affected by plant closures. 



  7. When TCCL and Benjamin Moore terminations are added together, 89 members ceased employment as a result of the reorganization, comprising 38 members who ceased employment under the terms of the VERWP and 51 members who otherwise ceased employment. 

  8. The 51 members who ceased employment other than under the VERWP are comprised of the 49 members identified in paragraph three above plus two additional members who had not vested under the terms of the Plan until the Plan was specifically amended, by resolution of the Directors of Benjamin Moore dated December 19, 2003, to grant such entitlements.

  9. The total of 51 members includes the members who were affected by the Weston plant shut down and who were part of the Weston wind up group.  The closure of the Weston plant was an integral part of the larger reorganization of the Benjamin Moore’s operations (including TCCL) undertaken in 2000 and, therefore, it is appropriate to include the Weston members in determining whether the significance threshold in section 69(1)(d) has been met.

  10. There were 257 Plan members as of February 14, 2000.  Accordingly, the number of members who ceased employment as a result of the reorganization is significant within the meaning of section 69(1)(d) whether measured on an absolute basis or in proportion to the total number of Plan members.   

  11. Alternatively, if it is determined that TCCL members who ceased employment must be accounted for separately from the Benjamin Moore members who ceased employment, then it is appropriate to use the total number of TCCL Plan members as the base for determining significance on a proportionate basis.  A total of at least 14 TCCL members ceased employment as a result of the reorganization.  The total TCCL Plan membership at the relevant time was 33.  The test of significance is met even in respect of a smaller TCCL partial wind up.

  12. Assuming that the grounds for a partial wind exist, this is not an appropriate case for the Superintendent to exercise his discretion not to order a partial wind up (whether that wind up includes all of Benjamin Moore or is limited to TCCL) because a number of members affected by the reorganization did not receive their statutory wind up entitlements.  In addition, according to the Weston Wind Up Report, a surplus exists as of the wind up proposed in this Notice of Proposal.  Accordingly, members are entitled to the same rights and benefits in respect of the distribution of that surplus that members are entitled to on a full wind up, and this constitutes a sufficient basis for proceeding with the wind up.  

  13. Such further and other reasons as may come to my attention.

 

 

 

YOU ARE ENTITLED TO A HEARING by the Financial Services Tribunal (the Tribunal) pursuant to section 89(6) of the Act.  To request a hearing, you must deliver to the Tribunal a written notice that you require a hearing, within thirty (30) days after this Notice of Proposal is served on you.*

 

 

YOUR WRITTEN NOTICE must be delivered to:

 

Financial Services Tribunal
5160 Yonge Street
14th Floor
Toronto ON   M2N 6L9

 

Attention: The Registrar

 

 

 

FOR FURTHER INFORMATION on a Form for the written notice, please see the Tribunal website at www.fstontario.ca or contact the Registrar of the Tribunal by phone at (416) 590-7294,  toll free at 1-800-668-0128, ext. 7294, or by fax at (416) 226-7750.

IF YOU FAIL TO REQUEST A HEARING WITHIN THIRTY (30) DAYS, I MAY CARRY OUT THE PROPOSAL AS DESCRIBED IN THIS NOTICE.

 

 

DATED at Toronto, Ontario, this 28th day of June, 2007.   

 

           

 


                                                      
K. David Gordon
Deputy Superintendent, Pensions

 

 

 

copy:    Hicks Morley Hamilton Stewart Storie LLP
            Toronto-Dominion Tower, 30th Floor
            Box 371, T-D Centre
            Toronto, ON   M5K 1K8

 

            Attention:       Sheldon Wayne

 

            Counsel for Benjamin Moore

 

*    NOTE - Pursuant to section 112 of the Act any Notice, Order or other document is sufficiently given, served or delivered if delivered personally or sent by regular mail and any document sent by regular mail shall be deemed to be given, served or delivered on the seventh day after the date of mailing.


 
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